PSI Insurance Exam Practice 5

Question 1

Which of the following is NOT a required element for a valid insurance contract?

Accepted Answer

Written form

Answer

Insurance contracts do not have to be in writing to be legally valid; oral binders are enforceable, though written policies are standard practice.

Question 2

A 'named perils' property policy differs from an 'open perils' (all-risk) policy in that it:

Accepted Answer

Only covers losses caused by perils specifically listed in the policy

Answer

A named perils policy only responds to losses caused by one of the perils explicitly named in the policy; unlisted causes of loss are not covered.

Question 3

Under COBRA, how long may a qualified beneficiary typically continue group health coverage after losing coverage due to a voluntary termination of employment?

Accepted Answer

18 months

Answer

COBRA allows qualified beneficiaries who lose group health coverage due to voluntary or involuntary termination of employment (other than gross misconduct) to continue coverage for up to 18 months.

Question 4

The 'twisting' of insurance refers to which prohibited practice?

Accepted Answer

Inducing a policyholder to lapse or surrender a policy by misrepresenting facts to buy a new one

Answer

Twisting is an unfair trade practice where an agent uses misrepresentation or incomplete comparisons to persuade a policyholder to replace an existing policy with a new one that may not be in their best interest.

Question 5

Which settlement option in a life insurance policy pays the death benefit in equal installments over a fixed period regardless of how long the beneficiary lives?

Accepted Answer

Fixed period option

Answer

The fixed period (installments for a fixed period) option pays out the proceeds plus interest in equal payments over a specified number of years, stopping when the period ends.

PSI - Exams Practice Test

PSI - Exams Practice Test

PSI Insurance Exam Practice 5