Free PSI Insurance Exam Practice Questions and Answers

Question 1

A potential insured wants to buy a policy that would offer the HIGHEST level of protection for a brief period of time during which the insured will have few financial resources. Which of the following types of insurance should the agent suggest the potential insured to purchase?

Accepted Answer

Term Life

Answer

Term life insurance offers the highest level of protection for the lowest premium over a specific period. It is ideal for individuals with limited financial resources who need maximum coverage for a temporary need, such as covering a mortgage or providing for dependents during their working years.

Question 2

Basic whole life insurance includes ALL of the following EXCEPT:

Accepted Answer

Interim term

Answer

Basic whole life insurance policies are characterized by level premiums, guaranteed cash value growth, and lifetime coverage, often structured as continuous premium or limited payment. Interim term insurance, however, is a temporary policy used for short-term coverage, typically during the underwriting process of a permanent policy, and is not a core feature of basic whole life itself.

Question 3

Most premiums for whole life insurance are:

Accepted Answer

Fixed

Answer

Whole life insurance policies are distinguished by their fixed or level premiums, meaning the premium amount remains constant throughout the entire life of the policy. This predictability allows policyholders to budget consistently, providing financial stability and certainty.

Question 4

Living benefits are provided by which life insurance?

Accepted Answer

Whole

Answer

Whole life insurance policies accumulate cash value over time, which policyholders can access during their lifetime. These 'living benefits' include the ability to take out policy loans, make withdrawals, or surrender the policy for its cash value, providing financial flexibility beyond the death benefit.

Question 5

This life insurance policy protects the insured against death for the rest of his or her life, but premiums are not paid for the whole time.

Accepted Answer

20-pay life

Answer

A 20-pay life policy is a type of limited payment whole life insurance where premiums are paid for a specific period, in this case, 20 years. After this period, the policy is considered 'paid up,' meaning no further premiums are required, but the coverage remains in force for the insured's entire life.

PSI - Exams Practice Test

PSI - Exams Practice Test

Free PSI Insurance Exam Practice Questions and Answers