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North Carolina Life Insurance Questions and
Correct Answers
An agent is required to obtain a signed acceptance from the
policyowner when a policy is Ans: — Changed
A third party contract consists of Ans: — the policyowner, insured
and the insurer.
3. The application is the primary source of Ans: — underwriting.
4. An exchange of an act for a promise is a Ans: — unilateral
contract
5. The applicant must initial any changes made on the application
after the application has Ans: — already been signed.
6. The elements of a valid contract consist of Ans: —
consideration, competent parties, agreement which is made up of
offer and acceptance, legal form and legal purpose.
7. The insured's consideration is Ans: — the statements on the
application and payment of the initial premium.
8. The insurer's consideration is Ans: — the "promise to pay".
9. In order to sell Variable products, agent must have a
To get the Variable Life and Annuity license Ans: — a Variable Life
and Annuity license in addition to their Life license
the individual must be licensed with FINRA.
10. The insurer is required to pay interest on the death benefits if
not paid out within 30 days of Ans: — the proof of loss being
received by the insurer.
11. An individual has 31 days to convert a group plan to an
individual plan after leaving their job Ans: — without having to
prove evidence of insurability.
12. An insurance company incorporated or organized under the
laws of the United States or of any jurisdiction within the United
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States other than North Carolina would be known as Ans: — a
foreign company.
13. An agent will be held personally liable for contracts written by
agent while representing an Ans: — unauthorized (non-admitted)
company. Representing an unlicensed company is a misdemeanor.
14. You cannot call yourself a Ans: — financial planner, consultant
or advisor unless such is actually the case.
15. The fact that a company is protected by the Guaranty
Association cannot be Ans: — used as a sales aide.
16. The Notice of Information Practices and the Disclosure
Authorization forms must be provided at the Ans: — time the
information is being gathered (time of application) if the insurer is
going to use a non-public source as part of the underwriting
17. A agent or insurer must maintain policyowner files and records
for at least Ans: — 5 years
18. Making malicious or derogatory statements against another
company with the intent to damage
their reputation is known as Ans: — defamation.
19. An appointment with a company remains in effect as long as
the agent is licensed and the appointing insurer is Ans: —
authorized (licensed).
20. One of the requirements to be a life or health agent is to
complete and successfully pass a Ans: — 20 hour pre-licensing or
correspondence course.
22. An agent is committing a misdemeanor when signing a blank
policy. A blank policy is Ans: — a policy that has not been sold
and paid for.
21. When an agent is using a cost index to compare policy costs,
he/she must remember Ans: — that using a cost index is useful
only when comparing similar products.
23. Universal Life is considered to be an interest-sensitive product
because Ans: — the cash value earns Interest based on current
© 2025 All rights reserved
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interest rates as opposed to a guaranteed interest rate like
traditional life insurance products.
24. Under a Universal Life policy, Ans: — the interest is credited to
the account monthly. The mortality cost and expense or loading
charges (if applicable) are deducted from the account on a
monthly basis. The expense or loading charge in a Universal Life
policy is the specific amount being deducted out of the account to
cover administrative expenses. Similar to the fees charged by the
bank to cover handling and processing fees associated with your
account.
25. By adding a term rider to a base whole life policy Ans: — the
policyowner is increasing the face amount and thus the death
benefit of the base policy.
26. Remember that mortality cost and cost of insurance are used
Ans: — Interchangeably
27. Remember the key characteristics of Universal Life such as
Ans: — target premium, unbundling, corridor of insurance,
flexibility or surrender charge (rear-end loading).
28. The term separate account is Ans: — associated with variable
products
29. If the insured dies within the grace period on a term policy
If the insured dies after the grace period on a term policy has
expired Ans: — the face amount will still be payable minus the
outstanding premium
no benefits are payable because the policy lapsed upon the ending
of the grace period
30. If the primary beneficiary predeceases the insured, under the
Uniform Simultaneous Death Act the benefits will be payable to
the Ans: — contingent beneficiary.
