PSI Insurance Practice Exam

Browse all practice questions for the PSI Insurance Practice Exam. Search by topic, open any question and review its full explanation, then test yourself in the practice quiz.

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Here’s What You Should Know About the Free Look Provision in InsuranceWhich provision allows the policyowner a specified number of days to examine the contract and cancel it for a full refund?How Ambiguity is Addressed in Insurance ContractsHow are issues of ambiguity generally resolved in insurance contracts?How Do Beneficiaries Receive Life Insurance Proceeds?In what order do beneficiaries receive proceeds from a life insurance policy?How to Effectively Manage Risks Through Avoidance and Other StrategiesWhich method of handling risk involves avoiding exposure to the risk entirely?Understand the Tax Implications of a Modified Endowment ContractIf a policy is determined to be a Modified Endowment Contract (MEC), what are the tax implications for funds received under the policy?Understanding Disability Income Insurance and Its BenefitsWhat type of insurance pays a monthly cash benefit following an elimination period for total disability?Understanding Implied Authority in the Insurance IndustryWhat type of authority is NOT written and allows a producer to conduct the business of the insurer?Understanding Jumping Juvenile Policies and Their BenefitsWhich of the following describes a jumping juvenile policy?Understanding Signature Requirements on Life Insurance ApplicationsAll of the following are required signatures on a life insurance application EXCEPT?Understanding the 45-Day Grace Period for Health Insurance Coverage ReinstatementIf a health insurance policy lapses due to nonpayment of premium, coverage can be reinstated after how many days?Understanding the Benefits of Equity-Indexed AnnuitiesWhich of the following is TRUE of an equity-indexed annuity?Understanding the Concept of Risk Pooling in InsuranceWhich term describes the insurance principle where policyholders contribute a premium to mutually share risk?Understanding the Concept of Risk RetentionWhich of the following best describes the concept of 'risk retention'?Understanding the Incontestable Clause in Insurance PoliciesWhat is the time limit on certain defenses after which the policy becomes incontestable?Understanding the Joint and Survivorship Annuity OptionWhat annuity settlement option guarantees a monthly amount to the annuitant and a survivor after the annuitant's death?Understanding the Key Element of Insurable Risk in InsuranceWhich of the following is an element of insurable risk?Understanding the Key Features of Fixed AnnuitiesWhat is a defining characteristic of a fixed annuity?Understanding the Key Role of Risk Assessment in UnderwritingWhat is the primary concern of underwriters during the application process?Understanding the Most Common Ways to Supplement Medicare CoverageWhat is the most common method to supplement Medicare coverage?Understanding the Role of Health Reimbursement Accounts in Managing Medical ExpensesWhat is the primary function of Health Reimbursement Accounts (HRAs)?Understanding the Role of Term Riders in InsuranceHow are term riders typically used in insurance?Understanding What’s Covered in Accident and Health InsuranceWhich of the following is typically NOT an exclusion from accident and health policies?Understanding Whole Life Insurance: Why Continuous Premium Is the Most Common ChoiceWhich whole life policy premium type is the most common?What Is Typically Covered by Health Insurance Policies?What does a health insurance policy typically cover?What to Know About Recurrent Disabilities in Disability Insurance PoliciesHow do most disability policies handle the case of a recurrent disability occurring at least 90 days after the first claim?What You Should Know About First Dollar Coverage in Insurance PoliciesWhat does first dollar coverage mean in insurance policies?What You Should Know About Level Term Life InsuranceIn a level term life policy, which part of the policy ALWAYS remains constant?Why Do Individual Insurance Premiums Cost More Than Group Rates?What typically happens to the premium rate when an employee converts a group health plan to an individual policy?You Can Change a Revocable Beneficiary AnytimeWhen can a policyowner change a revocable beneficiary?
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  • When can premiums for an individually owned health insurance policy be deducted from income tax?
  • How does the per capita rule apply to proceeds from a life insurance policy?
  • When do dependent children's benefits for Social Security disability payments typically end?
  • When does insurable interest come into play in a life insurance policy?
  • A consumer report used to determine eligibility for insurance may include all of the following EXCEPT?
  • Which type of insurance is designed primarily for those looking to protect their family in the event of their death?
