PSI Insurance Exam Practice 2

Question 1

Which type of life insurance policy builds cash value and keeps the premium level for the life of the insured?

Accepted Answer

Whole life

Answer

Whole life insurance provides permanent coverage with a fixed premium and a guaranteed cash value accumulation component.

Question 2

Under the concept of subrogation, an insurer that pays a claim then has the right to:

Accepted Answer

Recover payment from a negligent third party

Answer

Subrogation allows the insurer to step into the insured's shoes and sue the responsible third party to recover the amount paid.

Question 3

A property insurance policy that pays the cost to repair or replace damaged property without deducting for depreciation is using which valuation method?

Accepted Answer

Replacement cost

Answer

Replacement cost coverage pays the full cost to replace damaged property with new property of like kind and quality, without subtracting depreciation.

Question 4

An insured deliberately misrepresents a material fact on an insurance application. This is known as:

Accepted Answer

Fraud

Answer

Fraud is an intentional misrepresentation of a material fact made with the intent to deceive the insurer.

Question 5

The 'free look' period in a life insurance policy typically allows the policyowner to:

Accepted Answer

Return the policy for a full refund within a set number of days

Answer

The free look period (typically 10–30 days) lets the policyowner review and return the policy for a full premium refund if not satisfied.

PSI - Exams Practice Test

PSI - Exams Practice Test

PSI Insurance Exam Practice 2