NC LIFE Insurance State Exam Questions with Verified Solution

NC LIFE Insurance State Exam Questions with Verified Solution ABSOLUTE ASSIGNMENT - Answer involves transferring all rights of ownership to another person or entity. This is a permanent and total transfer of all the policy rights. The new policy owner does not need to have an insurable interest in the insured. ACCIDENTAL DEATH BENEFIT AND DISMEMBERMENT BENEFIT - Answer pays the principal (face amount) for accidental death, and pays a percentage of that amount, or a capital sum, for accidental dismemberment ADDITIONAL INSURED - Answer provides coverage for one or more family members other than the insured. The rider is usually level term insurance, attached to the base policy covering the insured ADHESION - Answer a contract of adhesion is prepared by one of the parties (insurer) and accepted or rejected by the other party (insured). Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. Insurance contract are offered on a take it or leave it basis by an insurer Adjustable life - Answer can assume the form of either term insurance or permanent insurance; as the needs change the policy holder can increase/decrease the premium or premium paying period; increase/decrease the face amount/ or change the period of protection. The policy holder can also convert from term to whole life. Some changes can require proof of insurability ALEATORY - Answer an exchange of unequal amounts or values. The premium paid by the insured is small in relation to the amount that will be paid by the insurer in the event of a loss. ANNUITY WITH PERIOD CERTAIN - Answer short term annuities that limit the amount paid to a certain fixed period or until a certain fixed amount it liquidated AUTOMATIC PREMIUM LOAN - Answer Loan that prevents the unintentional lapse of a policy due to nonpayment of the premium. BUY-SELL AGREEMENTS - Answer a legal contract that determines what will be done with a business in the event that an owner dies or becomes disabled. Otherwise known as a business continuation agreement CHANGE OF PLAN PROVISION - Answer allows the policy owner to change the policy form, usually at a higher premium rate.