PSI online exam Life Insurance

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) insurer’s practices with respect to the treatment of this information
B) an opportunity to refuse the dissemination of the information
C) the applicant’s rights to maintain privacy
D) the treatment procedures that are covered by the policy.

All of the following are common exclusions from loss found in disability income policies EXCEPT for that incurred while
A) piloting a personal aircraft
B) living overseas
C) committing a misdemeanor
D) serving in the military

What type of insurance should a company purchase if it wants to insure the life of its CEO?
A) BOE insurance
B) industrial life insurance
C) group life policy
D) key person insurance

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) policy value
C) premium cost
D) cost of care

Which of the following is exempted from the incontestability provision in insurance policies?
A) pre-existing conditions
B) change in health
C) fraudulent misstatements
D) changes in the insurance code

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) convertible
B) level
C) re-entry
D) decreasing

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

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) premium due dates
B) the effective date
C) any exclusions
D) loan interest rates

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) changing the beneficiary of the policy
D) borrowing funds against cash value

How might someone cover the extra expenses of child care and home-related costs?
A) purchasing a substitute insured rider
B) adding coverage of a grandparent
C) purchasing family term insurance
D) adding cost of living coverage

All of the following are required signatures on a life insurance application EXCEPT
A) the agent
B) the applicant
C) the proposed insured
D) the minor in a juvenile policy

Which of the following is TRUE regarding assignment rights for irrevocable beneficiaries?
A) They are LESS likely to receive a loan based on the expectations of the proceeds.
B) They can be changed without the beneficiary’s consent after a life changing event.
C) They are responsible for premium payment when policyholder fails to pay.
D) They are MORE likely to receive a loan based on the expectations of the proceeds.

why is relying solely on employer group life insurance generally considered inadequate for most individual's needs?
A) It is meant to cover funeral expenses only.
B) It is based on salary amounts that are too low.
C) It does not pay off the insured’s mortgage.
D) It is financially insufficient to cover end of life expenses.

How do warranties differ from representations?
A) a warranty is guaranteed to be true, a representation 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 representation is guaranteed to be true, a warranty 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.

The group conversion option is allowed for all of the following EXCEPT
A) loss of group coverage due to termination of employment.
B) during the annual benefits enrollment period.
C) upon the loss of eligibility on the part of a class insureds.
D) termination of the master policy.

Which type of annuity attempts to offset inflation by providing a benefit linked to an underlying investment account?
A) fixed
B) deferred
C) immediate
D) variable

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) The applicant and the agent sign a document that outlines changes made.
B) The applicant and possibly the agent initial any changes made.
C) All changes must be approved by the underwriter prior to the submission of the application.
D) An arbitration agreement is signed at the time of the signing of the application.

All of the following are features of the spendthrift clause EXCEPT
A) transfer of proceeds to creditors is prohibited.
B) the proceeds are paid in some other way than a single lump sum.
C) the beneficiary may encumber the proceeds.
D) proceeds are protected by the insurer from the beneficiary’s creditors.

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) recording method
D) designation option

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) insuring clause
C) conditions
D) policy title pages

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.

An insured and the beneficiary are both killed in a fatal accident. Which provision presumes the insured survived the beneficiary?
A) irrevocable beneficiary
B) common disaster clause
C) contingent beneficiary
D) endorsement method

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) if the death is two years after originally policy purchase, complete benefits are paid.
B) the proceeds of the policy must be determined by a probate court proceeding.
C) benefits are adjusted to an amount that the premium would have purchased at the correct age or gender
D) the application is considered fraudulent and no benefits are paid.

All life insurance and health insurance contracts contain all of the following EXCEPT
A) Insuring clause
B) Policy face
C) representation
D) conditions

All of the following are classifications of risk EXCEPT
A) non-nicotine.
B) declined
C) preferred
D) substandard

Group AD&D policies may be deducted by whom and under which deduction category?
A) the employee under medical expenses
B) the employee under business expenses
C) the employer under business expenses
D) the employer under worker’s compensation

All of the following are tax qualified retirement plans EXCEPT
A) Section 529 plan
B) 403(B)
C) SIPMPLE IRA
D) 401(K)

Which of the following is common in an increasing term life policy?
A) Insurance protection decreases over time.
B) It begins with little or no insurance protection.
C) It is used as mortgage credit insurance.
D) The premium increases over time.

