Life Insurance

Which of the following must be adequately disclosed by the insurance agent at the time an application is made, prior to accepting the applicant's initial premium, for a prearrangement insurance policy?

The provider of the funeral or cemetery merchandise or services

Replacement

When new life insurance is purchased and existing life insurance is terminated.

Endowment

a whole life policy that will pay the face amount under one of two situations: 1.) if the insured is alive at the contract maturity date, or 2.) if the insured dies during the policy period. The policy cash value must equal the face amount by the end of the policy period.

Defamation

to make derogatory, false or malicious statement about insurers financial condition in order to hurt it

Contract of Adhesion

"Take it or leave it"

Conditional Contract

"if-then", if loss, then insurer pays

A licensee must notify the Commissioner of Change of E-mail within:

10 days

A licensee must notify the Commissioner of criminal conviction other than a traffic violation within:

10 days

If an insurer terminates an appointment with a producer, how much time does it have to notify the producer?

15 days

A notice of information practices must contain, among other items:

A description of the rights and the manner in which such rights may be exercised

When does a policy's coverage start?

After the premium is paid

In NC, a "person" can be...

An individual, partnership, or a corporation

Third Party Ownership

Owner of the policy different from the insured, whose life is insured, whose life is insured, example`include key person, juvenile policies, assignment

A person found guilty of selling insurance without a license is subject to a:

Class 1 misdemeanor

A person who refuses to exhibit their books to the Commissioner is guilty of a:

Class 1 misdemeanor

Any insurance policy which insures the life of a person for the sole use and benefit of that person's spouse, or children, or both, will not be subject to the claims of creditors of the insured:

During their lifetime

Which nonforfeiture option is the "automatic" option?

Extended term option

NAIC

National Association of Insurance Commissioners

What is the act of conferring directly with a purchaser of a particular contract of insurance concerning any of the substantive benefits, terms, or conditions of the contract?

Negotiate

Life insurance dividends are:

Never guaranteed

What must a broker licensee do to keep their license in force?

Pay an annual renewal fee

If the policy is rated, the agent should explain what at delivery?

That the policy is rated, and collect the added premium

A broker represents:

The insured

Who does a soliciting agent represent?

The insurer

Backdating

The insurer allows an applicant to backdate up to 6-months, it lowers the premium by using younger ages, they must pay back premiums

What happens if an applicant with a conditional receipt dies, and the policy come back rated?

The insurer will not pay the death benefit

A premium receipt is given:

When the premium is paid with the application.

Stock insurers

has stockholder that receive dividends and elect the board of directors, Called nonparticipating

A policy summary and buyers guide

Must be delivered to the policy owner by agent.

Contributory plans:

Must have 75% participation

Does the insurer have to sign the application?

No

The requirement for providing a Policy Summary will be satisfied by delivery of a written statement in the case of policies whose Equivalent Level Death Benefit does not exceed:

$5,000

A life insurance policy is not payable for suicide that occurs within:

2 years

In North Carolina, a life insurance policy has an incontestability period of:

2 years

In North Carolina, a life insurance policy has a grace period of:

31 days

A life insurer doing business in North Carolina cannot declare a policy forfeited unless the payee is mailed a notice no more than how many days in advance?

45 days prior to the due date

What is the maximum amount of time a lapsed life insurance policy can be reinstated?

5 years

What is the minimum penalty for willfully violating a cease and desist order of the Commissioner?

$1,000

Brokers must put forth a bond of at least how much?

$15,000

What is the maximum amount that the North Carolina Life and Health Guaranty Association will pay the beneficiaries of a deceased individual for annuities from an insolvent insurer?

$300,000

Any agent who signs a blank contract or policy of insurance will be fined a maximum of:

$5,000

What is the requirement for a licensed resident agent countersigning an application on behalf of a nonresident agent?

A licensed resident agent never has to countersign on behalf of a nonresident agent

An unlicensed person who solicits or negotiates insurance is considered:

An agent

What are the Amin two types of premium receipts?

Binding and Conditional

The statements made in an insurance application are held to a principle of:

Representation

In North Carolina, what condition cannot be used to raise rates?

Sickle cell trait

If the interest of insureds or the public are endangered, the Commissioner may revoke a:

Temporary License

How soon must an insurer file an appointment notice with the Commissioner after appointing an agent?

Within 15 days after the first insurance application is submitted

False advertising

it is knowingly making an untrue, misleading, or deceptive insurance advertisement

Who must sign the notice regarding replacement?

the applicant and the producer

Who pays age appointment fees?

the insurer

Dividends

A return of overcharged premium, which is not taxable

No agent may place a policy of insurance with any insurer unless the agent has a current appointment as agent for the insurer, or:

A temporary license

A one-sided agreement in which someone promises to do something in return for a payment is what type of contract?

