NC Life Insurance Exam Prep Questions and Answers |Fall
2025/2026 Update | 100% Correct
Question 1
Whose life is covered on a life insurance policy that contains a payor benefit clause?
Correct Answer
Child; A payor benefit clause is generally added to a life policy that insures the life of a juvenile. It provides continuance
of insurance coverage in the event of the death or total disability of the individual responsible for the payment of
premiums.
Question 2
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
Correct Answer
Not eligible for the insurance because as a seasonal employee K doesn't meet the definition of "employee" under NC law
Question 3
Which of the following consists of an offer, acceptance, and consideration?
Correct Answer
Contract
Page 1 of 59
,Question 4
If a company accepts a renewal premium payment that would extend coverage beyond the policy's MAXIMUM age limit,
the company
Correct Answer
Must continue the coverage to the end of the period of time for which the premium was accepted
Question 5
Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2?
Correct Answer
Ordinary income tax and a 10% tax penalty for early withdrawal
Question 6
How do life insurance companies handle cases where the insured commits suicide within the contract's stated contestable
period?
Correct Answer
Claims are denied under the Suicide Clause (1 year) of the policy
Question 7
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?
Correct Answer
Proceed will go to the contingent beneficiary
Page 2 of 59
,Question 8
Annuity
Correct Answer
An agreement by an insurer to make periodic payments that continue during the lifetime of the annuitant(s) or for a
specified period. Protects against the risk of living too long.
Question 9
K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable?
Correct Answer
Level
Question 10
All of these are considered sources of underwriting information about an applicant EXCEPT
Correct Answer
Rating services
Question 11
Which of the following correctly explains the actions an agent should take if a customer wants to apply for a insurance
company?
Correct Answer
Complete the application and review the information with the customer prior to obtaining the customer's signature, then
send the application off to the insurance company
Page 3 of 59
, Question 12
Which of the following Dividend options results in taxable income to the policy owner?
Correct Answer
Accumulation at Interest
Question 13
Which of these are NOT an example of a Non-forfeiture option?
Correct Answer
Life income
Question 14
Aleatory Contract
Correct Answer
A contract in which the number of dollars to be given up by each party is not equal. Insurance contracts are of this type,
as the policyholder pays a premium and may collect nothing from the insurer or may collect a great deal more than the
amount of the premium if a loss occurs.
Question 15
Which of these insurance riders allows the applicant to have excess coverage?
Correct Answer
Term rider
Page 4 of 59
2025/2026 Update | 100% Correct
Question 1
Whose life is covered on a life insurance policy that contains a payor benefit clause?
Correct Answer
Child; A payor benefit clause is generally added to a life policy that insures the life of a juvenile. It provides continuance
of insurance coverage in the event of the death or total disability of the individual responsible for the payment of
premiums.
Question 2
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
Correct Answer
Not eligible for the insurance because as a seasonal employee K doesn't meet the definition of "employee" under NC law
Question 3
Which of the following consists of an offer, acceptance, and consideration?
Correct Answer
Contract
Page 1 of 59
,Question 4
If a company accepts a renewal premium payment that would extend coverage beyond the policy's MAXIMUM age limit,
the company
Correct Answer
Must continue the coverage to the end of the period of time for which the premium was accepted
Question 5
Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2?
Correct Answer
Ordinary income tax and a 10% tax penalty for early withdrawal
Question 6
How do life insurance companies handle cases where the insured commits suicide within the contract's stated contestable
period?
Correct Answer
Claims are denied under the Suicide Clause (1 year) of the policy
Question 7
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?
Correct Answer
Proceed will go to the contingent beneficiary
Page 2 of 59
,Question 8
Annuity
Correct Answer
An agreement by an insurer to make periodic payments that continue during the lifetime of the annuitant(s) or for a
specified period. Protects against the risk of living too long.
Question 9
K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable?
Correct Answer
Level
Question 10
All of these are considered sources of underwriting information about an applicant EXCEPT
Correct Answer
Rating services
Question 11
Which of the following correctly explains the actions an agent should take if a customer wants to apply for a insurance
company?
Correct Answer
Complete the application and review the information with the customer prior to obtaining the customer's signature, then
send the application off to the insurance company
Page 3 of 59
, Question 12
Which of the following Dividend options results in taxable income to the policy owner?
Correct Answer
Accumulation at Interest
Question 13
Which of these are NOT an example of a Non-forfeiture option?
Correct Answer
Life income
Question 14
Aleatory Contract
Correct Answer
A contract in which the number of dollars to be given up by each party is not equal. Insurance contracts are of this type,
as the policyholder pays a premium and may collect nothing from the insurer or may collect a great deal more than the
amount of the premium if a loss occurs.
Question 15
Which of these insurance riders allows the applicant to have excess coverage?
Correct Answer
Term rider
Page 4 of 59
