PSI online exam Life Insurance

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  1. If the insurer wishes to share an applicant's HIV status, the applicant must be given full notice of all of the following EXCEPT
    A) the applicant’s rights to maintain privacy
    B) an opportunity to refuse the dissemination of the information
    C) insurer’s practices with respect to the treatment of this information
    D) the treatment procedures that are covered by the policy.
    D) the treatment procedures that are covered by the policy.
    (this multiple choice question has been scrambled)
  2. All of the following are common exclusions from loss found in disability income policies EXCEPT for that incurred while
    A) committing a misdemeanor
    B) piloting a personal aircraft
    C) living overseas
    D) serving in the military
    A) committing a misdemeanor
    (this multiple choice question has been scrambled)
  3. What type of insurance should a company purchase if it wants to insure the life of its CEO?
    A) BOE insurance
    B) key person insurance
    C) industrial life insurance
    D) group life policy
    B) key person insurance
    (this multiple choice question has been scrambled)
  4. For an individual long-term care policy there is an annual dollar limit for tax-deductions that is base on which of the following?
    A) age
    B) premium cost
    C) cost of care
    D) policy value
    A) age
    (this multiple choice question has been scrambled)
  5. Which of the following is exempted from the incontestability provision in insurance policies?
    A) change in health
    B) pre-existing conditions
    C) changes in the insurance code
    D) fraudulent misstatements
    D) fraudulent misstatements
    (this multiple choice question has been scrambled)
  6. Which of the following term insurance types provides temporary protection that can be changed to some type of permanent protection without evidence of insurability?
    A) re-entry
    B) decreasing
    C) level
    D) convertible
    D) convertible
    (this multiple choice question has been scrambled)
  7. Which annuity settlement option provides a stated monthly amount to the annuitant and upon the annuitant's death the same or a lesser amount paid for the lifetime of the survivor?
    A) Refund life annuity option
    B) Life annuity certain option
    C) Joint life option
    D) Joint and survivorship option
    D) Joint and survivorship option
    (this multiple choice question has been scrambled)
  8. Which one of the following is particularly important for an insurance producer to explain to a client upon delivery of a life insurance policy?
    A) the effective date
    B) premium due dates
    C) any exclusions
    D) loan interest rates
    C) any exclusions
    (this multiple choice question has been scrambled)
  9. All of the following are ownership rights EXCEPT
    A) assigning all of the rights of the policy to another person
    B) switching the policy from one insured to anther
    C) borrowing funds against cash value
    D) changing the beneficiary of the policy
    B) switching the policy from one insured to another
    (this multiple choice question has been scrambled)
  10. How might someone cover the extra expenses of child care and home-related costs?
    A) adding coverage of a grandparent
    B) purchasing a substitute insured rider
    C) adding cost of living coverage
    D) purchasing family term insurance
    D) purchasing family term insurance
    (this multiple choice question has been scrambled)
  11. All of the following are required signatures on a life insurance application EXCEPT
    A) the agent
    B) the proposed insured
    C) the minor in a juvenile policy
    D) the applicant
    C) the minor in a juvenile policy.
    (this multiple choice question has been scrambled)
  12. Which of the following is TRUE regarding assignment rights for irrevocable beneficiaries?
    A) They are responsible for premium payment when policyholder fails to pay.
    B) They are MORE likely to receive a loan based on the expectations of the proceeds.
    C) They can be changed without the beneficiary’s consent after a life changing event.
    D) They are LESS likely to receive a loan based on the expectations of the proceeds.
    B) They are MORE likely to receive a loan based on the expectations of the proceeds.
    (this multiple choice question has been scrambled)
  13. why is relying solely on employer group life insurance generally considered inadequate for most individual's needs?
    A) It is financially insufficient to cover end of life expenses.
    B) It is meant to cover funeral expenses only.
    C) It does not pay off the insured’s mortgage.
    D) It is based on salary amounts that are too low.
    A) It is financially insufficient to cover end of life expenses.
