Insurance Exam Practice Flashcards
7 cards from real PSI practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Insurance Exam Practice flashcards as text
A commercial general liability (CGL) policy written on a 'claims-made' basis covers claims:
Answer: Only if the injury occurs and is reported during the policy period
A claims-made policy covers claims that are both made (reported) during the active policy period, making the reporting date critical.
The 'incontestability clause' in a life insurance policy prevents the insurer from voiding the policy for misrepresentation after:
Answer: 2 years
After the incontestability period (typically 2 years), the insurer cannot contest the policy's validity based on misstatements in the application.
Which auto insurance coverage pays for the insured's own vehicle damage when colliding with another object?
Answer: Collision
Collision coverage pays for damage to the insured's vehicle resulting from impact with another vehicle or object, regardless of fault.
A person who is licensed to sell insurance and represents the insured rather than the insurance company is called a(n):
Answer: Broker
A broker represents the insurance buyer (insured) and shops the market on their behalf, owing fiduciary duty to the client rather than to any one insurer.
Under the Social Security definition used in many disability income policies, total disability means the inability to perform:
Answer: Any occupation for which the insured is reasonably suited
Social Security's strict definition of disability requires the inability to engage in any substantial gainful activity due to a medically determinable condition expected to last at least 12 months or result in death.
Which provision in a health insurance policy requires the insurer to renew coverage as long as premiums are paid, but allows rate increases for an entire class of insureds?
Answer: Guaranteed renewable
A guaranteed renewable policy cannot be cancelled as long as premiums are paid, but the insurer may raise rates for an entire class—not for a single insured.
The 'principle of indemnity' in insurance means that after a covered loss, the insured should be:
Answer: Restored to approximately the same financial position as before the loss
Indemnity prevents the insured from profiting from a loss; the goal is restoration to the pre-loss financial condition, not a windfall.