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