NC Life & Health State Exam

T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive?

$0 - T is still alive and the see primary beneficiary, while the mother is the contingent beneficiary

Chemical dependency treatment under a Group Health policy must include (over the life of the contract) a minimum benefit of

$16,000

What percent of personal life insurance premium is usually deductible for federal income tax?

0%

An Accident/Health policyholder has ___ days to return the policy and receive a full refund on premiums.

10

An agent must report to the Commissioner of Insurance any administrative action or criminal charges taken against the agent within ___ days of the conviction date.

10

Z is an agent who violated the Insurance Information and Privacy Protection Act. Z was the issued and served a statement of charges and notice of hearing by the Commissioner of Insurance. Z's hearing date must be at least ___ days after service of charges.

10

Premature IRA distributions are assessed a penalty tax of

10%

What is the minimum age for an individual to be a licensed North Carolina insurance agent?

18

In North Carolina, life insurance policies have a contestability period of

2 years

The USA Patriot Act was enacted in

2001

A terminated employee must have been covered for at least ___ month(s) under a Group Health Insurance policy immediately prior to termination in order to be eligible for continuation of coverage.

3

ABC Insurance Company fails to pay death proceeds after satisfactory proof of loss was submitted. ABC must begin paying interest on the death proceeds after ___ days of receiving proof of loss.

30

Before an insurer can increase the rates for an individual accident and health policy owners, the insurer must provide ___ days before the effective rate increase.

30

N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase?

30 Pay Life - limited pay whole life policies have level premiums that are limited to a certain period

How long must every insurance agent maintain all records, books, and documents related to each insurance transaction?

5 years

All students attending a large university could be covered by

A blanket policy

What is an element of a Variable Life policy?

A fixed, level premium

According to the Affordable Care Act (ACA), a dependent child's eligibility status is determined by

Age - up until age 26

A French insurance company conducting business in North Carolina would be known in North Carolina as a(n)

Alien Company

The Consideration clause in a life insurance contract contains what pertinent information?

Amount of premium payments and when they are due

Which type of contract liquidates an estate through recurrent payments?

Annuity

An applicant's medical information received from the Medical Information Bureau (MIB) may be furnished to the

Applicants Physician

An incomplete life insurance application submitted to an insurer will result in what actions?

Application will be returned to the writing agent - If a company discovers a mistake or incompletion, it usually returns the application to the producer

The automatic premium loan provision is designed to

Avoid a policy lapse

Variable Whole Life Insurance can be described as

Both an insurance and securities product

Many small business owners worry how their business would survive financially if the owner becomes disabled. The policy which BEST addresses this concern is

Business Overhead Expense

Which type of policy would pay an employee's salary if the employer was injured in a bicycle accident and out of work for six weeks?

Business Overhead Expense - policy covers fixed business expenses in the event of the owner becoming unable to work due to an accident or illness

Whole Life insurance policies are contractually guaranteed to provide

Cash value that will ultimately replace the death benefit Nonforfeiture benefit options Premiums that remain fixed for the life of the policy

A Whole Life Insurance Policy endows when the

Cash values equal death benefit

A person who is insured within a group contract will be given a

Certificate

What reimburses its insureds for covered medical expenses?

Commercial Insurers - function on the reimbursement approach. Policy-owners brain medical treatment form whatever source they feel is most appropriate and submit their changes to they insurer for reimbursement

XYZ insurance would like to begin conducting business in North Carolina. Before XYZ can issue or deliver a Health policy, classification of risk, and premium rates must be filed with the

Commissioner of Insurance

A Key Employee policy is taken out by Company X on its vice president. Ten years later, this employee leaves Company X and begins working for Company Y. If this individual were to die and the policy is still in force and unchanged, where would the death proceeds be directed?

Company X - the company purchases, owns, pays the premiums and is the beneficiary of the life insurance policy on the key person

What consists of an offer, acceptance, and consideration?

Contract

hat requires an ofer, acceptance, and consideration?

