PSI EXAM Questions and Answers Updated 2024/2025 (Graded A+)

PSI EXAM Questions and Answers Updated 2024/2025 (Graded A+) During which period of a Disability Income Policy is coverage effective but during which no benefits will be paid under the policy? - ANSWER Probationary period All of the following are common exclusions from loss found in disability income policies EXCEPT for that incurred while - ANSWER commiting a misdemeanor What is the primary advantage for obtaining a reinstatement of a policy rather than obtaining a new one? - ANSWER insured original issue age is used How does a noncancelable policy differ from a guaranteed renewable policy? - ANSWER With the noncancelable policy the insurer may increase premiums only based on the terms of the policy. What does first dollar coverage mean? - ANSWER As soon as covered medical expenses are incurred, the policy begins to pay. What is the maximum amount of time the insured has to file legal action against the insurer after written proof of loss is provided? - ANSWER 3 years What is a MIB report? - ANSWER medical information on an applicant for assessing life or health insurance risk All of the following are TRUE regarding incomplete applications EXCEPT - ANSWER the incomplete application can be accepted with the missing information added later. hy are insurance policies considered conditional contracts? - ANSWER Certain conditions need to be met to make the contract legally enforceable. When does insurable interest come into play in a life insurance policy? - ANSWER when the applicant for the policy is not the insured Which type of receipt makes the insurer liable for the risk from the date of application, regardless of the applicant's insurability? - ANSWER binding receipt What specific new procedures does the USA Patriot Act require of insurance companies? - ANSWER Establish an anti-money laundering program What is the purpose of Stranger-originated life insurance (STOLI)? - ANSWER he policy is originated primarily or solely for the purpose of resale PSI EXAM Questions and Answers Updated 2024/2025 (Graded A+) How do warranties differ from representations? - ANSWER a warranty is guaranteed to be true, a representation is believed to be true to the best of one's knowledge. Obtaining consumer information reports under false pretenses is prosecutable by which of the following? - ANSWER Fair Credit Reporting Act Which of the following was specifically designed to address STOLI and IOLI practices? - ANSWER NCOIL Act Which of the following occurs immediately after the application is submitted and the initial premium paid? - ANSWER the underwriting process begins A consumer report used to determine eligibility for insurance may include all of the following EXCEPT - ANSWER medical underwriting exam For an individual long-term care policy there is an annual dollar limit for tax deductions that is based on which of the following? - ANSWER age Under which situation must insurable interest exist between the applicant and insured at the time of application? - ANSWER When a third-party applicant names themselves beneficiary. In noncontributory plans, which percentage of eligible members must participate? - ANSWER 100% When can the premiums of an individually owned health insurance policy be deducted from the individual's income tax? - ANSWER hen the taxpayer's medical expenses exceed 7.5% of adjusted gross income during a taxable year Short term disability insurance generally only covers injuries due to which of the following? - ANSWER Non-occupational injuries Managed care plans increase efficiency by all of the following means EXCEPT - ANSWER transferring the management of costs to the insureds. Why is rehabilitation considered worthy of federal help under workers' compensation? - ANSWER it reduces insurance losses and helps regain the worker's dignity What type of insurance should a company purchase if it wants to insure the life of its CEO? - ANSWER key person insurance