NC life and health insurance study questions
Insurance companies are required to provide proof of loss forms to the claimant within how many days after receipt of notice of loss? A15 B30 C31 D45
A
Before the Commissioner will issue a broker's license, the licensee must obtain a bond for at least A$10,000 B$15,000 C$20,000 D$50,000
B
Which of the following best describes the MIB? AIt is a rating organization for health insurance. BIt is a nonprofit organization that maintains underwriting information on applicants for life and health insurance. CIt is a government agency that collects medical information on the insured from the insurance companies. DIt is a member organization that protects insured against insolvent insurers.
B
In a direct rollover, how is the money transferred from one plan to the new one? AFrom the original plan to the original custodian BFrom trustee to trustee CFrom trustee to the participant DFrom the participant to the new plan
B
The interest earned on policy dividends is A40% taxable, similar to a capital gain. BTaxable. CNontaxable. DTax deductible.
B
What is the purpose of a conditional receipt? AIt serves as proof that the agent has determined the applicant to be fully insurable for coverage by the insurance company. BIt is given by the agent only to applicants who fully prepay all scheduled premiums in advance of policy issue. CIt is intended to provide coverage on a date earlier than the date of the issuance of the policy. DIt guarantees the applicant that a policy will be issued in the amount applied for in the application.
C
A Universal Life insurance policy has two types of interest rate that are called AFixed and Variable BMinimum and Target CGuaranteed and Current DOption A and Option B
C The insurer credits the cash value in the policy with a current (nonguaranteed) interest rate and backs the cash value with a contract (lower guaranteed) rate of interest.
Which of the following products requires a securities license? AFixed annuity BEquity Indexed annuity CDeferred annuity DVariable annuity
D
Who can request changes in premium payments, face value, loans, and policy plans? AContingent beneficiary BBeneficiary CProducer DPolicyowner
D
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the AOther-insured rider. BChange of insured rider. CJuvenile rider. DPayor rider.
A
The two types of assignments are AAbsolute and collateral. BAbsolute and partial. CComplete and partial. DComplete and proportionate.
A
The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called AJoint and survivor. BFixed period. CFixed amount. DJoint life.
A
What kind of policy allows withdrawals or partial surrenders? AVariable whole life BUniversal life C20-pay life DTerm policy
B
What do Modified Life and Straight Life policies have in common? AGraded premium BTemporary protection CAccumulation of cash value DSame amount of premium
C
When an annuity is written, whose life expectancy is taken into account? AAnnuitant BBeneficiary CLife expectancy is not a factor when writing an annuity. DOwner
A
Which type of life insurance policy allows the policyowner to pay more or less than the planned premium? AUniversal life BVariable life CDecreasing term DStraight whole life
A The policyowner has the flexibility to increase the amount of premium going into the policy and to later decrease it again. In fact, the policyowner may even skip paying a premium and the policy will not lapse as long as there is sufficient cash value at the time to compensate for the nonpayment of premium.
All of the following are TRUE statements regarding the accumulation at interest option EXCEPT AThe policyholder has the right to withdraw the accumulations at any time. BThe interest credited under this option is not taxable since it remains inside the insurance policy. CThe annual dividend is retained by the company. DThe interest is credited at a rate specified by the policy
B
The minimum number of credits required for partially insured status for Social Security disability benefits is A4 credits. B6 credits. C10 credits. D40 credits.
B
When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy as well as a refund of all of the premiums paid. Which rider is attached to the policy? APremature death BReturn of premium CCost of living DDecreasing term
B
Which of the following is TRUE about nonforfeiture values? APolicyowners do not have the authority to decide how to exercise nonforfeiture values. BThey are required by state law to be included in the policy. CThey are optional provisions. DA table showing nonforfeiture values for the next 10 years must be included in the policy.
B
Which of the following is NOT a characteristic of universal life insurance? A Flexible death benefit B Cash account C Fixed premium D Unbundled premium
C Universal life policies allow the policy owner to increase the amount of premium going into the policy and to later decrease it again. They may even skip a premium payment. The rest of the features apply to universal life policies.
An insured committed suicide one year after his life insurance policy was issued. The insurer will APay the policy's cash value. BPay the full death benefit to the beneficiary. CPay nothing. DRefund the premiums paid.
D
What type of whole life insurance policy has premiums that are adjusted so that during the first years of the policy, the premiums are lower than those of a straight whole life policy, and in subsequent years the premiums are higher than those of a straight whole life policy? AIndexed life BIndeterminate premium CEnhanced life DModified life
D Modified life policies were developed to attract young professionals who have a large financial investment in their education and training, but starting their professional careers, they have limited resources to buy insurance. Modified life is a permanent policy, but in the early years, the premiums are similar to that of a term policy; in later years, the premiums are increased to build cash values and cause the policy to endow.
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? AThe insured must provide evidence of insurability to renew the policy. BThe insured may only convert the policy to another term policy. CThe insured may renew the policy for another 10 years at the same premium rate. DThe insured may renew the policy for another 10 years, but at a higher premium rate.
