NC Life Exam Simulation Exam fully solved Latest version verified updated 2026/2027

NC Life Exam Simulation Exam fully solved Latest version verified updated 2026/2027 Which of the following actions require a policy owner to provide proof of insurability in an Adjustable Life policy? - -ANSWER: increase face amount 2. If the Commissioner of insurance finds that a licensed person has used fraudulent, coercive, or dishonest practices or has proved to be incompetent, untrustworthy, or financially irresponsible, the law allows the Commissioner to - -ANSWER: suspend, revoke, or refuse to renew the agent's license 3. A Whole Life Insurance Policy endows when the: - -ANSWER: Cash value equals the death benefit 4. A provision in a life insurance policy that pays the policy owner an amount that does not surpass the guaranteed cash value is called the: - -ANSWER: Policy Loan provision 5. The Life and Health Insurance Guaranty Association becomes involved in an insurance company's affairs when the company - -ANSWER: becomes insolvent 6. If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of? - -ANSWER: Insured 7. 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 sixth 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: - ANSWER: Adjustable Life 8. Which parts of a life insurance policy are guaranteed to be true? - -ANSWER: Warranty 9. Q applied for life insurance and submitted the initial premium on January 1. The policy was issued February 1, but it was not delivered by the agent until February 7. Q is dissatisfied and returns the policy February 13. How will the insurer handle this situation? - -ANSWER: Policy was returned within the free-look period, premium will be fully refunded NC LIFE NC LIFE 10. Which of these types of policies may NOT have the Automatic Premium Loan provision attached to it? - -ANSWER: Decreasing Term 11. Which of the following consists of an offer, acceptance, and consideration? - ANSWER: Contract 12. According to North Carolina's rules on disclosure, a life insurance applicant is expected to be provided with - -ANSWER: a Buyer's Guide and Policy Summary 13. Which of the following statements about noncontributory employee group life insurance is FALSE? - -ANSWER: A minimum number of employees is required to participate 14. The automatic premium loan provision is designed to: - -ANSWER: avoid a policy lapse 15. The amount received for a life insurance policy in a viatical settlement is - ANSWER: Less than the death benefit 16. If after satisfactory proof of loss, an insurer fails or refuses to pay death proceeds, the insurer must pay interest on the proceeds after how many days? - -ANSWER: 30 17. When a life insurance policy exceeds certain IRS table values, the result would create which of the following? - -ANSWER: Modified Endowment Contract (MEC) 18. A written agreement to provide a Life Insurance Policy holder immediate cash in exchange for the sale and transfer of a Life Insurance Policy is a - -ANSWER: Viatical Settlement 19. The annuity that represents the largest possible monthly payment to an individual annuitant is a(n): - -ANSWER: Straight Life annuity 20. The fund that assures policyholders payment of death benefits on Life Policies, if the company is insolvent at the time of the claim, is called the - -ANSWER: Life and Health Insurance Guaranty Association 21. The most important factor to consider when determining whether to convert term insurance at the insured's attained age or the insured's original age is: - -ANSWER: the cost 22. Which of these is NOT considered to be an element of an insurance contract? - ANSWER: negotiating 23. J is 35-years old and looking to purchase a whole life insurance policy. Which of the following types of policies will provide the most rapid growth of cash value? - ANSWER: 20-pay Life NC LIFE NC LIFE 24. A trustee-to-trustee transfer of rollover funds in a qualified plan allows a participant to avoid: - -ANSWER: mandatory income tax withholding on the transfer amount 25. A policyowner is allowed to pay premiums more than once a year under which provision? - -ANSWER: Mode of Premium 26. Which type of life policy contains a monthly mortality charge as well as self-directed investment choices? - -ANSWER: Variable Universal Life 27. Which policy requires an agent to register with the National Association of Securities Dealers (NASD) before selling? - -ANSWER: Variable Life 28. What does a 401(k) plan generally provide its participants? - -ANSWER: Salary deferral contributions 29. Which of the following statements regarding a Tax Sheltered Annuity (TSA) is INCORRECT? - -ANSWER: The income from the TSA is received income tax-free 30. An insurance company MUST clearly specify questions designed to obtain information solely for marketing research - -ANSWER: in any insurance transaction 31. Proceeds of the viatical settlement contract could be subject to the claims of - ANSWER: Creditors 32. 