NC LIFE INSURANCE PRACTICE EXAM
QUESTIONS AND CORRECT ANSWERS
WITH DETAILED RATIONNALES GRADED
A+
All are true regarding the Insurance Commissioner's powers
related to hearing and investigations EXCEPT
a). Enact statutes to govern the insurance industry
b). Disseminate information regarding the Department activities
c). Enforce the NC Insurance Code
d). Determine if an agent has acted in violation of the Insurance
Code Correct Answer a). Enact statutes to govern the insurance
industry
State statutes are enacted by the state legislature. The Insurance
Commissioner is empowered to enforce the laws pertaining to
insurance
What is a specific requirement regarding the number of
employees in a SIMPLE plan?
,a). No more that 100 employees
b). At least 100 employees
c). Between 2 and 50 employees
d). No more than 2 employees Correct Answer a). No more that
100 employees
A SIMPLE ( Saving Incentive Match of Employees) plan is
available to small business that employ not more than 100
employees receiving at least 5K in compensation from the
employer during the previous year.
To purchase insurance, the policy owner must face the possibility
of losing money or something of value in the event of loss. What
is this concept called?
a) Insurable interest
b). Indemnity
c). Exposure
d). Pure Loss Correct Answer a) Insurable interest
To purchase insurance, the policy owner must face the possibility
of losing money or something of value in the event of loss this is
called insurable interest
,After an insurer appoints a new agent, the Commissioner must be
notified within
a). 10 days
b). 15 days
c). 20 days
d). 30 days Correct Answer d). 30 days
Within 30 days of new agent appointments, the insurer must file
the names, addresses, and other information with the
Commissioner.
Dividends received on participating life insurance policies are
a). Not taxable because they are a return of unused premiums
b. Taxable because they are a return on your investment
c). Not taxable because they are a return on your investment
d). Taxable because they are a return of unused premiums
Correct Answer a). Not taxable because they are a return of
unused premiums
Dividends on participating life insurance policies are not income
taxable because they are a return of unused premiums
, In a variable life insurance policy, all of the following assets are
held in the insurance company's general account EXCEPT
a). Mortality reserves
b). Face amount reserves
c). Incidental benefit amounts
d). Cash surrender values Correct Answer d). Cash surrender
values
The insurer does not guarantee or participate in the investment
risk of a variable life insurance policy. Because all underlying
assets must kept in separate account variable life insurance
policies cannot provide guaranteed cash surrender value
When the owner of participating whole life policy uses the
dividend to provide more life insurance coverage, which of the
following dividend options is being used?
a). Paid-up additions
b). Reduce the premium
c). Fixed amount
d). Reduced paid up Correct Answer a). Paid-up additions
QUESTIONS AND CORRECT ANSWERS
WITH DETAILED RATIONNALES GRADED
A+
All are true regarding the Insurance Commissioner's powers
related to hearing and investigations EXCEPT
a). Enact statutes to govern the insurance industry
b). Disseminate information regarding the Department activities
c). Enforce the NC Insurance Code
d). Determine if an agent has acted in violation of the Insurance
Code Correct Answer a). Enact statutes to govern the insurance
industry
State statutes are enacted by the state legislature. The Insurance
Commissioner is empowered to enforce the laws pertaining to
insurance
What is a specific requirement regarding the number of
employees in a SIMPLE plan?
,a). No more that 100 employees
b). At least 100 employees
c). Between 2 and 50 employees
d). No more than 2 employees Correct Answer a). No more that
100 employees
A SIMPLE ( Saving Incentive Match of Employees) plan is
available to small business that employ not more than 100
employees receiving at least 5K in compensation from the
employer during the previous year.
To purchase insurance, the policy owner must face the possibility
of losing money or something of value in the event of loss. What
is this concept called?
a) Insurable interest
b). Indemnity
c). Exposure
d). Pure Loss Correct Answer a) Insurable interest
To purchase insurance, the policy owner must face the possibility
of losing money or something of value in the event of loss this is
called insurable interest
,After an insurer appoints a new agent, the Commissioner must be
notified within
a). 10 days
b). 15 days
c). 20 days
d). 30 days Correct Answer d). 30 days
Within 30 days of new agent appointments, the insurer must file
the names, addresses, and other information with the
Commissioner.
Dividends received on participating life insurance policies are
a). Not taxable because they are a return of unused premiums
b. Taxable because they are a return on your investment
c). Not taxable because they are a return on your investment
d). Taxable because they are a return of unused premiums
Correct Answer a). Not taxable because they are a return of
unused premiums
Dividends on participating life insurance policies are not income
taxable because they are a return of unused premiums
, In a variable life insurance policy, all of the following assets are
held in the insurance company's general account EXCEPT
a). Mortality reserves
b). Face amount reserves
c). Incidental benefit amounts
d). Cash surrender values Correct Answer d). Cash surrender
values
The insurer does not guarantee or participate in the investment
risk of a variable life insurance policy. Because all underlying
assets must kept in separate account variable life insurance
policies cannot provide guaranteed cash surrender value
When the owner of participating whole life policy uses the
dividend to provide more life insurance coverage, which of the
following dividend options is being used?
a). Paid-up additions
b). Reduce the premium
c). Fixed amount
d). Reduced paid up Correct Answer a). Paid-up additions
