FREE PSI Insurance Exam Questions and Answers

Question 1

What is the main benefit of having an existing policy reinstated as opposed to getting a new one? 1. No evidence of insurability is necessary 2. Using original insured issue age  3. No registration is necessary 4. Unpaid loans are forgiven

Accepted Answer

First issuance insurance Use of age

Answer

The main benefit of reinstating an existing life insurance policy, as opposed to getting a new one, is often the use of the original insured issue age. Premiums are typically based on the insured's age when the policy was first issued, so reinstating can result in lower premiums than a new policy at a current, older age. Additionally, it may avoid the need for new evidence of insurability if done within a specific timeframe.

Question 2

Which of the following applies most frequently to term life insurance?

Accepted Answer

It starts with little to no insurance coverage.

Answer

The statement 'It starts with little to no insurance coverage' is generally incorrect for term life insurance, as term policies provide a specific death benefit from the policy's inception. However, if 'insurance coverage' is interpreted as 'cash value,' then term life insurance indeed has no cash value component, unlike permanent life insurance. This lack of cash value accumulation is a defining characteristic of term life, which focuses solely on providing a death benefit for a specified period.

Question 3

Which of the following is taken into account when courts examine a contract to ascertain the parties' intentions? 1. the whole contract; 2. the pertinent sections of the deal; 3. any additions to the main contract; and 4. any words with unclear definitions

Accepted Answer

The entire contract

Answer

When courts examine a contract to ascertain the parties' intentions, they typically consider the entire contract, often referred to as the 'four corners' doctrine. This means all clauses, provisions, and any attached riders or amendments are viewed holistically to understand the full context and meaning of the agreement. This approach prevents misinterpretations based on isolated phrases and ensures the contract is treated as a unified document.

Question 4

Which key distinction between individual and group health insurance exists?

Accepted Answer

Evidence of insurability is necessary for individual insurance

Answer

A key distinction between individual and group health insurance is the requirement for evidence of insurability. For individual health insurance, applicants typically undergo medical underwriting, where they must provide evidence of their health status to the insurer. In contrast, group health insurance usually does not require individual members to prove insurability, as the risk is spread across the entire group, making it accessible even to those with pre-existing conditions.

Question 5

Which of the following requires a covered employee to consent to a pay cut so that the money can be used to pay for medical costs?

Accepted Answer

Flexible Spending Account (FSA)

Answer

A Flexible Spending Account (FSA) requires a covered employee to consent to a pay cut so that the money can be used to pay for medical costs. Employees contribute pre-tax dollars from their salary into the FSA, which can then be used for qualified healthcare expenses. This arrangement provides tax advantages by reducing the employee's taxable income.

PSI - Exams Practice Test

PSI - Exams Practice Test

FREE PSI Insurance Exam Questions and Answers