NC Life Insurance Practice Exam Questions
a) 15
When any company under any insurance policy requires a written proof of loss after notice of
the loss has been given by the insured or beneficiary, the company must furnish a blank form
within 15 days. - ANS-Insurance companies are required to provide proof of loss forms to the
claimant within how many days after receipt of notice of loss?
a) 15
b) 30
c) 31
d) 45
a) Class 1 misdemeanor.
A person who knowingly obtains information about an individual from an insurer or agent under
false pretenses is guilty of a Class 1 misdemeanor. - ANS-A person who knowingly obtains
information about an individual from an agent or the insurer under false pretenses has
committed a(n)
a)Class 1 misdemeanor.
b)Trustworthy act.
c)Unfair trade practice.
d)Felony.
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 - ANS-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
a) The rider is usually level term insurance.
,The spouse term rider allows a spouse to be added for coverage. It is available for a limited
amount of time, typically expiring at age 65. A spouse term rider (just like any other insured
rider) is usually level term insurance. - ANS-Which is true about a spouse term rider?
a) The rider is usually level term insurance.
b) Coverage is allowed for an unlimited time.
c) The rider is decreasing term insurance.
d) Coverage is allowed up to age 75.
a). Alien
An insurer incorporated in a foreign country is considered to be an alien insurer - ANS-An
insurer who transact insurance in this state but whose articles of incorporation are registered in
Canada is considered what type of insurer?
a). Alien
b). Unauthorized
c). Surplus lines
d). Foreign
a). At the insured's age 100
The cash value, created by the accumulation of premium, is scheduled to equal the face amount
of the policy when the insured reaches age 100 and is paid out - ANS-In whole life insurance,
when is the policy cash value scheduled to equal the face amount?
a). At the insured's age 100
b). By the policy's 10th year
c). When the insured paid up all policy loans
d). It depends on the type of whole life purchased
a). Both guarantee that the principal and interest will be fully paid out
Neither the fixed-period nor fixed-amount settlement options guarantee income for the life of the
beneficiary; however they both guarantee that the entire principal and interest will be distributed
- ANS-Which of the following would be true of both the fixed-period and fixed-amount settlement
options?
a). Both guarantee that the principal and interest will be fully paid out
b). The amount of payments is based on the recipient's life expectancy.
c). The size of installments decreases after certain period of time
d). Both guarantee payments for the life of the beneficiary
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 - ANS-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
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. - ANS-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
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 - ANS-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
a). Paid-up additions
The paid-up addition dividend option is used to purchase more paid-up insurance each year,
thereby increasing the death benefit - ANS-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
, a)$1,000
Industrial life insurance is a form of life insurance where premiums are payable monthly or more
frequently. The face amount of an industrial insurance policy may not exceed $1,000. -
ANS-What is the maximum face amount on an industrial life policy?
a)$1,000
b)$10,000
c)$1 million
d)Unlimited
a)10 days
All hearings will be held at a time and place designated in a written notice provided by the
Commissioner. The notice must be provided at least 10 days prior to the hearing, and must also
state any specific charges. - ANS-If the Commissioner is scheduling a hearing for a potential
violation of the Insurance Code, what is the minimum required notice?
a)10 days
b)15 days
c)30 days
d)45 days
a)An agent fails to pay state income tax.
Failure to pay state income tax is a violation subject to license suspension or revocation; all the
other examples are not. - ANS-Which of the following acts would be grounds for a person's
license suspension, revocation, or refusal to renew?
a)An agent fails to pay state income tax.
b)An agent unknowingly misrepresents the terms of an insurance contract.
c)An agent refuses to offer an explanation to a policyholder concerning the coverage provided
by another insurer.
d)A broker does not return a client's calls on timely basis.
a)Annual
Annual premiums are the only modes of payment that do not result in service fee, so the overall
payment will be lower. - ANS-Which of the following premium payment modes will incur the
lowest overall payment?
a)Annual
b)Semi-annual
c)Quarterly
a) 15
When any company under any insurance policy requires a written proof of loss after notice of
the loss has been given by the insured or beneficiary, the company must furnish a blank form
within 15 days. - ANS-Insurance companies are required to provide proof of loss forms to the
claimant within how many days after receipt of notice of loss?
a) 15
b) 30
c) 31
d) 45
a) Class 1 misdemeanor.
