NC LIFE INSURANCE EXAM PREP QUESTIONS AND
ANSWERS SURE A+
✔✔What group term life feature permits an individual to depart from the group and
continue to be converted without providing evidence of insurability? - ✔✔Conversion
✔✔An insured covered by life insurance has just died. What will happen if the primary
beneficiary had already died before the insured and contingent beneficiary? -
✔✔Proceed will go to the contingent beneficiary
✔✔S buys a $10,000 Whole Life Policy in 2003 and pays an annual premium of $100. S
dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of
rider did S include on the policy? - ✔✔Return of Premium rider
✔✔One of the stated purposes of the Life and Health Insurance Guaranty Association is
to - ✔✔Assist in the prevention of insurer insolvencies
✔✔The following acts are examples of unfair methods of competition and deceptive
practices in the business of insurance EXCEPT the use for - ✔✔Comparisons showing
that a policy has higher benefits
✔✔Which of the following policies combines investment choices with a form of Term
coverage? - ✔✔Variable universal life
✔✔Under a renewable term policy, - ✔✔The renewal premium is calculated on the
basis of the insured's attained age
✔✔Additional coverage can be added to a Whole Life policy by adding a(n) -
✔✔Decreasing term rider
✔✔The rules and regulations of the Life and Health Insurance Guaranty Association in
NC apply to - ✔✔Life and Health policies insured by companies authorized in NC
✔✔What type of life policy covers 2 people and pays upon the death of the last insured?
- ✔✔Survivorship
✔✔K works for XYZ clothing store from September through December each year. K
works 4 hours a week for this period of time. The employer's Group Policy would
consider K - ✔✔Not eligible for the insurance because as a seasonal employee K
doesn't meet the definition of "employee" under NC law
,✔✔A written agreement to provide a Life Insurance Policyholder immediate cash in
exchange for the sale and transfer of a Life Insurance Policy is a - ✔✔Viatical
Settlement
✔✔When an employee is terminated, which statement about a group term life
conversion is true? - ✔✔Policy proceeds will be paid if the employee dies during the
conversion period
✔✔A 42 year old executive wants to purchase life insurance that will allow for increases
or decreases to coverage as his/her needs change. Which of the following policies will
best meet this need? - ✔✔Universal life
✔✔What kind of life insurance policy pays a specified monthly income to a beneficiary
for 30 years and then pays a lump sum benefit at the end of that 30 years? - ✔✔Family
Maintenance Policy
✔✔The fund that assures policyholders payment of death benefits on Life Policies, if the
company is insolvent at the same time of the claim, is called the - ✔✔Life and Health
Insurance Guaranty Association
✔✔A policy that becomes a Modified Endowment Contract (MEC) - ✔✔Will lose many
of its tax advantage
✔✔Which provision allows the policy owner to change a term life policy to a permanent
one without providing proof of health? - ✔✔Conversion
✔✔T applies for a life insurance policy and is told by the producer that the insurer is
bound to the coverage as of the date of the application or medical examination,
whichever is later. Assuming that T is an acceptable risk, what item is given to T? -
✔✔Conditional receipt; Binds the insurer to coverage as of the date of the application or
medical exam, provided the proposed insured is determined to be an acceptable risk.
✔✔An insurance company MUST clearly specify questions designed to obtain
information solely for marketing research - ✔✔In any insurance transactions
✔✔In a life insurance policy which provision states who may select policy options,
designate and name a beneficiary, and be the recipient of any financial benefits from
the policy? - ✔✔Owner's rights
✔✔No insurer shall refuse to insure an individual because of - ✔✔Race
✔✔M had an annual life insurance premium payment due January 1. She died January
10 without making the premium payment. What action will the insurer take? - ✔✔Pay
, face amount minus the past due premium, because death occurred within the grace
period
✔✔When a life insurance policy exceeds certain IRS table values, the result would
create which of the following? - ✔✔Modified Endowment Contract (MEC)
✔✔Which of the following terms is defined as any transaction in which new life
insurance or new annuity is to be purchased and existing life insurance or annuity is to
be terminated or discontinued? - ✔✔Replacement
✔✔Which of the following consists of an offer, acceptance, and consideration? -
✔✔Contract
✔✔If a company accepts a renewal premium payment that would extend coverage
beyond the policy's MAXIMUM age limit, the company - ✔✔Must continue the coverage
to the end of the period of time for which the premium was accepted
✔✔A vacancy that occurs during the NC Commissioner of Insurance's term of office
MUST be filled by the - ✔✔Governor
✔✔Variable Whole Life insurance can be described as - ✔✔Both an insurance and
securities product
✔✔Which of these statements about a Guaranteed Insurability Option rider is NOT
true? - ✔✔Evidence of insurability is required when the option is exercised
✔✔Which type of policy is considered to be overfunded, as stated by the IRS
guidelines? - ✔✔Modified Endowment Contract
✔✔Which of these insurance riders allows the applicant to have excess coverage? -
✔✔Term rider
✔✔Which of the following actions requires a policy owner to provide proof of insurability
in an Adjustable Life Policy? - ✔✔Increase face amount
✔✔M purchases a $70,000 Life Insurance Policy with premium payments of $550 a
year for the first 5 years. At the beginning of the 6th year, the premium will increase to
$800 per year but will remain level thereafter. The face amount will remain at $70,000
throughout the life of the policy. The type of policy that M has purchased is -
✔✔Modified Premium Life; Modified Whole Life policies are distinguished by premiums
that are lower than typical whole life premiums during the first few years usually five and
higher thereafter.
