NC Life Insurance Exam

Per Stirpes

"By the bloodline", that is, if a beneficiary dies prior to the insured, that beneficiary's heirs will split his share equally.

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

$5,000,000

When an agent changes their email address they must notify the department of insurance within

10 Days

The required privacy disclosure notice must be provided by the insurer to current policy holders at least once every:

12 Months

The required privacy disclosure notice must be provided by insurer to current policyholders at least once in any period of

12 months

Insurance companies are required to provide proof of loss forms to the claimant within how many days after receipt of loss or notice?

15 days

How long is an insurance company allowed to defer policy loan requests?

6 months

annuity

A contract that provides income for a specified period of years, or for life.

Waiver of Premium

A disability insurance policy provision that an employee does not have to pay any premiums while disabled.

Twisting

A form of misrepresentation in which an agent persuades an insured/owner to cancel, lapse, or switch policies, even when it's to the insured's disadvantage.

Viatical Settlement Provider

A person, other than a Viator that makes a viatical settlement contract effective.

Dividends

A return of excess premiums, therefore not taxable when paid to the policy holder.

Representations

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

Conversion Privilege

Allows the policy owner, before an original insurance policy expires, to elect to have a new policy issued that will continue the insurance coverage. Conversion may be effected at attained age (premiums based on the age attained at time of conversion) or at original age (premiums based on age at time of original issue).

Family Protection Policy

Also known as a Family Plan Policy, this form of whole life insurance provides coverage on each family member with the breadwinner's amount of coverage being four times the spouse's and five times the children's coverage amounts. The children's coverage is usually written as term coverage expiring at age 18 with the ability to convert to long-term coverage without proof of insurability.

Viatical Settlement

An arrangement that allows someone living with a life threatening condition to sell their existing life insurance policy and use the proceeds when and where they are most needed, before death.

restricted license

An individual who sells insurance solely as a foreign military sales agent works with a?

Certificate Authority

An insurer must obtain this in order to transact insurance wihtin a given state.

Fraternal Benefit Societies

An organization formed to provide insurance benefits for members of an affiliated lodge, religious organization, or fraternal organization with a representative form of government.

Conservation

Any attempt by the existing insurer, or its producers or by a broker to dissuade a current policy holder from the replacement of existing life insurance or annuity.

Rebating

Any inducement offered in the sale of insurance products that is not specified in the policy.

Reinstatement Provision

Applies to the timeframe that an insurer hasn't paid premium but wants the policy back. - You have 3-5 years to reinstate - proof of insurability and back premiums plus interest would have to be paid - If you havent heard back in 45 days, then the policy has been reinstated - policy premium is based on original age

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

Automatically suspended

Excess interest

Difference between the rates of interest the company guarantees to pay on proceeds left under settlement options and the interest actually paid on such funds by the company.

One-Year Term Option

Dividend option in which the policyowner uses the dividend as a single premium to purchase one-year term protection.

Which policy is generally used to accumulate funds for education?

Endowment

The monthly income period for a family income policy:

Ends after a stipulated time BEGINNING with the date of the policy's PURCHASE.

Level Equals

Face Amount

Principle Sum

Face amount for accidental death

The 2 main categories of policy loan interest rates are:

Fixed or variable

When an insurer requires a written proof of loss after the notice of such loss has been given by the insured or beneficiary, the company must:

Furnish a blank form to be used for that purpose.

Universal Life Option B

Increasing death benefit (insurance amount plus cash account) annually.

Accumulation at Interest

Insurance company keeps the dividend in an account where it accumulates interest

Misrepresentation Example

Issuing sales material with exaggerated statements about policy benefits.

Which 2 terms are associated directly with the premium?

Level or flexible

Graded Premium Whole Life

Like modified life, premiums start out low and level off in the future. Premium starts at 50% or lower than the premium of a straight-life policy. Lower premiums for the designated timeframe (typically 5-10 years); payments rise annually after that until leveling off. (Think Low Grades)

Capital Sum

Loss of limb or sight

False Financial Statements

Making false statements regarding the solvency of an insurer with the intent to deceive. Used to hide financial problems from the public and government officials.

Irrevocable Designation

May not be changed without the written consent of the beneficiary.

per capita

Per person, per head (by the head)

Premium payment schedule for a whole life policy:

Premiums are payable THROUGHOUT the insured's lifetime, and coverage continues until the insured's death.

Current assumption about whole life insurance

Premiums which may vary according to interest rate fluctuations.

Pure Life Annuity

Provides periodic benefit payments as long as the annuitant lives, with the payments ceasing at death.

Endowment policy

Provides permanent, level death protection if the insured should die prematurely AND they accumulate cash values. Often used as a way of saving over the long term. Matures before 100.

