Primerica Insurance
What is the civil penalty the Commissioner may impose on a producer who willfully violates a cease and desist order pertaining to consumer information privacy?
$10,000
An insured purchased a variable life insurance policy with a face amount of $50,000. Over the life of the policy, stock performance declined and the the cash value fell to $10,000. If the insured dies how much will be paid out?
$50,000
An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy?
$9,800
In a noncontributory group policy
100% of eligible employees must participate
In North Carolina, the Commissioner serves a term of how many years?
4 years
An Internal Revenue Code provision that specifically provides for an individual retirement plan for public school teachers is a(n)
403(b) Plan (TSA)
The Commissioner must examine every domestic insurer at least once every
5 years
*Policy loan requests, except for loan requests for payment of due premiums, may be deferred for a period of up to
6 months
Stating that an insurer's policies are guaranteed by the existence of the Life and Health Guaranty Association is
An unfair trade practice
Which statement below is INCORRECT regarding the type of term insurance that fits best with the applicant's needs?
Applicants who may require a larger death benefit in the future should by convertible term insurance
In life insurance when must the policy summary be presented
Before accepting the initial premium deposit
In insurance, producers are permitted to share or split commissions providing that
Both are properly licensed for the line of insurance
Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT
Conditions
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
Which of the following is not fundable by annuities?
Death benefits
During policy solicitation, an insurer exaggerates the financial condition of one of its competitors, and makes it sounds worse than it is. This is an example of an unfair trade practice of
Defamation
If a change needs to be made to the application for insurance, the agent may do all of the following EXCEPT
Erase the incorrect answer and record the correct answer
Which special policy combines decreasing term insurance with whole life insurance to provide the insured's family with monthly income upon the death of the insured, while maintaining permanent coverage until the end of the income payments?
Family Income Policy
The Commissioner has the power to examine and investigate the affairs of every insurance institution or agent doing business in North Carolina to determine which of the following
If the insurer remains solvent and conducts business in compliance with state laws and regulations
A fraternal benefit society
Is operated for the benefit of its members
All of the following statements are true regarding an Ordinary (Straight) Life Policy EXCEPT
It does no have a guaranteed death benefit
If a deferred annuity is surrendered prematurely, a surrender charge is imposed. How is the surrender charge determined?
It is a percentage of the cash value and decreases over time
Which of the following is TRUE regarding the accumulation period of an annuity?
It is a period during which the payments into the annuity grow tax deferred
Which of the following is TRUE of level term insurance?
It is temporary protection
Which of the following best describes pure life annuity?
It provides the highest monthly benefit
When comparing a joint life policy to two individual life policies of the same amount on the same insureds: which condition is true?
Joint Life has a lower premium than the total of two individual policies
Which two terms are associated directly with the premium?
Level or Flexible
An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it?
Limited-pay LIfe
Which of the following is guaranteed under a variable whole life insurance policy?
Minimum Death Benefit
All of the following are characteristics of group life insurance EXCEPT
Premiums are determined by the age, sex and occupation of each individual certificate holder
All of the following are true of annually renewable term insurance EXCEPT
Proof of insurability must be provided at each renewal
A domestic insurer issuing variable contract must establish one or more
Separate accounts
Which of the following individuals would be a likely candidate to purchase a deferred annuity?
Someone who wants to grow retirement tax deferred
Which of the following policies would be classified as a traditional level premium contract?
Straight Life
In a deferred annuity, the difference between the accumulation value and the surrender value is the
Surrender Charge
All are true regarding the insurance Commissioner's powers related to hearing and investigations EXCEPT
The Commissioner may hold hearings immediately after determining that a violation has occurred.
If an insurer becomes insolvent, which of the following would pay benefits to policyholders?
The Guaranty Association
The regulation of the insurance industry primarily rests with
The State
All of the following statements about indexed whole life insurance are correct EXCEPT
The cash value depends on the performance of the equity index
With Adjustable Life, the owner can change all of the following EXCEPT
The insured
Insurance agents licensed in this state must complete continuing education every 2 years by
The last day of the license's birth day
If an agent is convicted of a criminal violation of the General Statutes, what will happen to the agent's license?
The license will be automatically suspended.
All of the following statements about indexed whole life insurance are correct EXCEPT
The policy face amount remains level throughout the life of the policy
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
Which of the following best defines target premium in a universal life policy?
The recommended amount to keep the policy in force throughout its lifetime
Which is true about a spouse term rider?
The rider is usually level term insurance
In an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT
The type of investment
An agent who knowingly misrepresents material information for the purpose of inducing an insured to lapse, forfeit, change or surrender a life insurance policy or annuity has committed an illegal practice known as
Twisting
What would be a 20-pay whole life policy endow?
When the insured reaches age 100
When an insured terminates membership in the insured group, the insured can convert to
Whole life without proof of insurability
The renewable provision allows the policy-owner to renew the coverage at the expiration date
Without evidence of insurability
An insured has a life insurance policy in the amount of $250,000 naming his wife as beneficiary. Upon his death, his beneficiary decides not to receive the death benefit for some time. When she finally receives the death benefit check, its in the amount of $250,530. Is any portion of the proceeds that the beneficiary receives taxable?
Yes proceeds in access of face amount are taxable as interest
A Universal Life Insurance policy is best described as a/an
Annually Renewable Term policy with a cash value account
Which is the primary source of information used for insurance underwriting?
Application
A lender who conditions approval of a loan on the condition that the borrower purchase insurance from that lender may be guilty of
Coercion
An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation?
