PSI Insurance Exam 2

Question 1

Which type of life insurance policy builds cash value and provides permanent coverage?

Accepted Answer

Whole life

Answer

Whole life insurance provides lifelong coverage and accumulates cash value over time, unlike term which expires.

Question 2

An insured's home is destroyed by fire. The insurer pays the cost to rebuild it with new materials of like kind and quality. This is called:

Accepted Answer

Replacement cost

Answer

Replacement cost coverage pays to repair or replace damaged property without deducting for depreciation.

Question 3

Under the coordination of benefits provision, when a child is covered by both parents' health plans, which plan pays first?

Accepted Answer

The plan of the parent whose birthday falls first in the year

Answer

The birthday rule states the plan of the parent whose birthday (month and day) comes first in the calendar year is primary.

Question 4

A surety bond in which a business owner is bonded against dishonest acts of employees is called a:

Accepted Answer

Fidelity bond

Answer

A fidelity bond protects employers from losses caused by dishonest or fraudulent acts of their employees.

Question 5

Which provision in a disability income policy requires the insured to be under a physician's care to receive benefits?

Accepted Answer

Physician care clause

Answer

The physician care clause stipulates that the insured must be under regular care of a licensed physician to qualify for disability benefits.

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