© 2025 All rights reserved
North Carolina Life Insurance Questions and
Correct Answers
An agent is required to obtain a signed acceptance from the
policyowner when a policy is Ans: — Changed
A third party contract consists of Ans: — the policyowner, insured
and the insurer.
3. The application is the primary source of Ans: — underwriting.
4. An exchange of an act for a promise is a Ans: — unilateral
contract
5. The applicant must initial any changes made on the application
after the application has Ans: — already been signed.
6. The elements of a valid contract consist of Ans: —
consideration, competent parties, agreement which is made up of
offer and acceptance, legal form and legal purpose.
7. The insured's consideration is Ans: — the statements on the
application and payment of the initial premium.
8. The insurer's consideration is Ans: — the "promise to pay".
9. In order to sell Variable products, agent must have a
To get the Variable Life and Annuity license Ans: — a Variable Life
and Annuity license in addition to their Life license
the individual must be licensed with FINRA.
10. The insurer is required to pay interest on the death benefits if
not paid out within 30 days of Ans: — the proof of loss being
received by the insurer.
11. An individual has 31 days to convert a group plan to an
individual plan after leaving their job Ans: — without having to
prove evidence of insurability.
12. An insurance company incorporated or organized under the
laws of the United States or of any jurisdiction within the United
© 2025 All rights reserved
, 2 | Page
States other than North Carolina would be known as Ans: — a
foreign company.
13. An agent will be held personally liable for contracts written by
agent while representing an Ans: — unauthorized (non-admitted)
company. Representing an unlicensed company is a misdemeanor.
14. You cannot call yourself a Ans: — financial planner, consultant
or advisor unless such is actually the case.
15. The fact that a company is protected by the Guaranty
Association cannot be Ans: — used as a sales aide.
16. The Notice of Information Practices and the Disclosure
Authorization forms must be provided at the Ans: — time the
information is being gathered (time of application) if the insurer is
going to use a non-public source as part of the underwriting
17. A agent or insurer must maintain policyowner files and records
for at least Ans: — 5 years
18. Making malicious or derogatory statements against another
company with the intent to damage
their reputation is known as Ans: — defamation.
19. An appointment with a company remains in effect as long as
the agent is licensed and the appointing insurer is Ans: —
authorized (licensed).
20. One of the requirements to be a life or health agent is to
complete and successfully pass a Ans: — 20 hour pre-licensing or
correspondence course.
22. An agent is committing a misdemeanor when signing a blank
policy. A blank policy is Ans: — a policy that has not been sold
and paid for.
21. When an agent is using a cost index to compare policy costs,
he/she must remember Ans: — that using a cost index is useful
only when comparing similar products.
23. Universal Life is considered to be an interest-sensitive product
because Ans: — the cash value earns Interest based on current
© 2025 All rights reserved
, 3 | Page
interest rates as opposed to a guaranteed interest rate like
traditional life insurance products.
24. Under a Universal Life policy, Ans: — the interest is credited to
the account monthly. The mortality cost and expense or loading
charges (if applicable) are deducted from the account on a
monthly basis. The expense or loading charge in a Universal Life
policy is the specific amount being deducted out of the account to
cover administrative expenses. Similar to the fees charged by the
bank to cover handling and processing fees associated with your
account.
25. By adding a term rider to a base whole life policy Ans: — the
policyowner is increasing the face amount and thus the death
benefit of the base policy.
26. Remember that mortality cost and cost of insurance are used
Ans: — Interchangeably
27. Remember the key characteristics of Universal Life such as
Ans: — target premium, unbundling, corridor of insurance,
flexibility or surrender charge (rear-end loading).
28. The term separate account is Ans: — associated with variable
products
29. If the insured dies within the grace period on a term policy
If the insured dies after the grace period on a term policy has
expired Ans: — the face amount will still be payable minus the
outstanding premium
no benefits are payable because the policy lapsed upon the ending
of the grace period
30. If the primary beneficiary predeceases the insured, under the
Uniform Simultaneous Death Act the benefits will be payable to
the Ans: — contingent beneficiary.
© 2025 All rights reserved
