PSI Knowledge Exam 3

Question 1

Which insurance principle states that a policyholder should not profit from an insurance claim?

Accepted Answer

Principle of indemnity

Answer

The principle of indemnity holds that insurance should restore the insured to their pre-loss financial position, not allow them to profit from a loss.

Question 2

A real estate listing agreement in which the seller must pay a commission regardless of who sells the property is called a(n):

Accepted Answer

Exclusive right-to-sell listing

Answer

An exclusive right-to-sell listing guarantees the listing broker a commission if the property sells during the listing period, regardless of who procures the buyer.

Question 3

In the context of contractor licensing, what does 'surety bond' protect?

Accepted Answer

The public and clients if the contractor fails to fulfill contractual obligations

Answer

A surety bond protects consumers and project owners by providing financial compensation if a contractor fails to complete work or meet contractual terms.

Question 4

Which type of life insurance policy builds cash value over time?

Accepted Answer

Whole life

Answer

Whole life insurance is a permanent policy that accumulates a guaranteed cash value over the life of the policy in addition to providing a death benefit.

Question 5

When a licensed real estate agent fails to disclose a known material defect, they may be liable for:

Accepted Answer

Misrepresentation or fraud

Answer

Failing to disclose a known material defect exposes a licensee to claims of misrepresentation or fraud, which can result in license suspension, fines, or lawsuits.

PSI - Exams Practice Test

PSI - Exams Practice Test

PSI Knowledge Exam 3