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PSI: LIFE, ACCIDENT, AND HEALTH
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"How does a noncancelable policy differ from a guaranteed renewable policy? - CORRECT ANSWER=>
With the noncancelable policy the insurer may increase premiums only based on the terms of the policy."
"Which of the following refers to how often a premium is paid? - CORRECT ANSWER=> Mode"
"What is the return of premium rider? - CORRECT ANSWER=> An increasing amount of term insurance
that always equals the total of premiums paid up to the current point."
"What does first dollar coverage mean? - CORRECT ANSWER=> As soon as covered medical expenses
are incurred, the policy begins to pay." "When the suicide clause is inserted in a life insurance contract, death by suicide is not covered during
the policy's initial: - CORRECT ANSWER=> 2 year period"
"All of the following are required signatures on a life insurance application EXCEPT? - CORRECT
ANSWER=> The minor in a juvenile policy."
"What is the purpose of Stranger-originated life insurance (STOLI)? - CORRECT ANSWER=> The policy is
originated primarily or solely for the purpose of resale." "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? - CORRECT
ANSWER=> The applicant and possibly the agent initial any changes made."
"What specific new procedures does the USA Patriot Act require of insurance program? - CORRECT
ANSWER=> Establish an anti-money laundering program."
"Which of the following occurs immediately after the application is submitted and the initial premium
paid? - CORRECT ANSWER=> The underwriting process begins."
"A consumer report used to determine eligibility for insurance may include all of the following EXCEPT? -
CORRECT ANSWER=> Medical Underwriting exam."
"Why are insurance policies considered conditional contracts? - CORRECT ANSWER=> Certain
conditions need to be met to make the contract legally enforceable."
"When does insurable interest come into play in a life insurance policy? - CORRECT ANSWER=> When
the applicant for the policy is not the insured."
"All of the following are TRUE regarding incomplete applications EXCEPT? - CORRECT ANSWER=> The
incomplete application can be accepted with the missing information added later."
"What is a MIB report? - CORRECT ANSWER=> Medical information on an applicant for assessing life or
health insurance risk." "Obtaining consumer information reports under false pretenses is prosecutable by which of the
following? - CORRECT ANSWER=> Fair Credit Reporting Act"
"All of the following are classifications of risk EXCEPT? - CORRECT ANSWER=> Non-nicotine"
"Which type of receipt makes the insurer liable for the risk from the date of application, regardless of the
applicant's insurability? - CORRECT ANSWER=> Binding receipt"
"If the insurer wishes to share an applicant's HIV status, the applicant must be given full notice of all of
the following EXCEPT? - CORRECT ANSWER=> The treatment procedures that are covered by the
policy."
"How do warranties differ from representations? - CORRECT ANSWER=> A warranty is guaranteed to
be true, a representation is believed to be true to the best of one's knowledge."
"In noncontributory plans, which percentage of eligible members must participate? - CORRECT
ANSWER=> 100%"
"Managed care plans increase efficiency by all of the following means EXCEPT? - CORRECT ANSWER=>
Transferring the management of costs to the insureds."
"All of the following are tax qualified retirement plans EXCEPT? - CORRECT ANSWER=> Section 529
plan."
"Which of the following is true about a decreasing term life policy? - CORRECT ANSWER=> The face
amount reached zero at policy expiration." "Which of the following lists the three common types of permanent individual life insurance? -
CORRECT ANSWER=> Variable Life, Whole Life, Universal Life"
"Which types of life policy can be continued year after year without a required medical examination but
rates are dependent on the insured's current age? - CORRECT ANSWER=> Renewable term"
"Which of the following coverage types pays a monthly cash benefit following the elimination period for
total disability due to accident or sickness? - CORRECT ANSWER=> Disability income insurance"
"Which of the following is TRUE of an equity-indexed annuity? - CORRECT ANSWER=> It has a
guaranteed minimum interest rate." "Compared to basic hospital, medical and surgical policies, which type of insurance provides broader
coverage, fewer gaps, higher individual benefits, and higher policy maximums? - CORRECT ANSWER=>
Major medical insurance."
"Which of the following is the most common method to supplement Medicare coverage? - CORRECT
ANSWER=> Coverage offered by private insurers."
"Which of the following is defined as the dollar amount beyond which the insured no longer participates
in payment of medical expenses? - CORRECT ANSWER=> Stop Loss Limit"
"A basic vision care package includes all of the following EXCEPT? - CORRECT ANSWER=> Safety
glasses" "In which of the following does a covered employee agree to a reduction in compensation so the amount
can be used to cover medical expenses? - CORRECT ANSWER=> Flexible Spending Account (FSA)"
"Current assumption whole life policies are sensitive to which of the following? - CORRECT ANSWER=>
Interest rates"
"A group conversion option may be used in all the following instances EXCEPT? - CORRECT ANSWER=>
A life-changing event, such as marriage, divorce, or childbirth." "Why is relying solely on employer group life insurance generally considered inadequate for most
individual's needs? - CORRECT ANSWER=> It is financially insufficient to cover end of life expenses."
"In a home healthcare benefit, all of the following are eligible expenses EXCEPT? - CORRECT
ANSWER=> Blood Transfusions"
"Which of the following amends the Social Security Act to make Medicare secondary to group health
plans? - CORRECT ANSWER=> TEFRA"
"All of the following are requirements to qualify for Social Security disability benefits EXCEPT when -
CORRECT ANSWER=> Unable to work in occupation on which the worker was trained or educated."
"How long after being entitled to disability benefits will an individual be eligible to receive Medicare
benefits? - CORRECT ANSWER=> 2 years"
"Which of the following is TRUE for a flexible premium annuity? - CORRECT ANSWER=> The purchaser
has the option to vary the amount of each premium payment falling between a minimum and maximum amount."
"All of the following are characteristics of COBRA EXCEPT? - CORRECT ANSWER=> Change in medical
privacy procedures."
"Which is the primary purpose of Health Reimbursement Accounts (HFAs)? - CORRECT ANSWER=> To
assist covered employees with the payment of medical expenses on a high deductible plan funded through pre-tax." "Which type of annuity covers two or more annuitants and provides monthly income only until the first
annuitant dies? - CORRECT ANSWER=> Joint Life Annuity"
"All of the following are characteristics of variable whole life EXCEPT? - CORRECT ANSWER=> There is
no guaranteed minimum death benefit."
"Which problem was Universal Life insurance designed to address? - CORRECT ANSWER=> Low interest
rates during periods of high inflation."
"Which of the following is covered by a dread disease policy? - CORRECT ANSWER=> Illnesses that do
not occur frequently but incur significant costs when they do occur." “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? - CORRECT ANSWER=>
Benefits are adjusted to an amount that the premium would have purchased at the correct age or gender." "Which of the following must be given to the insurer within 20 days after occurrence or commencement
of any loss covered by the policy, or as thereafter as is reasonably possible? - CORRECT ANSWER=>
Notice of claim."
"When will a policy pay on a UCR basis? - CORRECT ANSWER=> When particular benefits are not listed
on a payment schedule."
