PSI Life Insurance Exam – Study Guide & Practice Questions
What is it called when a life insurance policy pays a multiple of the coverage amount when certain types
of accidents occur? - (answer)multiple indemnity
Upon the issuance of a conditional receipt for a renewal when the premium is paid AFTER the time
granted by the insurer, what is the maximum amount of time for reinstatement of the policy? -
(answer)30 days
Which of the following statements regarding a pure life annuity payout option is correct? - (answer)This
option provides the highest monthly income.
Which of the following does not apply to the time limit on certain defenses provision in health insurance
policies? - (answer)fraudulent misstatements
If an individual is insured by both their own health insurance policy and their spouse's policy, which
policy pays first in the event of an illness? - (answer)The individual's policy pays first, the spouse's policy
pays the remaining up to coverage amount.
When can the premiums of an individually owned health insurance policy be deducted from the
individual's income tax? - (answer)when the taxpayer's unreimbursed medical expenses exceed 7.5% of
adjusted gross income during a taxable year
When the suicide clause is inserted in a life insurance contract, death by suicide is not covered during
the policy's initial - (answer)2 year period.
Which of the following is a characteristic of Health Maintenance Organizations (HMOs)? -
(answer)preventive care
The life insurance policy will not be truly effective until all of the following occur EXCEPT - (answer)the
producer has explained the policy to the client.
,PSI Life Insurance Exam – Study Guide & Practice Questions
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
Which of the following is a distinguishing feature of a variable life insurance policy? - (answer)The cash
value earnings are based on the performance of the separate account.
The person who receives the benefit of an annuity is known as the - (answer)annuitant.
Which of the following is an example of a premium payment mode? - (answer)annual premium payment
How do most disability policies handle the case of a recurrent disability occurring at least 90 days after
the first claim? - (answer)it must be handled as a new claim for a new period of disability, requiring a
new elimination period.
Which of the following is true for most comprehensive dental policies? - (answer)Routine care is
provided without coinsurance or deductibles.
Under a Medicare Supplement Policy, preexisting conditions CANNOT be excluded after how many
months from the effective date of the policy? - (answer)6 months
What does an application for insurance contractually represent for the insured? - (answer)an offer
Which of the following is exempted from the incontestability provision in insurance policies? -
(answer)fraudulent misstatements
Which of the following may be thought of as a time deductible rather than a dollar deductible in a
disability income policy because benefits are not payable during that time? - (answer)elimination period
How long after being entitled to Social Security disability benefits will an individual be eligible to receive
Medicare benefits? - (answer)2 years
, PSI Life Insurance Exam – Study Guide & Practice Questions
If a policy is determined to be a Modified Endowment Contract (MEC), funds received under the policy
will be - (answer)considered taxable income first.
Which type of annuity attempts to offset inflation by providing a benefit linked to an underlying
investment account? - (answer)variable
What is a MIB report? - (answer)medical information on an applicant for assessing life or health
insurance risk
Group Life Policies typically include which of the following provisions? - (answer)conversion privilege
In a case where an individual's health is insured by both their own policy and their spouse's policy, which
policy pays in the event of an illness? - (answer)The individual's policy pays first, the spouse's policy pays
the remaining up to coverage amount.
The feature of a Life Insurance Policy stating that the policy will NOT cover certain risks is known as -
(answer)exclusion.
The primary purpose of Health Reimbursement Accounts (HRAs) is to assist - (answer)covered
employees with the payment of medical expenses on a high deductible plan funded through pre-tax
contributions.
What type of insurance should a company purchase if it wants to insure the life of its CEO? - (answer)key
person insurance
Which is the major reason why long term care insurance is becoming increasingly important? -
(answer)As life expectancy increases, the chances of needing long term care also increase.
Which of the following requires the claim information to be submitted to the insurer prior to treatment
to determine whether the treatment is covered and how much the insured's plan will pay? -
(answer)precertification provision
What is it called when a life insurance policy pays a multiple of the coverage amount when certain types
of accidents occur? - (answer)multiple indemnity
Upon the issuance of a conditional receipt for a renewal when the premium is paid AFTER the time
granted by the insurer, what is the maximum amount of time for reinstatement of the policy? -
(answer)30 days
Which of the following statements regarding a pure life annuity payout option is correct? - (answer)This
option provides the highest monthly income.
Which of the following does not apply to the time limit on certain defenses provision in health insurance
policies? - (answer)fraudulent misstatements
If an individual is insured by both their own health insurance policy and their spouse's policy, which
policy pays first in the event of an illness? - (answer)The individual's policy pays first, the spouse's policy
pays the remaining up to coverage amount.
When can the premiums of an individually owned health insurance policy be deducted from the
individual's income tax? - (answer)when the taxpayer's unreimbursed medical expenses exceed 7.5% of
adjusted gross income during a taxable year
When the suicide clause is inserted in a life insurance contract, death by suicide is not covered during
the policy's initial - (answer)2 year period.
Which of the following is a characteristic of Health Maintenance Organizations (HMOs)? -
(answer)preventive care
The life insurance policy will not be truly effective until all of the following occur EXCEPT - (answer)the
producer has explained the policy to the client.
,PSI Life Insurance Exam – Study Guide & Practice Questions
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
Which of the following is a distinguishing feature of a variable life insurance policy? - (answer)The cash
value earnings are based on the performance of the separate account.
The person who receives the benefit of an annuity is known as the - (answer)annuitant.
Which of the following is an example of a premium payment mode? - (answer)annual premium payment
How do most disability policies handle the case of a recurrent disability occurring at least 90 days after
the first claim? - (answer)it must be handled as a new claim for a new period of disability, requiring a
new elimination period.
Which of the following is true for most comprehensive dental policies? - (answer)Routine care is
provided without coinsurance or deductibles.
Under a Medicare Supplement Policy, preexisting conditions CANNOT be excluded after how many
months from the effective date of the policy? - (answer)6 months
What does an application for insurance contractually represent for the insured? - (answer)an offer
Which of the following is exempted from the incontestability provision in insurance policies? -
(answer)fraudulent misstatements
Which of the following may be thought of as a time deductible rather than a dollar deductible in a
disability income policy because benefits are not payable during that time? - (answer)elimination period
How long after being entitled to Social Security disability benefits will an individual be eligible to receive
Medicare benefits? - (answer)2 years
, PSI Life Insurance Exam – Study Guide & Practice Questions
If a policy is determined to be a Modified Endowment Contract (MEC), funds received under the policy
will be - (answer)considered taxable income first.
Which type of annuity attempts to offset inflation by providing a benefit linked to an underlying
investment account? - (answer)variable
What is a MIB report? - (answer)medical information on an applicant for assessing life or health
insurance risk
Group Life Policies typically include which of the following provisions? - (answer)conversion privilege
In a case where an individual's health is insured by both their own policy and their spouse's policy, which
policy pays in the event of an illness? - (answer)The individual's policy pays first, the spouse's policy pays
the remaining up to coverage amount.
The feature of a Life Insurance Policy stating that the policy will NOT cover certain risks is known as -
(answer)exclusion.
The primary purpose of Health Reimbursement Accounts (HRAs) is to assist - (answer)covered
employees with the payment of medical expenses on a high deductible plan funded through pre-tax
contributions.
What type of insurance should a company purchase if it wants to insure the life of its CEO? - (answer)key
person insurance
Which is the major reason why long term care insurance is becoming increasingly important? -
(answer)As life expectancy increases, the chances of needing long term care also increase.
Which of the following requires the claim information to be submitted to the insurer prior to treatment
to determine whether the treatment is covered and how much the insured's plan will pay? -
(answer)precertification provision