    (this multiple choice question has been scrambled)
  14. How do warranties differ from representations?
    A) a representation is guaranteed to be true, a warranty is believed to be true to the best of one’s knowledge.
    B) a warranty is issued by the insurer, a representation is a statement provided by the applicant.
    C) a warranty is guaranteed to be true, a representation is believed to be true to the best of one's knowledge.
    D) an incorrect representation automatically voids a contract, whereas an incorrect warranty must be proven.
    C) a warranty is guaranteed to be true, a representation is believed to be true to the best of one's knowledge.
    (this multiple choice question has been scrambled)
  15. The group conversion option is allowed for all of the following EXCEPT
    A) termination of the master policy.
    B) loss of group coverage due to termination of employment.
    C) during the annual benefits enrollment period.
    D) upon the loss of eligibility on the part of a class insureds.
    C) during the annual benefits enrollment period.
    (this multiple choice question has been scrambled)
  16. Which type of annuity attempts to offset inflation by providing a benefit linked to an underlying investment account?
    A) immediate
    B) deferred
    C) fixed
    D) variable
    D) variable
    (this multiple choice question has been scrambled)
  17. What procedure is used by an insurer to protect itself in the event a dispute arises and the applicant and the agent do not recall the changes that were made in a completed application?
    A) An arbitration agreement is signed at the time of the signing of the application.
    B) The applicant and possibly the agent initial any changes made.
    C) The applicant and the agent sign a document that outlines changes made.
    D) All changes must be approved by the underwriter prior to the submission of the application.
    B) The applicant and possibly the agent initial any changes made.
    (this multiple choice question has been scrambled)
  18. All of the following are features of the spendthrift clause EXCEPT
    A) the beneficiary may encumber the proceeds.
    B) transfer of proceeds to creditors is prohibited.
    C) the proceeds are paid in some other way than a single lump sum.
    D) proceeds are protected by the insurer from the beneficiary’s creditors.
    A) the beneficiary may encumber the proceeds.
    (this multiple choice question has been scrambled)
  19. In which of the following must a beneficiary change request be filed in writing to the insurer and is made effective by the insurance company recording the change in its records?
    A) succession of beneficiaries
    B) endorsement method
    C) designation option
    D) recording method
    D) recording method
    (this multiple choice question has been scrambled)
  20. Which part of an insurance contract contains the promise to pay losses covered by the policy in exchange for the insured's premium and compliance with policy terms?
    A) definitions
    B) policy title pages
    C) insuring clause
    D) conditions
    C) insuring clause
    (this multiple choice question has been scrambled)
  21. Which of the following is TRUE of an equity-indexed annuity?
    A) It is a variable annuity.
    B) It may decrease in value.
    C) it requires a securities license to sell.
    D) It has a guaranteed minimum interest rate.
    D ) It has a guaranteed minimum interest rate.
  22. An insured and the beneficiary are both killed in a fatal accident. Which provision presumes the insured survived the beneficiary?
    A) endorsement method
    B) common disaster clause
    C) contingent beneficiary
    D) irrevocable beneficiary
    B) common disaster clause
    (this multiple choice question has been scrambled)
  23. Under the misstatement of age or gender provision, what happens if it is determined at death that the insured's age or gender was misstated on a life insurance policy application?
    A) the proceeds of the policy must be determined by a probate court proceeding.
    B) if the death is two years after originally policy purchase, complete benefits are paid.
    C) the application is considered fraudulent and no benefits are paid.
    D) benefits are adjusted to an amount that the premium would have purchased at the correct age or gender
    D) benefits are adjusted to an amount that the premium would have purchased at the correct age or gender
    (this multiple choice question has been scrambled)
  24. All life insurance and health insurance contracts contain all of the following EXCEPT
    A) conditions
    B) Policy face
    C) representation
    D) Insuring clause
    C) representation
    (this multiple choice question has been scrambled)
  25. All of the following are classifications of risk EXCEPT
    A) preferred
    B) substandard
    C) non-nicotine.