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? - ANSWER: Pay face amount minus the past due premium 33. Which of these statements concerning an Individual Straight Life annuity is accurate? - -ANSWER: Payments are made to an annuitant for life 34. What type of life policy covers two people and pays upon the death of the last insured? - -ANSWER: Survivorship 35. L, aged 50, and L's spouse, 48, have one natural child and one adopted child. They purchase a Family Policy that covers L's spouse to age 65. A death benefit will NOT be paid in which of the following circumstances? - -ANSWER: L's spouse dies at age 66. 36. P died five years after purchasing a life policy. While investigating the claim, the insurer discovered material misrepresentations made by P during the application process. Which of these actions will the insurer take? - -ANSWER: Beneficiary will be paid the Death Benefit NC LIFE NC LIFE 37. How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy? - -ANSWER: If the primary beneficiary dies before the insured 38. When a policyowner cash surrenders a Universal Life insurance policy in it's early years, this may be considered a red flag for a(n): - -ANSWER: Anti-Money Laundering violation 39. T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this? - -ANSWER: Renewable 40. J let her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions? - -ANSWER: Reinstatement provision 41. A whole life insurance policyowner does not wish to continue making premium payments. Which of the following enables the policyowner to sell the policy for more than its cash value? - -ANSWER: Life settlement contract 42. When a misrepresentation on a life insurance policy application is discovered, what action may an insurance company take? - -ANSWER: Void the policy only if it is discovered during the Contestable period and proven to be material 43. S is close to retiring and would like to purchase a policy that will yield greater gains than bonds, but will still protect the principal with a minimum level or risk. Which product would S be advised to purchase? - -ANSWER: Equity index insurance 44. 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? - -ANSWER: Universal Life 45. D was actively serving in the Marines when he was killed in an automobile accident while on leave. His $100,000 Whole life policy contains a War Exclusion clause. How much will D's beneficiary's receive? - -ANSWER: The full face amount 46. J chooses a monthly premium payment mode on his Whole Life insurance policy. Which of these statements is correct? - -ANSWER: The gross premium is higher on a monthly payment mode as compared to being paid annually 47. When funds are shifted straight from one IRA to another IRA, what percentage of the tax is withheld? - -ANSWER: None 48. Which of the following consists of an offer, acceptance, and consideration? - ANSWER: Contract NC LIFE NC LIFE 49. What benefit does the Payor clause on a Juvenile Life policy provide? - -ANSWER: Premiums are waived if payor becomes disabled 50. J would like to maintain the right to change beneficiaries. Which beneficiary designation should be used? - -ANSWER: Revocable 51. Lapsed individual life insurance may be reinstated at any time within - -ANSWER: 5 years 52. What is considered a valid reason for small businesses to insure the lives of its major shareholders? - -ANSWER: Fund a buy-sell agreement 53. An insurance company may NOT reject a prospective insured's life application on the basis of which of the following factors? - -ANSWER: Gender 54. Which statement regarding third-party ownership of a life insurance policy is true? - ANSWER: It is used extensively in estate-planning as well as business circumstances 55. A potential client, age 40, would like to purchase a Whole Life policy that will accumulate cash value at a faster rate in the early years of the policy. Which of these statements made by the producer would be correct? - -ANSWER: 20-Pay Life accumulates cash value faster than Straight Life 56. A policy of adhesion can only be modified by whom? - -ANSWER: The insurance company 57. Which of these would be considered a Limited-Pay Life