NC Life Exam Simulation 2026 With
Answers
Which of the following actions require a policyowner to provide proof of
insurability in an Adjustable Life policy? - Correct Answer -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 -
Correct Answer -ANSWER: suspend, revoke, or refuse to renew the agent's license
3. A Whole Life Insurance Policy endows when the: - Correct Answer -ANSWER:
Cash value equals the death benefit
4. A provision in a life insurance policy that pays the policyowner an amount that
does not surpass the guaranteed cash value is called the: - Correct Answer -
ANSWER: Policy Loan provision
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,5. The Life and Health Insurance Guaranty Association becomes involved in an
insurance company's affairs when the company - Correct Answer -ANSWER:
becomes insolvent
6. If a contract of adhesion contains complicated language, to whom would the
interpretation be in favor of? - Correct Answer -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: - Correct Answer -ANSWER: Adjustable Life
8. Which parts of a life insurance policy are guaranteed to be true? - Correct
Answer -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? - Correct Answer -ANSWER: Policy was returned within the free-
look period, premium will be fully refunded
10. Which of these types of policies may NOT have the Automatic Premium Loan
provision attached to it? - Correct Answer -ANSWER: Decreasing Term
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,11. Which of the following consists of an offer, acceptance, and consideration? -
Correct Answer -ANSWER: Contract
12. According to North Carolina's rules on disclosure, a life insurance applicant is
expected to be provided with - Correct Answer -ANSWER: a Buyer's Guide and
Policy Summary
13. Which of the following statements about noncontributory employee group life
insurance is FALSE? - Correct Answer -ANSWER: A minimum number of
employees is required to participate
14. The automatic premium loan provision is designed to: - Correct Answer -
ANSWER: avoid a policy lapse
15. The amount received for a life insurance policy in a viatical settlement is -
Correct Answer -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? -
Correct Answer -ANSWER: 30
17. When a life insurance policy exceeds certain IRS table values, the result would
create which of the following? - Correct Answer -ANSWER: Modified
Endowment Contract (MEC)
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, 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 - Correct
Answer -ANSWER: Viatical Settlement
19. The annuity that represents the largest possible monthly payment to an
individual annuitant is a(n): - Correct Answer -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 - Correct Answer
-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: -
Correct Answer -ANSWER: the cost
22. Which of these is NOT considered to be an element of an insurance contract? -
Correct Answer -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?
- Correct Answer -ANSWER: 20-pay Life
©COPYRIGHT 2025 ALL RIGHTS RESERVED 4
Answers
Which of the following actions require a policyowner to provide proof of
insurability in an Adjustable Life policy? - Correct Answer -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 -
Correct Answer -ANSWER: suspend, revoke, or refuse to renew the agent's license
3. A Whole Life Insurance Policy endows when the: - Correct Answer -ANSWER:
Cash value equals the death benefit
4. A provision in a life insurance policy that pays the policyowner an amount that
does not surpass the guaranteed cash value is called the: - Correct Answer -
ANSWER: Policy Loan provision
©COPYRIGHT 2025 ALL RIGHTS RESERVED 1
,5. The Life and Health Insurance Guaranty Association becomes involved in an
insurance company's affairs when the company - Correct Answer -ANSWER:
becomes insolvent
6. If a contract of adhesion contains complicated language, to whom would the
interpretation be in favor of? - Correct Answer -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: - Correct Answer -ANSWER: Adjustable Life
8. Which parts of a life insurance policy are guaranteed to be true? - Correct
Answer -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? - Correct Answer -ANSWER: Policy was returned within the free-
look period, premium will be fully refunded
10. Which of these types of policies may NOT have the Automatic Premium Loan
provision attached to it? - Correct Answer -ANSWER: Decreasing Term
©COPYRIGHT 2025 ALL RIGHTS RESERVED 2
,11. Which of the following consists of an offer, acceptance, and consideration? -
Correct Answer -ANSWER: Contract
12. According to North Carolina's rules on disclosure, a life insurance applicant is
expected to be provided with - Correct Answer -ANSWER: a Buyer's Guide and
Policy Summary
13. Which of the following statements about noncontributory employee group life
insurance is FALSE? - Correct Answer -ANSWER: A minimum number of
employees is required to participate
14. The automatic premium loan provision is designed to: - Correct Answer -
ANSWER: avoid a policy lapse
15. The amount received for a life insurance policy in a viatical settlement is -
Correct Answer -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? -
Correct Answer -ANSWER: 30
17. When a life insurance policy exceeds certain IRS table values, the result would
create which of the following? - Correct Answer -ANSWER: Modified
Endowment Contract (MEC)
©COPYRIGHT 2025 ALL RIGHTS RESERVED 3
, 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 - Correct
Answer -ANSWER: Viatical Settlement
19. The annuity that represents the largest possible monthly payment to an
individual annuitant is a(n): - Correct Answer -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 - Correct Answer
-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: -
Correct Answer -ANSWER: the cost
22. Which of these is NOT considered to be an element of an insurance contract? -
Correct Answer -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?
- Correct Answer -ANSWER: 20-pay Life
©COPYRIGHT 2025 ALL RIGHTS RESERVED 4