ANSWERS SURE A+
✔✔What group term life feature permits an individual to depart from the group and
continue to be converted without providing evidence of insurability? - ✔✔Conversion
✔✔An insured covered by life insurance has just died. What will happen if the primary
beneficiary had already died before the insured and contingent beneficiary? -
✔✔Proceed will go to the contingent beneficiary
✔✔S buys a $10,000 Whole Life Policy in 2003 and pays an annual premium of $100. S
dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of
rider did S include on the policy? - ✔✔Return of Premium rider
✔✔One of the stated purposes of the Life and Health Insurance Guaranty Association is
to - ✔✔Assist in the prevention of insurer insolvencies
✔✔The following acts are examples of unfair methods of competition and deceptive
practices in the business of insurance EXCEPT the use for - ✔✔Comparisons showing
that a policy has higher benefits
✔✔Which of the following policies combines investment choices with a form of Term
coverage? - ✔✔Variable universal life
✔✔Under a renewable term policy, - ✔✔The renewal premium is calculated on the
basis of the insured's attained age
✔✔Additional coverage can be added to a Whole Life policy by adding a(n) -
✔✔Decreasing term rider
✔✔The rules and regulations of the Life and Health Insurance Guaranty Association in
NC apply to - ✔✔Life and Health policies insured by companies authorized in NC
✔✔What type of life policy covers 2 people and pays upon the death of the last insured?
- ✔✔Survivorship
✔✔K works for XYZ clothing store from September through December each year. K
works 4 hours a week for this period of time. The employer's Group Policy would
consider K - ✔✔Not eligible for the insurance because as a seasonal employee K
doesn't meet the definition of "employee" under NC law
,✔✔A written agreement to provide a Life Insurance Policyholder immediate cash in
exchange for the sale and transfer of a Life Insurance Policy is a - ✔✔Viatical
Settlement
✔✔When an employee is terminated, which statement about a group term life
conversion is true? - ✔✔Policy proceeds will be paid if the employee dies during the
conversion period
✔✔A 42 year old executive wants to purchase life insurance that will allow for increases
or decreases to coverage as his/her needs change. Which of the following policies will
best meet this need? - ✔✔Universal life
✔✔What kind of life insurance policy pays a specified monthly income to a beneficiary
for 30 years and then pays a lump sum benefit at the end of that 30 years? - ✔✔Family
Maintenance Policy
✔✔The fund that assures policyholders payment of death benefits on Life Policies, if the
company is insolvent at the same time of the claim, is called the - ✔✔Life and Health
Insurance Guaranty Association
✔✔A policy that becomes a Modified Endowment Contract (MEC) - ✔✔Will lose many
of its tax advantage
✔✔Which provision allows the policy owner to change a term life policy to a permanent
one without providing proof of health? - ✔✔Conversion
✔✔T applies for a life insurance policy and is told by the producer that the insurer is
bound to the coverage as of the date of the application or medical examination,
whichever is later. Assuming that T is an acceptable risk, what item is given to T? -
✔✔Conditional receipt; Binds the insurer to coverage as of the date of the application or
medical exam, provided the proposed insured is determined to be an acceptable risk.
✔✔An insurance company MUST clearly specify questions designed to obtain
information solely for marketing research - ✔✔In any insurance transactions
✔✔In a life insurance policy which provision states who may select policy options,
designate and name a beneficiary, and be the recipient of any financial benefits from
the policy? - ✔✔Owner's rights
✔✔No insurer shall refuse to insure an individual because of - ✔✔Race
✔✔M had an annual life insurance premium payment due January 1. She died January
10 without making the premium payment. What action will the insurer take? - ✔✔Pay
, face amount minus the past due premium, because death occurred within the grace
period
✔✔When a life insurance policy exceeds certain IRS table values, the result would
create which of the following? - ✔✔Modified Endowment Contract (MEC)
✔✔Which of the following terms is defined as any transaction in which new life
insurance or new annuity is to be purchased and existing life insurance or annuity is to
be terminated or discontinued? - ✔✔Replacement
✔✔Which of the following consists of an offer, acceptance, and consideration? -
✔✔Contract
✔✔If a company accepts a renewal premium payment that would extend coverage
beyond the policy's MAXIMUM age limit, the company - ✔✔Must continue the coverage
to the end of the period of time for which the premium was accepted
✔✔A vacancy that occurs during the NC Commissioner of Insurance's term of office
MUST be filled by the - ✔✔Governor
✔✔Variable Whole Life insurance can be described as - ✔✔Both an insurance and
securities product
✔✔Which of these statements about a Guaranteed Insurability Option rider is NOT
true? - ✔✔Evidence of insurability is required when the option is exercised
✔✔Which type of policy is considered to be overfunded, as stated by the IRS
guidelines? - ✔✔Modified Endowment Contract
✔✔Which of these insurance riders allows the applicant to have excess coverage? -
✔✔Term rider
✔✔Which of the following actions requires a policy owner to provide proof of insurability
in an Adjustable Life Policy? - ✔✔Increase face amount
✔✔M purchases a $70,000 Life Insurance Policy with premium payments of $550 a
year for the first 5 years. At the beginning of the 6th year, the premium will increase to
$800 per year but will remain level thereafter. The face amount will remain at $70,000
throughout the life of the policy. The type of policy that M has purchased is -
✔✔Modified Premium Life; Modified Whole Life policies are distinguished by premiums
that are lower than typical whole life premiums during the first few years usually five and
higher thereafter.
