PSI Life, Accident, and Health Practice Exam with complete solution

PSI Life, Accident, and Health Practice Exam with complete solutions A group conversion option may be used in all the following instances EXCEPT - ANSWER-a life-changing event, such as marriage, divorce, or childbirth. Which is the primary purpose of Health Reimbursement Accounts (HRAs)? - ANSWERTo assist covered employees with the payment of medical expenses on a high deductible plan funded through pre-tax contributions. All of the following are characteristics of variable whole life EXCEPT - ANSWER-there is no guaranteed minimum death benefit. When should a buy-sell agreement include a provision for the buy-out of an owner's business interest in the event of a disability? - ANSWER-When there is a buy-sell agreement funded with life insurance to buyout the interest of a deceased owner or partner. Which of the following is TRUE of a point of service plan? - ANSWER-A patient's care is coordinated by an in-network primary care physician. Which of the following coverage types pays a monthly cash benefit following the elimination period for total disability due to accident or sickness? - ANSWER-Disability income insuran Which of the following is TRUE of an equity-indexed annuity? - ANSWER-It has a guaranteed minimum interest rate. All of the following are characteristics of COBRA EXCEPT - ANSWER-change in medical privacy procedures. In which of the following does a covered employee agree to a reduction in compensation so the amount can be used to cover medical expenses? - ANSWERFlexible Spending Account (FSA) Which problem was universal life insurance designed to address? - ANSWER-low interest rates during periods of high inflation This study source was downloaded by from CourseH on :05:25 GMT -05:00 A basic vision care package includes all of the following EXCEPT - ANSWER-safety glasses Which of the following is the most common method to supplement Medicare coverage? - ANSWER-Coverage offered by private insurers This study source was downloaded by from CourseH on :05:25 GMT -05:00 Which of the following is TRUE for a flexible premium annuity? - ANSWER-The purchaser has the option to vary the amount of each premium payment falling between a minimum and maximum amount. Compared to basic hospital, medical and surgical policies, which type of insurance provides broader coverage, fewer gaps, higher individual benefits, and higher policy maximums? - ANSWER-major medical insurance States generally define a true "group" for insurance as requiring a minimum of how many participants? - ANSWER-10 Which of the following is defined as the dollar amount beyond which the insured no longer participates in payment of medical expenses? - ANSWER-Stop Loss Limit Which is the major reason why long term care insurance is becoming increasingly important? - ANSWER-As life expectancy increases, the chances of needing long term care also increase Which of the following is TRUE of the limited pay whole life policy? - ANSWERCoverage continues after the policy is paid-up. Which of the following is covered by a dread disease policy? - ANSWER-illnesses that do not occur frequently but incur significant costs when they do occur Which of the following lists the three common types of permanent individual life insurance? - ANSWER-Variable Life, Whole Life, Universal Life Which of the following is true about a decreasing term life policy? - ANSWER-The face amount reaches zero at policy expiration. Which type of life policy can be continued year after year without a required medical examination but rates are dependent on the insured's current age? - ANSWERrenewable term Which type of annuity covers two or more annuitants and provides monthly income only until the first annuitant dies? - ANSWER-Joint Life What is the primary advantage for obtaining a reinstatement of a policy rather than obtaining a new one? - ANSWER-insured original issue age is used At which point are contractual death benefit settlement options determined and by whom? - ANSWER-At the time the policy is purchased by the owner of the policy What does it mean if a health policy is conditionally renewable? - ANSWER-Insurer may elect NOT to renew only under conditions specified in the policy. This study source was downloaded by from CourseH on :05:25 GMT -05:00 Which policy provision permits the policyowner to take a specified number of days to examine the contract, and allows for cancellation and a full refund if the policyowner rejects the terms or costs? - ANSWER-Free Look Which one of the following represents an advantage of obtaining a policy loan vesus a withdrawal? - ANSWER-the loan is not taxed while a withdrawal is taxed for amounts above the contract cost basis How are term riders used? - ANSWER-to purchase insurance on a family member of the originally insured Which of the following is TRUE regarding assignment rights for irrevocable beneficiaries? - ANSWER-They are MORE likely to receive a loan based on the expectations of the proceeds. In order for an insurer to increase the premium on a noncancelable policy, which of the following MUST be true? - ANSWER-The premium increase must be in the contract at the time it is issued. Under normal conditions which of the following is TRUE for proof of loss when a single loss is claimed? - ANSWER-The insured has 90 days from the date of loss to provide proof of loss. Which of the following refers to how often a premium is paid? - ANSWER-mode What is the maximum amount of time the insured has to file legal action against the insurer after written proof of loss is provided? - ANSWER-3 years All of the following are ownership rights EXCEPT - ANSWER-switching the policy from one insured to another Which is the difference between participating and non-participating policies? - ANSWER-Participating policies pay dividends while non-participating policies do not. What happens with the lifetime maximum benefit limit has been reached? - ANSWERThe insured will pay all of the remaining medical costs for as long as the policy is in force. How does a noncancelable policy differ from a guaranteed renewable policy? - ANSWER-With the noncancelable policy the insurer may increase premiums only based on the terms of the policy. All of the following are features of the spendthrift clause EXCEPT - ANSWER-the beneficiary may encumber the proceeds. This study source was downloaded by from CourseH on :05:25 GMT -05:00 Whose responsibility is it to make sure that the company is notified of a death claim at the earliest possible opportunity (in most cases)? - ANSWER-the producer Under the misstatement of age provision, what happens if it is determined at death that the insured's age or gender was misstated on a life insurance policy application? - ANSWER-benefits are adjusted to an amount that the premium would have purchased at the correct age or gender All of the following statements define preexisting conditions EXCEPT - ANSWER-any chronic health condition that presents symptoms and which was unknown at the time of application. Which of the following must be given to the insurer within 20 days after occurrence or commencement of any loss covered by the policy, or as soon thereafter as is reasonably possible? - ANSWER-notice of claim What specific new procedures does the USA Patriot Act require of insurance companies? - ANSWER-Establish an anti-money laundering program All of the following are required signatures on a life insurance application EXCEPT - ANSWER-the minor in a juvenile policy Which type of receipt makes the insurer liable for the risk from the date of application, regardless of the applicant's insurability? - ANSWER-binding receipt What is a MIB report? - ANSWER-medical information on an applicant for assessing life or health insurance risk Why are insurance policies considered conditional contracts? - ANSWER-Certain conditions need to be met to make the contract legally enforceable. How do warranties differ from representations? - ANSWER-a warranty is guaranteed to be true, a representation is believed to be true to the best of one's knowledge. Which of the following occurs immediately after the application is submitted and the initial premium paid? - ANSWER-the underwriting process begins What is the purpose of Stranger-originated life insurance (STOLI)? - ANSWER-he policy is originated primarily or solely for the purpose of resale What procedure is used by an insurer to protect itself in the event a dispute arises and the applicant and the agent do not recall the changes that were made in a completed application? - ANSWER-The applicant and possibly the agent initial any changes made. When does insurable interest come into play in a life insurance policy? - ANSWERwhen the applicant for the policy is not the insured