D Policies that are guaranteed renewable and convertible may be renewed, without evidence of insurability, for another like term, or may be converted to permanent insurance, without evidence of insurability.
Concerning Juvenile Life insurance, which of the following statements is INCORRECT? AJuvenile Life is classified as any life insurance purchased by a minor. BUsually a parent or guardian is the applicant for insurance on the life of a minor. CIt can be a limited premium payment policy. DJuvenile Life is classified as any life insurance written on the life of a minor.
A Juvenile Life insures the life of a minor. It does not need to be purchased by a minor.
What is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident? ANonforfeiture Clause BCommon Disaster Clause CSpendthrift Clause DSettlement Clause
B
What would be an advantage to naming a contingent (or secondary) beneficiary in a life insurance policy? AIt ensures the policy proceeds will be split between the primary and contingent beneficiaries. BIt requires that someone who is not the primary beneficiary handles the estate. CIt determines who receives policy benefits if the primary beneficiary is deceased. DIt allows creditors to receive payment out of the proceeds.
C
The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT AFace amount of the policy. BThe insured's age at death. CThe beneficiary's life expectancy. DProjected interest rates.
B
The premiums paid by the employer in a business life insurance policy are ATax deductible by the employee. BAlways taxable to the employee. CNever taxable to the employee. DTax deductible by the employer.
D
All of the following statements are true regarding mortgage protection insurance EXCEPT AThe face amount remains the same throughout the life of the policy. BIt is used to pay off the balance on the mortgage. CThe face amount decreases as the amount owed on the mortgage decreases. DIt's a decreasing term insurance.
A
A deferred annuity is surrendered prior to annuitization. Which of the following best describes the nonforfeiture value of the annuity? AThe surrender value will not be more than 80% of the cash value in the annuity at the time of surrender. BThe surrender value should be equal to 100% of the premium paid, minus any prior withdrawals and surrender charges. CA deferred annuity cannot be surrendered prior to annuitization. The owner must wait until the annuitization period begins to receive any payments. DThe surrender value will be based on current interest rates.
B
If an annuitant dies before annuitization occurs, what will the beneficiary receive? ACash value of the plan BEither the amount paid into the plan or the cash value of the plan, whichever is the greater amount CEither the amount paid into the plan or the cash value of the plan, whichever is the lesser amount DAmount paid into the plan
B
Which of the following best describes a pure life annuity settlement option? ABenefits are paid for a fixed period of time, specified when the policy begins to pay. BPure life provides payments for as long as both the annuitant and the spouse are living. CPure life provides payments for as long as the annuitant is alive. DPure life guarantees that all the proceeds will be paid out.
C
Which of the following is TRUE for both equity indexed annuities and fixed annuities? ABoth are considered to be more risky than variable annuities. BThey invest on a conservative basis. CThey have a guaranteed minimum interest rate. DThey are both tied to an equity index.
C
In an annuity, the accumulated money is converted into a stream of income during which time period? APayment period BAmortization period CConversion period DAnnuitization period
D
In order to qualify for conversion from a group life policy to an individual policy of the same coverage, a person must have been insured under the group plan for how many years? A10 B1 C3 D5
D
A group policy used to provide accident and health coverage on a group of persons being transported by a common carrier, without naming the insured persons individually is called ABlanket Policy. BActivity policy. CSpecified disease policy. DCertificate of Coverage Policy.
A
A guaranteed renewable health insurance policy allows the APolicyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class. BPolicyholder to renew the policy to a stated age and guarantees the premium for the same period. CPolicy to be renewed at time of expiration, but the policy can be canceled for cause during the policy term. DInsurer to renew the policy to a specified age.
A
All other factors being equal, which of the following types of annuities will generally provide the highest monthly income? AStraight Life BJoint and Survivor CInstallment Refund DLife with a 10-year Period Certain
A
An insured has medical insurance coverage through 2 different providers, both covering the same expenses on an expense-incurred basis. Neither company knows in advance that the insured has coverage through any other insurers. The insured submits a claim to both insurers. How should the claim be handled? AEach insurer should pay a proportionate share of the claim. BOne of the insurers will pay fully, while the other will not pay any benefits. COnce the insurers discover the duplicate coverage, the policies would most likely be cancelled, and no claim paid. DThe insured should receive full benefits from each insurer.
A
An insured receives an annual life insurance dividend check. What term best describes this arrangement? ACash option BReduction of Premium CAnnual Dividend Provision DAccumulation at Interest
A
If an employee terminates her employment, which of the following provisions would allow her to continue health coverage under an individual policy, if requested within 31 days? AConversion provision. BReinstatement provision. CGrace period DRenewable provision
A
After appointing an agent, how long does an insurer have to file with the Commissioner the form detailing the agent's name, address, and other needed information? A15 days B30 days C45 days D60 days
B
In order to qualify for conversion from a group life policy to an individual policy of the same coverage, a person must have been insured under the group plan for how many years? A3 B5 C10 D1
B
In which of the following examples would a contract between an insurer and prospective insured be legal? AThe applicant is under the influence of medication at the time of application. BThe applicant has a prior felony conviction. CThe applicant is intoxicated at the time of application. DThe applicant is a 12-year-old student.