Contract

An employee of 20 years recently retied at age 59 1/2. This employee's group life contract can be

Converted to an individuals permanent policy at an individual rate

Guaranteed Insurability Option rider

Coverage can be added at specific events such as marriage or having a child Evidence of insurability is not required when the option is exercised Coverage can be added at specific ages

What is covered under a hospitalization expense policy?

Daily room and board Intensive care Miscellaneous expenses

How are surrender charges deducted in a life policy with a rear-ed loaded provision?

Deducted when the policy is discontinued

What is not an unfair method of competition or deceptive practice?

Demonstrating that a policy has higher benefits by using a comparison

A variable insurance policy

Does not guarantee a return on investment accounts - variable insurance products do not guarantee contract cash values, and it is the policy owner how assumes the investment risk. Variable life insurance contracts do not make any promises as to either interest rates or minimum cash values.

Under a trustee group life policy ,who would be eligible for a certificate of coverage?

Employee

K purchased a $10,000 Life Policy that will pay the face amount to her if she lives to age 65, or to her beneficiary if she dies before age 65. K purchased which of the following types of policies?

Endowment at Age 65 - An endowment policy is characterized by cash values that grow at a rapidly pace so that the policy made or endows at a specified date (before age 100)

What provision in life insurance policy states that the application is considered part of the contract?

Entire Contract Provision - found at the beginning of the policy, states that the policy document, the application (which is attached to the policy), and any attached riders constitutes the entire contract

D is the policyowner and insured for a $50,000 life insurance policy. The beneficiary is D's wife. D and his wife divorce and D remarries, transferring ownership of his policy to his new wife. If D dies without making any further changes, to whom will the policy proceeds be paid to?

Ex-wife

E and F are business partners. Each takes out a $500,000 life insurance policy on the other, naming himself as primary beneficiary. E and F eventually terminate their business, and four months later E dies. Although E was married with three children at the time of death, the primary beneficiary is still F. However, an insurable interest no longer exists. Where will the proceeds from E's life insurance policy be directed to?

F

This type of deductible provision waives the deductible for all family members after some of them have satisfied individual deductibles within the same year

Family Maximum Deductible

N, age 50, recently bought an annuity that will pay a guaranteed $2,000/month at age 70 for life. What type of annuity did N purchase?

Fixed Deferred - annuity pays out a fixed amount for life starting at a future date

What action should a producer take if the initial premium is not submitted with the application?

Forward the application to the insurer without the initial premium

How is the Life and Health Insurance Guaranty Association funded?

From member companies

If the Commissioner of Insurance is no longer able to complete the term of office, who is required to fill this vacancy?

Governor

What organization are prepaid group health plans, where members pay in advance for there services of participating physicians and hospitals that have agreements?

HMO

A medical are provider which typically delivers health services at its own local medical facility is known as

Health Maintenance Organization

What must be included with the continuation of coverage of a group Hospital Surgical, and Major Medical policy?

Hospital expenses

T, age 30, withdraws cash from a profit plan and purchases a Straight Life Annuity. What will this transaction provide?

Income that cannot be outlived by the owner

A life insurance policy would be considered a wager ing contract without

Insurable Interest

The clause identifying which losses resulting from an accident or sickness are insured by the policy is called the

Insuring clause

Quarterly premium payments increase the annual cost of insurance because

Interest to the insurer is decreased while the administrative cost are increased

Credit Life Insurance is

Issued in an amount not to exceed the amount of the loan

What combination plan is designed to protect an insured from an unpaid mortgage balance upon premature death?

Joint Life - policy covers two or more people. Using some type o permanent insurance, it pays the death benefit at the first insured's death

Pre-hospitalization authorization is considered an example of

Managed care: Pre- hospitalization authorization is the insured's approval of an insured entering a hospital. Many health policies require this as part of an effort to manage cost

In an individual retirement account (IRA), rollover contributions are

No limited by dollar amount

J purchased a Disability Income Policy that only J can terminate and on which the rates will never increase above those illustrated in the policy. Which of the following types of policies did J purchase?

Noncancelable

What is included in an annuity contract?

Nonforfeiture benefit Free-look period Beneficiary

A young, married teacher has two children and owns a Whole Life policy. If the teacher wants an increasing Death Benefits to protect against inflation, the teacher should choose what Dividend option?

