NC LIFE insurance state exam questions and answers
100% pass
CREDIT LIFE
a special type of coverage written to the life of the debtor and pay off the balance of a
loan in the event of the death of the debtor.
BUY-SELL AGREEMENTS
a legal contract that determines what will be done with a business in the event that an
owner dies or becomes disabled. Otherwise known as a business continuation
agreement
INSURABLE INTEREST
to purchase insurance the policy owner must face the possibility of losing money or
something of value in the event of loss, insurable interest must exist between the policy
owner and the insured at the time of application
CONCEALMENT
the legal term for the intentional withholding of information of a material fact that is
crucial in making a decision
MISREPRESENTATION
statement that if discovered would alter the underwriting decision of the insurance
company
IMPERSONATION
Otherwise known as false pretense, refers to the act of assuming the name and/or
identity of another person for the purpose of committing a fraud
UNILATERAL
only one of the parties to the contract is legally bound to do anything. The insured
makes no legally binding promises however an insurer is legally bound to pay losses
covered by a policy in force
ADHESION
a contract of adhesion is prepared by one of the parties (insurer) and accepted or
rejected by the other party (insured). Insurance policies are not drawn up through
negotiations, and an insured has little to say about its provisions. Insurance contract are
offered on a take it or leave it basis by an insurer
INDEMNITY
sometimes known as reimbursement, a provision in an insurance policy that states that
in the event of loss, an insured or beneficiary is permitted to collect only to the extent of
the financial loss, and is not allowed to gain financially because of the existence of an
insurance contract. The purpose of an insurance contract is to restore, but not let an
insured or a beneficiary profit from the loss
ALEATORY
an exchange of unequal amounts or values. The premium paid by the insured is small in
relation to the amount that will be paid by the insurer in the event of a loss.
CONDITIONAL
requires that certain conditions must be met by the policy owner and the company in
order for the contract to be executed and before each party fulfills its obligations.
ELEMENTS OF A VALID CONTRACT
, Agreement - Offer and Acceptance, Consideration, Competent Parties, Legal Purpose
TERM LIFE INSURANCE
temporary protection because it only provides coverage for a specific period of time;
pure death protection; if the insured dies during this term, the policy pays the death
benefits to the beneficiary; if the policy is canceled or expires prior to the insured's
death, nothing is payable at the end of the term; there is no cash value or other living
benefits
RENEWABILITY
allows the policy owner the right to renew the coverage at the expiration date without
evidence of insurability. The premium will be based on the insured age at the time of
renewing
CONVERTIBILITY
provision that provides the policy owner with the right to convert the policy to a
permanent insurance policy without the evidence of insurability. Premium will be based
on the insured's attained age at the time of conversion
WHOLE LIFE INSURANCE
provides lifetime protection and includes a savings element or cash value; endow at age
100 which means the cash value created by the accumulation of premium is scheduled
to equal the face amount of the policy at age 100
ENDOWMENT
policies that provide a permanent, level death protection if the insured should die
prematurely, and they accumulate cash values; matures (endows) at an earlier age and
has a considerable higher premium. The sooner the policy endows, the higher the
premiums.
Single Premium Whole Life (SPWL)
designed to provide a level death benefit to the insured's age 100 for a one-time, lump
sum payment. The policy is completely paid up after one premium and generates
immediate cash.
LIMITED-PAY
designed so that the premiums for coverage will be completely paid-up before age 100.
Some versions include 20-pay life where coverage is completely paid for in 20 years,
and life paid up at 65 (LP-65) whereby the coverage is completely paid up for by the
insured's age 65
LEVEL
policyowner pays the premium from the time the policy is issued until the insured's
death or age 100 (whichever comes first)...lowest annual premium.
Adjustable life
can assume the form of either term insurance or permanent insurance; as the needs
change the policy holder can increase/decrease the premium or premium paying period;
increase/decrease the face amount/ or change the period of protection. The policy
holder can also convert from term to whole life. Some changes can require proof of
insurability
MODIFIED
Whole life policy that charges a lower premium in the first few policy years, usually 3 to
5 years, and then a higher level premium for the remainder of the insured's life
GRADED
100% pass
CREDIT LIFE
a special type of coverage written to the life of the debtor and pay off the balance of a
loan in the event of the death of the debtor.
