PSI - NY Life, Accident and Health Practice
Exam 17-55 Questions With 100% Correct
Verified Answers
1. A policyowner wants to take money from their life insurance policy. Which of
the following represents an advantage of obtaining a policy loan versus a
withdrawal?
A. The loan is not taxable, while a withdrawal is taxable for amounts above the
contract cost basis.
B. The loan does not need to be repaid.
C. Withdrawals are never taxable.
D. Loans are always tax-free and never accrue interest.
Correct Answer: A
Rationale: Policy loans are generally not considered taxable income at the time of
the loan, whereas withdrawals exceeding the cost basis are taxable as ordinary
income.
2. How does a noncancelable policy differ from a guaranteed renewable policy?
A. With a noncancelable policy, the insurer may increase premiums only based on
the terms of the policy.
B. A guaranteed renewable policy allows the insurer to cancel at any time.
C. A noncancelable policy allows the insurer to change premium rates by class.
D. A guaranteed renewable policy guarantees that premiums will never increase.
Correct Answer: A
Rationale: A noncancelable policy guarantees both renewability and fixed
premiums. A guaranteed renewable policy guarantees renewability but allows
premium increases for an entire class of insureds.
3. What does it mean if a health policy is conditionally renewable?
,A. The insurer may cancel the policy at any time for any reason.
B. The insurer may elect NOT to renew only under the conditions specified in the
policy.
C. The policy is renewable only if the insured pays a higher premium.
D. The policy automatically renews every year regardless of health.
Correct Answer: B
Rationale: Conditionally renewable means the insurer has the right to refuse
renewal only under specific conditions listed in the policy (e.g., reaching a certain
age, loss of employment status).
4. According to the Time Payment of Claims provision, when must the insurer
make payment after receiving proof of loss?
A. Within 10 days for all claims
B. Immediately for all claims except those involving periodic payments
C. Within 30 days for all claims
D. Within 45 days for periodic payments
Correct Answer: B
Rationale: The Time Payment of Claims provision requires immediate payment
after proof of loss, except for periodic payments which may follow a different
schedule.
5. What is the disadvantage of a flexible premium annuity?
A. The policyowner cannot change the premium amount.
B. The actuarial amount of the annuity benefit cannot be determined in advance.
C. The annuity has no death benefit.
D. Flexible premium annuities are not tax-deferred.
Correct Answer: B
Rationale: Because the premium amounts and timing are flexible, the ultimate
benefit amount cannot be accurately predetermined actuarially.
6. When a policy containing an accelerated benefit provision is applied for or
delivered, the producer is responsible for providing the applicant with:
, A. A verbal explanation only
B. A summary of coverage including all details and a comprehensive summary of
the accelerated benefits
C. A copy of the insurer’s financial statement
D. A list of other insurance companies
Correct Answer: B
Rationale: Producers must provide a written summary of coverage that clearly
explains the accelerated benefits, including effects on other policy values.
7. According to the suicide clause in a life insurance contract, can the suicide
clause be used to avoid liability?
A. Yes, for any suicide at any time.
B. Yes, only within the first two years of the policy.
C. No, suicide is always covered.
D. Yes, only if the insured was hospitalized for mental illness.
Correct Answer: B
Rationale: Most life insurance policies have a two-year suicide clause; if suicide
occurs within the first two policy years, the insurer may return premiums but not
pay the death benefit.
8. Which policy provision permits the policy owner to take a number of days to
examine the contract and allows for cancellation with a refund if the policy owner
rejects the terms or costs?
A. Grace period
B. Free Look provision
C. Incontestability clause
D. Reinstatement provision
Correct Answer: B
Rationale: The Free Look provision typically gives 10-30 days to review the
policy and return it for a full refund if not satisfied.
9. When will a policy pay on a UCR (Usual, Customary, and Reasonable) basis?
Exam 17-55 Questions With 100% Correct
Verified Answers
1. A policyowner wants to take money from their life insurance policy. Which of
the following represents an advantage of obtaining a policy loan versus a
withdrawal?
A. The loan is not taxable, while a withdrawal is taxable for amounts above the
contract cost basis.
B. The loan does not need to be repaid.
C. Withdrawals are never taxable.
D. Loans are always tax-free and never accrue interest.
Correct Answer: A
Rationale: Policy loans are generally not considered taxable income at the time of
the loan, whereas withdrawals exceeding the cost basis are taxable as ordinary
income.
2. How does a noncancelable policy differ from a guaranteed renewable policy?
A. With a noncancelable policy, the insurer may increase premiums only based on
the terms of the policy.
B. A guaranteed renewable policy allows the insurer to cancel at any time.
C. A noncancelable policy allows the insurer to change premium rates by class.
D. A guaranteed renewable policy guarantees that premiums will never increase.
Correct Answer: A
Rationale: A noncancelable policy guarantees both renewability and fixed
premiums. A guaranteed renewable policy guarantees renewability but allows
premium increases for an entire class of insureds.
3. What does it mean if a health policy is conditionally renewable?
,A. The insurer may cancel the policy at any time for any reason.
B. The insurer may elect NOT to renew only under the conditions specified in the
policy.
C. The policy is renewable only if the insured pays a higher premium.
D. The policy automatically renews every year regardless of health.
Correct Answer: B
Rationale: Conditionally renewable means the insurer has the right to refuse
renewal only under specific conditions listed in the policy (e.g., reaching a certain
age, loss of employment status).
4. According to the Time Payment of Claims provision, when must the insurer
make payment after receiving proof of loss?
A. Within 10 days for all claims
B. Immediately for all claims except those involving periodic payments
C. Within 30 days for all claims
D. Within 45 days for periodic payments
Correct Answer: B
Rationale: The Time Payment of Claims provision requires immediate payment
after proof of loss, except for periodic payments which may follow a different
schedule.
5. What is the disadvantage of a flexible premium annuity?
A. The policyowner cannot change the premium amount.
B. The actuarial amount of the annuity benefit cannot be determined in advance.
C. The annuity has no death benefit.
D. Flexible premium annuities are not tax-deferred.
Correct Answer: B
Rationale: Because the premium amounts and timing are flexible, the ultimate
benefit amount cannot be accurately predetermined actuarially.
6. When a policy containing an accelerated benefit provision is applied for or
delivered, the producer is responsible for providing the applicant with:
, A. A verbal explanation only
B. A summary of coverage including all details and a comprehensive summary of
the accelerated benefits
C. A copy of the insurer’s financial statement
D. A list of other insurance companies
Correct Answer: B
Rationale: Producers must provide a written summary of coverage that clearly
explains the accelerated benefits, including effects on other policy values.
7. According to the suicide clause in a life insurance contract, can the suicide
clause be used to avoid liability?
A. Yes, for any suicide at any time.
B. Yes, only within the first two years of the policy.
C. No, suicide is always covered.
D. Yes, only if the insured was hospitalized for mental illness.
Correct Answer: B
Rationale: Most life insurance policies have a two-year suicide clause; if suicide
occurs within the first two policy years, the insurer may return premiums but not
pay the death benefit.
8. Which policy provision permits the policy owner to take a number of days to
examine the contract and allows for cancellation with a refund if the policy owner
rejects the terms or costs?
A. Grace period
B. Free Look provision
C. Incontestability clause
D. Reinstatement provision
Correct Answer: B
Rationale: The Free Look provision typically gives 10-30 days to review the
policy and return it for a full refund if not satisfied.
9. When will a policy pay on a UCR (Usual, Customary, and Reasonable) basis?
