NC Life Insurance Practice Exam Questions and Answers |Fall
2025/2026 Update | 100% Correct
Question 1
How long is a free-look period for replacement policies?
a)10 days
b)14 days
c)20 days
d)30 days
Correct Answer
d)30 days
The replacing insurer must provide to the policyowner notice of the right to return the policy or contract within 30 days
of the delivery of the contract and receive an unconditional full refund of all premiums.
Page 1 of 75
,Question 2
Which of the following are NOT fundable by annuities?
a)A person's retirement
b)Estate liquidation
c)Death benefits
d)Cash accumulation for any reason
Correct Answer
c)Death benefits
Annuities are most commonly used to fund a person's retirement, but they can technically be used to accumulate cash
for any reason. Annuities can also be used to liquidate an estate. Annuities do not provide death benefits; those are
provided by life insurance.
Page 2 of 75
,Question 3
Cash Value guarantees in whole life policy are called
a). Dividends
b). Nonforfeiture values
c). Living Benefits
d). Cash Loans
Correct Answer
b). Nonforfeiture values
Because permanent life insurance policies have cash values, there are certain guarantees that are built into the policy that
cannot be forfeited by the policy owner. These guarantees (know as nonforfeiture values) are required by state law to be
included in the policy. A table showing the nonforfeiture values must be included in the policy for a minimum period of
20 years. The policy owner has options as to how to exercise nonforfeiture values.
Question 4
The regulation of the insurance industry primarily rests with
a)Private insurers.
b)The federal government.
c)The State.
d)The NAIC.
Correct Answer
c)The State.
Each state regulates the business of insurance conducted within that state.
Page 3 of 75
, Question 5
Which of the following best defines target premium in a universal life policy?
a)The corridor of insurance
b)The recommended amount to keep the policy in force throughout its lifetime
c)The maximum amount the policyowner may pay on a policy
d)The minimum amount to make sure the policy is annually renewable
Correct Answer
b)The recommended amount to keep the policy in force throughout its lifetime
The target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance
protection and to keep the policy in force throughout its lifetime.
Page 4 of 75
2025/2026 Update | 100% Correct
Question 1
How long is a free-look period for replacement policies?
a)10 days
b)14 days
c)20 days
d)30 days
Correct Answer
d)30 days
The replacing insurer must provide to the policyowner notice of the right to return the policy or contract within 30 days
of the delivery of the contract and receive an unconditional full refund of all premiums.
Page 1 of 75
,Question 2
Which of the following are NOT fundable by annuities?
a)A person's retirement
b)Estate liquidation
c)Death benefits
d)Cash accumulation for any reason
Correct Answer
c)Death benefits
Annuities are most commonly used to fund a person's retirement, but they can technically be used to accumulate cash
for any reason. Annuities can also be used to liquidate an estate. Annuities do not provide death benefits; those are
provided by life insurance.
Page 2 of 75
,Question 3
Cash Value guarantees in whole life policy are called
a). Dividends
b). Nonforfeiture values
c). Living Benefits
d). Cash Loans
Correct Answer
b). Nonforfeiture values
Because permanent life insurance policies have cash values, there are certain guarantees that are built into the policy that
cannot be forfeited by the policy owner. These guarantees (know as nonforfeiture values) are required by state law to be
included in the policy. A table showing the nonforfeiture values must be included in the policy for a minimum period of
20 years. The policy owner has options as to how to exercise nonforfeiture values.
Question 4
The regulation of the insurance industry primarily rests with
a)Private insurers.
b)The federal government.
c)The State.
d)The NAIC.
Correct Answer
c)The State.
Each state regulates the business of insurance conducted within that state.
Page 3 of 75
, Question 5
Which of the following best defines target premium in a universal life policy?
a)The corridor of insurance
b)The recommended amount to keep the policy in force throughout its lifetime
c)The maximum amount the policyowner may pay on a policy
d)The minimum amount to make sure the policy is annually renewable
Correct Answer
b)The recommended amount to keep the policy in force throughout its lifetime
The target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance
protection and to keep the policy in force throughout its lifetime.
Page 4 of 75