  • Which characteristic is associated with indexed universal life insurance?
  • What is the provision in which an amount equal to the premium due is subtracted from the cash value to prevent a lapse?
  • A life insurance policy may be canceled for a full refund if returned no later than how many days after receipt?
  • How many days does an insured have to provide proof of loss following a health insurance claim?
  • Standard nonforfeiture benefits include which of the following?
  • Which element must be included in all valid life insurance and health insurance contracts?
  • Which of the following refers to how often a premium is paid?
  • If a life insurance policy is deemed a Modified Endowment Contract (MEC), how are the withdrawals treated for taxation purposes?
  • In which situation would an immediate annuity be most appropriate?
  • A health insurance policy that covers dependent children must provide coverage for newborns starting at what time?
  • What type of annuity guarantees benefit payments for a specified number of years?
  • Under what scenario would a cost of living adjustment rider be especially valuable?
  • What is the purpose of Key Employee Life Insurance?
  • What happens if an insurer does not send proof of loss forms within the required timeframe?
  • Which payout option provides the highest monthly income for a life annuity?
  • Which of the following is not a requirement for a life insurance policy to be effective?
  • What typically happens when a disability requires verification of age in benefit calculations?
  • What type of insurance should a business buy to cover the life of its CEO?
  • An insurer that has been granted a certificate of authority to conduct business in a particular state is referred to as what?
  • Which of the following is NOT a classification of risk?
  • Which type of authority holds that a producer may have whatever authority a reasonable person would assume the producer has?
  • Which of the following is true for most comprehensive dental policies?
  • What is particularly important for an insurance producer to explain to a client upon delivery of a life insurance policy?
  • In insurance, what does the term 'premium' refer to?
  • If a company provides group disability insurance to its employees, what may be tax-deductible?
  • What right does an employee have when covered under a group life insurance policy?
  • Under an individual policy, an insured who CANNOT perform the duties of his/her own occupation for a specific period of time is?
  • Which rider protects against inflation by increasing disability income benefits annually after the start of a disability?
  • What method of handling risk is defined as the planned assumption of risk through self-insurance?
  • What is the term for the period before benefits are payable after an insured loss?
  • How do warranties differ from representations in insurance contracts?
  • Which of the following statements is CORRECT about the Coordination of Benefits Provision?
  • What method should an insurer use to protect itself in the event of a dispute regarding changes made in a completed application?
  • What does coinsurance refer to in an insurance policy?
  • When courts look at a contract to determine the intent of the parties, what is considered?
  • In health insurance, what is the purpose of a deductible?
  • What type of insurance policy allows the cash value to grow based on the performance of investment accounts?
  • Which provision in disability income policies allows for automatic qualification for benefits in case of certain severe losses?
  • Which feature of term insurance provides temporary protection that can change to permanent protection within specified years without evidence of insurability?
  • Under a Medicare Supplement Policy, preexisting conditions cannot be excluded after how many months from the effective date of the policy?
  • How is an insurance producer defined?
  • Offer, acceptance, and consideration are necessary elements of what?
  • How is the term 'peril' defined in insurance terms?
  • In a disability income policy, what is the time frame called before coverage becomes effective?
  • Which of the following is a distinguishing feature of a variable life insurance policy?
  • What type of receipt holds the insurer liable for risks from the date of the application?
  • Under the Free Look Provision, when can an insured cancel a policy for a full refund?
  • The group conversion option is not allowed during which period?
  • Which of the following is true about federal taxation of individual life insurance premiums?
  • Which plan is most commonly paired with a high deductible health plan?
  • In calculating an insurance policy's gross premium, which factors are involved?
  • What feature of a life insurance policy indicates risks that will not be covered?
  • Why do equity-indexed life insurance policies have an increased premium?
  • Which type of life policy can be continued year after year without a required medical examination, but rates are dependent on the insured's current age?
  • Managed care plans improve efficiency by all the following means EXCEPT?
  • Which of the following is NOT a benefit of reinstating a policy instead of taking a new one?
  • A group conversion option may be used in all instances EXCEPT?
  • Which of the following is not affected by the time limit on certain defenses in health insurance policies?
