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PSI Life Exam Questions and Answers
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What kind of retirement plan can a 75-employee for profit corporation establish? - ANSWER-Simple IRA The taxable portion of a monthly income benefit paid during the annuity phase from a nonqualified annuity is calculated using the - ANSWER-Exclusion ratio Unfair claims settlement methods and practices by an insurance company include all of the following acts EXCEPT - ANSWER-failure to pay all claims that are reported within 90 days after a loss occurs The settlement option that allows proceeds to remain with the insurer and the earnings to be paid to the beneficiary on a monthly basis is called - ANSWER- Interest only Regulations on life insurance advertising apply to which of the following insurance company materials? - ANSWER-A radio commercial that promotes the benefits of a specific company's life insurance products An insurance company may contest a life policy within a MAXIMUM of how many
years after the policy's effective date? - ANSWER- All of the following factors are used in life insurance premium determination EXCEPT - ANSWER-Morbidity The authorization used to obtain the applicant's medical information that will be used by the insurer for the primary purpose of determining eligibility must include: - ANSWER- the time frame in which the insurer must release the eligibility decision to the agent An intermediary who omits information on an insurance application without the applicant's knowledge and submits the application to the insurer may be guilty of: - ANSWER-Misrepresentation Dividends are NOT subject to taxation because - ANSWER-Paying dividends is equivalent to returning a premium The XYZ Insurance Company cancels an intermediary's contract. XYZ could be bound by the intermediary's later acts if it: - ANSWER-Continues to pay the intermediary deferred commissions Which of the following products is designed to pay benefits that can provide a stream of retirement income to the purchaser? - ANSWER-tax-deferred growth Which of the following guarantees that the annuitant CANNOT outlive their benefits? - ANSWER-Guaranteed lifetime withdrawal benefit Which of the following statements is CORRECT about an insured's failure to report a claim in a timely manner based on the advice of an intermediary? -
at least how many years after termination or lapse of the policy? - ANSWER- When underwriting group life insurance, the underwriter - ANSWER-Typically evaluates the group as a whole When using the needs approach to determine the amount of life insurance needed, it is necessary to determine all of the following EXCEPT - ANSWER-project lifetime earnings in the stock market, including dividends and growth account Which of the following is permitted under the proper exchange of business? - ANSWER- Splitting a commission between two intermediaries licensed in the same line of insurance
the life insurance illustration rule applies to: - ANSWER-Universal Life Which of the following is NOT subject to the Wisconsin annuity suitability law? - ANSWER-Fixed settlement options Without written consent, a policyowner CANNOT change the beneficiary if he has named - ANSWER-An irrevocable beneficiary What element of a contract does the application represent? - ANSWER-Offer An life insurance policy is required to contain which of the following provisions? - ANSWER-A reinstatement provision during which the interest may be charge for late payments In which of the following fixed annuity features is the surrender value tied to interest rates? - ANSWER-Market value adjustments Which of the following policies allows for partial surrender? - ANSWER-Universal Life Any form that becomes part of an insurance contract must be filed at the Office of the Commissioner of Insurance - ANSWER-Prior to its use Keogh (HR 10) plans were designed to provide retirement benefits for - ANSWER- Self- employed individuals Which statements is NOT a characteristic of Group Life insurance plan? - ANSWER- Individual underwriting Insurance applications with an AVERAGE life expectancy without higher than
A premium is due on a life insurance policy the first of each month. The policyowner failed to pay the premium and 20 days later the insured died. Under which of the following provisions would the death benefit be paid? - ANSWER-a nonforfeiture clause The period after an annuity is purchased but before distributions begin is referred to as the - ANSWER-accumulation phase In order to ensure compliance with the law, the Insurance Commissioner may issue - ANSWER-orders As a form of level premium permanent insurance, ordinary life insurance accumulates a reserve that eventually - ANSWER-equals the face amount of the policy An intermediary is employed by an insurance agency affiliated with a lending institution. As a condition for a loan, the institution requires placement of insurance on the applicant's life with the affiliated agency. In this situation the institution's action is referred to as: - ANSWER-Twisting If Term Life is renewable, the policyowner is purchasing the right to renew the policy - ANSWER-without showing proof of insurability An important goal of the Interstate Insurance Product Regulation Compact is to - ANSWER-Provide insurers a single point of filling for review and approval of certain policy forms Events or conditions the increase the likelihood of an insured's loss are referred to as - ANSWER-hazards
What type of insurance is the cheapest option to pay off a 30-year mortgage balance? - ANSWER-Decreasing term life Under a Universal Life Insurance policy, a corridor represents the - ANSWER-gap between the total death benefit and the policy's cash value