A person who knowingly obtains information about an individual from an insurer or agent under
false pretenses is guilty of a Class 1 misdemeanor. - ANS-A person who knowingly obtains
information about an individual from an agent or the insurer under false pretenses has
committed a(n)
a)Class 1 misdemeanor.
b)Trustworthy act.
c)Unfair trade practice.
d)Felony.
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 - ANS-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
a) The rider is usually level term insurance.
,The spouse term rider allows a spouse to be added for coverage. It is available for a limited
amount of time, typically expiring at age 65. A spouse term rider (just like any other insured
rider) is usually level term insurance. - ANS-Which is true about a spouse term rider?
a) The rider is usually level term insurance.
b) Coverage is allowed for an unlimited time.
c) The rider is decreasing term insurance.
d) Coverage is allowed up to age 75.
a). Alien
An insurer incorporated in a foreign country is considered to be an alien insurer - ANS-An
insurer who transact insurance in this state but whose articles of incorporation are registered in
Canada is considered what type of insurer?
a). Alien
b). Unauthorized
c). Surplus lines
d). Foreign
a). At the insured's age 100
The cash value, created by the accumulation of premium, is scheduled to equal the face amount
of the policy when the insured reaches age 100 and is paid out - ANS-In whole life insurance,
when is the policy cash value scheduled to equal the face amount?
a). At the insured's age 100
b). By the policy's 10th year
c). When the insured paid up all policy loans
d). It depends on the type of whole life purchased
a). Both guarantee that the principal and interest will be fully paid out
Neither the fixed-period nor fixed-amount settlement options guarantee income for the life of the
beneficiary; however they both guarantee that the entire principal and interest will be distributed
- ANS-Which of the following would be true of both the fixed-period and fixed-amount settlement
options?
a). Both guarantee that the principal and interest will be fully paid out
b). The amount of payments is based on the recipient's life expectancy.
c). The size of installments decreases after certain period of time
d). Both guarantee payments for the life of the beneficiary
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 - ANS-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
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. - ANS-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
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 - ANS-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
a). Paid-up additions
The paid-up addition dividend option is used to purchase more paid-up insurance each year,
thereby increasing the death benefit - ANS-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
, a)$1,000
Industrial life insurance is a form of life insurance where premiums are payable monthly or more
frequently. The face amount of an industrial insurance policy may not exceed $1,000. -
ANS-What is the maximum face amount on an industrial life policy?
a)$1,000
b)$10,000
c)$1 million
d)Unlimited
a)10 days
All hearings will be held at a time and place designated in a written notice provided by the
Commissioner. The notice must be provided at least 10 days prior to the hearing, and must also
state any specific charges. - ANS-If the Commissioner is scheduling a hearing for a potential
violation of the Insurance Code, what is the minimum required notice?
a)10 days
b)15 days
c)30 days
d)45 days
a)An agent fails to pay state income tax.
Failure to pay state income tax is a violation subject to license suspension or revocation; all the
other examples are not. - ANS-Which of the following acts would be grounds for a person's
license suspension, revocation, or refusal to renew?
a)An agent fails to pay state income tax.
b)An agent unknowingly misrepresents the terms of an insurance contract.
c)An agent refuses to offer an explanation to a policyholder concerning the coverage provided
by another insurer.
d)A broker does not return a client's calls on timely basis.
a)Annual
Annual premiums are the only modes of payment that do not result in service fee, so the overall
payment will be lower. - ANS-Which of the following premium payment modes will incur the
lowest overall payment?
a)Annual
b)Semi-annual
c)Quarterly