    D) declined
    C) non-nicotine.
    (this multiple choice question has been scrambled)
  26. Group AD&D policies may be deducted by whom and under which deduction category?
    A) the employee under medical expenses
    B) the employer under worker’s compensation
    C) the employer under business expenses
    D) the employee under business expenses
    C) the employer under business expenses
    (this multiple choice question has been scrambled)
  27. All of the following are tax qualified retirement plans EXCEPT
    A) 401(K)
    B) 403(B)
    C) Section 529 plan
    D) SIPMPLE IRA
    C) Section 529 plan
    (this multiple choice question has been scrambled)
  28. Which of the following is common in an increasing term life policy?
    A) The premium increases over time.
    B) It is used as mortgage credit insurance.
    C) Insurance protection decreases over time.
    D) It begins with little or no insurance protection.
    D) It begins with little or no insurance protection.
    (this multiple choice question has been scrambled)
  29. Which of the following is the time limit on certain defenses after which the policy becomes incontestable?
    A) 12 months
    B) 5 years
    C) 18 months
    D) 2 years
    D) 2 years
    (this multiple choice question has been scrambled)
  30. Which whole life policy premium type is the most common?
    A) continuous premium
    B) non-participating
    C) limited payment
    D) single premium
    A) continuous premium
    (this multiple choice question has been scrambled)
  31. The right to change the beneficiary or dispose of the policy or its benefits in any manner one chooses is reserved to the policyowner UNLESS which of the following is true?
    A) The insurer prohibits changes to beneficiaries.
    B) The policyowner deems the beneficiary unfit.
    C) The policyowner has named an irrevocable beneficiary.
    D) The policyowner has named a revocable beneficiary.
    C) The policyowner has named an irrevocable beneficiary.
    (this multiple choice question has been scrambled)
  32. Which of the following is characteristic of a nonqualified plan?
    A) defined vesting schedule
    B) plan does not meet federal guidelines for tax benefits
    C) plan established by the employer
    D) employer contributions are deductible business expenses
    B) plan does not meet federal guidelines for tax benefits
    (this multiple choice question has been scrambled)
  33. In a level term life policy, which ALWAYS remains constant?
    A) maximum age of the insured
    B) premium
    C) death benefit
    D) beneficiary
    C) death benefit
    (this multiple choice question has been scrambled)
  34. Why is the accidental death benefit referred to as double indemnity?
    A) The beneficiaries must provide proof of death due to multiple causes.
    B) It provides for both the actual death as well as other losses from the accident.
    C) The beneficiaries have twice the amount of time to provide proof of loss.
    D) It provides twice the face value in the policy for death due to accident.
    D) It provides twice the face value in the policy for death due to accident.
    (this multiple choice question has been scrambled)
  35. Which of the following is TRUE for a flexible premium annuity?
    A) A single set amount premium is paid by the annuitant on an annual basis.
    B) The company promises to pay the annuitant an amount each period beginning after a single lump sum payment.
    C) The purchaser has the option to vary the amount of each premium payment falling between a minimum and maximum amount.
    D) The actual amount of the annuity benefit is determined in advanced.
    C) The purchaser has the option to vary the amount of each premium payment falling between a minimum and maximum amount.
    (this multiple choice question has been scrambled)
  36. Which of the following occurs immediately after the application is submitted and the initial premium paid?
    A) the insurance goes into effect
    B) the applicant’s references are checked
    C) the beneficiaries are selected
    D) the underwriting process begins
    D) the underwriting process begins
    (this multiple choice question has been scrambled)
  37. In order to AVOID being classified as an MEC, a policy must pass which of the following?
    A) five-pay test
    B) policy loan test
    C) seven-pay test
    D) accelerated benefits test
    C) seven-pay test
    (this multiple choice question has been scrambled)
