PSI FINAL EXAM 2026-2027 QUESTIONS
AND ANSWERS GRADED A+
1. What does the fixed amount annuity certain payment option guarantee?
A. a higher rate of return
B. the highest monthly Income
C. payments will continue until all of the funds are exhausted
D. benefits will be paid to the beneficiary for the remainder of their life
C. payments will continue until all of the funds are exhausted
2. According to the Uniform Optional Provisions, what action can the insurance
company take if the insured unintentionally understated his or her age on the
original application?
A. The policy can be terminated for misrepresentation.
B. No punitive actions can be taken because the error was unintentional.
C. All amounts payable can be reduced to what they would be if the insured had
reported the correct age.
D. Current claims must be paid under the incorrect age, but future claims can be
paid under the correct age.
C. All amounts payable can be reduced to what they would be if the insured had
reported the correct age.
,3. An insured has disability Insurance through his employer. The employer pays
60% of the premium, and the Insured pays the remaining 40%. What is the
insured's tax liability for any benefits paid from the disability plan?
A. He must pay taxes on all benefits.
B. His only tax liability Is Social Security.
C. He must pay taxes on 40% of the benefits received.
D. He must pay taxes on 60% of the benefits received.
D. He must pay taxes on 60% of the benefits received.
4. All of the following are unfair insurance trade practices EXCEPT
A. encouraging prospective clients to lapse their policy to their detriment.
B. offering a portion of the producer's commission to prospective clients.
C. issuing stock as an encouragement to purchase insurance.
D. receiving a commission as a licensed producer.
D. receiving a commission as a licensed producer.
5. Individual disability Income policies usually limit the monthly benefit to a
percentage of an insured's income to reduce
A. adverse selection.
B. claims
,C. over Insurance.
D. the probationary period.
C. over Insurance.
6. All of the following are functions of the Department of Insurance EXCEPT to
A. ensure compliance with all Insurance laws.
B. see that the public interest is protected at all times.
C. maintain records of individual policies of Insurance issued.
D. assure that regulations are consistent with insurance laws.
C. maintain records of individual policies of Insurance issued.
7. A primary difference between pre-certification provision and concurrent review
is that only the pre-certification provision
A. ls designed to be a cost containment measure.
B. Involves a review by the physician.
C. requires the consent of the patient
D. occurs before the treatment is provided
D. occurs before the treatment is provided
8. The insured and the primary beneficiary of a life insurance policy were in a car
together when they were involved in an accident. The Insured was killed instantly
, and the beneficiary died 10 days later. Which policy provision will protect the
rights of the contingent beneficiary to receive the policy benefits?
A. Accidental death rider.
B. Common disaster clause.
C. Facility of payment provision
D. Spendthrift clause.
B. Common disaster clause.
9. Long-term care policies will NOT cover necessary medical services one receives
in
A. an acute care unit of a hospital.
B. a nursing home.
C. one's own home.
D. an outpatient facility.
A. an acute care unit of a hospital.
10. When an insurer has the right to terminate a health insurance policy for specific
reasons other than the insured's heath, the plan is described as
A. guaranteed renewable.
B. a. conditionally renewable
C. flexibly renewable
AND ANSWERS GRADED A+
1. What does the fixed amount annuity certain payment option guarantee?
A. a higher rate of return
B. the highest monthly Income
C. payments will continue until all of the funds are exhausted
D. benefits will be paid to the beneficiary for the remainder of their life
C. payments will continue until all of the funds are exhausted
2. According to the Uniform Optional Provisions, what action can the insurance
company take if the insured unintentionally understated his or her age on the
original application?
A. The policy can be terminated for misrepresentation.
B. No punitive actions can be taken because the error was unintentional.
C. All amounts payable can be reduced to what they would be if the insured had
reported the correct age.
D. Current claims must be paid under the incorrect age, but future claims can be
paid under the correct age.
C. All amounts payable can be reduced to what they would be if the insured had
reported the correct age.
,3. An insured has disability Insurance through his employer. The employer pays
60% of the premium, and the Insured pays the remaining 40%. What is the
insured's tax liability for any benefits paid from the disability plan?
A. He must pay taxes on all benefits.
B. His only tax liability Is Social Security.
C. He must pay taxes on 40% of the benefits received.
D. He must pay taxes on 60% of the benefits received.
D. He must pay taxes on 60% of the benefits received.
4. All of the following are unfair insurance trade practices EXCEPT
A. encouraging prospective clients to lapse their policy to their detriment.
B. offering a portion of the producer's commission to prospective clients.
C. issuing stock as an encouragement to purchase insurance.
D. receiving a commission as a licensed producer.
D. receiving a commission as a licensed producer.
5. Individual disability Income policies usually limit the monthly benefit to a
percentage of an insured's income to reduce
A. adverse selection.
B. claims
,C. over Insurance.
D. the probationary period.
C. over Insurance.
6. All of the following are functions of the Department of Insurance EXCEPT to
A. ensure compliance with all Insurance laws.
B. see that the public interest is protected at all times.
C. maintain records of individual policies of Insurance issued.
D. assure that regulations are consistent with insurance laws.
C. maintain records of individual policies of Insurance issued.
7. A primary difference between pre-certification provision and concurrent review
is that only the pre-certification provision
A. ls designed to be a cost containment measure.
B. Involves a review by the physician.
C. requires the consent of the patient
D. occurs before the treatment is provided
D. occurs before the treatment is provided
8. The insured and the primary beneficiary of a life insurance policy were in a car
together when they were involved in an accident. The Insured was killed instantly
, and the beneficiary died 10 days later. Which policy provision will protect the
rights of the contingent beneficiary to receive the policy benefits?
A. Accidental death rider.
B. Common disaster clause.
C. Facility of payment provision
D. Spendthrift clause.
B. Common disaster clause.
9. Long-term care policies will NOT cover necessary medical services one receives
in
A. an acute care unit of a hospital.
B. a nursing home.
C. one's own home.
D. an outpatient facility.
A. an acute care unit of a hospital.
10. When an insurer has the right to terminate a health insurance policy for specific
reasons other than the insured's heath, the plan is described as
A. guaranteed renewable.
B. a. conditionally renewable
C. flexibly renewable
