NC Life Insurance Exam 2026 Questions
and Answers
Fraternal Benefit Society - Correct Answer -An organization of people who share
a month ethnic, religious or vocational affiliation. They are entities they have no
capital stock, have a representative form of government. They exist not for profit
but solely for the benefit of their members and their beneficiaries and operate on a
lodge system.
Fraternal Benefit Societies - Correct Answer -Agents of these societies must
comply with the SAME general laws governing licensing that apply to resident and
nonresident agents.
Graded Premium Whole Life - Correct Answer -Has premiums they start very low
then increase annually for a long period and stay level for the rest of the life of the
policy.
Death Benefit Option 1 of a universal life policy - Correct Answer -the benefit
payable when the insured dies stays level and equal to the initial specified amount.
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,Death Benefit Option 2 of a universal life policy - Correct Answer -this benefit is
generally increasing. This benefit equals the policy's specified amount plus the
cash value.
Variable Universal Life insurance - Correct Answer -Combines the features of
universal life insurane with the ability to allocate premiums to a seperate account.
THIS MEANS the growth of the contract's cash value is based on the performance
of the underlying investment.
Straight Life Income - Correct Answer -provides the largest monthly income
payment for a given amount o annualized funds. Also called pure life option,
income payments are made for the annuitants lifetime, regardless of how long that
may be.
In regards to the Section 1035 tax code, which exchanges is permitted on a tax-free
basis? - Correct Answer -1. life insurance for life insurance
2. Life insurance for an endowment
3.Endowment for an Endowment
4.Life insurance for an Annuity
5. Annuity for an Annuity
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,Modified Endowment Contract (MEC) - Correct Answer -Tax law considers a
single premium life insurance policy to be what?
Anthony becomes an agent for Acme Insurance Company. Acme has not filed the
Notice of appointment with the commissioner. It must do so within how many
days? - Correct Answer -15 Days
Spendthrift Clause - Correct Answer -A clause that prevents the debtors of a
beneficiary from collecting the benefits before he/she receives them.
Annuity death benefits - Correct Answer -are not tax deductible or tax free
A couple makes a combined income for $175,000 annually.Will their Individual
Retirement Plan (IRA) be tax deductible? - Correct Answer -No. If it is joint an
dover $123,000 there is no deduction.
What is the cap on an IRA tax deduction that will provide NO DEDUCTION for a
single person? - Correct Answer -$74000 or more.
Prepaid Tuition Plans - Correct Answer -College saving plan that allows for the
purchase of units or credits at participating colleges and universities for future
tuition. Limited to instate tuition only. NOT SUBJECT TO FEDERAL TAX.
Parents are able to lock in the price of tuition at that time.
risk sharing - Correct Answer -Allocating ownership of a risk to another party
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, Risk Transfer - Correct Answer -A pure risk is transferred from the insured to the
insurer, who typically is in a stronger financial position
Which is a characteristic of industrial life Insurance? - Correct Answer -Premiums
are payable monthly or weekly.
Industrial Life Insurance - Correct Answer -These policies generally do not
require a medical exam to qualify. They offer individual coverage in small face
amounts usually less than $10,000.
Reinsurance - Correct Answer -an arrangement by which the primary insurer that
initially writes the insurance transfers to another insurer part or all of the potential
losses associated with such insurance
How long do insurers allow backdating a policy in order to receive lower rates? -
Correct Answer -6 Months
What are the differences between mutual insurance companies and stock insurance
companies? - Correct Answer -Mutual insurance companies are owned by its
policy holders while stock insurance companies are owned by stockholders who
may or may not be policy holders. Mutual Insurance companies sell participating
policies which distributes policy dividends that are NONTAXABLE while Stock
companies distribute profit in the form of taxable stock dividends.