policy? - -ANSWER: Life Paid-Up at Age 70 58. When can a policyowner change a revocable beneficiary? - -ANSWER: Anytime 59. What is the consideration given by an insurer in the Consideration clause of a life policy? - -ANSWER: Promise to pay a death benefit to a named beneficiary 60. Which of the following terms is defined as any transaction in which new life insurance or a new annuity is to be purchased and existing life insurance or annuity is to be terminated or discontinued? - -ANSWER: Replacement 61. What type of policy would offer a 40-year old the quickest accumulation of cash value? - -ANSWER: 20-pay life 62. Boycott, coercion, and intimidation that result in the unreasonable restraint of trade are prohibited under the North Carolina insurance laws covering - -ANSWER: unfair trade practices NC LIFE NC LIFE 63. What type of group insurance plan involves employees sharing the cost? - ANSWER: contributory plan 64. In a life insurance policy, which feature states that the policy will not cover certain risks? - -ANSWER: Exclusion 65. A person who is insured within a group contract will be given a: - -ANSWER: certificate 66. N is a 40-year old applicant who would like to retire at age 70. He is looking to buy a life insurance policy with level premiums, permanent protection, and be paid-up at retirement. Which of these should N purchase? - -ANSWER: 30 Pay Life 67. What kind of life insurance product covers children under their parent's policy? - ANSWER: Term rider 68. Which of the following correctly explains the actions an agent should take if a customer wants to apply for an insurance policy? - -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 69. A statement made by an insured in an insurance application that must be true to the best of one's knowledge and which becomes a part of the contract is known as: - ANSWER: a representation 70. Every insurance agent/broker MUST maintain all records, books, and documents for insurance transactions for a period of not less than - -ANSWER: 5 years 71. Which of these actions should a producer take when submitting an insurance application to an insurer? - -ANSWER: Inform insurer of relevant information not included on the application 72. T has an annuity that guarantees an income payment for the rest of his life. The contract also guarantees that if T dies before receiving payments for 20 years, the remaining payments will be paid to his son for the balance of the 20 years. What type of annuity is this? - -ANSWER: Life Annuity with Period Certain 73. Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called: - -ANSWER: representations 74. A temporary license may be issued for a MAXIMUM period of how many days? - ANSWER: 180 75. The funds used by the Life and Health Insurance Guaranty Association to carry out its purpose are obtained from the - -ANSWER: member companies NC LIFE NC LIFE 76. When does a Guaranteed Insurability Rider allow the insured to buy additional coverage? - -ANSWER: at future dates specified in the contract with no evidence of insurability required 77. Which statement regarding the Misstatement of Age provision is considered to be true? - -ANSWER: Coverage will be adjusted to reflect the insured's true age if a misstatement of age is discovered 78. 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? - -ANSWER: Return of premium rider 79. A vacancy that occurs during the North Carolina Commissioner of Insurance's term of office MUST be filled by the - -ANSWER: Governor 80. When an employee is terminated, which statement about a group term life conversion is true? - -ANSWER: Policy proceeds will be paid if the employee dies during the conversion period 81. When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have: - -ANSWER: insurable interest in the proposed insured 82. Which premium schedule results in the lowest cost to the policyowner? - -ANSWER: Annual 83. Under a Renewable Term policy, - -ANSWER: the renewal premium is calculated on the basis of the insured's attained age 84. How long does the coverage normally remain on a limited-pay life policy? - ANSWER: age 100 85. Which statement about a whole life policy is correct? - -ANSWER: Cash value may be borrowed against 86. M has an insurance policy that also has an outstanding policy loan at the time of M's death. The insurer will deduct the outstanding loan balance from the: - -ANSWER: policy proceeds 87. The amount of coverage on a group credit life policy is limited to: - -ANSWER: the insured's total loan value 88. What type of life insurance are credit