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Insurance > Exam > Flashcards

Exam Flashcards

1
Q

An agent soliciting insurance policies in North Carolina MUST be

A

appointed by an authorized insurer in North Carolina

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2
Q

If an agent is found to be incompetent, untrustworthy, or financially irresponsible, the Commissioner of Insurance may

A

suspend, revoke, or refuse to renew the agent’s license

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3
Q

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?

A

Insurance Information and Privacy Protection Act

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4
Q

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

A

must continue the coverage to the end of the period of time for which the premium was accepted

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5
Q

North Carolina insurance law specifically allows the Commissioner of Insurance to issue a temporary license to which of the following individuals?

A

A surviving spouse of a deceased agent

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6
Q

One role of the Life and Health Guaranty Association is to

A

maintain public confidence in the promises of insurers

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7
Q

T is employed by an amusement park from June through September, working 50 hours per week. The amusement park’s Group Policy would

A

consider T NOT eligible for the insurance because as a seasonal employee, T does not meet the definition of “employee” under North Carolina law

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8
Q

The circulation of written literature that is maliciously critical of an insurer’s financial condition is called

A

defamation

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9
Q

The Life and Health Insurance Guaranty Association is funded by authorized insurers in this State. One of the roles of this organization is to

A

assist in the prevention of insurer insolvencies

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10
Q

A life insurance contract may NOT be voided by the insurance company beginning ___ year(s) after the policy’s issue date.

A

2

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11
Q

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?

A

Upon policy delivery

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12
Q

An agent who solicits applications for life insurance in North Carolina is considered to represent the

A

insurance company

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13
Q

Which of the following issues new insurance coverage intended to replace an existing Life insurance policy?

A

Replacing insurer

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14
Q

Which of these circumstances REQUIRE an insurer to clearly specify questions designed to obtain information solely for marketing research?

A

Any insurance transaction

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15
Q

Fixed annuities provide each of the following EXCEPT

Retirement funds
Guaranteed interest
Hedge against inflation
Tax advantage

A

Hedge against inflation

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16
Q

All of the following are characteristics of a Group Life Insurance Plan EXCEPT

Probationary period
Master contract
Individual underwriting
Group underwriting

A

Individual underwriting

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17
Q

Fixed period settlement options are considered to be a form of a(n)

A

annuity

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18
Q

Which of these will have the highest monthly payout upon annuitization?

A

Straight life

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19
Q

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

A

decreasing term life

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20
Q

A life insurance policy that is subject to a contract interest rate is referred to as

term life
group life
adjustable life
universal life

A

universal life

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21
Q

The premium for a Modified whole life policy is

A

ower than the typical whole life policy during the first few years and then higher than typical for the remainder

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22
Q

A renewable Term Life insurance policy allows the policyowner the right to renew the policy

A

without producing proof of insurability

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23
Q

A single premium cash value policy can be described as

A

a policy that is paid up after only one payment

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23
Q

What happens to interest earned if the annuitant dies before the payout start date?

A

It is taxable

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24
Q

Index whole life insurance contains a securities component that acts as a(n)

A

hedge against inflation

25
Q

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?

A

Child term rider

26
Q

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?

A

Nothing

27
Q

Which of the following is considered to be the period when the accumulated value in an annuity is paid out?

A

Annuitization phase

28
Q

Variable life insurance and Universal life insurance are very similar. Which of these features are held exclusively by variable universal life insurance?

A

Policyowner has the right to select the investment which will provide the greatest return

29
Q

Level premium term life insurance policies

A

have premiums that are averaged over the policy period

30
Q

Which of the following policies does NOT build cash value?

A

term

31
Q

A life insurance policy written on one contract for two people in which it is payable upon the first death is called

A

joint

32
Q

Tonya has replaced her whole life policy with an annuity without incurring a tax penalty. This transaction is called a(n)

A

1035 Exchange

33
Q

A partial surrender is allowed in which of the following life policies?

A

Universal life

34
Q

A policyowner can receive a percentage payment of the death benefits prior to death by using what kind of contract?

A

Viatical settlement agreement

35
Q

A policyowner may change two policy features on what type of life insurance?

A

Adjustable Life

36
Q

A permanent life insurance policy where the policyowner pays premiums for a specified number of years is called a(n)

A

limited pay policy

37
Q

According to life insurance contract law, insurable interest exists

A

at the time of application

38
Q

All of these are valid options for an Adjustable Life Policy EXCEPT

A

A nonforfeiture option can be used to increase the death benefit

39
Q

Pre-death distributions from a modified endowment contract (MEC) receive different tax treatment than other life insurance policies because

A

the MEC tends to be an investment vehicle

40
Q

Which type of life insurance policy pays the face amount at the end of the specified period if the insured is still alive?

A

Endowment policy

41
Q

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?

A

Common disaster clause

42
Q

What is the primary feature of a viatical settlement?

A

Reduced death benefit prepayment

43
Q

Which of the following would disqualify a company’s retirement plan from receiving favorable tax treatment?

A

It is temporary

44
Q

Social Security is funded by a payroll tax imposed on a limit of an employee’s income. What is this limitation called?

A

Taxable wage base

45
Q

An individual most likely will have an insurable interest in insuring a person’s life if

A

an economic interest exists for the continuance of the insured’s life

46
Q

A provision that allows a policyowner to temporarily give up ownership rights to secure a loan is called a(n)

A

collateral assignment

47
Q

A whole life insurance policy accumulates cash value that becomes

A

the policy loan value which the insured may borrow against

48
Q

If an insured’s age on a life insurance policy has been misstated, what is the insurer’s liability if the insured dies?

A

A prorated death benefit based on the amount of insurance the insured’s premiums would have been if purchased at the correct age

49
Q

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

A

Disclosure authorization response

50
Q

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?

A

results

51
Q

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?

A

Net death benefit will be reduced if the loan is not repaid

52
Q

The double indemnity provision in a life insurance policy pertains to an insured’s death caused by a(n)

A

accident

53
Q

Which dividend option would an insurer invest the policyowner’s money and add any interest earnings as the dividends accrue?

A

Accumulation at Interest Option

54
Q

Statements made by an insurance applicant on an application are considered to be

A

representations

55
Q

Which situation accurately describes a reduced paid-up nonforfeiture option?

A

Policy has a decreased face amount

56
Q

What is the purpose of the Medical Information Bureau (MIB)?

A

To help underwriters evaluate risk

57
Q

A rider that assures premiums will be paid on a juvenile policy until the child reaches a specific age is called a(n)

A

payor rider

58
Q

A life insurance policyowner does NOT have the right to

A

revoke an absolute assignment

59
Q

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,

A

the protection ends

Insurance (3 decks)

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