NC Life Insurance Practice Exam
Questions and Guide Answers
100% Verified Graded A+
1. All of the following are included within the Insurance Commissioner's duties
EXCEPT
a) Conducting investigation of all domestic insurers.
b) Reviewing the insurers' annual reports.
c) Writing North Carolina insurance laws.
d) Reporting any violations of insurance laws to the Attorney General. Writing
insurance law is not the Insurance Commissioner's responsibility, but enforc-ing
the law is.
Answer: c) Writing North Carolina insurance laws.
Writing insurance law is not the Insurance Commissioner's responsibility, but enforcing the law is.
,2. Which of the following insurance providers must be nonprofit and sell insur-
ance only to its members?
a) Reciprocal
b) Fraternal
c) Service
d) Mutual
Answer: b) Fraternal
To be characterized as a fraternal benefit society, the organization must be nonprofit, have a lodge system that includes
ritualistic work and maintain a representative form of government with elected oflcers. Insurance may only be sold to
members of the society.
3. A married couple owns a permanent policy which covers both of their lives
and pays the death benefit only upon the death of the first insured. Which
policy is that?
a) Second-to-Die
b) Family Income Policy
c) Joint Life Policy
d) Survivorship Life Policy
, Answer: c)Joint Life Policy
Joint life policies cover the lives of two insureds; rates are blended. Upon the death of the first insured, the policy ends.
4. The insured under a $100,000 life insurance policy with a triple indemnity
rider for accidental death was killed in a car accident. It was determined that
the accident was his fault. The triple indemnity rider in the policy specifies that
the death must not be contributed to by the insured in any manner. In this
case, what will the policy beneficiary receive?
a) $0
b) $50,000 (50% of the policy value)
c)$100,000
d)$300,000 (triple the amount of policy value)
Answer: c)$100,000
The triple indemnity accidental death rider obligates the company to pay three times the face amount of the policy if
the insured dies as a result of an accident. The death must be accidental and not contributed to by any other factors
and must occur within 90 days of the accident. In this case, since the insured contributed to his own death, the triple
indemnity rider is void, but the beneficiary will still receive the policy's death benefit.
, 5. In term policies, what happens to the premium throughout the term of the
policy?
a) Premium gradually increases.
b) Premium gradually decreases.
c) Premium fluctuates.
d) Premium always remains level.
Answer: d) Premium always remains level.
There are three basic types of term coverage available, based on how the face amount (death benefit) changes during
the policy term: Level, Increasing, and Decreasing. Regardless of the type of term insurance purchased, the premium is
often level throughout the term of the policy.
6. An insurer neglects to pay a legitimate claim that is covered under the
terms of the policy. Which of the following insurance principles has the insurer
violated?
a) Representation
b) Adhesion
c) Consideration
Questions and Guide Answers
100% Verified Graded A+
1. All of the following are included within the Insurance Commissioner's duties
EXCEPT
a) Conducting investigation of all domestic insurers.
b) Reviewing the insurers' annual reports.
c) Writing North Carolina insurance laws.
d) Reporting any violations of insurance laws to the Attorney General. Writing
insurance law is not the Insurance Commissioner's responsibility, but enforc-ing
the law is.
Answer: c) Writing North Carolina insurance laws.
Writing insurance law is not the Insurance Commissioner's responsibility, but enforcing the law is.
,2. Which of the following insurance providers must be nonprofit and sell insur-
ance only to its members?
a) Reciprocal
b) Fraternal
c) Service
d) Mutual
Answer: b) Fraternal
To be characterized as a fraternal benefit society, the organization must be nonprofit, have a lodge system that includes
ritualistic work and maintain a representative form of government with elected oflcers. Insurance may only be sold to
members of the society.
3. A married couple owns a permanent policy which covers both of their lives
and pays the death benefit only upon the death of the first insured. Which
policy is that?
a) Second-to-Die
b) Family Income Policy
c) Joint Life Policy
d) Survivorship Life Policy
, Answer: c)Joint Life Policy
Joint life policies cover the lives of two insureds; rates are blended. Upon the death of the first insured, the policy ends.
4. The insured under a $100,000 life insurance policy with a triple indemnity
rider for accidental death was killed in a car accident. It was determined that
the accident was his fault. The triple indemnity rider in the policy specifies that
the death must not be contributed to by the insured in any manner. In this
case, what will the policy beneficiary receive?
a) $0
b) $50,000 (50% of the policy value)
c)$100,000
d)$300,000 (triple the amount of policy value)
Answer: c)$100,000
The triple indemnity accidental death rider obligates the company to pay three times the face amount of the policy if
the insured dies as a result of an accident. The death must be accidental and not contributed to by any other factors
and must occur within 90 days of the accident. In this case, since the insured contributed to his own death, the triple
indemnity rider is void, but the beneficiary will still receive the policy's death benefit.
, 5. In term policies, what happens to the premium throughout the term of the
policy?
a) Premium gradually increases.
b) Premium gradually decreases.
c) Premium fluctuates.
d) Premium always remains level.
Answer: d) Premium always remains level.
There are three basic types of term coverage available, based on how the face amount (death benefit) changes during
the policy term: Level, Increasing, and Decreasing. Regardless of the type of term insurance purchased, the premium is
often level throughout the term of the policy.
6. An insurer neglects to pay a legitimate claim that is covered under the
terms of the policy. Which of the following insurance principles has the insurer
violated?
a) Representation
b) Adhesion
c) Consideration