policies issued as? - -ANSWER: Term NC LIFE NC LIFE 89. T would like to be assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase? - -ANSWER: Ten-Year Endowment 90. In a Life insurance contract, an insurance company's promise to pay stated benefits is called the: - -ANSWER: Insuring clause 91. G purchased a Family Income policy at age 40. The policy has a 20-year rider period. If G were to die at age 50, how long would G's family receive an income? - ANSWER: 10 years 92. Insurance policies are considered aleatory contracts because - -ANSWER: performance is conditioned upon a future occurrence 93. A variable insurance policy: - -ANSWER: does not guarantee a return on its investment accounts 94. Which statement regarding a Key Employee Life policy is NOT true? - -ANSWER: The beneficiary is named by the key employee 95. From what authority derives the requirement that an insurance application contains a disclosure stating that an investigative consumer report may be obtained on an applicant? - -ANSWER: Fair Credit Reporting Act 96. The Universal Life Policy is called an unbundled Life Policy because the policyholder can see the expense charges, the interest earned, and the: - -`ANSWER: Cost of insurance 97. N is covered by a Term Life policy and does not make the required premium payment which was due August 1. N dies September 15. What action will the insurer take? - -ANSWER: Claim will be denied 98. Premature IRA distributions are assessed a penalty tax of: - -ANSWER: 10% 99. Which factors are taken into consideration when an insurance company determines the premium rate for a Whole Life policy on an applicant? - -ANSWER: Risk classification 100. Equity indexed annuities are invested in which of the following: - -ANSWER: S&P 500 101. K pays on a $20,000 20-Year Endowment policy for 10 years and dies from an automobile accident. How much will the insurance company pay the beneficiary? - ANSWER: $20,000 death benefit NC LIFE NC LIFE 102. Which of the following is TRUE about a qualified retirement that is "top heavy"? - ANSWER: More than 60% of plan assets are in key employee accounts 103. At the age of 45, an individual withdraws $50,000 from his Qualified Profit-Sharing Plan and then deposits this amount into a personal savings account. This action would result in: - -ANSWER: Income tax and a 10% penalty assessed upon funds withdrawn from the Qualified Plan 104. Which requirement must be met for an association to be eligible for a group life plan? - -ANSWER: Group was formed for a purpose other than acquiring insurance 105. B owns a Whole Life policy with a guaranteed insurability option that allows him to purchase, without evidence of insurability, stated amounts of - -ANSWER: additional Whole Life coverage at specified times 106. Which of these arrangements allows one to bypass insurable interest laws? - ANSWER: Investor-Originated Life Insurance 107. Which type of contract liquidates an estate through recurrent payments? - ANSWER: Annuity 108. Traditional individual retirement annuity (IRA) distributions must start by: - ANSWER: April 1st of the year following the year the participant attains age 70 1/2 109. An employee with $25,000 group term life coverage was recently fired. This employee's group coverage may be converted to a: - -ANSWER: $25,000 individual whole life policy 110. All of the following statements are true regarding a policy's Grace period, EXCEPT: - -ANSWER: Past due premiums are waived 111. T, age 70, withdraws cash from a profit-sharing plan and purchases a Straight Life Annuity. What will this transaction provide? - -ANSWER: Income that cannot be outlived by the owner 112. Which of these terms accurately defines an underwriter's assessment of information on a life insurance application? - -ANSWER: Risk classification 113. Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary? - -ANSWER: Life Income 114. A long-term care rider in a life insurance policy pays a daily benefit in the event of which of the following? - -ANSWER: Inability of the insured to perform more than 2 Activities of Daily Living (ADL's) NC LIFE NC LIFE 115. An incomplete life insurance application submitted to an insurer will result in which of these actions? - -ANSWER: Application will be returned to the writing agent 116. C is a key employee at ABC Incorporated. If a Key Employee life policy is purchased on her life, which of these statements would be true? - -ANSWER: ABC is the policyowner, C is the insured, and ABC is the beneficiary 117. Which of these is NOT a reason for