Paid-Up Additional Insurance

Statement in regards to a policy loan

Past-due interest on a policy loan is added to the total debt

Payments concerning Individual Straight Life annuity..

Payments are made to an annuitant for life

What organization are considered Managed Care?

Point-of-Service plan (POS) Preferred Provider Organization (PPO) Health Maintenance Organization (HMO)

M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the

Policy Proceeds - if not repairs by the time the insured dies, the loan balance and any interest accrued are deducted from the policy proceeds at the time of the claim

In North Carolina, what must be delivered to a policy owner upon the sale of an individual life insurance policy?

Policy Summary and Buyer's Guide

What can a Guaranteed Renewable Health Insurance policy do?

Policy can have increasing premiums at the time of renewal

Characteristic about Interest Sensitive Whole Life

Premium payments can vary

What benefit does the Payor clause on a Juvenile Life policy provide?

Premiums are waived if the payor becomes disabled

What determines the full amount of Social Security retirement benefits a qualified individual is entitled to receive?

Primary Insurance Amount (PIA)

K is the insured and P is the sole beneficiary on an Accidental Death and Dismemberment (AD&D) insurance policy. Both are involved in a fatal accident where K dies before P. Under the Common Disaster provision, who the the proceeds go to?

Proceeds will be paid to P's estate

A primary beneficiary has died before the insured in a life insurance policy. A contingent beneficiary is also named in the policy. What will happen when the insured dies?

Proceeds will go to the contingent beneficiary

In North Carolina , tontine policies are

Prohibited

What is the consideration given by an insurer in the Consideration clause of a life policy?

Promise to pay a death benefit to a named beneficiary

The provision that can be used to put an insurance policy back in force after it has lapsed to to nonpayment is called

Reinstatement

When an existing life insurance policy is terminated so that a new life policy can be purchased, this transaction is referred to as

Replacement

When existing life insurance policy is terminated so that a new life insurance policy can be purchased, this transaction is referred to as

Replacement -any transaction in which a new insurance or new annuity is to be purchased and existing life insurance is to be terminated or discontinued

T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary?

Request of the change will be refused

What is an effort to influence a person to buy an insurance product from you?

Soliciting

What type of cost is Basic Hospital/Surgical policy likely to cover?

Surgically removing birthmark

What is considered to be a right given to a policy owner?

Surrendering the policy's cash value Assignments of ownership Change the beneficiary, if revocable

What are some Social Security benefits?

Survivorship Disability Retirement

What kind of life insurance product covers children under their parents policy?

Term rider

What effects the amount of monthly disability benefits payable under Social Security?

The amount too benefits available from other sources

K is an agent who takes an application for individual life insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application is approved when will the coverage be effective?

The date the agent deliver the policy, collected the initial premium, and obtained a good health statements from the insured.

J chooses a monthly premium payment mode on his Whole Life insurance policy...

The gross premium is high on a monthly payment mode as to being paid annually

The amount of coverage on a group credit life policy is limited to

The insured's total loan value

Why is an applicant's signature required on a life insurance application?

To attest that the statements on the application are accurate to the best of the applicant's knowledge

An example of an unfair claims settlement practice is

Turning down a chain without providing the basis of denial

An agent inducing an insured to lapse, forfeit, or surrender insurance through misrepresentation is committing the illegal act of

Twisting

S would like to sue dividends from her life insurance policy t purchase paid-ip additions. What would be factors to determine how much coverage can be purchased?

Type of life insurance S's attained age Dividend amount used toward purchase

How are pre-admission certification used?

Used to prevent nonessential medical cost

A(n) ___ life policy offers the owner investment in products such as money-market funds, long-term bonds and equities

Variable

S is a life insurance policy owner ad enters into written agreement to receive immediate cash in exchange for eat sale and transfer of her life insurance policy. This agreement is referred to as a(n)

Viatical Settlement

When must insurable interest be present in order for a life insurance to be valid?

When the application is made

A Health Insurance Policy applicant unintentionally fails to list a previous visit to a neurologist. If the policy is issued and the insurer later decided to contest the policy, it must do so

Within 2 years from the date of issue