Life Practice Exam 2

All of the following describe the purpose of the North Carolina regulations governing the solicitation of life insurance EXCEPT

Educate the buyer about policy protection by the Guaranty Association.

All of the following are types of term policies based on what happens to the face amount during the Solicy term EXCEPT

Increasing

All statements of the insured in any application for a policy of insurance are deemed

Representations

Which of the following is TRUE regarding the insurance amount in a credit life policy?

Creditor can only insure the debtor for the amount owed - Credit life insurance cannot pay out more than the balance of the debt, so that there is no financial incentive for the death of the insured.

In which of the following situations is it legal to limit coverage based on marital status?

It is never legal to limit coverage based on marital status.

An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term?

The insured may renew the policy for another 10 years, but at a higher premium rate.

Which of the following will NOT be an appropriate use of a deferred annuity?

creating an estate - Deferred annuities grow tax deferred, and are best suitable for accumulating retirement income or funds for children's college education.

Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die?

joint life - least expensive because premiums are based on average age and it only pays a death benefit at the first death