Family Income Policy

Same as Whole Life but w/ Decreasing Term rider; upon death, pays monthly income for REMAINING term AFTER which pays a full death benefit.

False

Term insurance has a higher premium per $1,000 when compared to whole life insurance.

A viatical settlement is arranged between a viatical company and:

Terminally Ill Insured

What happens If a licensee fails to notify the Commissioner of insurer insolvency, if known or suspected, and to provide a statement of relevant facts?

The Commissioner may suspend or revoke the person's license.

Who pays the annual agent appointment fee?

The Insurer

The regulation of the insurance industry primarily rests with:

The State

Commissioner of Insurance

The chief officer of the insurance department

Universal Life- Option A

The death benefit remains level while the cash value gradually increases, thereby lowering the [pure insurance] with the insurer in the later years. (Level Death Benefit Option)- IRS

Insurance Commissioner

The insurer must notify _____ when a person has violated either the fraudulent claims or embezzlement provisions.

Reduction of premium

The insurer uses the dividend to reduce the next year's premium

Insurance agents licensed in NC must complete continuing education every 2 years by:

The last day of the licensee's birth month

Insurance Code

The laws that govern the business of insurance in a given state.

Viator

The owner of a life insurance policy (or a certificate holder under a group policy) who enters or seeks to enter into a viatical settlement contract.

Primary Beneficiary

The person who is named as first to receive benefits from a policy.

Endorsement Method

The policy owner is required to send the request for change with the contract to the home office of the insurer.

Revocable designation

The policy owner without knowledge or consent may change this at any time.

interdeterminate Premium Whole Life Policy

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

A renewable term policy guarantees:

The right to renew regardless of health up to a sated date or age.

When a licensee is accused of any act, omission, or misconduct that would subject the licensee to a license suspension or revocation , with the approval of the commissioner, the license may be surrendered for a period of:

Time to be set by commissioner

What is the license suspension period for the 2nd offense of violating state rules regarding records and reports?

Up to 1 year

The difference between viatical settlements and accelerated death benefits is:

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

Payor (aka Waiver of Payor's Premium) rider

Waives premium on Life policy for minor child until age 21 in event premium payor dies or becomes disabled.

Common Disaster Clause

When insured and primary die at the same time, it is assumed that the primary died first

Extended Term

Which nonforfeiture option has the highest amount of insurance protection?

Replacement rule

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

Attourney general

Whom the Commissioner reports any violations of insurance laws and regulations to.

Contigent Beneficiary

a beneficiary who has second claim to the policy proceeds after the death of the insured (usually after death of the primary beneficiary)

Double Indemnity

a benefit under which the company pays twice the face value of the policy if the insured's death results from an accident

current assumption whole life insurance

a nonparticipating whole life policy in which the cash values are based on the insurer's current mortality, investment, and expense experience (another word for interest sensitive whole life)

Decreasing term policy

a term insurance policy that maintains a level premium throughout all periods of coverage while the amount of protection decreases (face amount). Mainly used when the amount of needed protection Is time sensitive or decreases over time.

Universal Life Insurance

a whole life policy that combines term insurance and investment elements. The death protection component is renewable annually.

Modified Life Policy

a whole-life policy in which premiums are lower for the first three to five years and higher thereafter

Absolute Assignment

all ownership rights in the policy are transferred to a new owner (permanent)

increasing term policy

level premium but the face amount (death benefit) increases every year of the policy term. Good for handling inflation and increased cost of living.

whole life insurance

lifetime protection that pays a benefit on the death of the insured and also accumulates a cash value.

Term Insurance is also known as

pure life insurance and provides pure death protection.

Incontestable Clause

states that the insurer cannot contest the policy after it has been in force two years during the insured's lifetime

Defamation

the action of damaging the good reputation of someone; slander or libel- can be oral or written.

A universal life contract expires when:

the cash value account becomes too small to pay the cost of insurance

Interest Only Option

the insurance company retains the policy proceeds and pays interest on the proceeds to the recipient at regular intervals

Paid-Up Insurance

the insurer first accumulates the dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early

Uniform Simultaneous Death Law

the law will assume that the primary beneficiary died first in a common disaster. this provides that the proceeds will be paid to either the contingent beneficiary or the insureds estate

Reduced Paid-Up Insurance

the policy cash value is used by the insurer as a single premium to purchase a completely paid-up permanent policy that has a reduced face amount from that of the former policy

Collateral Assignment

transfer of partial rights to another person (temporary)

Extended Term Option

use the policy's cash value to purchase a term insurance policy in an amount equal to the original policy's face value for as long a period as the cash value will purchase. Same face amount, shorter term of coverage.