North Carolina Life Insurance Exam

What is the maximum amount on an industrial life policy?

$1000

Under the L&H Guaranty Association, the maximum benefit one contract holder may receive in benefits, regardless of the number of contracts held, is

$5,000,000

How long does a North Carolina Agent have to notify the Department of insurance in the event of a change in residence address?

10 business days

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?

100% participation of members is required in noncontributory plans

A 20 year family income policy was purchased effective april 1 2001. The insured died 4 months later, on august 1, 2001. The beneficiary receives monthly income for

19 years 8 months

to maintain their insurance license, agents are required to complete how many hours of continuing education every 2 years?

24 hours

What is the continuing education requirement in Ethics for agents in this state?

3 hours every 2 years

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?

30 days

how long is a free look period for replacement policies?

30 days

To attain currently insured status under Social Security, a worker must have earned at least how many credits during the last 13 quarters?

6 credits

What is the waiting period on a Waiver of Premium rider in life insurance policies?

6 months

Any person who violates a cease and desist order of the Commissioner pertaining to consumer information privacy may be subject to which of the following penalties?

A monetary fine up to $10,000 for each violation

an individual has been diagnosed with Alzheimer's disease. He is insured under a life insurance policy with the accelerated benefits rider. Which of the following is true regarding taxation of the accelerated benefits?

A portion of the benefit up to a limit is tax free; the rest is taxable income

Stating that an insurer's policies are guaranteed by the existence of the Life and Health Guaranty Association is

An unfair trade practice

which of the following premium payment modes will incur the lowest overall payment?

Annual

A Universal Life Insurance policy is best described as a/an

Annually Renewable Term policy with a cash value account.

Your client plans to retire at age 50. He would like to purchase an annuity that would provide income from the time he retires to the age when social security and other pension funds become available. What settlement option should he consider?

Annuity certain

which of the following statements concerning buy sell agreements is true

Buy sell agreements are normally funded with a life insurance policy

Any person who willfully misstates financial or other information under oath may be charged with a

Class 1 Felony

If an annuitant dies before annuitization occurs, what will the beneficiary receive?

Either the amount paid into the plan or the cash value of the plan, whichever is the greater amount

Which of the following best describes the aleatory nature of an insurance contract?

Exchange of unequal values

What does level refer to in level term insurance?

Face amount

A policy which pays monthly income upon the death of the breadwinner for a predetermined number of years after death, plus a lump sum at death, and combines level term and whole life is known as which policy?

Family maintenance

If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select?

Fixed period

All of the following are dividend options EXCEPT

Fixed period installments

Mortality-interest+expense=

Gross Premium

Two attorneys at law and operate their practice as a partnership. They want to start a program through their practice that will provide retirement benefits for themselves and three employees. They would likely choose

HR-10 (Keogh Plan)

If an insurer accepts premium payments by credit card, who is responsible for paying the fees charged by a credit card company?

Insurer accepting payment

Which of the following ultimately determines the interest rates paid to the owner of a fixed annuity?

Insurer's guaranteed minimum rate of interest

What is the purpose of the Seven-Pay Test?

It determines if the insurance policy is an MEC

What is the benefit of choosing extended term as a nonforfeiture option?

It has the highest amount of insurance protection.

In modified life policies, what happens to the premium?

It is level at the beginning but increases after the first few years

When a reduced paid up nonforfeiture option is chosen, what happens to the face amount of the policy?

It is reduced to the amount of what the cash value would buy as a single premium

The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called

Joint and survivor

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 benefits should one of them die?

Joint life

Variable life insurance is based on what kind of premium?

Level fixed

Which two terms are associated directly with the premium

Level or flexible

Which life insurance settlement option guarantees payments for the lifetime of the recipient but also specifies a guaranteed period during which if the original recipient dies the payments will continue to a designated beneficiary?

Life income with period certain

all other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy?

Lower

Which universal life option has a gradually increasing cash value and a level death benefit?

Option A

A rider attached to a life insurance policy that provides coverage on the insured's family members is called the

Other-insured rider

An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called

Paid up additions

which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early?

Paid up option

in term policies, what happens to the premium throughout the term of the policy?

Premium always remains level

All of the following are characteristics of group life insurance except

Premiums are determined by the age, sex and occupation of each individual certificate holder.

A private investigator has been hired by an insurance company to obtain a character report on an insurance applicant. The investigator contacts the applicant and requests an interview stating that he is conducting a research for a publication. The applicant permits the interview and unknowingly gives information that will be used in the underwriting decision. Which of the following does this scenario describe?

Pretext interview

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

Representations

Which two terms are associated directly with the way an annuity is funded?

Single payment or periodic payments

In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to

The contingent beneficiary

The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?

