NC LIFE INSURANCE EXAM STUDY KIT
WITH COMPLETE QUESTIONS AND
CORRECT ANSWERS RATED A+
Brian's two children are entitled to receive survivor benefits equal
to 75 percent of his primary insurance amount until they reach
age 18. Correct Answer Brian worked as a chemical engineer for
the past 25 years until he died last month. He left behind his wife
Janet, age 45, and two children, ages 12 and 14. Which one of
the following statements is most correct?
Up to 85 percent of his or her Social Security benefits will be
subject to tax. Correct Answer A Social Security recipient's
modified adjusted gross income exceeds the threshold level for
his or her filing status. What will happen to his or her benefits?
Sara will be eligible to receive a monthly Social Security benefit
indefinitely. Correct Answer John, age 62, retired early and is
receiving Social Security retirement benefits. He has one child,
Sara, age 15. What will happen if Sara is in a car accident and
becomes disabled?
2 years following policy issue. Correct Answer The suicide
exclusion provision of a typical life insurance policy excludes
coverage if death is the result of suicide within
,The insurer names a blood relative or someone with a valid claim
as the new beneficiary. Correct Answer Under a policy's facility of
payment provision, what does an insurer do with the death
benefit?
Frank Grant Correct Answer Who is the tertiary beneficiary in the
following beneficiary designation: "Sally Grant, wife of the insured,
if she survives the insured; otherwise in equal shares to surviving
children of the insured, if any; otherwise to Frank Grant, brother of
the insured."
Insurers require the court to appoint a legal guardian before
paying benefits to a minor child. Correct Answer If insurers do not
allow minors to be beneficiaries of life insurance, what do they do
if no adults are available to receive death benefits?
common disaster provision Correct Answer allows for life
insurance policy proceeds to pass to a contingent beneficiary if
the primary beneficiary doesn't survive the insured for a minimum
period which can be 30 days of more depending on the state.
Nonforfeiture Options Correct Answer determine how cash value
will be handled when a permanent life policy is lapsed or
surrendered.
,Cash surrender- surrenders the policy and pays cash value in a
lump sum to PO.
Extended Term-** Used when PO has not selected an option,
provides same amount of coverage as in the lapsed policy but
lasts for a term that is purchased with the policy's cash value
Reduced Paid-Up Insurance- uses cash value to buy a paid up
policy using a single premium payment based on the insureds
current age. Correct Answer What are the 3 nonforfeiture options?
Define Options vs. Riders Correct Answer Options must be
selected when purchasing a policy. A rider is a truly optional
feature that costs extra but adds value to the policy.
reduced paid-up option Correct Answer Under which nonforfeiture
option does permanent life insurance continue in force with no
further need for premiums?
cash surrender option Correct Answer Jerry asks his insurance
company to pay him the cash value of his permanent life
insurance and cancel the policy. Jerry is using which of the
following nonforfeiture options?
It will tell Melissa that her policy does not have the extended term
option and she may only take any remaining cash value in cash.
Because Universal life policies normally do not contain the
standard nonforfeiture options for policy lapses. Correct Answer
, Melissa asks to continue her lapsed universal life insurance policy
under the extended term option. How will the insurance company
respond?
6 months Correct Answer What is the max amount of time most
states allow insurers to delay paying cash surrender values?
Cash surrender option only Correct Answer What is the only
nonforfeiture option for a universal life insurance policy?
Automatically apply the extended term option Correct Answer If a
policy owner does not select a nonforfeiture option for a whole life
policy what will the insurer most likely do?
Policy Surrender Correct Answer surrenders a portion of policy
coverage causing a proportionate reduction in the death benefit.
Partial surrender Correct Answer it is a partial surrender of a
portion of the policy. the death benefit is reduced proportionately
by the amount of the the surrender.
Living Benefit Correct Answer insured is alive and insured wants
to withdraw that money for a living purposed opposed to a death
benefit.
WITH COMPLETE QUESTIONS AND
CORRECT ANSWERS RATED A+
Brian's two children are entitled to receive survivor benefits equal
to 75 percent of his primary insurance amount until they reach
age 18. Correct Answer Brian worked as a chemical engineer for
the past 25 years until he died last month. He left behind his wife
Janet, age 45, and two children, ages 12 and 14. Which one of
the following statements is most correct?
Up to 85 percent of his or her Social Security benefits will be
subject to tax. Correct Answer A Social Security recipient's
modified adjusted gross income exceeds the threshold level for
his or her filing status. What will happen to his or her benefits?
Sara will be eligible to receive a monthly Social Security benefit
indefinitely. Correct Answer John, age 62, retired early and is
receiving Social Security retirement benefits. He has one child,
Sara, age 15. What will happen if Sara is in a car accident and
becomes disabled?
2 years following policy issue. Correct Answer The suicide
exclusion provision of a typical life insurance policy excludes
coverage if death is the result of suicide within
,The insurer names a blood relative or someone with a valid claim
as the new beneficiary. Correct Answer Under a policy's facility of
payment provision, what does an insurer do with the death
benefit?
Frank Grant Correct Answer Who is the tertiary beneficiary in the
following beneficiary designation: "Sally Grant, wife of the insured,
if she survives the insured; otherwise in equal shares to surviving
children of the insured, if any; otherwise to Frank Grant, brother of
the insured."
Insurers require the court to appoint a legal guardian before
paying benefits to a minor child. Correct Answer If insurers do not
allow minors to be beneficiaries of life insurance, what do they do
if no adults are available to receive death benefits?
common disaster provision Correct Answer allows for life
insurance policy proceeds to pass to a contingent beneficiary if
the primary beneficiary doesn't survive the insured for a minimum
period which can be 30 days of more depending on the state.
Nonforfeiture Options Correct Answer determine how cash value
will be handled when a permanent life policy is lapsed or
surrendered.
,Cash surrender- surrenders the policy and pays cash value in a
lump sum to PO.
Extended Term-** Used when PO has not selected an option,
provides same amount of coverage as in the lapsed policy but
lasts for a term that is purchased with the policy's cash value
Reduced Paid-Up Insurance- uses cash value to buy a paid up
policy using a single premium payment based on the insureds
current age. Correct Answer What are the 3 nonforfeiture options?
Define Options vs. Riders Correct Answer Options must be
selected when purchasing a policy. A rider is a truly optional
feature that costs extra but adds value to the policy.
reduced paid-up option Correct Answer Under which nonforfeiture
option does permanent life insurance continue in force with no
further need for premiums?
cash surrender option Correct Answer Jerry asks his insurance
company to pay him the cash value of his permanent life
insurance and cancel the policy. Jerry is using which of the
following nonforfeiture options?
It will tell Melissa that her policy does not have the extended term
option and she may only take any remaining cash value in cash.
Because Universal life policies normally do not contain the
standard nonforfeiture options for policy lapses. Correct Answer
, Melissa asks to continue her lapsed universal life insurance policy
under the extended term option. How will the insurance company
respond?
6 months Correct Answer What is the max amount of time most
states allow insurers to delay paying cash surrender values?
Cash surrender option only Correct Answer What is the only
nonforfeiture option for a universal life insurance policy?
Automatically apply the extended term option Correct Answer If a
policy owner does not select a nonforfeiture option for a whole life
policy what will the insurer most likely do?
Policy Surrender Correct Answer surrenders a portion of policy
coverage causing a proportionate reduction in the death benefit.
Partial surrender Correct Answer it is a partial surrender of a
portion of the policy. the death benefit is reduced proportionately
by the amount of the the surrender.
Living Benefit Correct Answer insured is alive and insured wants
to withdraw that money for a living purposed opposed to a death
benefit.
