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PSI LIFE: PERFORMANCE UNDER
PRESSURE
โ When will a policy pay on a UCR basis? Answer: When particular benefits are not listed on a payment schedule โ Which type of rider reimburses health and social service expenses incurred in a convalescent or nursing home facility? Answer: long term care rider โ Which of the following is exempted from the incontestability provision in insurance policies? Answer: Fraudulent misstatements โ What does first dollar coverage mean? Answer: As soon as covered medical expenses are incurred, the policy begins to pay โ What is the waiver of premium provision? Answer: In a long term care contract, the premium is waived after the insured has been confined for a specific period of time โ According to the Time Payment of Claims provision, the insurer must make the payment immediately after receiving proof of loss EXCEPT Answer: for claims involving periodic payments
โ Which is a disadvantage to a flexible premium annuity? Answer: the actual amount of the annuity benefit cannot be determined in advance โ When a policy or certificate containing an accelerated benefit provision is applied for or delivered, the producer is responsible for providing that applicant a summary of coverage that includes all of the following EXCEPT Answer: a detailed and comprehensive summary of the accelerated benefit โ which one of the following represents an advantage of obtaining a policy loan versus a withdrawal? Answer: the loan is not taxed while a withdrawal is taxed for amounts above the contract cost basis โ How does a noncancelable policy differ from a guaranteed renewable policy? Answer: with the non cancelable policy the insurer may increase premiums only based on the terms of the policy โ What does it mean if a health policy is conditionally renewable? Answer: Insurer may elect NOT to renew only under the conditions specified in the policy โ When the suicide clause is inserted in a life insurance contract, death by suicide is not covered during the policy's initial: Answer: 2 year period โ What does coinsurance mean? Answer: The insurer and the insured share expenses over the deductible.
โ A consumer report used to determine eligibility for insurance may include all of the following EXCEPT Answer: Medical underwriting exam โ All of the following are required signatures on a life insurance application EXCEPT Answer: The minor in a juvenile policy โ Why are insurance policies considered conditional contracts? Answer: Certain conditions need to be met to make the contract legally enforceable. โ When does insurable interest come into play in a life insurance policy? Answer: when the applicant for the policy is not the insured โ Which of the following occurs immediately after the application is submitted and the initial premium paid? Answer: the underwriting process begins โ Obtaining consumer information reports under false pretenses is prosecutable by which of the following? Answer: Fair Credit Reporting Act โ What is the purpose of Stranger-originated life insurance (STOLI)? Answer: the policy is originated primarily or solely for the purpose of resale
โ All of the following are classifications of risk EXCEPT Answer: non- nicotine โ What specific new procedures does the USA Patriot Act require of insurance companies? Answer: Establish an anti-money laundering program โ 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. โ What is a MIB report? Answer: medical information on an applicant for assessing life or health insurance risk โ 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. โ If the insurer wishes to share an applicant's HIV status, the applicant must be given full notice of all of the following EXCEPT Answer: the treatment procedures that are covered by the policy. โ Which of the following was specifically designed to address STOLI and IOLI practices? Answer: NCOIL Act
โ When can the premiums of an individually owned health insurance policy be deducted from the individual's income tax? Answer: when the taxpayer's medical expenses exceed 7.5% of adjusted gross income during a taxable year โ In noncontributory plans, which percentage of eligible members must participate? Answer: 100% โ Short term disability insurance generally only covers injuries due to which of the following? Answer: Non-occupational injuries โ Managed care plans increase efficiency by all of the following means EXCEPT Answer: transferring the management of costs to the insureds. โ Under which situation must insurable interest exist between the applicant and insured at the time of application? Answer: When a third- party applicant names themselves beneficiary โ Which of the following is characteristic of a nonqualified plan? Answer: plan does not meet federal guidelines for tax benefits โ In a home healthcare benefit, all of the following are eligible expenses EXCEPT Answer: blood transfusions
โ All of the following are requirements to qualify for Social Security disability benefits EXCEPT when Answer: unable to work in occupation in which the worker was trained or educated โ How long after being entitled to disability benefits will an individual be eligible to receive Medicare benefits? Answer: 2 years โ Which of the following amends the Social Security Act to make Medicare secondary to group health plans? Answer: TEFRA โ 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. โ A group conversion option may be used in all the following instances EXCEPT Answer: a life-changing event, such as marriage, divorce, or childbirth โ Which problem was universal life insurance designed to address? Answer: low interest rates during periods of high inflation โ 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
โ Which of the following is true about a decreasing term life policy? Answer: The face amount reaches zero at policy expiration. โ Which of the following is TRUE of the limited pay whole life policy? Answer: Coverage continues after the policy is paid-up. โ Which of the following is a characteristic of Preferred Provider Organizations (PPOs)? Answer: prearranged costs for services rendered โ All of the following are characteristics of variable whole life EXCEPT Answer: there is no guaranteed minimum death benefit. โ Which of the following policy types is considered double indemnity? Answer: accidental death โ Which of the following lists the three common types of permanent individual life insurance? Answer: Variable Life, Whole Life, Universal Life โ 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.
โ Which type of annuity covers two or more annuitants and provides monthly income only until the first annuitant dies? Answer: Joint Life Annuity โ 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 insurance โ 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? Answer: Flexible Spending Account (FSA) โ 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 โ Which insurance plans are commonly offered through the worksite (employer sponsored) EXCEPT? Answer: Medicare โ