  • Which policy is specifically designed to provide nursing home benefits for at least 12 consecutive months?
  • What is a key advantage of obtaining a policy loan rather than making a withdrawal?
  • Which of the following statements regarding irrevocable beneficiaries is true?
  • What does a policyholder receive upon surrendering a policy with cash value?
  • Which policy provides benefits for in-hospital medical treatment and surgery, along with certain outpatient expenses?
  • What is the accumulation period in an annuity?
  • A Basic Hospital Policy covers expenses for which of the following?
  • Which characteristic of an insurance contract indicates restoration to the financial condition prior to loss?
  • If the insurer wishes to share an applicant's HIV status, the applicant must be given full notice of all of the following EXCEPT?
  • What is the maximum time frame for an insurer to provide a claimant with forms for filing proof of loss?
  • When are dividends paid from a participating policy considered taxable?
  • Which of the following statements is true regarding an irrevocable beneficiary designation?
  • Which statement is TRUE regarding a flexible premium annuity?
  • Which type of life insurance provides coverage for a specific period of time?
  • In noncontributory plans, what percentage of eligible members must participate?
  • Which of the following best describes risk retention?
  • What is a defining characteristic of Health Maintenance Organizations (HMOs)?
  • All of the following are characteristics of a Whole Life Policy EXCEPT?
  • What determines whether a person passes the financial test to qualify for Medicaid?
  • A basic vision care package includes all of the following EXCEPT?
  • Which type of dental policy typically pays a portion of usual and customary charges for covered procedures?
  • If an insurance company gathers an investigative consumer report, which law requires them to inform the prospect?
  • What does the waiver of premium provision or rider provide?
  • A Business Disability Buy-Sell Policy is designed to assist with what?
  • In Key Employee Life Insurance, who typically names the beneficiary?
  • What is the duration of the exclusion period for the suicide clause in a life insurance policy?
  • What is an example of implied authority under the law of agency?
  • Which policy type is backed by equity investments and allows the policyholder to adjust the death benefit?
  • What type of policy provides specified income benefits if an insured becomes unable to work?
  • According to the time of payment of claims provision, the insurer must make the payment immediately after receiving proof of loss, EXCEPT?
  • Which of the following is NOT a common exclusion from loss in disability income policies?
  • In a health insurance policy, what is meant by a pre-existing condition?
  • Which type of rider reimburses health and social service expenses incurred in a convalescent or nursing home facility?
  • Which of the following is NOT considered a nonforfeiture option?
  • What does it mean when an insurer uses the term "presumptive disability"?
  • What aspect of insurance does Medicare Advantage primarily cover?
  • What provision is typically included in Group Life Policies?
  • In which situation are premiums paid by a business NOT tax deductible as business expenses?
  • What does the term 'underwriting' primarily refer to in insurance?
  • What is usually the primary purpose of an annuity?
  • If an individual is covered by both their policy and their spouse's policy, which policy is responsible for payment in the event of an illness?
  • Which underwriting source collects general medical information about an individual's health history?
  • In order to avoid being classified as a Modified Endowment Contract (MEC), a policy must pass which test?
  • Which of the following is typically covered by a dread disease policy?
  • In which of the following does a covered employee agree to a reduction in compensation to cover medical expenses?
  • Which statement is NOT true about life insurance and health insurance contracts?
  • Which of the following is NOT an element of an uninsurable loss?
  • Which of the following is exempted from the incontestability provision in insurance policies?
  • Which principle holds that the insurer relies on the truthfulness of the applicant and in return promises and has the ability to pay claims?
  • A prospective insured wants to purchase a policy for maximum protection during a temporary financial situation. What should the producer recommend?
  • Why is long-term care insurance becoming more crucial?
  • An insurance policy that is intended to restore the insured to the same financial status as before the loss is a contract of?
  • In an adjustable life policy, which of the following is NOT adjustable by the policyholder?
  • Which of the following statements about the elimination period in disability income insurance is true?
  • What happens immediately after the application is submitted and the initial premium is paid?
  • Under which act is it prosecutable to obtain consumer information reports under false pretenses?
  • Which of the following is an example of a premium payment mode?
  • Which of the following describes a hospital indemnity plan?