purchasing life insurance on the life of a minor? - -ANSWER: If both parents were to die, it would provide death benefits to the child 118. The Commissioner of Insurance is empowered to - -ANSWER: enforce state laws relating to insurance 119. Inducing or attempting to induce any insured person through misrepresentation to lapse, forfeit, or surrender insurance is - -ANSWER: twisting 120. An insured is past due on his life insurance premium, but is still within the Grace Period. What will the beneficiary receive if the insured dies during this Grace Period? - ANSWER: Full face amount minus any past due premiums 121. Which statement is TRUE regarding a Variable Whole Life policy? - -ANSWER: A minimum guaranteed Death benefit is provided 122. Two partners own equal shares in a business worth a total of $1,000,000. If they both commit to the purchase of a life insurance policy that will fund a Buy-Sell Agreement, which of the following is TRUE? - -ANSWER: Each partner owns a $500,000 policy on their partner's life 123. What group term life feature permits an individual to depart from the group and continue to be covered without providing evidence of insurability? - -ANSWER: Conversion 124. P and Q are married and have three children. P is the primary beneficiary on Q's Accidental Death and Dismemberment (AD&D) policy and Q's sister R is the contingent beneficiary. P, Q, and R are involved in a car accident and Q and R are killed instantly. The Accidental Death benefits will be paid to: - -ANSWER: P only 125. Which of the following policies combines investment choices with a form of Term coverage? - -ANSWER: Variable Universal Life 126. The type of annuity that can be purchased with one monetary deposit is called a(n): - -ANSWER: Immediate annuity 127. Which of these statements is INCORRECT regarding the federal income tax treatment of life insurance? - -ANSWER: Entire cash surrender value is taxable NC LIFE NC LIFE 128. Credit life insurance is typically issued with which of the following types of coverage? - -ANSWER: Decreasing Term 129. An agent who sells an individual life insurance policy in North Carolina MUST deliver to the policyowner - -ANSWER: A Policy Summary and Buyer's Guide 130. Which tax would an IRA participant be subjected to on distributions received prior to age 59 1/2? - -ANSWER: Ordinary income tax and a 10% tax penalty for early withdrawal 131. Which type of life policy contains a monthly mortality charge as well as self directed investment choices? - -ANSWER: Variable Universal Life 132. Which of the following types of policies pays a benefit if the insured goes blind? - ANSWER: AD&D 133. When is the face amount of a Whole Life policy paid? - -ANSWER: When the insured dies or at the policy's maturity date, whichever happens first 134. An agent that has been or is engaged in conduct that violates the Insurance Information and Privacy Protection Act shall be issued and served a statement of charges and notice of hearing by the Commissioner of Insurance. The date of such hearing shall be AT LEAST how many days after service of charges? - -ANSWER: 10 135. Which of the following is a characteristic of a variable annuity? - -ANSWER: Underlying equity investments 136. Which of these characteristics is consistent with a Straight Life policy? - ANSWER: Premiums are payable for as long as there is insurance coverage in force 137. Which provision is NOT a requirement in a group life policy? - -ANSWER: Accidental 138. 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? - ANSWER: Conditional receipt 139. In order for coverage on a non-medical insurance application to take effect the same day, the producer must collect a signed application and - -ANSWER:the initial premium 140. Who is normally considered to be the owner of a 403(b) tax-sheltered annuity? - ANSWER: The employee NC LIFE NC LIFE 141. When must insurable interest exist for a life insurance contract to be valid? - ANSWER: Inception of the contract 142. At what time must a policyowner have insurable interest on the insured in order for the life policy to be valid? - -ANSWER: At the time of application 143. F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed? - -ANSWER: Decreasing term policy 144. An insurance agent is guilty of twisting if the agent - -ANSWER: misrepresents a policy to induce a policyowner to surrender an existing policy 145. A retirement plan that sets aside part of the company's net income for distributions to qualified employees is called a: - -ANSWER: profit-sharing plan 146. T