PSI Practice Exam

What is the maximum fine for a person who transacts insurance without a valid license?

$50,000 and/or imprisonment for a period not exceeding one year

How long does an employee in a group insurance policy have to exercise the conversion privilege after employment is terminated?

31 days to use the conversion privilege and begin an individual life insurance policy.

When a replacement policy is being considered, what is required from an insurer?

A list of existing policies, replacement notice signed by the applicant and the agent, and a notice sent to any existing insurers that replacement is possible are all requirements

Which of the following is TRUE regarding nonadmitted insurers?

Acting as an agent for a nonadmitted insurer is considered a misdemeanor

When does a disability policy become incontestable as to the statements contained in the application?

After this policy been in force for a period of two years during the lifetime of the insured

What happens under a misstatement of age clause on a disability policy?

All amounts payable under this policy shall be what the premium originally would have purchased and been paid at the correct age.

An "insurance agent" means a person authorized, by and on behalf of an insurer, to transact which of the following class of insurance?

Annuities

Which is NOT a requirement of a Medicare Supplement provider?

Displaying prominently on the first page of the policy the disclosure that the policy "will cover all of the medical expenses.

Which of the following is the method wherein a contract of insurance is finalized as relates to the sales process?

Execution of a contract of insurance

Which of the following is an INACCURATE statement regarding replacement for long-term care coverage?

Group long-term care policies have the same rules regarding replacement as individual long-term care policies.

When may a surplus line broker solicit and place insurance for a home state insured with a nonadmitted insurer?

If the same insurance coverage cannot be procured from an admitted insurer.

Which is an INACCURATE statement regarding standards to avoid unfair underwriting for applicants at risk for auto immune deficiency, human immunodeficiency virus, or AIDS related conditions?

Insurers are permitted to schedule AIDS and HIV testing without the specific consent of the individual applying for insurance

Which is considered unnecessary replacement for long-term coverage unless as a means to consolidate policies with one insurer?

Issuing 3 or more policies within a 12 month period.

Which of the following BEST defines the general concept of the 24-hour care plan?

It integrates workers? compensation medical care with the care provided by group health insurance.

Which statement describes the intent of the California Financial Information Privacy Act?

It provides greater privacy protections than those provided in the federal Gramm-Leach-Bliley Act.

Which of the following provisions of free insurance offered as an incentive to purchase or rent property is TRUE?

It requires a separate charge or fee

What is the punishment for a person who refuses to deliver books, records, or assets to the commissioner when subject to a seizure order in an insolvency proceeding?

Not more than $1000 fine and/or 1 year imprisonment

How does insurance written under a franchise agreement or on a wholesale basis differ from standard group insurance?

Premiums for the coverage under a franchise agreement may be written for more than the usual rates for such insurance.

Concealment, whether intentional or unintentional, entitles the injured party to?

Rescind insurance.

Which of the following can the insurer do if the insured intentionally conceals or misrepresents a material fact concerning any coverage part?

Rescind the contract

When does the guaranteed issue period for Medicare supplement end?

Sixty three days after the disenrollment of the previous coverage

According to the Administrative Procedures Act, what is required to make changes to the California Insurance Code?

The Department of Insurance is required to publish proposed changes at least 45 days prior to the hearing or decision to adopt the change

Which of the following regarding the Pre-Existing Condition Program (PCIP) is TRUE?

The State of California has transitioned their PCIP to the Federally run PCIP

While both work with an insurer, how does an "Insurance broker" differ from an "insurance agent"?

The broker does not transact on behalf of an insurer, while the agent does.

When examination of an insurer shows the insurer to be insolvent and a danger to the public, which authority is granted to the Commissioner by the CIC?

The commissioner may take possession of offices, books and property immediately without court order.

Which is an ACCURATE statement regarding dependent coverage under a group insurance policy?

The coverage must not exceed more than 100 percent of the coverage for the insured employee

When an insured under age 60 purchases a new policy, how much time do they have to cancel and receive a full refund of premiums?

The insured has a period of not less than 10, and not more than 30 days, during which they may cancel and receive a full refund for the premiums paid.

What happens if an owner requests an immediate investment of monies in a variable annuity policy be returned during the 30 day cancellation period?

The owner shall receive the market value at the time of the cancellation.

Which is an INACCURATE statement regarding blanket life insurance?

The policy is for the benefit of the policyholder.

Which is an INACCURATE statement regarding underwriting based on genetic testing?

The proposed insured must pay for the cost of the testing.

Which is an INACCURATE statement regarding inflation protection for long-term care insurance?

The protection covers a specified percentage of actual or reasonable charges, and includes a maximum specified indemnity amount

Which is an ACCURATE statement regarding benefits of Medicare supplement and Medicare select plans?

There is no restriction for benefits after the coverage has been in effect for six months when involving a preexisting condition

What are the requirements for notices required by any provision of the insurance code to a person unless expressly provided otherwise?

They should be sent to a mailing notice at their residence or place of business

What is a solicitor employed to do for a policy other than life?

To aid a property and casualty agent or broker in transacting insurance.

Which of the following actions is considered part of the insurance sales process?