  • Compared to basic hospital and medical policies, which type of insurance provides broader coverage?
  • Which of the following best represents the purpose of disability income insurance?
  • Which of the following statements about variable universal life policies is true?
  • Which insurance plans are commonly offered through the worksite?
  • 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?
  • How does a Health Maintenance Organization (HMO) differ from traditional health insurers?
  • Why are insurance regulators often critical of dread disease insurance policies?
  • What is a consequence of a misstatement of age on a life insurance application?
  • Obtaining consumer information reports under false pretenses is prosecutable by which act?
  • Which policy typically does not accumulate cash value and is considered pure insurance?
  • What is the correct statement regarding incomplete applications in insurance?
  • Which plan can be purchased to provide coverage in place of Medicare Parts A and B combined?
  • Which of the following is an example of a moral hazard?
  • What type of authority is in writing and allows a producer to act on behalf of the insurer?
  • Why is relying solely on employer group life insurance generally considered inadequate for most individuals' needs?
  • Which type of annuity links benefits to an underlying investment account to help offset inflation?
  • Short term disability insurance typically covers which types of injuries?
  • Which of the following is TRUE of a point of service plan?
  • Which provision indicates that the policy and application form the complete agreement between the policyowner and the insurance company?
  • Which option allows the policyowner to receive funds from the policy while still maintaining coverage?
  • Under Medicare Part B home health care benefit, which of the following is NOT an eligible expense?
  • Group credit life insurance is typically written as what type of policy?
  • Which of the following policies is classified as a limited policy?
  • Health Savings Accounts (HSAs) cover current and future qualified healthcare costs. Account beneficiaries can make tax-free withdrawals to cover all of the following EXCEPT?
  • What is the main objective of a key person insurance policy?
  • Which of the following is NOT a type of insurance agent?
  • What provision presumes the insured survived the beneficiary if both are killed in a fatal accident?
  • What is typically not covered by insurance due to its nature?
  • Which insurance policy is specifically designed to cover dental care?
  • Which of the following is NOT a disadvantage of an annually renewable term life policy?
  • What is a potential disadvantage of a Modified Endowment Contract (MEC)?
  • What typically organizes the payment of medical expenses for employees through pre-tax contributions?
  • Which type of policy is most appropriate for someone seeking lifelong coverage with cash value?
  • Which of the following is true regarding Medicaid?
  • In a level term life policy, what does the term "level" refer to?
  • What is one key difference between term life insurance and whole life insurance?
  • In a case where both personal and spouse's health insurance policies are in effect, which policy pays first in the event of a claim?
  • Which of the following is NOT authorized to transact insurance in a state?
  • What is a common characteristic of an increasing term life policy?
  • In which situation must insurable interest exist at the time of application?
  • Which term is used to describe a time deductible rather than a dollar deductible in a disability income policy?
  • What is a common approach to addressing the problems of naming a minor as a beneficiary to a life insurance policy?
  • Which type of annuity covers two or more annuitants and provides monthly income only until the first annuitant dies?
  • Which type of insurance provides benefits for expenses incurred as a result of hospitalization, surgical procedures, and outpatient expenses?
  • Which term refers to the consideration element that is crucial in insurance contracts?
  • What is the nature of a binding receipt in insurance?
  • Why is the accidental death benefit often referred to as double indemnity?
  • Which of the following is a characteristic of Preferred Provider Organizations (PPOs)?
  • What does the consideration clause grant to the insured?
  • What issue was universal life insurance specifically designed to address?
  • What is a characteristic of a mutual insurance company?
  • What is the effect of a common disaster clause in a life insurance policy?
  • Which of the following best describes warranties in the context of an insurance policy?
  • What term describes the planned assumption of risk through self-insurance?
  • All of the following are characteristics of variable whole life EXCEPT?
  • What is the primary advantage of obtaining a reinstatement of a policy rather than obtaining a new one?
  • What term is used for the clause in a policy that specifies certain risks will not be covered?
  • Which disability income rider allows the insured to purchase additional coverage at specified intervals without evidence of insurability?
  • What is a primary purpose of an annuity?
  • In a level term life policy, what does the word "level" refer to?
