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PSI Insurance Exam Questions and Answers | Latest Version | 2025/2026 | Correct & Verified
What is the purpose of an insurance deductible?✔✔To reduce small claims and share risk with the insured
What is the term for the money paid to an insurance company for coverage?✔✔Premium
What is a beneficiary in a life insurance policy?✔✔The person who receives the death benefit
What is the primary function of insurance?✔✔To transfer risk from the insured to the insurer
What does insurable interest mean?✔✔The policyholder must suffer a financial loss if the insured event occurs
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What is the purpose of a grace period in an insurance policy?✔✔To allow extra time for premium payment without policy cancellation
What is a claim in insurance?✔✔A request made by the insured for payment based on policy terms
What is a whole life insurance policy?✔✔A life insurance policy that provides lifetime coverage and builds cash value
What is term life insurance?✔✔Life insurance that provides coverage for a specific period only
What is the purpose of underwriting in insurance?✔✔To assess risk and determine policy terms and pricing
What is the cash value in a life insurance policy?✔✔The savings portion that grows over time and can be borrowed against
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What happens when a life insurance policy lapses?✔✔Coverage ends due to non-payment of premiums
What is a health insurance co-payment?✔✔A fixed amount the insured pays for a covered medical service
What is the elimination period in disability insurance?✔✔The waiting period before benefits begin
What does liability insurance cover?✔✔Damages the policyholder causes to others or their property
What is a rider in an insurance policy?✔✔An optional addition that provides extra coverage
What does the beneficiary receive when the insured dies under a life insurance policy?✔✔Death benefit
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What is the purpose of a health insurance deductible?✔✔The amount the insured must pay before the insurer covers expenses
What is subrogation in insurance?✔✔The insurer’s right to recover funds from a third party after paying a claim
What does the incontestability clause in a life insurance policy do?✔✔Prevents the insurer from voiding the policy after a certain time due to misstatements
What is an insurance policy?✔✔A legal contract between the insurer and the insured
What is the purpose of group insurance?✔✔To provide coverage to a group of people under one contract
What is the main difference between Medicare and Medicaid?✔✔Medicare is for seniors, Medicaid is for low-income individuals
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