Life Final

Which of the following statements concerning Fraternal Benefit Societies is true? A)All citizens of North Carolina may purchase the insurance products of a Fraternal Society regardless of active membership. B)A fraternal society must be organized on a non-profit basis with a representative form of government. C)Fraternal societies may sell any insurance product that is based on mortality, but they may not sell products based on morbidity. D)Fraternal societies are exempt from any rules governing unfair trade practices in the marketing of insurance products.

A)All citizens of North Carolina may purchase the insurance products of a Fraternal Society regardless of active membership.

Term insurance with a renewability option offers: A)Continued term coverage after the initial period at a higher premium. B)The ability to change to a whole life policy without providing evidence of insurability. C)The endowment settlement options that could be renewed for the lifetime of the insured. D)Term coverage at the same premium but for a reduced death benefit.

A)Continued term coverage after the initial period at a higher premium

"T" has arranged the premium payment on a whole life policy in such a way that the maximum yearly premium will be reached in the 5th year of the policy after increasing each of the previous 4 years. What type premium pattern does "T" have? A)Graded. B)Modified. C)Flexible. D)Paid-up.

A)Graded.

A whole life policy at age 100: A)Pays the face amount to the owner if living. B)Continues coverage until the death of the insured. C)Pays installments for a fixed period as retirement income. D)Is renewed for a fixed period of time.

A)Pays the face amount to the owner if living.

Which of the following statements regarding Universal Life is FALSE? A)Premiums are fixed and cost elements are not billed separately in an itemized statement. B)Interest rates above the guaranteed minimum can be credited on either an "index linked" or "portfolio" method. C)Mortality charges operate similar to annual renewable term insurance with an indeterminate rate. D)Cash policy reserves remaining after monthly deductions earn tax deferred interest until withdrawn.

A)Premiums are fixed and cost elements are not billed separately in an itemized statement.

Which of the following actions would be allowed according to North Carolina insurance law? A)Selling life insurance to a 15 year old who has not completed high school. B)Offering a discount on the sale of a life insurance product if the applicant accepts a "no refund" provision. C)Sharing commissions with an agent who is appointed with a different company. D)Soliciting the sale of a life insurance product prior to the agent executing the appointment form with the insurer.

A)Selling life insurance to a 15 year old who has not completed high school.

An annuity contract owner is approaching the end of the 10-year period certain. The total payments to date are very near the single premium price of the contract. What will happen if the contract owner does not contribute more premium? A)Payments will stop when the premium amount has been paid out unless more premium is deposited. B)Payments will continue until the end of the 10th year and then stop. C)Payments will continue until it exceeds the single premium plus the interest the premium has earned. D)Payments will continue until death without further premium requirements.

B) Payments will continue until the end of the 10th year and then stop.

Both the insured and the primary beneficiary are killed in a car wreck. Time of the death was the same for each. The Uniform Simultaneous Death Act would rule that the: A)Beneficiary is presumed to have survived the insured. B)Insured is presumed to have survived the beneficiary. C)Estate is to be divided between the heirs of the two decedents. D)Decision as to the succession of the estate will be left to the probate court.

B)Insured is presumed to have survived the beneficiary.

Federal income taxes on the receipt of a policy's cash value or endowment amount are based upon: A)Ownership of the policy. If the policy is owned by someone other than the insured, there is no taxable income. B)The amount of "equity" received. All money received that is greater than the premiums is considered to be "equity" and is taxable as ordinary income. C)The amount of dividends received. Dividends are taxed as ordinary income. D)Who was insured. Monies received by an individual over age 65 are not taxable as income.

B)The amount of "equity" received. All money received that is greater than the premiums is considered to be "equity" and is taxable as ordinary income.

If a policyholder lapses a $100,000 whole life policy in the 10th year, which nonforfeiture option will give them the highest continued death benefit? A)The cash value. B)The paid-up value. C)The extended term value. D)The modified endowment value.

B)The paid-up value.

The dividends paid on participating life insurance policies are not subject to federal income tax as ordinary income because: A)They represent the policyowner's share of the company's profits. B)They are a return of excess premiums. C)The Internal Revenue Service cannot decide how to separate the dividend into taxable income and non-taxable income. D)Taxation of participating policy dividends is reserved to the states.

B)They are a return of excess premiums.

To qualify under the reinstatement provision of a life insurance policy, the policyowner must do all of the following EXCEPT: A)Pay all back premiums. B)Pay interest on the overdue premiums. C)Furnish satisfactory evidence of insurability. D)Pay back the cash value that was taken out when the policy was surrendered.

C)Furnish satisfactory evidence of insurability.

"Non-forfeiture options" are used when a policy is: A)Renewed for another coverage period. B)Assigned under a collateral assignment. C)Lapsed or surrendered. D)Converted to a life income annuity.

C)Lapsed or surrendered.