B
Premium payments for personally-owned disability income policies are ATax deductible to the extent that they exceed 10% of the adjusted gross income of those itemizing deductions. BNot tax deductible. CEligible for tax credits. DTax deductible.
B
The coverage provided by a disability income policy that does not pay benefits for losses occurring as the result of the insured's employment is called AWorkers compensation. BNonoccupational coverage. CUnemployment coverage. DOccupational coverage.
B
The state Insurance Code regulates all of the following EXCEPT AProducer continuing education. BThe number of people that may serve on an insurer's board of directors. CInsurance companies. DLicensing of new producers.
B
Under the Accidental Death and Dismemberment (AD&D) coverage, what type of benefit will be paid to the beneficiary in the event of the insured's accidental death? ARefund of premiums BPrincipal sum CCapital sum DDouble the amount of the death benefit
B
What is the main purpose of the Seven-pay Test? AIt guarantees interest minimum. BIt determines if the insurance policy is an MEC. CIt requires level premium payments for 7 years. DIt ensures that the policy benefits are paid out in 7 years.
B
When transacting business in this state an insurer formed under the laws of another country is known as a/an AAdmitted insurer. BAlien insurer. CDomestic insurer. DForeign insurer.
B
Which of the following acts would be grounds for a person's license suspension, revocation, or refusal to renew? AA broker does not return a client's calls on timely basis. BAn agent fails to pay state income tax. CAn agent unknowingly misrepresents the terms of an insurance contract. DAn agent refuses to offer an explanation to a policyholder concerning the coverage provided by another insurer.
B
Which of the following entities has the authority to make changes to an insurance policy? AProducer BInsurer's executive officer CDepartment of Insurance DBroker
B
Which of the following provisions would prevent an insurance company from paying a reimbursement claim to someone other than the policyowner? AProof of Loss BPayment of Claims CChange of beneficiary DEntire Contract Clause
B
W owns a policy in which she is covered as the bread-winner with permanent insurance and with decreasing term insurance in the form of a rider. What type of policy is this? AFamily Protection Policy BFamily Income Policy CFamily Policy DFamily Maintenance Policy
B If the insured dies during the income period of a family income policy, monthly benefits are paid to the survivors for the balance of the income phase. The death benefit is then paid to the beneficiary. During the income phase, the insurer retains the cash value and death benefit to invest and generate interest.
Group life insurance is a single policy written to provide coverage to members of a group. Which of the following statements concerning group life is CORRECT? ACoverage cannot be converted when an individual leaves the group. BPremiums are determined by age, occupation, and individual underwriting. C100% participation of members is required in noncontributory plans. DEach member covered receives a policy.
C
If the Commissioner denies an initial application for an agent, how long does the applicant have to request a review after receiving notification of the denial? A10 days B20 days C30 days D45 days
C
In which of the following situations would Social Security Disability benefits NOT cease? AThe individual dies BThe individual has undergone therapy and is no longer disabled CThe individual's son gets a part-time job to help support the family DThe individual reaches age 65
C
The required privacy disclosure notice must be provided by insurer to current policyholders at least once in any period of A3 months B6 months. C12 months. D24 months.
C
When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer? AAlien BNonadmitted CForeign DDomestic
C
When employees are actively at work on the date coverage can be transferred to another insurance carrier, what happens to coinsurance and deductibles? ACoinsurance carries over, but deductibles are generally higher. BDeductibles carry over, but coinsurance is generally higher. CThey carry over from the old plan to the new plan. DThey have to be re-evaluated.
C
Which component increases in the increasing term insurance? AInterest on the proceeds BPremium CDeath benefit DCash value
C
Under which condition would an employee's group medical benefits be exempt from income taxes? AAn employee's group medical benefits are never exempt from taxation as income. BWhen the premiums and other unreimbursed medical expenses exceed 5% of the employee's adjusted gross income CWhen the premiums and other unreimbursed medical expenses exceed 10% of the employee's adjusted gross income DAn employee's group medical benefits are generally exempt from taxation as income.
D
When the insured purchased his health policy he was a window washer. He has since changed occupations and now manages a library. If the insurer is notified of the insured's change of occupation, the insurer should AIncrease the benefit. BReturn any unearned premium. CConsider decreasing the premium. DAdjust the benefit in accordance with the decreased risk
D
Which of the following explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy? AThe Entire Contract Provision BThe Consideration Clause CAssignment Rights DOwner's Rights
D
Which of the following is INCORRECT concerning taxation of disability income benefits? AIf the employer paid the premiums, income benefits are taxable to the insured as ordinary income. BIf the insured paid the premiums, any disability income benefits are tax-free. CIf the benefits are for a permanent loss, the benefits paid to the employee are not taxable. DIf paid by the individual, the premiums are tax deductible.
