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PSI LIFE
INSURANCE EXAM Q&A NEWLY MODIFIED
TESTED AND APPROVED!!!
When should a buy-sell agreement include a provision for the buy-out of an owner's business
interest in the event of a disability?
1.When a company is newly purchased and it is likely the new owner will be disabled within
a year.
2. When a takeover of a company with an owner who is in ill-health occurs.
3. When there is a buy-sell agreement funded with disability insurance to buyout the interest
of a deceased owner or partner.
4. When there is a buy-sell agreement funded with life insurance to buyout the interest of a
deceased owner or partner.
-- ANSWER--When there is a buy-sell agreement funded with life insurance to buyout the
interest of a deceased owner or partner.
An insured MUST present evidence of insurability and pay all overdue premiums with
interest after a policy has lapsed in order to exercise which policy provision?
1. Conversion.
2. Reinstatement.
3. Ownership.
4. Guaranteed Renewability.
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-- ANSWER--Reinstatement.
What is the purpose of Stranger-originated life insurance (STOLI)?
1. the policy is originated primarily or solely for the purpose of resale
2. the policy is written so as to avoid proof of insurable interest
3. it is a method of insuring a person who has been previously declined.
4. it is a fraudulent policy meant for financial gain of someone unknown to the insured.
-- ANSWER--the policy is originated primarily or solely for the purpose of resale
What is the minimum grace period for monthly accident and health insurance policies?
1. 7 days
2. 10 days
3. 31 days
4. 90 days
-- ANSWER--31 days
An insurance agent is defined as an individual who transacts business on behalf of
1. a client.
2. his/her agency.
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3. an insured.
4. an insurance company.
-- ANSWER--an insurance company
An employee is laid off and converts a group health plan to an individual policy. In this
situation, the new policy
1. will include a probationary period.
2. will exclude preexisting conditions for 6 months.
3. premium rate will be higher than the group rate.
4. requires evidence of insurability.
-- ANSWER--premium rate will be higher than the group rate
When replacing existing life insurance, what must an agent do?
1. Collect the in-force policies and send them to the replacing company.
2. Specify what constitutes the replacement.
3. Notify the producer whose policy is being replaced.
4. Inform the applicant that the new policy face amount must be higher than the replaced
policy.
-- ANSWER--Inform the applicant that the new policy face amount must be higher than the
replaced policy.
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In order for an insurer to increase the premium on a noncancelable policy, which of the
following MUST be true?
1. The premium increase must be in the contract at the time it is issued.
2. The insured develops a medical condition that increases risk.
3. The insured reaches the age of 65.
4. The premium increase must be in line with current inflation rates.
-- ANSWER--The premium increase must be in the contract at the time it is issued
An agent who offers to pay the first insurance premium as an inducement for an applicant to
purchase a policy may be found guilty of
1. rebating.
2. twisting.
3. controlled business.
4. unfair discrimination.
-- ANSWER--rebating
What must the policy summary in a life insurance policy include?
1. conditional receipt and the insurer?s home office address
2. reserve deposits.
3. the name and address of the insurance agent or broker
4. definition of replacement.
PSI LIFE
INSURANCE EXAM Q&A NEWLY MODIFIED
TESTED AND APPROVED!!!
When should a buy-sell agreement include a provision for the buy-out of an owner's business
interest in the event of a disability?
1.When a company is newly purchased and it is likely the new owner will be disabled within
a year.
2. When a takeover of a company with an owner who is in ill-health occurs.
3. When there is a buy-sell agreement funded with disability insurance to buyout the interest
of a deceased owner or partner.
4. When there is a buy-sell agreement funded with life insurance to buyout the interest of a
deceased owner or partner.
-- ANSWER--When there is a buy-sell agreement funded with life insurance to buyout the
interest of a deceased owner or partner.
An insured MUST present evidence of insurability and pay all overdue premiums with
interest after a policy has lapsed in order to exercise which policy provision?
1. Conversion.
2. Reinstatement.
3. Ownership.
4. Guaranteed Renewability.
, Page 2 of 117
-- ANSWER--Reinstatement.
What is the purpose of Stranger-originated life insurance (STOLI)?
1. the policy is originated primarily or solely for the purpose of resale
2. the policy is written so as to avoid proof of insurable interest
3. it is a method of insuring a person who has been previously declined.
4. it is a fraudulent policy meant for financial gain of someone unknown to the insured.
-- ANSWER--the policy is originated primarily or solely for the purpose of resale
What is the minimum grace period for monthly accident and health insurance policies?
1. 7 days
2. 10 days
3. 31 days
4. 90 days
-- ANSWER--31 days
An insurance agent is defined as an individual who transacts business on behalf of
1. a client.
2. his/her agency.
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3. an insured.
4. an insurance company.
-- ANSWER--an insurance company
An employee is laid off and converts a group health plan to an individual policy. In this
situation, the new policy
1. will include a probationary period.
2. will exclude preexisting conditions for 6 months.
3. premium rate will be higher than the group rate.
4. requires evidence of insurability.
-- ANSWER--premium rate will be higher than the group rate
When replacing existing life insurance, what must an agent do?
1. Collect the in-force policies and send them to the replacing company.
2. Specify what constitutes the replacement.
3. Notify the producer whose policy is being replaced.
4. Inform the applicant that the new policy face amount must be higher than the replaced
policy.
-- ANSWER--Inform the applicant that the new policy face amount must be higher than the
replaced policy.
, Page 4 of 117
In order for an insurer to increase the premium on a noncancelable policy, which of the
following MUST be true?
1. The premium increase must be in the contract at the time it is issued.
2. The insured develops a medical condition that increases risk.
3. The insured reaches the age of 65.
4. The premium increase must be in line with current inflation rates.
-- ANSWER--The premium increase must be in the contract at the time it is issued
An agent who offers to pay the first insurance premium as an inducement for an applicant to
purchase a policy may be found guilty of
1. rebating.
2. twisting.
3. controlled business.
4. unfair discrimination.
-- ANSWER--rebating
What must the policy summary in a life insurance policy include?
1. conditional receipt and the insurer?s home office address
2. reserve deposits.
3. the name and address of the insurance agent or broker
4. definition of replacement.