Which of the following is the time limit on certain defenses after which the policy becomes incontestable?
A) 18 months
B) 2 years
C) 12 months
D) 5 years

Which whole life policy premium type is the most common?
A) single premium
B) non-participating
C) continuous premium
D) limited payment

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 policyowner has named an irrevocable beneficiary.
B) The policyowner deems the beneficiary unfit.
C) The insurer prohibits changes to beneficiaries.
D) The policyowner has named a revocable beneficiary.

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) employer contributions are deductible business expenses
D) plan established by the employer

In a level term life policy, which ALWAYS remains constant?
A) premium
B) death benefit
C) beneficiary
D) maximum age of the insured

Why is the accidental death benefit referred to as double indemnity?
A) It provides twice the face value in the policy for death due to accident.
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) The beneficiaries must provide proof of death due to multiple causes.

Which of the following is TRUE for a flexible premium annuity?
A) The purchaser has the option to vary the amount of each premium payment falling between a minimum and maximum amount.
B) The company promises to pay the annuitant an amount each period beginning after a single lump sum payment.
C) A single set amount premium is paid by the annuitant on an annual basis.
D) The actual amount of the annuity benefit is determined in advanced.

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

In order to AVOID being classified as an MEC, a policy must pass which of the following?
A) five-pay test
B) accelerated benefits test
C) seven-pay test
D) policy loan test

Which of the following lists the three common types of permanent individual life insurance?
A) Universal Life, AD&D, Term Life
B) Whole life, Incidental Life, Term Life
C) Variable Life, Whole Life, Universal Life
D) Group Life, Whole Life, Variable Life

Which of the following refers to how often a premium is paid?
A) ratio
B) net
C) level
D) mode

When the courts look at a contract to determine the intent of the parties which of the following is considered?
A) any material added to the basic contract
B) the entire contract
C) any words that have ambiguous definitions
D) the relevant portions of the contract

Current assumption whole life policies are sensitive to which of the following?
A) health of the insured
B) interest rates
C) age of the insured
D) current cash value of the policy

What is the purpose of Stranger-originated life insurance (STOLI)?
A) it is a method of insuring a person who has been previously declined.
B) it is a fraudulent policy meant for financial gain of someone of unknown to the insured.
C) the policy is written so as to avoid proof of insurable interest.
D) the policy is originated primarily or solely for the purpose of resale

Which of the following is TRUE of the limited pay whole life policy?
A) Coverage ends when the policy is paid up.
B) Coverage continues after the policy is paid-up.
C) Premium payments increases as the insured ages.
D) Premium payments are lower than continuous premium whole life.

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) Exclusions
B) Grace period
C) Insuring clause
D) Free look

Obtaining consumer information reports under false pretenses is prosecutable by which of the following?
A) Securities and Exchange Commission
B) USA Patriot Act
C) Fair Credit Reporting Act
D) State laws where the applicant resides

All of the following are TRUE regarding incomplete applications EXCEPT
A) the incomplete application can be accepted with the missing information added later.
B) the applicant will have to wait additional time before coverage begins.
C) the underwriting department will return the application to the agent.
D) there will be a delay in the underwriting process.

What is the primary advantage for obtaining a reinstatement of a policy rather than obtaining a new one?
A) No application is required
B) insured original issue age is used
C) No proof of insurability is required
D) outstanding loans are cancelled

Which policy type is backed by equity investments and allows the policyholder to adjust the death benefit?
A) variable universal life
B) term life
C) regular whole life
D) variable life

Which of the following is an example of a premium payment mode?
A) automatic deductions of premium
B) payment by check
C) $200 per policy year
D) annual premium payment

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 are divided equally among living primary beneficiaries.
C) The secondary beneficiary receives the proceeds if the primary beneficiary is no longer living.
D) The proceeds go to the descendants of the primary beneficiaries.