D
Within how many months must a person be expected to die from a sickness in order to be classified as terminally ill? A3 B6 C12 D24
D
What are the two components of a universal policy? AInsurance and investments BMortality cost and interest CSeparate account and policy loans DInsurance and cash account
D A universal policy has two components: an insurance component and a cash account. The insurance component of a universal life policy is always annual renewable term insurance. The cash account accumulates on a tax deferred basis each year and earns either the guaranteed contract rate or the current rate, whichever is higher.
Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled? AJumping Juvenile BJuvenile Premium Provision CWaiver of Premium DPayor Benefit
D If the payor (usually a parent or guardian) becomes disabled for at least 6 months or dies, the insurer will waive the premiums until the minor reaches a certain age, such as 21.
Which of the following best defines target premium in a universal life policy? AThe maximum amount the policyowner may pay on a policy BThe minimum amount to make sure the policy is annually renewable CThe corridor of insurance DThe recommended amount to keep the policy in force throughout its lifetime
D The target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime.
Graded-Premium Whole Life policy premiums are typically lower initially, but gradually increase for a period of 5 to 10 years. After the period of increase the premiums will AContinue to increase. BReturn to the initial premium amount. CDecrease again. DBe level thereafter.
D When a Graded-Premium Whole Life policy begins, the premium amounts are typically 50% lower than premiums for straight life policies. The premium then gradually increases each year for a period of usually 5 or 10 years and then remains level thereafter.
All of the following statements are true regarding installments for a fixed amount EXCEPT AThe payments will stop when the annuitant dies. BValue of the account and future earnings will determine the time period for the benefits. CThis option pays specific amount until the funds are exhausted. DThe annuitant may select how big the payments will be.
A
What is the waiting period on a Waiver of Premium rider in life insurance policies? A30 days B3 months C5 months D6 months
D
Which of the following is another term for the accumulation period of an annuity? APay-in period BPremium period CLiquidation period DAnnuity period
A
Which of the following will NOT be an appropriate use of a deferred annuity? ACreating an estate BAccumulating retirement funds CAccumulating funds in an IRA DFunding a child's college education
A
Your client's employer does not offer a company-wide annuity contract. What type of annuity contract could your client obtain? AIndividual BIndependent Group Contract CSingle DNonqualified
A
An insured committed suicide one year after his life insurance policy was issued. The insurer will APay nothing. BRefund the premiums paid. CPay the policy's cash value. DPay the full death benefit to the beneficiary.
B
A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium? AIf the daughter is disabled for more than 3 months BIf the daughter is disabled for any length of time CIf the father is disabled for more than 6 months DIf the father is disabled for at least a year
C Payor benefit only pays if the owner, the father in this example, is disabled for at least 6 months.
What is the purpose of establishing the target premium for a universal life policy? ATo pay up the policy faster BTo cover all policy expenses CTo keep the policy in force DTo accumulate cash value faster
C The target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime.
A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums? AThe insured's premiums will be waived until she is 21. BThe premiums will become tax deductible until the insured's 18th birthday. CSince it is the policyowner, and not the insured, who has become disabled, the life insurance policy will not be affected. DThe insured will have to pay premiums for 6 months. If at the end of this period the father is still disabled, the insured will be refunded the premiums.
A
All of the following are true regarding a decreasing term policy EXCEPT AThe payable premium amount steadily declines throughout the duration of the contract. BIt has a lower premium than level term. CThe contract pays only in the event of death during the term and there is no cash value. DThe face amount steadily declines throughout the duration of the contract.
A Premiums remain level with a decreasing term policy; only the face amount decreases.
The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true? AThe contract can be issued without an annuitant. BThe annuitant must be a natural person. CA corporation can be an annuitant as long as it is also the owner. DA corporation can be an annuitant as long as the beneficiary is a natural person.
B
Which of the following is NOT true about a group annuity? AIt can be owned by individual employees. BIt can be noncontributory. CIt can be qualified. DIt can be tax deferred.
A
Which of the following is NOT true regarding the accumulation period of an annuity? AIt would not occur in a deferred annuity. BIt is the period during which the annuity payments earn interest. CIt is the period over which the annuitant makes payments into an annuity. DIt is also known as the pay-in period.
A
Which of the following is true of a children's rider added to an insured's permanent life insurance policy? AThe policy covers only the natural children of the insured. BEach child covered must show evidence of insurability. CIt is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age. DIt is permanent insurance.
C
Which of the following statements about a suicide clause in a life insurance policy is TRUE? ASuicide is covered as long as the policy is in force. BSuicide is excluded as long as the policy is in force. CSuicide is excluded for a specific period of years and covered thereafter. DSuicide is covered for a specific period of years and excluded thereafter.
C
An agent found representing an unlicensed company is guilty of AMisrepresentation. BA misdemeanor. CNegligence. DA felony.
