Life Insurance Exam NC
Failure to notify the commissioner of changed to a licensee's address within 10 business days may result in an administrative fee of
$50
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
Insurance companies are required to provide proof of loss forms to the claimant within how many days after receipt of notice of loss?
15
In North Carolina, suicide is covered after the life insurance policy has been in force for a minimum of how many years?
2 years
Within how many months must a person be expected to die from a sickness in order to be classified as terminally ill?
24
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 must a complaint record be maintained?
5 years
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
According to the Entire Contract provision, a policy must contain
A copy of the original application for insurance.
For variable products, underlying assets must be kept in
A separate account
Which of the following would be required in order to obtain a duplicate license due to a loss of the original one?
A written request to the Commissioner and payment of fees
A person licensed to solicit application or to negotiate a policy of insurance is called
An agent
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
Stating that an insurers policies are guaranteed by the existence of the life and health Guaranty Association is
An unfair trade practice.
Which of the following is TRUE about class designation?
Beneficiaries are not identified by name.
How are state insurance Guaranty Associations funded?
By their members - authorized insurers
Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policyowner?
Cash surrender
Which of the following will NOT be an appropriate use of a deferred annuity?
Creating an estate
An insurance institution or agent that disclosed information in violation of the information privacy and disclosure statues of North Carolina will be liable for
Damages sustained by the individual to whom the information relates.
Which of the following is NOT fundable by annuities?
Death Benefits
Which component increases in the increase term insurance?
Death benefit
Which of the following will NOT be considered unfair discrimination by insurers?
Discriminating in benefits and coverages based on the insured's habits and lifestyle
Which of the following terms is used to name the non taxed return of unused premiums?
Dividends
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?
Family Income Policy
Which of the following types of insurance covers the whole family in a single contract?
Family Policy
Under which installments option does the annuitant select the amount of each payment, and the insurer determines how long they will pay benefits?
Fixed amount
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
Under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid
For 20 years or until death, whichever occurs first.
An insurance company is domiciled in Montana and transacts insurance in Wyoming. Which term best describes the insurer's classification in Wyoming?
Foreign
At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called
Guaranteed insurability.
✅ Which of the following is an eligibility requirement for all social security disability income benefits
Have attained fully insured status
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?
Installments for a fixed period
What are the two components of a universal policy?
Insurance and cash account
Which of the following ultimately determines the interest rates paid to the owner of a fixed annuity?
Insurer's guaranteed minimum rate of interest
All of the following are nonforfeiture option except
Interest only
When a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income?
Interest only
In which of the following situations is it legal to limit coverage based on marital status?
It is never legal to limit covered based on marital status
Which of the following statements is TRUE concerning the Accidental Death Rider?
It will pay double or triple the face amount.
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 benefit should one of them die?
Joint life
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
Joint life annuity
Concerning Juvenile Life insurance, which of the following statements is INCORRECT?
Juvenile Life is classified as any life insurance purchased by a minor.
Which of the following is an IRS qualified retirement program for the self-employed?
Keogh plan
Variable Whole Life insurance is based on what type of premium?
Level fixed
Your clients 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
What is the other term for the cash payment settlement option?
Lump sum
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?
Modified life
A variable policy's death benefit and cash value is based on a distinct pool of investments. These are held in separate accounts that act like
Mutual Funds
During replacement of life insurance, a replacing insurer must do which of the following?
Obtain a list of all life insurance policies that will be replaced
Traditional IRA contributions are tax deductible based on which of the following?
Owners income
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
Which of the following is NOT true about a joint and survivor annuity benefit option?
Payments stop after the first death among the annuitants.
Which of the following is not true about a joint and survivor annuity benefit option?
Payments stop after the first death among the annuitants.
Which of the following allows the insurer to relieve a minor insured from premium payments in the minors parents who have died or become disabled
Payor Benefit
A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability?
Proof of insurability is not required.
Which rule would apply if an agent knows an applicant is going to case in an old policy and use the funds to purchase new insurance?
Replacement rule
If an agent wishes to sell variable life policies, what license must the agent obtain?
Securities
Which of the following policies would be classified as a traditional level premium contract?
Straight Life
How is Social Security funded?
Taxes imposed on a workers earned income
A viatical settlement is arranged between a viatical company and a/an
Terminally ill insured
If an insurer becomes insolvent, which of the following would pay benefits to policyholders?
The Guaranty Association
The initial amount of credit life insurance may NOT exceed
The amount to be repaid under the contract
A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then
The benefit is received tax free
Which of the following is true regarding the insurance amount in the credit life policy?
The creditor can only insure the debtor for the amount owed.
Which statement is NOT true regarding a Straight Life policy?
The death benefit can be increased by providing evidence of insurability. Its premium steadily decreases over time, in response to its growing cash value.
The sole beneficiary of a life insurance policy dies before the insured. If the policy owner fails to change the beneficiary before the insured's death, the proceeds of the policy will go to
The insured's estate.
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?
The insured's premiums will be waived until she is 21.
Which of the following best describes what the annuity period is?
The period of time during which accumulated money is converted into income payments
The commissioner is empowered to examine the record of any person transacting insurance in the state as a agency, an agent or broker of record. If the commissioner does examine a person the expense of that examination will be paid by
The person examined
All of the following are true of key person insurance except?
The plan is funded by permanent insurance only.
All of the following are true about variable products EXCEPT
The premiums are invested in the insurer's general account.
How must a replacing producer respond to an applicant wishing to replace existing life insurance?
The producer must provide the applicant with a Notice Regarding Replacement.
How are contributions to a tax-sheltered annuity treated with regards to taxation?
They are not included as income for the employee, but are taxable upon distribution.
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?
They can convert their coverage to permanent life insurance without evidence of insurability.
Which of the following is NOT a characteristic of variable annuities?
They offer guaranteed stock performance.
What is the purpose of establishing the target premium for a universal life policy?
To keep the policy in force
What is the purpose of fixed-period settlement option?
To provide a guaranteed income for a certain amount of time
The paid-up addition option uses the dividend
To purchase a smaller amount of the same type of insurance as the original policy.
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 type of life insurance policy allows the policy owner to pay more or less than the planned premium?
Universal life
Which of the following statements would best describe the different between vatical settlements and accelerated death benefits?
Viaticals are funded by a third party; accelerated death benefits are provided by the insurer that issued the original policy
An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, no conditional receipt is issued. When will coverage begin?
When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health