BUY-SELL AGREEMENTS
a legal contract that determines what will be done with a business in the event that an
owner dies or becomes disabled. Otherwise known as a business continuation
agreement
INSURABLE INTEREST
to purchase insurance the policy owner must face the possibility of losing money or
something of value in the event of loss, insurable interest must exist between the policy
owner and the insured at the time of application
CONCEALMENT
the legal term for the intentional withholding of information of a material fact that is
crucial in making a decision
MISREPRESENTATION
statement that if discovered would alter the underwriting decision of the insurance
company
IMPERSONATION
Otherwise known as false pretense, refers to the act of assuming the name and/or
identity of another person for the purpose of committing a fraud
UNILATERAL
only one of the parties to the contract is legally bound to do anything. The insured
makes no legally binding promises however an insurer is legally bound to pay losses
covered by a policy in force
ADHESION
a contract of adhesion is prepared by one of the parties (insurer) and accepted or
rejected by the other party (insured). Insurance policies are not drawn up through
negotiations, and an insured has little to say about its provisions. Insurance contract are
offered on a take it or leave it basis by an insurer
INDEMNITY
sometimes known as reimbursement, a provision in an insurance policy that states that
in the event of loss, an insured or beneficiary is permitted to collect only to the extent of
the financial loss, and is not allowed to gain financially because of the existence of an
insurance contract. The purpose of an insurance contract is to restore, but not let an
insured or a beneficiary profit from the loss
ALEATORY
an exchange of unequal amounts or values. The premium paid by the insured is small in
relation to the amount that will be paid by the insurer in the event of a loss.
CONDITIONAL
requires that certain conditions must be met by the policy owner and the company in
order for the contract to be executed and before each party fulfills its obligations.
ELEMENTS OF A VALID CONTRACT
, Agreement - Offer and Acceptance, Consideration, Competent Parties, Legal Purpose
TERM LIFE INSURANCE
temporary protection because it only provides coverage for a specific period of time;
pure death protection; if the insured dies during this term, the policy pays the death
benefits to the beneficiary; if the policy is canceled or expires prior to the insured's
death, nothing is payable at the end of the term; there is no cash value or other living
benefits
RENEWABILITY
allows the policy owner the right to renew the coverage at the expiration date without
evidence of insurability. The premium will be based on the insured age at the time of
renewing
CONVERTIBILITY
provision that provides the policy owner with the right to convert the policy to a
permanent insurance policy without the evidence of insurability. Premium will be based
on the insured's attained age at the time of conversion
WHOLE LIFE INSURANCE
provides lifetime protection and includes a savings element or cash value; endow at age
100 which means the cash value created by the accumulation of premium is scheduled
to equal the face amount of the policy at age 100
ENDOWMENT
policies that provide a permanent, level death protection if the insured should die
prematurely, and they accumulate cash values; matures (endows) at an earlier age and
has a considerable higher premium. The sooner the policy endows, the higher the
premiums.
Single Premium Whole Life (SPWL)
designed to provide a level death benefit to the insured's age 100 for a one-time, lump
sum payment. The policy is completely paid up after one premium and generates
immediate cash.
LIMITED-PAY
designed so that the premiums for coverage will be completely paid-up before age 100.
Some versions include 20-pay life where coverage is completely paid for in 20 years,
and life paid up at 65 (LP-65) whereby the coverage is completely paid up for by the
insured's age 65
LEVEL
policyowner pays the premium from the time the policy is issued until the insured's
death or age 100 (whichever comes first)...lowest annual premium.
Adjustable life
can assume the form of either term insurance or permanent insurance; as the needs
change the policy holder can increase/decrease the premium or premium paying period;
increase/decrease the face amount/ or change the period of protection. The policy
holder can also convert from term to whole life. Some changes can require proof of
insurability
MODIFIED
Whole life policy that charges a lower premium in the first few policy years, usually 3 to
5 years, and then a higher level premium for the remainder of the insured's life
GRADED