B
What type of insurance would be used for a Return of Premium rider? AAnnually Renewable Term BIncreasing Term CLevel Term DDecreasing Term
B
A group of 15 skydivers met at a seminar and began talking about life insurance during a break. Because it was expensive to get individual life insurance, they decided to band together to form a small group so that they could qualify for group life insurance. After they applied for group life insurance, they were rejected. Why? AThe purpose of the group was to purchase life insurance. BTheir profession poses too high of a risk for the insurer. CThere are not enough people in the group to qualify for group life insurance. DThe group has not been established for long enough.
A
When applying for an individual life insurance policy, an applicant states that he went to the doctor for nausea, but fails to mention that he was also having severe chest pains. This is an example of AConcealment. BMisrepresentation. CFraud. DWarranty.
A
A friend helped an insurance producer sell an insurance policy. The producer can share the commission with the friend if AThe Commissioner gives the producer verbal permission to share. BThe producer applies for a shared commission form for that fiscal year. CThe friend is licensed in the same line of insurance. DThe friend is licensed in any type of insurance.
C
All of the following describe the purpose of the North Carolina regulations governing the solicitation of life insurance EXCEPT AImprove the buyer's understanding of the basic features of the policy. BImprove the ability of the buyer to evaluate the relative costs of similar life plans. CEducate the buyer about policy protection by the Guaranty Association. DRequire insurers to deliver information to applicants to improve their ability to select the most appropriate kind of life insurance.
C
Which of the following would help prevent a universal life policy from lapsing? A Corridor of insurance B Target premium C Face amount D Adjustable premium
B The target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime.
All of the following are true about variable products EXCEPT AThe cash value is not guaranteed. BPolicyowners bear the investment risk. CThe premiums are invested in the insurer's general account. DThe minimum death benefit is guaranteed.
C
An individual has been making periodic premium payments on an annuity. The annuity income payments are scheduled to begin after 1 year since the annuity was purchased. What type of annuity is it? AFlexible premium BImmediate CDeferred DFixed
C
Which of the following best describes an insurance company that has been formed under the laws of this state? ADomestic BSovereign CAlien DForeign
A
In North Carolina, the Commissioner serves a term of how many years? A1 year B2 years C4 years D6 years
C
How long does the grace period last under a standard life policy issued in this state? A7 days B10 days C21 days D31 days
D
If a contract provides a set amount of income for two or more persons with the income stopping upon the first death of the insured, it is called a AJoint life annuity. BJoint and survivor annuity. CDeferred annuity. DPure annuity.
A
If an immediate annuity is purchased with the face amount at death or with the cash value at surrender, this would be considered a ASettlement option. BNontaxable exchange. CNonforfeiture option. DRollover.
A
If the insured under a disability income insurance policy changes to a more hazardous occupation after the policy has been issued, and a claim is filed, the insurance company should do which of the following? AAdjust the benefit in accordance with the increased risk BCancel the policy CIncrease the premium DExclude coverage for on-the-job injury
A
Kevin and Nancy are married; Kevin is the primary breadwinner and has a health insurance policy that covers both him and his wife. Nancy has an illness that requires significant medical attention. Kevin and Nancy decide to legally separate, which means that Nancy will no longer be eligible for health insurance coverage under Kevin. Which of the following options would be best for Nancy at this point? ACOBRA BApply for social security benefits CApply for coverage under the same group policy that covers Kevin DConvert to an individual insurance policy with 31 days so she won't have to provide evidence of insurability
A
The free-look provision allows for which of the following? AA right to return the policy for a full premium refund BImmediate coverage when the application is submitted CA guarantee that the policy will not lapse if the premium is overdue DA guarantee that the policy will be issued
A
What are the requirements for an agent asking a client questions designed to obtain information solely for marketing or research purposes? AThe agent must clearly specify the purpose of the questions. BThe agent must allow the client to answer the questions later. CThe agent and a witness must record the client's answers. DThe agent must give the client a written list of the questions.
A
Which of the following best details the underwriting process for life insurance? ASelection, classification, and rating of risks BSolicitation, negotiation and sale of policies CIssuance of policies DReporting and rejection of risks
A
Which of the following statements is correct concerning taxation of long-term care insurance? AExcessive benefits may be taxable. BBenefits may be taxable as ordinary income. CPremiums may be taxable as income. DPremiums are not deductible in any case.
A
All of the following are business uses of life insurance EXCEPT AFunding business continuation agreements. BFunding against general company financial loss. CCompensating executives. DFunding against financial loss caused by the death of a key employee.
B
Disclosure authorization forms must include all of the following EXCEPT AThe date of the authorization. BThe format in which the information may be shared. CThe name of the insurer or agent. DThe nature of the information authorized to be disclosed.
B
An insurance institution, agent, or insurance-support organization shall not disclose any personal or privileged information about an individual collected or received in connection with an insurance transaction unless ASuch information is considered to be nonpublic information. BThe Commissioner deems such disclosure to be in the best interest of the insurance buying public. CThe disclosure has been previously approved by the insurer. DThe disclosure is with the written authorization of the individual.