Decreasing Term
Which of the following types of insurance would be most suitable for mortgage protection?
Decreasing Term
Two individuals are in the same risk and age class; yet they are charged different rates for their insurance policies due to an insignificant factor. What is this called?
Discrimination
Which of the following is NOT one of the required qualifications for licensing as an insurance agent in this state?
Experience in the insurance industry
A Universal Life insurance policy has two types of interest rates that are called
Guaranteed and Current
An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy?
Guaranteed insurability option
All insurers, agents and brokers doing business in NC must maintain complete and accurate records of the business conducted. The first offense of failure to comply with the provision of the law may result in
License suspension or revocation for up to 6 months
According to the Common Disaster clause, if the insured and primary beneficiary are killed in the same accident and its cannot be determined who died first, which of the following will be assumed?
Primary beneficiary died before the insured
A couple of life insurance policy the Children's Term rider. Their daughter is reaching the maximum age of independent 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
If the applicant has not fully met the requirements for licensing, the Commissioner will
Refuse to issue the license and notify the applicant in writing
An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy?
She can convert her group policy to an individual life policy without proof of insurability within 31 days of leaving the group plan.
An individual receives a lump sum inheritance. He'd like to use the money to create a lifetime income since he'll be retiring soon. He purchases annuity and wishes to receive payments beginning in 2 months. What did he buy?
Single Premium Annuity
Variable life insurance is regulated by all of the following EXCEPT
The US Department of Treasury
What is the purpose of the surrender charge in a deferred annuity?
To compensate the company for loss of investment value
What is the purpose of key person insurance?
To cover decreased business revenues as a result of the death of a key employee
An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?
Universal Life
When an annuity is written, whose life expectancy is taken into account?
Annuitant
An agent selling variable annuities must be registered with
FINRA
If a loan request is for payment of due premiums on the policy, how soon must the insurer issue a loan?
Immediately
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 policy for which of the following?
A percentage of the face amount of the policy
If a licensee is convicted of a criminal violation, the licensee's insurance license is
Automatically suspended
Graded-Premium Whole Life policy premiums are typically lower initially, but gradually increase for a period of 5 to 10 years. After the period of increase the premiums will
Be level thereafter
Which of the following is NOT a characteristic of variable insurance and annuities?
Benefits are determined solely based on the policy premium
An IRA contribution can be made from which of the following?
Cash
An insured receives an annual life insurance dividend check. What term best describes this arrangement?
Cash Option
Which of the following features of the indexed Whole Life policy is NOT fixed?
Cash value growth
Which of the following is true of the taxation of cash values in a business life insurance policy?
Cash values grow tax deferred
A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible?
Collateral Assignment
What is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident?
Common Disaster Clause
Which of the following elements of an insurance contract requires payment of premium?
Consideration
what type of interest rate is guaranteed in universal life policies
Contract interest rate
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
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
What type of premium do both Universal Life and Variable Universal Life policies have?
Flexible
A jumping Juvenile policy is unique in that the death benefit automatically
Increases at a predetermined age
All of the following statements are true regarding an Ordinary (Straight) life policy EXCEPT
It does not have a guaranteed death benefit
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
When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?
It is reduced to the amount of what the cash value would buy a single premium
Which of the following is true of a children's rider added to an insured's permanent life insurance policy?
It is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age.
What does an annuity protect the annuitant against?
Living longer than expected
Guaranteeing future dividends is considered to be an unfair or deceptive act known as
Misrepresentation
B just bought a new car, which he anticipates will be paid for 4 years from now. He also wants to buy a life insurance policy, but is financially limited until the car is paid off. Which of the following types of policies would be best for B?
Modified Life
Using a class designation for beneficiaries means
Naming beneficiaries as a group
Dividend received on participating life insurance policies are
Not taxable because they are a return of unused premiums
Which of the following is NOT a component of an insurance policy premium?
Number of Beneficiaries
Among the applicants in the same class and life expectancy which of the following factors can be used to influence premium rates
Occupation
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 to make the premium payments due to death or disability. Which policy rider should their agent recommend?
Payor Benefit
The guaranteed insurability rider allows the owner to purchase additional amounts of life insurance without proof of insurability at all the following EXCEPT
Purchase of a new home
FICA tax applies to which of the following
Social Security
When an agent delivered an insurance policy to the insured, he collected the initial premium as well as a document verifying that the insured had not had any injuries or illness since the application date. What is this document called?
Statement of Good Health
Social Security was created to provide all of the following benefits EXCEPT
Unemployment income
Which of the following types of insurance is investment based, has a level fixed premium and nonguaranteed cash value
Variable whole life
As a policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should haver her husband named as the
Revocable beneficiary
If an agent wishes to sell variable life policies, what license must the agent obtain?
Securities
All of the following are considered unfair trade practices in the business of insurance EXCEPT
Sharing Commissions
Which of the following is TRUE regarding the insurance amount in credit life policy?
The creditor can only insure the debtor for the amount owed
Gross premium for a life insurance policy is determined by adding which two components
Net premium and expenses
All of the following are types of term policies based on what happens to the face amount during the policy term EXCEPT
Renewable
An individual purchases a life insurance policy and lists his parents as the beneficiaries. He is able to change the beneficiaries at any time. What type of beneficiary does the policy have?
Revocable
A whole life policy is surrendered for a reduced paid up policy. The cash value in the new policy will
Continue to increase
