PSI: LIFE, ACCIDENT, AND HEALTH PRACTICE EXAM QUESTIONS AND ANSWERS

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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? - ANSWER Benefits ar... e 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? - ANSWER Notice of claim. When will a policy pay on a UCR basis? - ANSWER When particular benefits are not listed on a payment schedule. All of the following are non-forfeiture options EXCEPT - ANSWER Cash dividend option. What happens when the lifetime maximum benefit limit has been reached? - ANSWER The insured will pay all of the remaining medial costs for as long as the policy is in force. Whose responsibility is it to make sure that the company is notified of a death claim at the earliest possible opportunity (in most cases)? - ANSWER The producer. What is the waiver of premium provision? - ANSWER In a long term care contract, the premium is waived after the insured has been confined for a specific period of time. All of the following are common exclusions from loss found in disability income policies EXCEPT for that incurred while? - ANSWER Committing a misdemeanor Which is a disadvantage to a flexible premium annuity? - ANSWER The actual amount of the annuity benefit cannot be determined in advance. What does coninsurance mean? - ANSWER The insurer and the insured share expenses over the deductible. Under normal conditions which of the following is TRUE for proof of loss when a single loss is claimed? - ANSWER The insured has 90 days from the date of loss to provide proof of loss. Which one of the following represents an advantage of obtaining a policy loan versus a withdrawal? - ANSWER The loan is not taxed while a withdrawal is taxed for amounts above the contract cost basis. All of the following statements define preexisting conditions EXCEPT? - ANSWER Any chronic health condition that presents symptoms and which was unknown at the time of application. Which is the difference between participating and non-participating? - ANSWER Participating policies pay dividends while non-participating policies do not. How does the per captia rule apply to proceeds from a life insurance policy? - ANSWER The proceeds are divided equally among living primary beneficiaries. How does a noncancelable policy differ from a guaranteed renewable policy? - 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? - ANSWER Mode What is the return of premium rider? - 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? - 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: - ANSWER 2 year period All of the following are required signatures on a life insurance application EXCEPT? - ANSWER The minor in a juvenile policy. What is the purpose of Stranger-originated life insurance (STOLI)? - 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? - ANSWER The applicant and possibly the agent initial any changes made. What specific new procedures does the USA Patriot Act require of insurance program? - ANSWER Establish an anti-money laundering program. Which of the following occurs immediately after the application is submitted and the initial premium paid? - ANSWER The underwriting process begins. A consumer report used to determine eligibility for insurance may include all of the following EXCEPT? - ANSWER Medical Underwriting exam. Why are insurance policies considered conditional contracts? - 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? - ANSWER When the applicant for the policy is not the insured. All of the following are TRUE regarding incomplete applications EXCEPT? - ANSWER The incomplete application can be accepted with the missing information added later. What is a MIB report? - 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? - ANSWER Fair Credit Reporting Act All of the following are classifications of risk EXCEPT? - 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? - 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? - ANSWER The treatment procedures that are covered by the policy. How do warranties differ from representations? - 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? - ANSWER 100% Managed care plans increase efficiency by all of the following means EXCEPT? - ANSWER Transferring the management of costs to the insureds. All of the following are tax qualified retirement plans EXCEPT? - ANSWER Section 529 plan. Which of the following is characteristic of a non-qualified plan? - ANSWER Plan does not meet federal guidelines for tax benefits. Under which situation must insurable interest exist between the applicant and insured at the time of application? - ANSWER When a third-party application names themselves beneficiary. The group conversion option is allowed for all of the following EXCEPT? - ANSWER During the annual benefits enrollment period. In a case where an individual's health is insured by both their own policy and their spouse's policy, which policy pays in the event of an illness? - ANSWER The individual's policy pays first, the spouse's policy pay the remaining up to coverage amount. Why is rehabilitation considered worthy of federal help under workers' compensation? - ANSWER It reduces insurance losses and helps regain the worker's dignity. When can the premiums of an individually owned health insurance policy be deducted from the individual's income tax? - ANSWER When the taxpayer's medical expenses exceed 7.5% of adjusted gross income during a taxable year. Short term disability insurance generally only covers injuries due to which of the following? - ANSWER Non-occupational injuries. What type of insurance should a company purchase if it wants to insure the life of its CEO? - ANSWER Key person insurance For an individual long-term care policy there is an annual dollar limit for tax deduction that is based on which of the following? - ANSWER Age When should a buy-sell agreement include a provision for the buy-out of an owner's business interest in the event of a disability? - ANSWER When there is a buy-sell agreement funded with life insurance to buyout the interest of a deceased owner or partner. Which insurance plans are commonly offered through the work-site (employer sponsored) EXCEPT? - ANSWER Medicare State generally define a true "Group" for insurance as requiring a minimum of how many participants? - ANSWER 10 Which of the following policy types is considered double indemnity? - ANSWER Accidental death Which of the following is true about a decreasing term life policy? - ANSWER The face amount reached zero at policy expiration. Which of the following lists the three common types of permanent individual life insurance? - 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? - 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? - ANSWER Disability income insurance Which of the following is TRUE of an equity-indexed annuity? - 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? - ANSWER Major medical insurance. Which of the following is the most common method to supplement Medicare coverage? - 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? - ANSWER Stop Loss Limit A basic vision care package includes all of the following EXCEPT? - 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? - ANSWER Flexible Spending Account (FSA) Current assumption whole life policies are sensitive to which of the following? - ANSWER Interest rates A group conversion option may be used in all the following instances EXCEPT? - 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? - ANSWER It is financially insufficient to cover end of life expenses. In a home healthcare benefit, all of the following are eligible expenses EXCEPT? - ANSWER Blood Transfusions Which of the following amends the Social Security Act to make Medicare secondary to group health plans? - ANSWER TEFRA All of the following are requirements to qualify for Social Security disability benefits EXCEPT when - 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? - ANSWER 2 years Which of the following is TRUE for a flexible premium annuity? - 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? - ANSWER Change in medical privacy procedures. Which is the primary purpose of Health Reimbursement Accounts (HFAs)? - 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? - ANSWER Joint Life Annuity All of the following are characteristics of variable whole life EXCEPT? - ANSWER There is no guaranteed minimum death benefit. Which problem was Universal Life insurance designed to address? - ANSWER Low interest rates during periods of high inflation. Which of the following is covered by a dread disease policy? - ANSWER Illnesses that do not occur frequently but incur [Show More]

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