D
An insured wants to name her husband as the beneficiary of her health policy. She also wishes to retain all of the rights of ownership. The insured should have her husband named as what type of beneficiary? APrimary BContingent CIrrevocable DRevocable
D
An insurer, agent, or broker may accept payment of an insurance premium by credit card if AThe identity of the credit card holder is verified prior to accepting the transaction. BThe insured has filed the appropriate credit information with the home office for such transactions. CThe insurer is willing to pay the fines levied by the State since credit card use for insurance premium collection is prohibited by the State. DThe insurer makes payment by credit card available to all existing and prospective insureds and pays all fees associated with the transaction.
D
In an optionally renewable policy, the insurer has which of the following options? AIncrease the grace period BAlter the due date so the policy can be cancelled sooner CShorten the notice that the insured receives DIncrease premiums
D
All of the following would be eligible to establish a Keogh retirement plan EXCEPT AThe president and employee of a family corporation. BA sole proprietor of a service station who employs four employees. CA sole proprietor of film development store with no employees. DA hair dresser who operates her business at her house.
A
If an insured worker has earned 40 quarters of coverage, the worker's status under Social Security disability is AFully insured. BPartially insured. CCorrectly insured. DPermanently insured
A
Which is true about a spouse term rider? AThe rider is usually level term insurance. BCoverage is allowed for an unlimited time. CThe rider is decreasing term insurance. DCoverage is allowed up to age 75.
A
All other factors being equal, the least expensive first-year premium payment is found in AAnnually Renewable Term. BIncreasing Term. CDecreasing Term. DLevel Term.
A Annually renewable term is the purest form of term insurance. The death benefit remains level, but the premium increases each year with the insured's attained age. In decreasing policies, while the face amount decreases, the premium remains constant throughout the life of the contracts. In level term and increasing term policies, the premium also remains level for the term of the policy. Therefore, in the other types of level policies, the first-year premium would not be different from any other year.
A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums? AThe insured's premiums will be waived until she is 21. BThe premiums will become tax deductible until the insured's 18th birthday. CSince it is the policyowner, and not the insured, who has become disabled, the life insurance policy will not be affected. DThe insured will have to pay premiums for 6 months. If at the end of this period the father is still disabled, the insured will be refunded the premiums.
A If the payor (usually a parent or guardian) becomes disabled for at least 6 months or dies, the insurer will waive the premiums until the minor reaches a certain age, such as 21.
Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be ADiscounted. BAdjusted to the insured's age at the time of renewal. CDetermined by the health of the insured. DBased on the issue age of the insured
B
Which of the following riders would NOT cause the Death Benefit to increase? AAccidental Death Rider BPayor Benefit Rider CGuaranteed Insurability Rider DCost of Living Rider
B
During partial withdrawal from a universal life policy, which portion will be taxed? ALoan BInterest CCash value DPrincipal
B During the withdrawal, the interest earned on the withdrawn cash value may be subject to taxation.
An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it? AGraded Premium Life BLimited-pay Life CVariable Life DAdjustable Life
B In limited-pay policies, the premiums for coverage will be completely paid-up well before age 100, usually after a specified number of years.
A 20-year family income policy was purchased effective April 1, 2001. The insured died four months later, on August 1, 2001. The beneficiary receives monthly income for A10 years. B19 years and 8 months. C9 years and 8 months. D20 years.
B Monthly benefits paid for the remainder of the 20 year benefit period.
In a survivorship life policy, when does the insurer pay the death benefit? AIf the insured survives to age 100 BUpon the last death CUpon the first death DHalf at the first death, and half at the second death
B Survivorship life pays on the last death rather than upon the first death.
Which of the following types of insurance policies would provide the greatest amount of protection for a temporary period during which an insured will have limited financial resources? AVariable life BTerm CWhole Life DAnnuity
B Term insurance provides a death benefit only; cost per $1,000 of coverage is less than other types of policies that create cash values. Review Content
If the owner prematurely surrenders his deferred annuity before the annuitization period begins, which of the following is most likely to occur? AA surrender charge will not be imposed because the account has been open for at least 1 year. BThe owner will forfeit any premiums he has paid into the account, but will receive any interest earned on the account. CThe owner will receive the premium payments that have been paid into the annuity, plus any interest, minus a surrender charge. DA surrender charge will be imposed that is equal to 3 of the owner's monthly annuity payments.
C
Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner? APaid-up options BExtended term CCash surrender DReduced paid-up
C
A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this? AOrdinary life policy BLimited pay whole life CLevel term DTerm to specified age
C A 20-year term policy is written to provide a level death benefit for 20 years.
B just bought a new car, which he anticipates will be paid for 4 years from now. He also wants to buy a life insurance policy, but is financially limited until the car is paid off. Which of the following types of policies would be best for B? ALimited Pay BInterest-sensitive Whole Life CModified Life DLimited Term
C A Modified Life policy would be best. It charges a lower premium for the first few policy years and then a higher level premium for the remainder of the life of the policy. These policies were developed to make the purchase of whole life insurance more attractive for individuals who have limited financial resources but will be able to afford higher premiums in the near future.
