North Carolina (NC) Life Insurance Practice
Exam | Complete Exam Questions with 100%
Verified Correct Answers and Rationales |
Latest Update 2026/2027
Question 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.
Answer: C
Rationale: Writing insurance law is not the Insurance Commissioner's responsibility;
enforcing the law is. The state legislature enacts statutes; the Commissioner enforces
them.
Question 2
Which of the following insurance providers must be nonprofit and sell insurance only to
its members?
A. Reciprocal
B. Fraternal
C. Service
D. Mutual
Answer: B
Rationale: To be characterized as a fraternal benefit society, the organization must be
nonprofit, have a lodge system with ritualistic work, and maintain a representative form
of government with elected officers. Insurance may only be sold to members.
Question 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
pg. 1
,B. Family Income Policy
C. Joint Life Policy
D. Survivorship Life Policy
Answer: C
Rationale: Joint life policies cover the lives of two insureds with blended rates. Upon
the death of the first insured, the policy ends.
Question 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
Rationale: The triple indemnity accidental death rider requires death to be accidental
and not contributed to by the insured. Since the insured contributed to his own death,
the rider is void, but the beneficiary will still receive the policy's death benefit
($100,000).
Question 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
Rationale: Regardless of the type of term insurance purchased (Level, Increasing, or
Decreasing), the premium is often level throughout the term of the policy.
Question 6
An insurer neglects to pay a legitimate claim that is covered under the terms of the
pg. 2
,policy. Which of the following insurance principles has the insurer violated?
A. Representation
B. Adhesion
C. Consideration
D. Good faith
Answer: C
Rationale: The binding force in any contract is consideration. Consideration on the
part of the insured is the payment of premiums; consideration on the part of the insurer
is the promise to pay in the event of loss.
Question 7
When the breadwinner that is insured by a Family Policy dies, what rights are provided
to other family members that are covered under the policy?
A. They can convert their coverage to permanent life insurance with evidence of
insurability.
B. Family members are not provided any rights.
C. They can surrender the coverage for its cash value.
D. They can convert their coverage to permanent life insurance without evidence of
insurability.
Answer: D
Rationale: Family members may convert their term coverage to permanent insurance
if requested within the time stated in the policy, without evidence of insurability.
Question 8
Forcing a client to buy insurance from a particular lender as a condition of granting a
loan is defined as
A. Defamation.
B. Coercion.
C. Rebating.
D. Misleading advertising.
Answer: B
Rationale: Coercion is when a lender requires a borrower to buy insurance from a
particular provider as a condition of granting a loan. This is an unfair trade practice.
pg. 3
, Question 9
When an insurer requires a written proof of loss after notice of such loss has been given
by the insured or beneficiary, the company must
A. Request a police report from the Department of Motor Vehicles.
B. Furnish a blank form to be used for that purpose.
C. Document the request for further investigation.
D. Submit the loss claim to underwriting for premium review and resolution.
Answer: B
Rationale: When an insurer requires written proof of loss, the company must furnish a
blank form to be used for that purpose.
Question 10
Insurance companies are required to provide proof of loss forms to the claimant within
how many days after receipt of notice of loss?
A. 15
B. 30
C. 31
D. 45
Answer: A
Rationale: When a company requires written proof of loss, it must furnish a blank
form within 15 days after notice of loss has been given.
Question 11
Which is true about a spouse term rider?
A. The rider is usually level term insurance.
B. Coverage is allowed for an unlimited time.
C. The rider is decreasing term insurance.
D. Coverage is allowed up to age 75.
Answer: A
Rationale: A spouse term rider allows a spouse to be added for coverage. It is available
for a limited amount of time, typically expiring at age 65, and is usually level term
insurance.
Question 12
A policy will pay the death benefit if the insured dies during the 20-year premium-
pg. 4
Exam | Complete Exam Questions with 100%
Verified Correct Answers and Rationales |
Latest Update 2026/2027
Question 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.
Answer: C
Rationale: Writing insurance law is not the Insurance Commissioner's responsibility;
enforcing the law is. The state legislature enacts statutes; the Commissioner enforces
them.
Question 2
Which of the following insurance providers must be nonprofit and sell insurance only to
its members?
A. Reciprocal
B. Fraternal
C. Service
D. Mutual
Answer: B
Rationale: To be characterized as a fraternal benefit society, the organization must be
nonprofit, have a lodge system with ritualistic work, and maintain a representative form
of government with elected officers. Insurance may only be sold to members.
Question 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
pg. 1
,B. Family Income Policy
C. Joint Life Policy
D. Survivorship Life Policy
Answer: C
Rationale: Joint life policies cover the lives of two insureds with blended rates. Upon
the death of the first insured, the policy ends.
Question 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
Rationale: The triple indemnity accidental death rider requires death to be accidental
and not contributed to by the insured. Since the insured contributed to his own death,
the rider is void, but the beneficiary will still receive the policy's death benefit
($100,000).
Question 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
Rationale: Regardless of the type of term insurance purchased (Level, Increasing, or
Decreasing), the premium is often level throughout the term of the policy.
Question 6
An insurer neglects to pay a legitimate claim that is covered under the terms of the
pg. 2
,policy. Which of the following insurance principles has the insurer violated?
A. Representation
B. Adhesion
C. Consideration
D. Good faith
Answer: C
Rationale: The binding force in any contract is consideration. Consideration on the
part of the insured is the payment of premiums; consideration on the part of the insurer
is the promise to pay in the event of loss.
Question 7
When the breadwinner that is insured by a Family Policy dies, what rights are provided
to other family members that are covered under the policy?
A. They can convert their coverage to permanent life insurance with evidence of
insurability.
B. Family members are not provided any rights.
C. They can surrender the coverage for its cash value.
D. They can convert their coverage to permanent life insurance without evidence of
insurability.
Answer: D
Rationale: Family members may convert their term coverage to permanent insurance
if requested within the time stated in the policy, without evidence of insurability.
Question 8
Forcing a client to buy insurance from a particular lender as a condition of granting a
loan is defined as
A. Defamation.
B. Coercion.
C. Rebating.
D. Misleading advertising.
Answer: B
Rationale: Coercion is when a lender requires a borrower to buy insurance from a
particular provider as a condition of granting a loan. This is an unfair trade practice.
pg. 3
, Question 9
When an insurer requires a written proof of loss after notice of such loss has been given
by the insured or beneficiary, the company must
A. Request a police report from the Department of Motor Vehicles.
B. Furnish a blank form to be used for that purpose.
C. Document the request for further investigation.
D. Submit the loss claim to underwriting for premium review and resolution.
Answer: B
Rationale: When an insurer requires written proof of loss, the company must furnish a
blank form to be used for that purpose.
Question 10
Insurance companies are required to provide proof of loss forms to the claimant within
how many days after receipt of notice of loss?
A. 15
B. 30
C. 31
D. 45
Answer: A
Rationale: When a company requires written proof of loss, it must furnish a blank
form within 15 days after notice of loss has been given.
Question 11
Which is true about a spouse term rider?
A. The rider is usually level term insurance.
B. Coverage is allowed for an unlimited time.
C. The rider is decreasing term insurance.
D. Coverage is allowed up to age 75.
Answer: A
Rationale: A spouse term rider allows a spouse to be added for coverage. It is available
for a limited amount of time, typically expiring at age 65, and is usually level term
insurance.
Question 12
A policy will pay the death benefit if the insured dies during the 20-year premium-
pg. 4