and S are named co-primary beneficiaries on a $500,000 Accidental Death and Dismemberment policy insuring their father. Their mother was named contingent beneficiary. Five years later, S dies of natural causes and the father is killed in a scuba accident shortly afterwards. How much of the death benefit will the mother receive? - ANSWER: $0 147. Insurance policies are offered on a "take it or leave it" basis, which make them: - ANSWER: Contracts of Adhesion 148. Which of these statements about a Guaranteed Insurability Option rider is NOT TRUE? - -ANSWER: Evidence of insurability is required when the option is exercised 149. How does an indexed annuity differ from a fixed annuity? - -ANSWER: Indexed annuity owners receive credited interest tied to the fluctuations of the linked index 150. P purchases a $50,000 whole life insurance policy in 2005. One of the questions on the application asks if P engages in scuba diving, to which P answers "No". The policy is then issued with no scuba exclusions. In 2010, P takes up scuba diving and dies in a scuba-related accident in 2011. What will the insurer pay to P's beneficiary? - ANSWER: $50,000 minus any outstanding policy loans 151. P, age 50, purchased an annuity that P will fund with $500/ month for 15 years. The annuity will then pay P retirement payments after the 15 years. Which type of annuity did P purchase? - -ANSWER: Deferred 152. A Medical Information Report (MIB) report may disclose which of the following: - ANSWER: Prior use of marijuana 153. Information obtained from a phone conversation to the proposed insured can be found in which of these reports? - -ANSWER: Inspection report NC LIFE NC LIFE 154. An agent who signs a blank contract application or policy of insurance - -ANSWER: is guilty of a misdemeanor 155. S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year later of natural causes. How much will the insurer pay the beneficiary? - -ANSWER: $50,000 156. The investment gains from a Universal Life Policy usually go toward: - -ANSWER: the cash value 157. All of these are considered sources of underwriting information about an applicant, EXCEPT: - -ANSWER: Rating Services 158. Which of the following statements is CORRECT about accelerated death benefits? - -ANSWER: Must have a terminal illness to qualify 159. When must insurable interest be present in order for a life insurance policy to be valid? - -ANSWER: When the application is made 160. If the insured and primary beneficiary are both killed in the same accident and it cannot be determined who died first, where are the death proceeds to be directed under the Uniform Simultaneous Death Act? - -ANSWER: Insured's contingent beneficiary 161. Upon delivery of a rated life insurance policy, the Producer must obtain each of the following, EXCEPT: - -ANSWER: Signed HIPAA disclosure 162.N, age 50, recently bought an annuity that will pay a guaranteed $2,000/month at age 70 for life. What type of annuity did N purchase? - -ANSWER: Fixed Deferred 163. Which of the following Dividend options results in taxable income to the policyowner? - -ANSWER: Accumulation at Interest 164. Which type of life insurance beneficiary requires his/her consent when a change of beneficiary is attempted by the policyowner? - -ANSWER: Irrevocable beneficiary 165. D is the policyowner and insured for a $50,000 life insurance policy. The beneficiary is D's wife. D and his wife divorce and D remarries, transferring ownership of his policy to his new wife. If D dies without making any further changes, to whom will the policy proceeds be paid to? - -ANSWER: Ex-wife 166. How are policyowner dividends treated in regards to income tax? - -ANSWER: Interest on accumulations is taxed 167. A life insurance policy would be considered a wagering contract WITHOUT: - ANSWER: insurable interest NC LIFE NC LIFE 168. P is a producer who notices 5 questions on a life application were not answered. What actions should P take? - -ANSWER: Set up a meeting with the applicant to answer the remaining questions 169. P is a forty year old woman and would like to purchase an annuity that will provide a lifetime income stream beginning at age sixty. Which of the following did she NOT buy? - -ANSWER: An immediate annuity 170. A life insurance policy that provides a policyowner with cash value along with a level face amount is called: - -ANSWER: Whole life 171. Which of these is considered a statement that is assured to be true in every respect? - -ANSWER: Warranty 172. Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted? - -ANSWER:If Tom's employment is terminated, 20% of the funds would be forfeited 173. A life insurance arrangement which circumvents insurable interest statutes is called: - -ANSWER: Investor-Originated Life Insurance 174. Under federal tax laws, what is the tax treatment for an employer providing $50,000 of a contributory group Term Life plan to all its eligible employees? - ANSWER: Portion of the premiums paid for by the employer may be a tax deduction 175. What is the underlying concept regarding level premiums? - -ANSWER: The early years are charged more than what is needed 176. W is a 39-year old female who just purchased an annuity to provide income for life starting at age 60. All of these would be acceptable annuity choices, EXCEPT a(n): - ANSWER: Immediate annuity 177. What kind of special need would a policyowner require with an Adjustable Life insurance policy? - -ANSWER: flexible premiums 178. When an individual is planning to protect his family with life insurance, one method of doing so is called needs analysis. What exactly does needs analysis involve? - ANSWER: Establishes the needs of the individual and his dependents 179. What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies? - -ANSWER: Family Maintenance Policy 180. 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? - -ANSWER: Family Maintenance Policy NC LIFE NC LIFE 181. S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT - -ANSWER: beneficiary's age 182. What is being delivered during a policy delivery? - -ANSWER: Insurance contract to the proposed insured 183. In North Carolina, which of the following is required in order to continue a resident insurance agent license? - -ANSWER: Meeting continuing education requirements 184. A policy loan is made possible by which of these life insurance policy features? - ANSWER: Cash value provision 185. K is an agent who takes an application for individual life insurance and accepts a check from the client. He submits the application and check to the insurance company, however the check was never signed by the applicant. If the application is approved, when will coverage be effective? - -ANSWER: The date the agent delivered the policy, collected the initial premium, and obtained a good health statement from the insured 186. Which provision prevents an insurer from changing the terms of the contract with the policyowner by referring to documents not found within the policy itself? - ANSWER: Entire Contract Provision 187. Which of the following statements about accumulated interest earned on dividends from an insurance policy is TRUE? - -ANSWER: It is taxed as ordinary income 188.At what point does an informal contract become binding? - -ANSWER: When one party makes an offer and the other party accepts that offer 189. Which of the following is NOT included in an annuity contract? - -ANSWER: AD&D rider 190. According to the Information and Privacy Protection Act, when access to recorded personal information is requested following an adverse underwriting decision, the insurer must make the information available within how many business days? - ANSWER: 30 191. Before a life insurance policy is issued, which of these components of the contract is required? - -ANSWER: Applicant's signature on application 192. A policy of adhesion can only be modified by whom? - -ANSWER: The insurance company 193. No insurer shall refuse to insure an individual because of - -ANSWER: race NC LIFE 194. Which of these factors does NOT influence an applicant's need for life insurance? - -ANSWER: Self-maintenance expenses 195. T is covered by an Accidental Death and Dismemberment (AD&D) policy that has an irrevocable beneficiary. What action will the insurance company take if T requests a change of beneficiary? - -ANSWER: Request of the change will be refused 196. Which of these is NOT considered to be a cost connected with an individual's death? - -ANSWER: Business expenses 197. Which of these is an element of a Variable Life policy? - -ANSWER: A fixed, level premium 198. A 55 year old recently received a $30,000 distribution from a previous employer's 401k plan, minus $6,000 withholding. Which federal taxes apply if none of the funds were rolled over? - -ANSWER: Income taxes plus a 10% penalty tax on $30,000 199. A policyowner is able to choose the frequency of premium payments through what policy feature? - -ANSWER: Premium Mode 200. Which of these is NOT a reason for a business to buy key person life insurance? - -ANSWER: A pension deficiency if the key employee dies NC LIFE