NC LIFE INSURANCE TEST 2025 QUESTIONS WITH
ANSWERS GUARANTEE A+
✔✔JOINT LIFE - ✔✔a single policy that is designed to insure two or more lives; policies
can be in the form of term insurance or permanent insurance. Premium would be less
than for the same type and amount of coverage on the same individuals. The premium
is based on a joint average age that is between the ages of the insureds; the death
benefit is paid upon the first death only. Also used to insure the lives of business
partners in the funding of a buy-sell agreement.
✔✔LAST SURVIVOR/SURVIVORSHIP LIFE - ✔✔(Second to Die) much the same as
joint life in that it insures two or more lives for a premium that is based on a joint age.
The major difference is that survivorship life pays on the last death rather than upon the
first death
✔✔Juvenile - ✔✔any life insurance written on the life of a minor
✔✔LIMITED BENEFIT - ✔✔These policies cover certain expenses from specifically
named illnesses, injuries, or circumstances. Cancer policies pay benefits for the actually
treatment of cancer and cover no other illness.
✔✔Flexible Premium Adjustable Life - ✔✔The policy owner has the flexibility to increase
the amount of premium paid into the policy and to later decrease it again. The policy
owner may even skip paying a premium and the policy will not lapse as long as there is
sufficient cash value at the time to cover the monthly deductions for cost of insurance. If
the cash value is too small, the policy will expire.
✔✔TARGET PREMIUM - ✔✔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
✔✔UNBUNDLED - ✔✔all the pricing elements are disclosed separately by the insurer,
unlike traditional term or whole life insurance in which the policy owner is charged a
single gross-premium amount
✔✔Option A Level death benefit options - ✔✔the death benefits remain level while the
cash value gradually increases, thereby lowering the pure insurance with the insurer in
the later years
✔✔Option B: Increasing death benefit option - ✔✔the death benefit includes the annual
increase in cash value so that the death benefit gradually increases each year by the
amount that the cash value increases. At any point the total death benefit will always be
equal to the face amount of the policy plus the current amount of cash values.
, ✔✔INTEREST SENSITIVE WHOLE LIFE (CURRENT ASSUMPTION LIFE): -
✔✔although the insurer guarantees a contract interest rate (usually 3 to 6%), there is
also a potential for the policy owner to get a current interest rate, which is not
guaranteed in the contract but may be higher because of current market conditions.
✔✔SINGLE PREMIUM - ✔✔one time lump sum payment
✔✔INSTALLMENT PREMIUM: FIXED/FLEXIBLE/PERIODIC - ✔✔paid in installments
over a period of time
✔✔FIXED - ✔✔the annuitant knows the exact amount of each payment received from
the annuity during the annuity period
✔✔VARIED - ✔✔serves as a hedge against inflation and is variable from the standpoint
that the annuitant may receive different rates of return on the funds that are paid into the
annuity
✔✔EQUITY INDEX - ✔✔fixed annuities that invest on a relatively aggressive basis to
aim for higher returns.
✔✔ANNUITY WITH PERIOD CERTAIN - ✔✔short term annuities that limit the amount
paid to a certain fixed period or until a certain fixed amount it liquidated
✔✔INSURING AGREEMENT/CLAUSE - ✔✔sets for the basic agreement between the
insurer and the insured. It states that the insurer's promise to pay the death benefit upon
the insured's death.
✔✔OWNERSHIP CLAUSE - ✔✔the policy owner has the responsibility of paying the
policy premiums, and is also the person who must have an insurable interest in the
insured at the time of application for the insurance
✔✔ENTIRE CONTRACT CLAUSE - ✔✔provision that stipulates that the policy and a
copy of the application along with any riders or amendments, constitute the entire
contract
✔✔GRACE PERIOD - ✔✔the period of time after the premium due date that the policy
owner has to pay the premium before the policy lapses
✔✔REINSTATMENT CLAUSE - ✔✔requires evidence of insurability and the policy
owner is also required to pay back premiums plus interest and any outstanding loans
with interest; the policy will be restored to its original status and retain all the values that
were established at the insured's issue age
ANSWERS GUARANTEE A+
✔✔JOINT LIFE - ✔✔a single policy that is designed to insure two or more lives; policies
can be in the form of term insurance or permanent insurance. Premium would be less
than for the same type and amount of coverage on the same individuals. The premium
is based on a joint average age that is between the ages of the insureds; the death
benefit is paid upon the first death only. Also used to insure the lives of business
partners in the funding of a buy-sell agreement.