An immediate annuity begins making payments after the - ANSWER-first premium has been paid If an annuitant is making premium payments on a periodic basis, which type of annuity have they purchased? - ANSWER-Deferred The accumulated cash value of a whole life insurance policy becomes the - ANSWER- amount used to purchase paid up additions to the insured's policy The settlement option that pays a specified amount to an annuitant, but pays no residual value to a beneficiary is known as - ANSWER-Life income What kind of retirement plan can a 1,500 employee for-profit corporation establish? - ANSWER-401(k) Which of the following authorities is required to examine the business records of domestic insurance companies and licensed rate-services organizations in Wisconsin? - ANSWER-The Office of commissioner of insurance
Which of the following dividend options will increase the death benefit? - ANSWER- Guaranteed insurability Under a executive bonus plan, premiums paid by the employer are - ANSWER-only tax deductible when the bonus is an insurance plan An intermediary should determine whether replacement is involved in a transaction no later than when the - ANSWER-Insurance company issues the policy In Wisconsin the intermediary holding which of the following licenses is exempt from continuing education requirements? - ANSWER-credit insurance Contributions made to a Roth IRA are - ANSWER-Not tax deductible Who can surrender an annuity during the accumulation period? - ANSWER- the policyowner An annuity that guarantees a given number of income payments, whether or not the annuitant is alive to receive them, is referred to as - ANSWER-a life annuity certain Which term describes naming a contingent beneficiary as "all of my children"? - ANSWER-Class designation A contract in which the company would be legally obligated to perform is considered - ANSWER-conditional
A common purpose for purchasing a fixed annuity is to - ANSWER-provide future economic security, as payments do not fluctuate What is an insurer's liability when it is discovered after an insured dies that the insured's age on the policy was misstated? - ANSWER-the insurer must pay a prorated amount of the policy based on the amount of insurance the insured's premiums would have been if purchased at the correct age An immediate annuity is designed to make its first benefit payment to the annuitant typically - ANSWER-one month from the annuity's purchase date In a policy collaterally assigned, proceeds will be paid upon the death of an insured to the - ANSWER-Beneficiary only Once an insurance company's liability on a claim is established, the company MUST - ANSWER-Settle the claim in good faith Annuities purchased with a series of premium payments that vary year to year are called - ANSWER-Flexible premium deferred annuities An insurance company is deemed to know any facts material to a risk in which of the following situations? - ANSWER-An intermediary learns of a material fact when delivering the policy An insured has a policy with a cash value of $1,500 and an outstanding loan of $500. How much money will the insured receive under the cash surrender value option? - ANSWER-$1,500 or $1,
An intermediary may receive a commission on business written on the intermediary's own life ONLY if the intermediary - ANSWER-Is a licensed life agent in Wisconsin and has sold insurance with the same company during the prior year with total premiums exceeding the premium on the intermediary's own life A policy summary MUST contain the - ANSWER-date on which the policy summary is prepared Under 18 USC 1033, anyone involved in the business of insurance by willfully embezzling funds intended for payment of interstate insurance transactions is subjected to which of the following penalties? - ANSWER-Fine and/or imprisonment A policy may contain provisions excluding or restricting coverage as specified in the event of death under all of the following except - ANSWER-a fare-paying passenger traveling via commercial transport
The insurance commissioner has the right to issue which of the following orders? - ANSWER-Compliance The purpose of the replacement regulation is to - ANSWER-Protect intermediaries from lawsuits filed by insureds Under an executive bonus plan, if the employee takes loans from the insurance policy, the funds are: - ANSWER-Reported as taxable income to the employee Which is the name of the policy that combines a universal life policy with investment choices? - ANSWER-Variable universal life policy What BEST describes a limited pay life insurance policy? - ANSWER-a whole life insurance policy where the premiums are paid up after 20 years In order to be insured, you must have a chance of financial loss or financial interest. This is called an - ANSWER-Insurable interest
An individual who is NOT acceptable by an insurer at standard rates because of health, habits, or occupation is called a - ANSWER-Substandard Risk An example of a risk that is NOT a pure risk would be - ANSWER-injury in an accident An applicant would be charged a higher premium for a life insurance policy if they were
- ANSWER-Older A payor benefit rider would be found on which type of policy? - ANSWER-A juvenile life policy Under the children term rider, what occurs when a child reaches the specified age? He or she - ANSWER-is eliminated from coverage A person who intentionally commits a criminal violation of an insurance law may be subject to a MAXIMUM fine of - ANSWER-$5, Which of the following is NOT a settlement option for life policies? - ANSWER- extended term
