Test questions

What is the minimum age that a person may make contracts of insurance with a life insurance company in this state?

15

A viatical settlement is a transaction outside the life insurance company where the owner sells the life insurance policy for which of the following?

A percentage of the face amount policy

Which of the following is TRUE about credit life insurance?

Creditor is the Policyowner

An insurance institution or agent that discloses information in violation of the information privacy and disclosure statutes of North Carolina will be liable for

Damages sustained by the individual to whom the information relates

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT

Dividends from a mutual insurer.

When an insurance agency published an advertising brochure, it emphasized the company's financial stability and sound business practices. In reality, it's financial health is terrible, and the company will soon have to file for bankruptcy. What type of advertisement is this?

False financial statement

J is receiving fixed amount benefit payments from his late wife's insurance policy. He was told that if he dies before all of the benefits are paid, the remaining amount will go to the contingent beneficiary. Which settlement option did J choose?

Fixed amount

Which of the following policies is characterized by a provision where the premiums are lower in the early years of the policy and increase over time to a point where they become level for the remainder of the policy

Graded premium whole life

A jumping juvenile policy is unique in that the death benefit automatically

Increases at a predetermined age

An agent represents the

Insurer

Which of the following is TRUE?

It is illegal for an insurer to advertise that policies are covered by the Life and Health Guaranty Association

All of the following statements are true regarding credit life insurance EXCEPT

It may be required if the loan amount exceeds $50,000.

If a retirement plan or annuity is "qualified", this means

It satisfies IRS requirements for favorable tax treatment

Which of the following is NOT true regarding the accumulation period of an annuity?

It would not occur in a deferred annuity.

The regulation of the insurance industry primarily rests with

The state

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

This rider is available to all insureds with no additional premium.

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

Which of the following Life Insurance policies would be considered interest sensitive?

Universal life

Because of an injury, an insured has been unable to work for 7 months. He wasn't able to pay his life insurance policy premium, yet the policy remained in force. The policy includes

Waiver of premium rider

An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision?

Common disaster

An individual has a $200,000 convertible term life insurance policy. If he chooses, he can

Convert to a whole life policy for the same face amount without proof of insurability.

All advertisements, regardless of their source of creation, are the responsibility of the

Insurer

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

During partial withdrawal from a universal life policy, which portion will be taxed?

Interest

Which of the following is not true regarding the Life with Guaranteed Minimum annuity settlement option?

It does not guarantee that the entire principal amount will be paid out.

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

It has the highest amount of insurance protection

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?

Limited pay whole life

In North Carolina, for licensing purposes, an applicant is considered a resident if he or she

Lives in North Carolina or any county outside this state this state that borders North Carolina

Contributions to Roth IRAs are

Not tax deductible

Which of the following is NOT a component of an insurance policy premium?

Number of beneficiaries

What is the official name for the social security program?

Old Age Survivors Disability Insurance (OASDI)

What does the application of contract of adhesion mean?

Since the insured does not participate in preparing the contract, any ambiguities would be resolved in favor of the insured

FICA tax applies to which of the following?

Social Security

In a life insurance application, all of the following signatures will be required EXCEPT

The home office underwriter

With Adjustable Life, the owner can change all of the following EXCEPT

The insured

An employee is insured under her employers group life plan. If she terminates her group coverage, which of the following is INCORRECT

The insured may choose to convert to term or permanent individual coverage

Which of the following is TRUE regarding an indeterminate premium whole life policy?

The premium can be raised up to a guaranteed maximum rate.

In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT

The type of investment

Under SIMPLE plans, participating employees may defer up to a specified amount each year, and the employer then makes a matching contribution up to an amount equal to what percent of the employee's annual wages?

3

To attain fully insured status under Social Security, an individual must have earned how many credits?

40

All of the following are true of the Survivorship Life policy EXCEPT

The premium is based on the age of each insured

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

A spouse of a deceased agent has held a temporary insurance license for 90 days. For how many more days will the license be valid?

90

When a viator sells a life insurance policy,

Absolute assignment is given to the viatical settlement company

An insurer who transacts insurance in this state but while articles of incorporation are registered in Canada is considered what type of insurer?

Alien

Your customer doesn't mind paying a higher premium as long as he gets a life insurance product that would allow for a faster growth of the cash value. What kind of policy would you recommend?

An endowment policy

The policies and practices of the insurance institution or agent with respect to disclosing no public personal information to non affiliated third parties must be provided to a policyholder no less frequently than

Annually

Which of the following indicates the person upon whose life the annuity income amount is determined?

Annuitant

Which of the following is INCORRECT regarding a $100,000 20-year level term policy?

At the end of 20 years, the policy's cash value will equal $100,000

All of the following are requirements of eligibility for social security disability income benefits EXCEPT

Being age 65

Which of the following would be TRUE of both the fixed-period and fixed-amount settlement options?

Both guarantee that the principal and interest will be fully paid out.

Which of the following statements concerning buy-sell agreements is true?

Buy-sell agreements are normally funded with a life insurance policy.

Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner?

Cash surrender

An insured and his spouse recently had a child. Which of the following riders would allow the couple to insure the child for a limited period of time at a specified amount

Children's term rider

Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as

Coercion

The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?

Interest only option

During replacement of life insurance, a replacing insurer must do which of the following?

Obtain aids of all life insurance policies that will be replaced

According to the Common Disaster clause, if the insured and primary beneficiary are killed in the same accident and it cannot be determined who died first, which of the following will be assumed?

The primary beneficiary died before the insured.

A married couple purchase a life insurance policy on their newborn baby. They are concerned about what would happen to the policy if either one of them were unable to continue making the premium payments due to death or disability. Which policy rider should their agent recommend?

Payor benefit

Which of the following riders would NOT cause the Death Benefit to increase?

Payor benefit rider

Which of the following is correct concerning the taxation of premiums in a key-person life insurance policy?

Premiums are NOT tax deductible as a business expense.

All of the following are true of annually renewable term insurance EXCEPT

Proof of insurability must be provided at each renewal

An insured committed suicide one year after his life insurance policy was issued. The insurer will

Refund the premiums paid

Which rule would apply if am agent knows an applicant is going to cash in an old policy and use funds to purchase new insurance?

Replacement rule