✔✔LAST SURVIVOR/SURVIVORSHIP LIFE - ✔✔(Second to Die) much the same as
joint life in that it insures two or more lives for a premium that is based on a joint age.
The major difference is that survivorship life pays on the last death rather than upon the
first death
✔✔Juvenile - ✔✔any life insurance written on the life of a minor
✔✔LIMITED BENEFIT - ✔✔These policies cover certain expenses from specifically
named illnesses, injuries, or circumstances. Cancer policies pay benefits for the actually
treatment of cancer and cover no other illness.
✔✔Flexible Premium Adjustable Life - ✔✔The policy owner has the flexibility to increase
the amount of premium paid into the policy and to later decrease it again. The policy
owner may even skip paying a premium and the policy will not lapse as long as there is
sufficient cash value at the time to cover the monthly deductions for cost of insurance. If
the cash value is too small, the policy will expire.
✔✔TARGET PREMIUM - ✔✔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
✔✔UNBUNDLED - ✔✔all the pricing elements are disclosed separately by the insurer,
unlike traditional term or whole life insurance in which the policy owner is charged a
single gross-premium amount
✔✔Option A Level death benefit options - ✔✔the death benefits remain level while the
cash value gradually increases, thereby lowering the pure insurance with the insurer in
the later years
✔✔Option B: Increasing death benefit option - ✔✔the death benefit includes the annual
increase in cash value so that the death benefit gradually increases each year by the
amount that the cash value increases. At any point the total death benefit will always be
equal to the face amount of the policy plus the current amount of cash values.
, ✔✔INTEREST SENSITIVE WHOLE LIFE (CURRENT ASSUMPTION LIFE): -
✔✔although the insurer guarantees a contract interest rate (usually 3 to 6%), there is
also a potential for the policy owner to get a current interest rate, which is not
guaranteed in the contract but may be higher because of current market conditions.
✔✔SINGLE PREMIUM - ✔✔one time lump sum payment
✔✔INSTALLMENT PREMIUM: FIXED/FLEXIBLE/PERIODIC - ✔✔paid in installments
over a period of time
✔✔FIXED - ✔✔the annuitant knows the exact amount of each payment received from
the annuity during the annuity period
✔✔VARIED - ✔✔serves as a hedge against inflation and is variable from the standpoint
that the annuitant may receive different rates of return on the funds that are paid into the
annuity
✔✔EQUITY INDEX - ✔✔fixed annuities that invest on a relatively aggressive basis to
aim for higher returns.
✔✔ANNUITY WITH PERIOD CERTAIN - ✔✔short term annuities that limit the amount
paid to a certain fixed period or until a certain fixed amount it liquidated
✔✔INSURING AGREEMENT/CLAUSE - ✔✔sets for the basic agreement between the
insurer and the insured. It states that the insurer's promise to pay the death benefit upon
the insured's death.
✔✔OWNERSHIP CLAUSE - ✔✔the policy owner has the responsibility of paying the
policy premiums, and is also the person who must have an insurable interest in the
insured at the time of application for the insurance
✔✔ENTIRE CONTRACT CLAUSE - ✔✔provision that stipulates that the policy and a
copy of the application along with any riders or amendments, constitute the entire
contract
✔✔GRACE PERIOD - ✔✔the period of time after the premium due date that the policy
owner has to pay the premium before the policy lapses
✔✔REINSTATMENT CLAUSE - ✔✔requires evidence of insurability and the policy
owner is also required to pay back premiums plus interest and any outstanding loans
with interest; the policy will be restored to its original status and retain all the values that
were established at the insured's issue age