Transaction of matters subsequent to execution of the contract and arising out of it

Which of the following may be insured against?

Wagering losses.

Which circumstances in a pretext interview determine if the questions are permissible?

When an insured is consulted by a person who hides his true identity on purpose when fraud for a claim is suspected.

Are dependents eligible for any premium refunds or dividends paid under any policy of group disability insurance?

Yes, insured employees are generally eligible as well as their dependents.

Can any life insurer issue group life insurance with premium rates less than the usual rates for such insurance?

Yes, they may do so on any group plan, with or without annuities

What do all long-term care insurers, agents, and brokers owe to the policyholder or prospective policyholder?

a duty of honesty, good faith, and fair dealing

Which statement accurately describes de-mutualization?

a mutual insurance company that decides to convert to a stock company

All of the following are TRUE regarding regulation and use of an agency name EXCEPT

a name would not be denied on the basis of being too similar to other company names

A claimant can be any of the following EXCEPT

a person who is conducting an investigation of a claim on behalf of an insurer.

The California Life and Health Insurance Guarantee Act provides coverage for all of the following EXCEPT

a stop-loss insurance plan

All of the following are types of licenses EXCEPT

accident and health solicitor

After what time period is the policy considered to have been delivered in an acceptable way if premiums have been paid?

after 6 months if the premiums have been paid

All of the following conditions provide a basis for group life insurance coverage EXCEPT

amounts of insurance may be selected as needed per individuals personal need

"Person" means all of the following EXCEPT

an organizational trust

When should an agent provide an applicant the effective date of coverage, if known, or the circumstances under which coverage will be effective?

at the time of application or receipt of premium

If fiduciary funds are received by any licensee, the funds shall be maintained in any of the following EXCEPT

bonds issued in all 50 states of the United States.

When is it allowable for a written application for any disability policy to be altered?

by the insurer, for administrative purposes only, when it is clear that the applicant has not made the insertions

An agent or representative who issues long term care insurance must do all of the following EXCEPT

complete a total of 10 hours of continuing education if licensed before January 1st, 2002

Which of the following types of coverage must have a proven insurable interest at the time of the application?

coverage for a minor child under age 18 or a corporate owned policy on an employee

A policy with a life insurance benefit for a disabled employee includes an extension of benefits upon its discontinuance when all of the following are met EXCEPT

during a 30 day period in which to accept the terms of the new policy

Which of the following may insurers use in their underwriting?

family medical history

All the following are requirements for an agent who advertises and transacts business on the Internet EXCEPT

his or her most recent license and appointment date

Where shall an express warranty be made?

in the policy itself

An insurance agent is a person who transacts all of the following types of insurance EXCEPT

life insurance

All of the following are a duty of an insurer in regards to claims on file and record documentation EXCEPT

maintaining any sales material, which had a material impact on the claims process.

It is unlawful to do any of the following EXCEPT

make or cause to made a knowingly false or fraudulent or material representation for the purpose of encouraging an injured worker to claim benefits

Losses arising from all of the following conditions may be excluded from group life policies EXCEPT

natural disasters.

Which would permit an insurer to escape insolvency?

possession of assets equal to the total paid-in capital after all liabilities and reinsurance

Which of the following is an insurer allowed to do in the event of a claim?

request a medical examination for the purpose of determining liability under a policy provision

Life and Disability Insurance Analysts must provide an agreement with a statement that includes all of the following EXCEPT

that fees can be received for servicing a policy on which they were the selling agent.

Which of the following may be described as an "administrator" of life or health coverage or annuities?

the Insurance Commissioner who has access to the records for examination, audit, and inspection purposes

ALL of the following are TRUE regarding the process to change the California Code of Regulations EXCEPT

the Office of Administrative Law (OAL) may substitute its own judgment for that of the rulemaking agency

All of the following are TRUE about the rules regarding the sale of life insurance and annuities to seniors age 65 or older EXCEPT

the agent, broker or insurer is required to show a copy of their insurance license with name, address, and phone number when conducting business in the senior's home.

The Insurance Commissioner may deny an application for any license issued for any of the following EXCEPT

the applicant is lacking in good judgment

All of the following are to be specified in an insurance policy EXCEPT

the financial rating of the insured

The following are all penalties for unlawfully acting as an insurer without a certificate of authority EXCEPT

the individual will be banned from practicing insurance for a period of 5 years

All of the following are examples of misrepresentations that may not be made by an insurer, officer or agent thereof or an insurance broker or solicitor EXCEPT

the specific contract language

What is the purpose of creating minimum underwriting standards for those testing positive for Acquired Immune Deficiency Syndrome, Human Immunodeficiency Virus or Aids Related Complex?

to avoid discrimination between individuals in the same rating class who have been diagnosed with the condition of AIDS, ARC or HIV

When does a license become inactive for a broker?

upon the termination of all appointments, or all endorsements

According to CIC Section 1711, an organization ceases to exist as an entity eligible to hold a license EXCEPT

upon the termination of all contracts.

When is a person acting as a licensee allowed to act as an agent of the insurer?

when the insurer has filed with the commissioner a notice of appointment