  • Whose responsibility is it to notify the insurance company about a death claim promptly?
  • Statements made by a prospective insured on an insurance application that are believed to be true are considered what?
  • What document outlines the entire agreement between the insurer and insured?
  • How long after being entitled to Social Security disability benefits will an individual be eligible to receive Medicare benefits?
  • How long does an insured have to file legal action against an insurer after providing written proof of loss?
  • Which of the following cannot be used to qualify for Medicare Parts A and B?
  • Which of the following provides life insurance coverage for a specific period?
  • What are the necessary elements of a valid contract in insurance?
  • Which type of coverage is designed to pay the operating costs of a small business when the owner is disabled?
  • What distinguishes misrepresentation from fraud in insurance?
  • What does a payor clause in insurance provide for?
  • A few small employers in the same industry join together to become eligible for group insurance. This is known as?
  • Which term refers to the specifics outlined in a policy that can terminate the policy if violated?
  • What protection does the grace period provide for a policyholder?
  • Which type of assignment occurs when ownership of a life insurance policy is transferred to another person?
  • Which is the difference between participating and non-participating policies?
  • What is the purpose of an impairment rider in an insurance policy?
  • What is the main benefit of having a trust as a beneficiary in a life insurance policy?
  • When will a dental policy pay on a UCR basis?
  • What term describes the aspect of a policy that allows a policyholder to select the timing of premium payments?
  • In a key employee life insurance policy, who is the applicant and policyholder?
  • What is required for claim information submission to determine coverage before treatment?
  • Why are premiums typically higher for equity-indexed life insurance?
  • What is the purpose of submitting precertification information to an insurer?
  • Which of the following types of permanent individual life insurance is included in the common classifications?
  • A producer who makes false statements about the financial condition of an insurer may be found guilty of which of the following?
  • Which type of risk is insurable under standard insurance practices?
  • What occurs under the misstatement of age provision when the insured's age is misstated on a life insurance policy application?
  • What type of insurance contract involves a promise made by only one party?
  • A Long-Term Care Policy covers which of the following?
  • What does the term "face value" refer to in a life insurance policy?
  • What is the term for a life insurance policy that pays a multiple of the coverage amount in the event of certain accidents?
  • What feature distinguishes Universal Life Insurance from other forms of Whole Life Insurance?
  • What is the purpose of an executive bonus plan in life insurance?
  • Why are insurance policies considered conditional contracts?
  • Which components of a policy can void the policy if breached?
  • What aspect of healthcare does an HMO emphasize compared to traditional insurance?
  • What is the tax advantage of a non-qualified annuity?
  • What is a common requirement for insurance underwriting?
  • What is the stop loss limit in health insurance?
  • When a renewal premium payment is made after the time granted by the insurer, what is the maximum reinstatement period allowed by law?
  • The person who receives the benefit of an annuity is known as the?
  • What does 'coinsurance' in a health insurance policy refer to?
  • Which type of plan is typically used to buy out a partner's business interest in the case of disability?
  • What is the return of premium rider?
  • All of the following are ownership rights EXCEPT?
  • Which of the following statements is true about a whole life insurance policy?
  • What is the primary function of a fraternal benefit society?
  • What is true about a decreasing term life policy?
  • In the context of authority under insurance contracts, what is "implied authority"?
  • Under what condition does the policyowner lose the right to change the beneficiary?
  • What is the difference between copayment and coinsurance in health insurance?
  • Which option enables the insured to purchase additional disability income protection at specified future dates at the applicable premium rate?
  • Current assumption whole life policies are most sensitive to which factor?
  • What is the benefit of a cost of living adjustment rider?
  • What does a Medical Information Bureau (MIB) report provide for life or health insurance assessments?
  • What does an application for insurance contractually represent for the insured?
  • What is a defining characteristic of an immediate annuity?
  • Which type of policy allows the policyowner to change the face value, premium, and type of coverage without changing policies?
  • Which of the following is NOT a requirement to qualify for Social Security disability benefits?
  • Under a Whole Life Policy, what is typically guaranteed to the policyholder?
  • What does the term 'beneficiary' refer to in an insurance policy?
  • Which of the following is TRUE of a limited pay whole life policy?
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