  38. Which of the following lists the three common types of permanent individual life insurance?
    A) Variable Life, Whole Life, Universal Life
    B) Universal Life, AD&D, Term Life
    C) Whole life, Incidental Life, Term Life
    D) Group Life, Whole Life, Variable Life
    A) Variable Life, Whole Life, Universal Life
    (this multiple choice question has been scrambled)
  39. Which of the following refers to how often a premium is paid?
    A) ratio
    B) mode
    C) net
    D) level
    B) mode
    (this multiple choice question has been scrambled)
  40. When the courts look at a contract to determine the intent of the parties which of the following is considered?
    A) the relevant portions of the contract
    B) any words that have ambiguous definitions
    C) any material added to the basic contract
    D) the entire contract
    D) the entire contract
    (this multiple choice question has been scrambled)
  41. Current assumption whole life policies are sensitive to which of the following?
    A) age of the insured
    B) health of the insured
    C) current cash value of the policy
    D) interest rates
    D) interest rates
    (this multiple choice question has been scrambled)
  42. What is the purpose of Stranger-originated life insurance (STOLI)?
    A) the policy is written so as to avoid proof of insurable interest.
    B) it is a fraudulent policy meant for financial gain of someone of unknown to the insured.
    C) the policy is originated primarily or solely for the purpose of resale
    D) it is a method of insuring a person who has been previously declined.
    C) the policy is originated primarily or solely for the purpose of resale
    (this multiple choice question has been scrambled)
  43. Which of the following is TRUE of the limited pay whole life policy?
    A) Premium payments increases as the insured ages.
    B) Coverage continues after the policy is paid-up.
    C) Premium payments are lower than continuous premium whole life.
    D) Coverage ends when the policy is paid up.
    B) Coverage continues after the policy is paid-up.
    (this multiple choice question has been scrambled)
  44. Which policy provision permits the policyowner to take a specified number of days to examine the contract, and allows for cancellation and a full refund if the policyowner rejects the terms or costs?
    A) Free look
    B) Exclusions
    C) Insuring clause
    D) Grace period
    A) Free look
    (this multiple choice question has been scrambled)
  45. Obtaining consumer information reports under false pretenses is prosecutable by which of the following?
    A) Securities and Exchange Commission
    B) USA Patriot Act
    C) State laws where the applicant resides
    D) Fair Credit Reporting Act
    D) Fair Credit Reporting Act
    (this multiple choice question has been scrambled)
  46. All of the following are TRUE regarding incomplete applications EXCEPT
    A) there will be a delay in the underwriting process.
    B) the incomplete application can be accepted with the missing information added later.
    C) the applicant will have to wait additional time before coverage begins.
    D) the underwriting department will return the application to the agent.
    B) the incomplete application can be accepted with the missing information added later.
    (this multiple choice question has been scrambled)
  47. What is the primary advantage for obtaining a reinstatement of a policy rather than obtaining a new one?
    A) No proof of insurability is required
    B) insured original issue age is used
    C) outstanding loans are cancelled
    D) No application is required
    B) insured original issue age is used
    (this multiple choice question has been scrambled)
  48. Which policy type is backed by equity investments and allows the policyholder to adjust the death benefit?
    A) variable universal life
    B) regular whole life
    C) variable life
    D) term life
    A) variable universal life
    (this multiple choice question has been scrambled)
  49. Which of the following is an example of a premium payment mode?
    A) $200 per policy year
    B) automatic deductions of premium
    C) payment by check
    D) annual premium payment
    D) annual premium payment
    (this multiple choice question has been scrambled)
  50. How does the per capita rule apply to proceeds from a life insurance policy?
    A) The proceeds go to the policyholder’s estate when no beneficiary is living.
    B) The proceeds go to the descendants of the primary beneficiaries.
    C) The proceeds are divided equally among living primary beneficiaries.
    D) The secondary beneficiary receives the proceeds if the primary beneficiary is no longer living.
    C) The proceeds are divided equally among living primary beneficiaries.
    (this multiple choice question has been scrambled)
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PSI online exam Life Insurance
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PSI online exam Life Insurance
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