Which of the following is an example of a limited-pay life policy? ALevel Term Life BStraight Life CLife Paid-up at Age 65 DRenewable Term to Age 70
C Limited Pay Whole Life premiums are all paid by the time the insured reaches age 65. The policy endows when the insured turns 100. It is the premium paying period that is limited, not the maturity.
In Modified Life policies, what happens to the premium? AIt is higher during the first policy years. BIt varies at the beginning, but levels out by the end of the third year. CIt is level at the beginning and increases after the first few years. DIt always remains level.
C Modified Life policies charge lower premiums (similar to term rates) during the first few policy years, usually the first 3 to 5 years, and then higher level premiums for the remainder of the insured's life. The higher subsequent premiums are typically higher than straight life premiums would be for the same age and amount of coverage.
Both Universal Life and Variable Universal Life have a ADecreasing premium. BIncreasing premium. CFlexible premium. DLevel fixed premium.
C Variable universal life, like universal life itself, has a flexible premium that can be increased or decreased as the policyowner chooses, so long as there is enough value in the policy to fund the death benefit.
If an insurer issued a policy based on the application that had unanswered questions, which of the following will be TRUE? AThe policy will be interpreted as if the insured did not have an answer to the question. BThe policy will be void. CThe insurer may deny coverage later, because of the information missing on the application. DThe policy will be interpreted as if the insurer waived its right to have an answer on the application.
D
The annuity owner dies during the accumulation period of his annuity. The cash value of his annuity exceeds the premiums he paid. There is no named beneficiary. Which of the following is true? AThe premium value will be paid to the annuitant's estate. BThe state government will receive the amount of premiums paid. CThe state government will receive the cash value of the annuity. DThe cash value will be paid to the annuitant's estate.
D
The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called AGuaranteed insurability. BWaiver of cost of insurance. CPayor benefit. DWaiver of premium.
D
Under which of the following annuity options does the annuitant select the time period for the benefits, and the insurer determines how much each payment will be? AInstallments for a fixed amount BInstallment refund CCash refund DInstallments for a fixed period
D
Which of the following is NOT allowed in credit life insurance? ACreditor having a collateral assignment on the policy BCreditor requiring that a debtor has a life insurance CCreditor becoming a policy beneficiary. DCreditor requiring that a debtor buys insurance from a certain insurer
D
Which of the following is NOT true regarding the annuitant? AThe annuitant's life expectancy is taken into consideration for the annuity. BThe annuitant receives the annuity benefits. CThe annuitant must be a natural person. DThe annuitant cannot be the same person as the annuity owner.
D
Which of the following is TRUE regarding the accumulation period of an annuity? AIt is also referred to as the annuity period. BIt is a period of time during which the beneficiary receives income CIt is limited to 10 years. DIt is a period during which the payments into the annuity grow tax deferred.
D
Which of the following ultimately determines the interest rates paid to the owner of a fixed annuity? AInvestment performance of the company BInvestment performance of the insured CStatewide predetermined annual interest rate DInsurer's guaranteed minimum rate of interest
D
Who is the owner and who is the beneficiary on a Key Person Life Insurance policy? AThe employer is the owner and the key employee is the beneficiary. BThe key employee is the owner and beneficiary. CThe key employee is the owner and the employer is the beneficiary. DThe employer is the owner and beneficiary.
D
When the breadwinner that is insured by a Family Policy dies, what rights are provided to other family members that are covered under the policy? AThey can convert their coverage to permanent life insurance with evidence of insurability. BFamily members are not provided any rights. CThey can surrender the coverage for its cash value. DThey can convert their coverage to permanent life insurance without evidence of insurability.
D Family members may convert their term coverage to permanent insurance if requested within the time stated in the policy.
Which of the following best describes annually renewable term insurance? AIt is level term insurance. BIt requires proof of insurability at each renewal. CNeither the premium nor the death benefit is affected by the insured's age. DIt provides an annually increasing death benefit.
A Annually renewable term is a form of level term insurance that offers the most insurance at the lowest cost.
Naming a "trust" as the beneficiary of a life insurance policy can accomplish all of the following for the policyowner, EXCEPT AReceive death benefits on behalf of beneficiaries who are minor children. BAllow the trustee to transfer the assets of the trust to their personal account. CEstablish an account to fund the insured's children's education. DGive the policyowner flexibility in disbursing the proceeds of a death benefit.
B
When a life insurance policy is cancelled and the insured has selected the extended term nonforfeiture option, the cash value will be used to purchase term insurance that has a face amount AThe same as the original policy minus the cash value. BEqual to the original policy for as long a period of time that the cash values will purchase. CIn lesser amounts for the remaining policy term of age 100. DEqual to the cash value surrendered from the policy.