©COPYRIGHT 2025 ALL RIGHTS RESERVED 4
and Answers
Fraternal Benefit Society - Correct Answer -An organization of people who share
a month ethnic, religious or vocational affiliation. They are entities they have no
capital stock, have a representative form of government. They exist not for profit
but solely for the benefit of their members and their beneficiaries and operate on a
lodge system.
Fraternal Benefit Societies - Correct Answer -Agents of these societies must
comply with the SAME general laws governing licensing that apply to resident and
nonresident agents.
Graded Premium Whole Life - Correct Answer -Has premiums they start very low
then increase annually for a long period and stay level for the rest of the life of the
policy.
Death Benefit Option 1 of a universal life policy - Correct Answer -the benefit
payable when the insured dies stays level and equal to the initial specified amount.
©COPYRIGHT 2025 ALL RIGHTS RESERVED 1
,Death Benefit Option 2 of a universal life policy - Correct Answer -this benefit is
generally increasing. This benefit equals the policy's specified amount plus the
cash value.
Variable Universal Life insurance - Correct Answer -Combines the features of
universal life insurane with the ability to allocate premiums to a seperate account.
THIS MEANS the growth of the contract's cash value is based on the performance
of the underlying investment.
Straight Life Income - Correct Answer -provides the largest monthly income
payment for a given amount o annualized funds. Also called pure life option,
income payments are made for the annuitants lifetime, regardless of how long that
may be.
In regards to the Section 1035 tax code, which exchanges is permitted on a tax-free
basis? - Correct Answer -1. life insurance for life insurance
2. Life insurance for an endowment
3.Endowment for an Endowment
4.Life insurance for an Annuity
5. Annuity for an Annuity
©COPYRIGHT 2025 ALL RIGHTS RESERVED 2
,Modified Endowment Contract (MEC) - Correct Answer -Tax law considers a
single premium life insurance policy to be what?
Anthony becomes an agent for Acme Insurance Company. Acme has not filed the
Notice of appointment with the commissioner. It must do so within how many
days? - Correct Answer -15 Days
Spendthrift Clause - Correct Answer -A clause that prevents the debtors of a
beneficiary from collecting the benefits before he/she receives them.
Annuity death benefits - Correct Answer -are not tax deductible or tax free
A couple makes a combined income for $175,000 annually.Will their Individual
Retirement Plan (IRA) be tax deductible? - Correct Answer -No. If it is joint an
dover $123,000 there is no deduction.
What is the cap on an IRA tax deduction that will provide NO DEDUCTION for a
single person? - Correct Answer -$74000 or more.
Prepaid Tuition Plans - Correct Answer -College saving plan that allows for the
purchase of units or credits at participating colleges and universities for future
tuition. Limited to instate tuition only. NOT SUBJECT TO FEDERAL TAX.
Parents are able to lock in the price of tuition at that time.
risk sharing - Correct Answer -Allocating ownership of a risk to another party
©COPYRIGHT 2025 ALL RIGHTS RESERVED 3
, Risk Transfer - Correct Answer -A pure risk is transferred from the insured to the
insurer, who typically is in a stronger financial position
Which is a characteristic of industrial life Insurance? - Correct Answer -Premiums
are payable monthly or weekly.
Industrial Life Insurance - Correct Answer -These policies generally do not
require a medical exam to qualify. They offer individual coverage in small face
amounts usually less than $10,000.
Reinsurance - Correct Answer -an arrangement by which the primary insurer that
initially writes the insurance transfers to another insurer part or all of the potential
losses associated with such insurance
How long do insurers allow backdating a policy in order to receive lower rates? -
Correct Answer -6 Months
What are the differences between mutual insurance companies and stock insurance
companies? - Correct Answer -Mutual insurance companies are owned by its
policy holders while stock insurance companies are owned by stockholders who
may or may not be policy holders. Mutual Insurance companies sell participating
policies which distributes policy dividends that are NONTAXABLE while Stock
companies distribute profit in the form of taxable stock dividends.
©COPYRIGHT 2025 ALL RIGHTS RESERVED 4
