PSI EXAM Questions and Answers
(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
, 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
The group conversion option is allowed for all of the following EXCEPT - ANSWER
during the annual benefits enrollment period
All of the following are tax qualified retirement plans EXCEPT - ANSWER Section 529
plan
(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
, 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
The group conversion option is allowed for all of the following EXCEPT - ANSWER
during the annual benefits enrollment period
All of the following are tax qualified retirement plans EXCEPT - ANSWER Section 529
plan