A unilateral contract

In North Carolina, what is the rule on agents retaining any portion of funds received for the payment of losses?

Agents can never retain a portion of funds received for the payment of losses

In connection with a replacement transaction, the producer will leave with the applicant at the time an application for a new policy or contract is completed the original or a copy of which of the following?

All sales material

With a binding receipt:

Coverage is guaranteed during the period of underwriting until the applicant is rejected or accepted.

Credit Life Insurance

Insurance that is issued on the life of the person who has the debt (debtor) and the creditor owns and is the beneficiary of the policy.

What is the Statement of Good Health?

It is a signed statement that the applicant is still in good health. Must be signed along with the premium at the time of delivery.

Coercion

It is called boycotting and intimidation, in insurance when threat or force is used to restrict trade is used to restrict trade or create a monopoly

Misrepresentation

It is misrepresentation to make false or misleading statements about a policy's term, or benefits, or any advantages of the policy

Industrial Life Insurance

It is sold by debit agents who collect premiums from policyholders on a weekly basis Synonymous with home service insurance

Twisting

It is when a producer makes a misrepresentation or incomplete comparison with a policy from another insurance company in order to cause an insured to lapse a policy.

How is the North Carolina Life and Health Insurance Guaranty Association to be used in advertisements?

It must never be mentioned

Universal Life

Life insurance that allows the policy owner to buy term and invest the difference. Synonymous with unbundled life insurance and flexible premium adjustable life.

Who is a person authorized by the Commissioner to solicit contracts for credit life, accident and health, credit, travel accident and baggage, motor club, and dental services coverages?

Limited Representative

Who provides funding for the North Carolina Life and Health Insurance Guaranty Association?

Member companies

Decreasing Term Rider

Method to add coverage to a Whole Life Policy

Adjustable Life

Mix of whole and term insurance. The policy owner can modify the premium, face amount, coverage period, and premium-paying period

What happens if an insured commits suicide during the first 2 years of a life insurance policy?

No payment will be made and premiums will be returned

Mutual insurers

No stockholders, policy owner's receive dividends and vote on board of directors, called participating

Can an agent make any changes to the application, even if it is minor?

No, changes must be in the presence of the applicant, and they must be initialed

Which form must be provided to applicants intending to replace a life insurance policy?

Notice regarding replacement

What are the four elements of a contract?

Offer & Acceptance Consideration Legal Purpose Competent Parties

Unilateral Contract

Only one party has legally enforceable claim

Whose signature needs to be on an application?

Proposed insured, policy owner (if not the insured), agent

The purpose of the North Carolina Life and Health Insurance Guaranty Association is to:

Protect against failure in the performance of contractual obligations

In North Carolina, what is attempting to sell insurance or asking or urging a person to apply for a particular kind of insurance from a particular company?

Solicit

Fraternals

Special type insurer, nonprofit, lodge system that does ritualistic work, charitable and benevolent activities, exempt from premium and most other taxes

Consideration

The applicant gives the premium and application as " for the insurer promising to pay any benefits

What must the applicant do if there are any mistakes on the application?

The applicant must initial any changes the agent makes if there is a mistake

The premium receipt determines:

When and the conditions on when coverage starts

Embezzlement

When insurance agents, brokers, or administrators misappropriate funds entrusted to them by clients or insurers

In North Carolina, industrial life insurance policies have face amounts of no more than:

$1,000

After proof of death, a life insurance policy must be paid within how many days to avoid paying interest?

30 days

In North Carolina, what percentage of an agent's collected premiums in a 12 month would be deemed controlled business?

50%

If the Commissioner is of the opinion that there is evidence to charge any person with a criminal violation, the Commissioner may:

Arrest with warrant

A person who intentionally misstates financial information is guilty of a:

Class I felony

What unfair trade practice manipulates through the prospect of something desirable?

Coercion

An agent must provide to all applicants and policyholders federal privacy disclosure notices:

In written or electronic form

Alien Company

Incorporated in another company

Domestic Company

Incorporated in the state doing business

A trustee of a pension plan has what kind of interest in a person covered by the plan?

Insurable Interest

Which act limits the disclosure of information collected in connection with insurance transactions and enables insurance applicants and policyholders to obtain the reasons for any adverse underwriting decision?

Insurance Information and Privacy Protection Act

What happens if an applicant with a conditional receipt dies and the policy comes back approved?

The insurer will pay the benefit

What happens if an applicant with a binding receipts dies, and the policy come back rated?

The insurer will pay the death benefit

What does the insurer do if the application is incomplete?

The insurer will send the application back to the agent to be correct and initialed by the applicant

Which of the following will exempt a licensee from needing to complete the continuing education courses requirement?

The licensee is over the age of 65

Variable Universal Life

Universal life insurance with a separate account. the variable portion of premium is invested in the insurer's separate account