PSI Insurance Exam 4 — Questions and Answers
Question 1: A health insurance policy that requires the insured to use network providers except in emergencies is a:
- PPO
- HMO (Correct answer)
- POS plan
- Indemnity plan
Correct answer: HMO
HMOs (Health Maintenance Organizations) generally require members to receive care from network providers and have a primary care physician as gatekeeper.
Question 2: Under an auto policy, which coverage pays for damage to the insured's own vehicle caused by hitting another car?
- Comprehensive
- Collision (Correct answer)
- Liability
- Uninsured motorist property damage
Correct answer: Collision
Collision coverage pays for damage to the insured's vehicle resulting from a collision with another vehicle or object.
Question 3: Which life insurance rider waives premium payments if the insured becomes totally disabled?
- Accidental death benefit rider
- Guaranteed insurability rider
- Waiver of premium rider (Correct answer)
- Cost of living rider
Correct answer: Waiver of premium rider
The waiver of premium rider keeps the life policy in force without premium payments if the insured suffers total disability as defined in the policy.
Question 4: An insurer's legal right to recover from a negligent third party the amount paid to an insured claimant is called:
- Indemnity
- Subrogation (Correct answer)
- Contribution
- Assignment
Correct answer: Subrogation
Subrogation allows the insurer to 'step into the shoes' of the insured and sue the responsible party to recover claim payments made.
Question 5: A long-term care policy that allows unused benefits to be carried forward to extend the benefit period is using which feature?
- Shared care rider
- Inflation protection
- Pooled benefits (Correct answer)
- Restoration of benefits
Correct answer: Pooled benefits
Pooled benefits allow the total benefit pool to be drawn upon flexibly, so unused daily benefits effectively extend the total coverage period.
Question 6: An insurance agent who represents multiple insurers and legally represents the policyholder rather than any single insurer is a:
- Captive agent
- Independent agent
- Managing general agent
- Insurance broker (Correct answer)
Correct answer: Insurance broker
A broker represents the buyer/policyholder and can place coverage with multiple insurers, unlike an agent who represents the insurer.
Question 7: Which type of annuity provides a guaranteed minimum return while also offering growth potential tied to a market index?
- Fixed annuity
- Variable annuity
- Indexed annuity (Correct answer)
- Immediate annuity
Correct answer: Indexed annuity
An indexed (equity-indexed) annuity credits interest based partly on the performance of a market index while guaranteeing a minimum interest rate.
PSI Insurance Exam 4
A health insurance policy that requires the insured to use network providers except in emergencies is a: