Exam Flashcards
An agent soliciting insurance policies in North Carolina MUST be
appointed by an authorized insurer in North Carolina
If an agent is found to be incompetent, untrustworthy, or financially irresponsible, the Commissioner of Insurance may
suspend, revoke, or refuse to renew the agent’s license
If an insurance applicant is being investigated into his/her personal character and mode of living, the applicant MUST be notified of this investigation. Which of the following makes this a requirement?
Insurance Information and Privacy Protection Act
K sent a renewal premium payment to her insurer that would extend her coverage beyond the policy’s maximum age limit. If the insurer accepts this premium payment, it
must continue the coverage to the end of the period of time for which the premium was accepted
North Carolina insurance law specifically allows the Commissioner of Insurance to issue a temporary license to which of the following individuals?
A surviving spouse of a deceased agent
One role of the Life and Health Guaranty Association is to
maintain public confidence in the promises of insurers
T is employed by an amusement park from June through September, working 50 hours per week. The amusement park’s Group Policy would
consider T NOT eligible for the insurance because as a seasonal employee, T does not meet the definition of “employee” under North Carolina law
The circulation of written literature that is maliciously critical of an insurer’s financial condition is called
defamation
The Life and Health Insurance Guaranty Association is funded by authorized insurers in this State. One of the roles of this organization is to
assist in the prevention of insurer insolvencies
A life insurance contract may NOT be voided by the insurance company beginning ___ year(s) after the policy’s issue date.
2
An agent completes an application with a client for a $50,000 Life Insurance policy. At what point is the LATEST a Policy Summary and Buyers Guide must be given to the applicant?
Upon policy delivery
An agent who solicits applications for life insurance in North Carolina is considered to represent the
insurance company
Which of the following issues new insurance coverage intended to replace an existing Life insurance policy?
Replacing insurer
Which of these circumstances REQUIRE an insurer to clearly specify questions designed to obtain information solely for marketing research?
Any insurance transaction
Fixed annuities provide each of the following EXCEPT
Retirement funds
Guaranteed interest
Hedge against inflation
Tax advantage
Hedge against inflation
All of the following are characteristics of a Group Life Insurance Plan EXCEPT
Probationary period
Master contract
Individual underwriting
Group underwriting
Individual underwriting
Fixed period settlement options are considered to be a form of a(n)
annuity
Which of these will have the highest monthly payout upon annuitization?
Straight life
The least expensive option to pay off a 30-year mortgage balance would be
increasing term life
adjustable term life
decreasing term life
convertible term life
decreasing term life
A life insurance policy that is subject to a contract interest rate is referred to as
term life
group life
adjustable life
universal life
universal life
The premium for a Modified whole life policy is
ower than the typical whole life policy during the first few years and then higher than typical for the remainder
A renewable Term Life insurance policy allows the policyowner the right to renew the policy
without producing proof of insurability
A single premium cash value policy can be described as
a policy that is paid up after only one payment
What happens to interest earned if the annuitant dies before the payout start date?
It is taxable
Index whole life insurance contains a securities component that acts as a(n)
hedge against inflation
Jonas is a whole life insurance policyowner and would like to add coverage for his two children. Which of the following products would allow him to accomplish this?
Child term rider
Shirley has a $500,000 10-year non-renewable level term life policy. If she dies 15 years after the policy’s inception date, how much will her beneficiary receive?
Nothing
Which of the following is considered to be the period when the accumulated value in an annuity is paid out?
Annuitization phase
Variable life insurance and Universal life insurance are very similar. Which of these features are held exclusively by variable universal life insurance?
Policyowner has the right to select the investment which will provide the greatest return
Level premium term life insurance policies
have premiums that are averaged over the policy period
Which of the following policies does NOT build cash value?
term
A life insurance policy written on one contract for two people in which it is payable upon the first death is called
joint
Tonya has replaced her whole life policy with an annuity without incurring a tax penalty. This transaction is called a(n)
1035 Exchange
A partial surrender is allowed in which of the following life policies?
Universal life
A policyowner can receive a percentage payment of the death benefits prior to death by using what kind of contract?
Viatical settlement agreement
A policyowner may change two policy features on what type of life insurance?
Adjustable Life
A permanent life insurance policy where the policyowner pays premiums for a specified number of years is called a(n)
limited pay policy
According to life insurance contract law, insurable interest exists
at the time of application
All of these are valid options for an Adjustable Life Policy EXCEPT
A nonforfeiture option can be used to increase the death benefit
Pre-death distributions from a modified endowment contract (MEC) receive different tax treatment than other life insurance policies because
the MEC tends to be an investment vehicle
Which type of life insurance policy pays the face amount at the end of the specified period if the insured is still alive?
Endowment policy
Pat is insured with a life insurance policy and Karen is his primary beneficiary. They are both involved in an automobile accident where Pat dies instantly and Karen dies 5 days later. Which policy provision will protect the rights of the contingent beneficiary to receive the policy benefits?
Common disaster clause
What is the primary feature of a viatical settlement?
Reduced death benefit prepayment
Which of the following would disqualify a company’s retirement plan from receiving favorable tax treatment?
It is temporary
Social Security is funded by a payroll tax imposed on a limit of an employee’s income. What is this limitation called?
Taxable wage base
An individual most likely will have an insurable interest in insuring a person’s life if
an economic interest exists for the continuance of the insured’s life
A provision that allows a policyowner to temporarily give up ownership rights to secure a loan is called a(n)
collateral assignment
A whole life insurance policy accumulates cash value that becomes
the policy loan value which the insured may borrow against
If an insured’s age on a life insurance policy has been misstated, what is the insurer’s liability if the insured dies?
A prorated death benefit based on the amount of insurance the insured’s premiums would have been if purchased at the correct age
All of these are typically sources of underwriting information for life or health insurance EXCEPT
Attending physician’s statement (APS)
Consumer reports
Medical Information Bureau (MIB) reports
Disclosure authorization response
Disclosure authorization response
Kurt is an active duty serviceman who was recently killed in an accident while home on leave. Which military service exclusion clause would pay upon his death?
results
Joanne has a $100,000 whole life policy with an accumulated $25,000 of cash value. She would like to borrow $15,000 against the cash value. Which of the following statements is TRUE?
Net death benefit will be reduced if the loan is not repaid
The double indemnity provision in a life insurance policy pertains to an insured’s death caused by a(n)
accident
Which dividend option would an insurer invest the policyowner’s money and add any interest earnings as the dividends accrue?
Accumulation at Interest Option
Statements made by an insurance applicant on an application are considered to be
representations
Which situation accurately describes a reduced paid-up nonforfeiture option?
Policy has a decreased face amount
What is the purpose of the Medical Information Bureau (MIB)?
To help underwriters evaluate risk
A rider that assures premiums will be paid on a juvenile policy until the child reaches a specific age is called a(n)
payor rider
A life insurance policyowner does NOT have the right to
revoke an absolute assignment
Dorian exercised a nonforfeiture option by using his life policy’s cash value to purchase an extended term insurance option. When the term insurance expires,
the protection ends