Which of the following statements concerning the general regulation of the life insurance business is FALSE? A)Genetic underwriting is prohibited in North Carolina. B)Reinstated life insurance policies that have lapsed for non-payment of premium may be subject to a two-year contestable period. C)Proceed payment from a life insurance policy to a named beneficiary may be reduced by claims of the deceased insured's creditors. D)All contracts of life insurance must state the amount of benefits, the manner of payment and the premium required to purchase the contract.

C)Proceed payment from a life insurance policy to a named beneficiary may be reduced by claims of the deceased insured's creditors.

In the sale of a life insurance contract, an agent is responsible to conduct the transaction according to the North Carolina Department of Insurance regulations. All of the following actions are required EXCEPT: A)Identify themselves as an insurance agent and indicate what company they represent. B)Indicate that the transaction is involving the purchase of insurance. C)Provide an annual financial statement of the proposed insurer. D)Ask necessary questions to determine whether the policy is to replace another policy.

C)Provide an annual financial statement of the proposed insurer.

Which of the following agent activities would be allowable under the regulations concerning Life Insurance Solicitation? A)Presenting premium payments without showing the guaranteed maximum rate of an indeterminate premium policy. B)Stating that the agent represents the applicant. C)Retaining all sales material used in a replacement life insurance sale after leaving a copy of the Notice Regarding Replacement. D)Delivering a Buyer's Guide and Policy Summary at the time of policy delivery.

C)Retaining all sales material used in a replacement life insurance sale after leaving a copy of the Notice Regarding Replacement. ?? D)Delivering a Buyer's Guide and Policy Summary at the time of policy delivery. (could also be this)

Which of the following statements regarding settlement options in life insurance is correct? A)The beneficiary may change the settlement option choice made by the insured after a waiting period of six months. B)If the owner of the policy does not choose an option, the choice is made by the executor of the insured's estate. C)Settlement option choices made by the owner cannot be changed after the death of the insured. D)If a settlement option is not chosen by the policyowner, proceeds will be paid to the estate of the deceased insured.

C)Settlement option choices made by the owner cannot be changed after the death of the insured.

Which of the following would NOT be considered an Unfair Trade Practice? A)Offering two $50.00 tickets to an applicant provided they purchase their insurance coverage through that agent. B)Suggesting that the applicant should not do business with a particular company due to rumors that the company may be punished by the Commissioner. C)Stating that their life insurance policy dividends cannot be guaranteed and that any values shown are projections based upon the insurer's current dividend scale. D)Telling an existing insured that their automobile insurance would be canceled if they did not buy life insurance with that company.

C)Stating that their life insurance policy dividends cannot be guaranteed and that any values shown are projections based upon the insurer's current dividend scale.

Excess interest credited under an index-linked method would pay interest in relation to: A)An external economic indicator. B)Performance of the Dow Jones Industrial Average. C)The interest earned on the insurance company's investments. D)A portfolio of securities selected by the policyowner.

C)The interest earned on the insurance company's investments.

Failure to pay a loan interest payment when due on a whole life policy will result in which of the following actions? A)The loan balance will immediately become payable. B)Further cash value accumulation will be suspended until the interest on the loan is paid. C)The loan balance will increase by the amount of the overdue interest. D)Coverage will terminate due to a "default" on behalf of the insured.

D)Coverage will terminate due to a "default" on behalf of the insured.

Which of the following statements is true regarding non-traditional life insurance policies? A)Current assumption life gives the owner flexibility in deciding the amount of premium to pay. B)Universal life policies restrict the death benefit to the face amount only. C)Variable life insurance may be sold by life insurance agents with no further licensing requirement. D)Earnings on the cash value may fluctuate in both universal and current assumption life insurance contracts.

D)Earnings on the cash value may fluctuate in both universal and current assumption life insurance contracts.

All of the following statements describe the payment pattern of a "life with period certain" settlement option EXCEPT: A)Income is payable until the principal is exhausted. B)Payments are guaranteed for a specified time regardless of the death of the recipient. C)This option is available with both life insurance and annuities. D)Income is payable as long as the recipient is alive.

D)Income is payable as long as the recipient is alive.

"M" has a life insurance policy with Acme Life Insurance Company. Each year, Acme refigures the rate based on the company's mortality experience, expenses and interest earnings subject to a stated maximum for the insured's age. What kind of premium does "M" have? A)Level. B)Modified. C)Graded. D)Indeterminate.

D)Indeterminate.

All of the following statements concerning an annuity are true EXCEPT: A)An annuity provides an income over the remaining lifetime of an individual. B)An annuity is a form of life insurance. C)If the annuitant dies before they being receiving the annuity payments, the beneficiary will receive the cash value of the contract. D)The annuity payment can be expressed in fixed dollars or paid out based on units.

D)The annuity payment can be expressed in fixed dollars or paid out based on units.

If the insured should die while the policy is in the grace period, the beneficiary would most likely receive: A)Nothing. B)Return of all premiums paid. C)The face amount of the policy. D)The face amount minus the premium due.

D)The face amount minus the premium due.