The death benefit can be increased by providing evidence of insurability

The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change?

The death benefit can be increased by providing evidence of insurability.

All of the following are true regarding a decreasing term policy EXCEPT

The payable premium amount steadily declines throughout the duration of the contract

Which is true about a spouse term rider?

The rider is usually level term insurance.

Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated?

Those who have been insured under the plan for at least 5 years

What is the purpose of establishing the target premium for a universal life policy?

To keep the policy in force

which of the following policies would the IRS required corridor gap between the cash value and the death benefit?

Universal life- option A

Which of the following terms is used to describe a person, other than a viator, that enters into or effectuates a viatical settlement contract?

Viatical settlement provider

Which of the following named beneficiaries would not be able to receive the death benefit directly from the insurer in the event of the insureds' death?

a minor son of the insured

In cases where the Commissioner shall find upon substantial evidence that any complaint against a company is justified, in addition to any penalties, the company shall..

also be liable for the expenses of the investigation

The death protection component of universal life insurance is always

annually renewable

all other factors being equal, the least expensive first year premium payment is found in

annually renewable term

in an annuity, the accumulated money is converted into a stream of income during which time period?

annuitization period

In order to get a nonresident liscense in north carolina an agent must

apply and pay a fee to a nonresident state that reciprocates

if a licensee is convicted of a criminal violation, the licensee's insurance license is

automatically suspended

which of the following features of the indexed whole life policy is not fixed?

cash value growth

Persons who either assist or provide false or misleading information regarding a claim are guilty of a

class h felony

An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?

consideration

What happens when a policy is surrendered for its cash value?

coverage ends and the policy cannot be reinstated

The type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is called

credit life

Which of the following are not fundable by annuities?

death benefits

An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice?

illegal

a return of premium term life policy is written as what type of term coverage?

increasing

What type of insurance wold be used for a return of premium rider?

increasing term

in modified life policies what happens to the premium

it is level at the beginning and increases after the first few years

Which of the following is true regarding the annuity period?

it may last for the lifetime of the annuitant

if a life insurance policy increases significantly in face amount (death benefit) when the insured reaches a specified age, what type of policy is this?

jumping juvenile policy

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

payor benefit

Which nonforfeiture option provides coverage for the longest period of time?

reduced paid up

A man decided to purchase $100,000 annually renewable term life policy to provide additional protection until his children finished college. He discovered that this policy

required a premium increase each renewal

in case of a loss, the indemnity provision in insurance policies

restores an insured person to the same financial state as before the loss

which of the following policies would be classified as a traditional level premium contract?

straight life

Which of the following is called a "second to die" policy?

survivorship life

Children's riders attached to whole life policies are usually issued as what type of insurance?

term

Which of the following is not true regarding the annuitant

the annuitant cannot be the same person as the annuity owner

which of the following can surrender a deferred annuity contract

the annuity owner

if a licensee fails to notify the commissioner of insurer insolvency if known or suspected, and to provide a statement of relevant facts, which of the following is True?

the commissioner may suspend or revoke the person's license

Which of the following is incorrect concerning a noncontributory group plan?

the employees receive individual policies

All of the following statements are true regarding installments for a fixed amount EXCEPT

the payments will stop when the annuitant dies

The policyowner of a Universal life policy may skip paying the premium and the policy will not lapse as long as

the policy contains sufficient cash value to cover the cost of insurance

The owner of a life insurance policy wishes to name two beneficiaries for the policy proceeds. What will the soliciting insurance producer say?

the policyowner can specify the way proceeds are split in the policy

All of the following are true regarding the guaranteed insurability rider EXCEPT

the rider is available to all insureds with no additional premium

Under an extended term nonforfeiture option, the policy cash value is converted to

the same face amount as in the whole life policy

A deferred annuity is surrendered prior to annuitization. Which of the following best describes the non forfeiture value of the annuity?

the surrender value should be equal to 100% of the premium paid minus any prior withdrawals and surrender charges

All of the following identify purposes of the insurance information and privacy act except

to establish fair and marketable advertisement procedures

Which of the following types of policies allows the policyowner to skip premium payments, provided that there is enough cash value in the policy to cover the premium amount?

universal life

which of the following policies would have an irs required corridor or gap between the cash value and the death benefit

universal life - option a

An insured receives a monthly summary for his life insurance policy. He notices that the cash value of the policy is significantly lower this month than it was last month. What type of policy does the insured have?

variable

which of the following products requires a securities license

variable annuity

which of the following statements would best describe the difference between viatical settlements and accelerated death benefits?

viaticals are funded by a third party, and accelerated death benefits are provided by the insurer that issued the original policy.

all of the following are true regarding the exceptions to the notice requirements except

when an agent discloses a policyholder's medical information to an insurer