B
Which of the following best describes what the annuity period is? AThe period of time from the effective date of the contract to the date of its termination BThe period of time during which accumulated money is converted into income payments CThe period of time from the accumulation period to the annuitization period DThe period of time during which money is accumulated in an annuity
B
Who has the legal title of the property in a trust? AGuardian BTrustee CGrantor DBeneficiary
B
Which nonforfeiture option has the highest amount of insurance protection? ADecreasing Term BReduced Paid-up CExtended Term DConversion
C
Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? ADefamation BUndercutting CTwisting DSlandering
A
All of the following identify purposes of the Insurance Information and Privacy Act EXCEPT ATo limit the disclosure of information collected in connection with insurance. BTo establish fair and marketable advertisement procedures. CTo establish standards for collection, use and disclosure of information. DTo minimize intrusiveness of insurance collection practices.
B
All of the following statements concerning Accidental Death and Dismemberment coverage are correct EXCEPT AAccidental death and dismemberment insurance is considered to be limited coverage. BDeath benefits are paid only if death occurs within 24 hours of an accident. CAccidental death benefits are paid only if death results from accidental bodily injury as defined in the policy. DDismemberment benefits are paid for certain disabilities that are presumed to be total and permanent.
B
An applicant for an individual health policy failed to complete the application properly. Before being able to complete the application and pay the initial premium, she is confined to a hospital. This will not be covered by insurance because she has not met the conditions specified in the AEligibility Clause. BConsideration Clause. CInsuring Clause. DPre-existing Conditions Clause.
B
Social Security was created to protect against all of the following EXCEPT ADisability. BBad investment choices. CSickness in old age. DPremature death.
B
What process do insurance companies use to determine whether or not a particular applicant is insurable? ASolicitation BUnderwriting CAdverse Selection DMarketing
B
What type of information is NOT included in a certificate of insurance? AThe length of coverage BThe cost the company is paying for monthly premiums CThe policy benefits and exclusions DThe procedures for filing a claim
B
Which renewal option does NOT guarantee renewal and allows the insurance company to refuse renewal of a policy at any premium due date? ANoncancellable BOptionally renewable CConditionally renewable DGuaranteed renewable
B
An insurance institution or agent that discloses information in violation of the information privacy and disclosure statutes of North Carolina will be liable for AThe legal costs incurred by the client with regards to identity theft or consumer credit fraud investigation. BOnly such damages as can be proven in a court of law. CDamages sustained by the individual to whom the information relates. DThe invasive actions which such disclosure may bring regarding the client.
C
An insured submitted a notice of claim to the insurer, but never received claims forms. He later submits proof of loss, and explains the nature and extent of loss in a hand-written letter to the insurer. Which of the following would be true? AThe insurer will be fined for not providing the claims forms. BThe insured must submit proof of loss to the Department of Insurance. CThe insured was in compliance with the policy requirements regarding claims. DThe claim most likely will not be paid since the official claims form was not submitted.
C
Which of the following groups would probably be covered by blanket insurance? AA publishing company BPeople who obtain temporary insurance CA university's sports team DA large family
C
Which of the following would be a qualifying event as it relates to COBRA? AEligibility for coverage under another group plan BEligibility for Medicare CTermination of employment due to downsizing DTermination of employment for stealing
C
Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another? AFalse advertising BRebating CTwisting DSwitching
C
While a claim is pending, an insurance company may require AThe insured to be examined only once annually. BAn independent examination only once every 45 days. CAn independent examination as often as reasonably required. DThe insured to be examined only within the first 30 days.
C
A man is injured while robbing a convenience store. How does his major medical policy handle the payment of his claim? A50% of claim will be paid. BIf the man is not convicted, he will get 75% of his claim paid. CThe claim is paid in full. DClaim is denied if his policy contains the Illegal Occupation provision.
D
An agent in Ohio wants to become an agent in North Carolina. The Commissioner will waive certain examination requirements, provided that Ohio would waive these same requirements if a North Carolina agent sought licensure in Ohio. What term is used to describe this? AEquality BFair exchange CEquanimity DReciprocity
D
An employee quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on his AExperience Rating. BGroup rate. CInsurer's scheduled rate. DAttained age.
D
An insurance contract requires that both the insured and the insurer meet certain conditions in order for the contract to be enforceable. What contract characteristic does this describe? AContingent BAleatory CUnilateral DConditional
D
The reinstatement provision in life insurance policies in this state allows an owner of a lapsed policy to reestablish it within how many years? A2 B3 C4 D5
D
The relation of earnings to insurance provision allows the insurance company to limit the insured's benefits to his/her average income over the last A6 months. B12 months. C18 months. D24 months.
D
Which of the following is NOT a term for the period of time during which the annuitant or the beneficiary receives income? AAnnuitization period BPay-out period CLiquidation period DDepreciation period
D
Which of the following policies would be classified as a traditional level premium contract? AUniversal Life BVariable Universal Life CStraight Life DAdjustable Life
C Straight whole life policies have a level guaranteed face amount and a level premium for the life of the insured.
Which policy component decreases in decreasing term insurance? ACash value BDividend CPremium DFace amount
D Decreasing term policies feature a level premium and a death benefit that decreases each year over the duration of the policy term.