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North Carolina Insurance Exam ALL VERSIONS
2025 | LATEST AND ACCURATE REAL EXAM
QUESTIONS WITH DETAILED ANSWERS |
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During the application process, a mistake is made by the applicant in answering one of the health questions and needs to be corrected. What is the best way to go about this? A Submit the application as is and see if the insurance company catches the mistake B Have the applicant initial the change or start over with a completely new application C The producer should simply make a note in the agent report section of the application describing the error and what the true response was supposed to be D The licensed producer has the applicant's implied authority to make any necessary changes to the application on the applicant's behalf
- ANSWER Have the applicant initial the change or start over with a completely new application Which of the following is true in regard to an Entity Purchase Plan? A It is an incentive plan for key employees B The business enters into an agreement to purchase the deceased's interest in the business C The owners are named as beneficiaries in the policy acquired D The entity buys life insurance on non-owner key employees
- ANSWER The business enters into an agreement to purchase the deceased's interest in the business An entity purchase plan is one which life insurance provides the funds necessary to buy out the business interest of the deceased. One characteristic of life insurance is that the insurer is obligated to pay a claim in the event of the death of the insured, however, the insured is not contractually obligated to do anything other than keep the policy in force. This is a: A Contract of Adhesion B Aleatory Contract C Unilateral Contract D Conditional Contract - ANSWER Unilateral Contract Only one party is legally bound to contractual obligations after the premium is paid. A homeowner with a 20-year mortgage needs to cover the mortgage amount with term insurance. Which of the following would she choose? A Decreasing Term B Level Term C Increasing Term D Re-entry Term
- ANSWER Decreasing Term
B State C Insurers D County
- ANSWER Stat A Credit Life Policy will be cancelled if: A The loan is paid off or refinanced B The premiums increase by more than 10% C The insurer's credit rating falls below A+ D The coverage is less than the total debt outstanding - ANSWER The loan is paid off or refinanced Which of the following is TRUE of a term rider when attached to a permanent life policy? A It allows the policy to achieve paid up status at the end of the term B It can provide additional temporary coverage on the insured or on other members of the family C It only pays out a death benefit in cases of accidental death D It always is in the amount of the base policy - ANSWER It can provide additional temporary coverage on the insured or on other members of the family The premium charged for new policies obtained by exercising the Guaranteed Insurability Rider is based upon the:
A Attained age of the insured B Original policy issue age of the insured C Attained age of the policyowner DOriginal policy issue age of the policyowner
- ANSWER Attained age of the insured A Child Rider that is added to an insured's permanent policy includes which of the following features? A All children (beyond 14 or 15 days of age) are covered, and the rider may be converted to permanent coverage at a specified age without evidence of insurability B Coverage is for the same amount as the primary insured C If the child rider death benefit is paid, it reduces the face amount of coverage D The covered child becomes the premium payor - ANSWER All children (beyond 14 or 15 days of age) are covered, and the rider may be converted to permanent coverage at a specified age without evidence of insurability Roth IRAs and Traditional IRAs have only one of the following in common. Which one is it? A The account has to be open for at least 5 years and the owner at least 59 1/2 for proceeds to be received tax free BIf a person owns a traditional IRA and a Roth IRA, the combined contributions to both cannot exceed the annual maximum IRA contribution for one IRA
D Expiration
- ANSWER Expiration _____________ insurance allows for insurance coverage to be obtained when not available from admitted carriers. A Foreign B Brokerage C Fraternal D Surplus lines - ANSWER Surplus lines A 22 year-old applicant for life insurance has a limited budget for premiums. Which of the following policies would provide for the highest face value, for the lowest premium amount? A Annually Renewable Term B 30 year Term C 20 Year Term D 10 Year Term - ANSWER Annually Renewable Term Term insurance does not accumulate cash value. T has some heart health issues, but needs some additional life insurance coverage. What options should T consider?
A A group health insurance plan B Universal Life Option B C Adjustable Life D A group life insurance plan - ANSWER A group life insurance plan For those who don't qualify for an individual policy because of age or health reasons, group life coverage might be a good option. The __________ provision specifies what an insured must do, if a policy has lapsed, in order to put it back in force. A Renewal B Reissuance C Reinstatement D Reconsideration - ANSWER Reinstatement Which type of term protection has an increasing face value as the insured gets older? A Increasing Term B Renewable Term
C
Mortality rate and expenses D Premiums paid plus interest earned - ANSWER Rate of interest assumed and mortality rate Mortality Rate - Rate of Interest Assumed= Net Premium The ________ decides which dividend option is in effect and can change his/her election at any time. A Beneficiary B Insurer C Insured D Policyowner - ANSWER Policyowner A policy is issued with a rider. Years later the policyowner would like to drop the rider in order to save some money. Who has the authority to effect that policy change? A The insured
B
An executive officer of the insurer C The beneficiary D The producer - ANSWER An executive officer of the insurer Any policy changes of modifications must be in writing and signed off at the home office by an executive officer. A producer cannot change, alter, modify, or waive an policy provisions. After a life insurance policy has been in force for 5 years the insured dies. During the claims process, the insurer discovers that the insured did not disclose material health information that had it known, would have caused the application to be rejected. What can the insurer do at this point in time? A The insurer can void the contract and refund any and all premium payments received plus interest B The insurer must pay out the death benefit but can then take legal action against the beneficiary based on insurance fraud C The insurer can contest the claim D The insurer must pay out the death benefit of the policy to the named beneficiary - ANSWER The insurer must pay out the death benefit of the policy to the named beneficiary
D
Annuity rules - ANSWER Nonforfeiture provisions Gives the owner the rights to the accumulation in the contract. The period of time from the first deposit into an annuity to the selection of a settlement option is considered the ___________ period. A Annuitization B Accumulation C Deferred D Annuity - ANSWER Accumulation If the premiums are not paid on a Traditional Whole Life policy that has been in force for decades with no loan outstanding, what happens? A The policy lapses and is of no value to the policyowner B The policy becomes a reduced paid-up policy
C
Unless specified otherwise, the cash values buy extended term D The insurer mails a check to the policyowner in the amount of the policy's cash value - ANSWER Unless specified otherwise, the cash values buy extended term Upon non-payment of premium due, the extended term option kicks in automatically and is paid for by the cash values of the policy. The policy has nonforfeiture values which are available to the policyowner. All of the following are examples of an absolute assignment, except: A A court orders the existing policyowner to change it to their ex-spouse B A business permits the change of ownership of a company owned policy over to a retiring executive C Using a Life Insurance policy as collateral for a loan D A donor transfers ownership of a paid-up policy to charitable organization as a donation - ANSWER Using a Life Insurance policy as collateral for a loan The owner possesses all of the rights in the policy, one of which is the right to assign. When a policy is used to collaterize a loan it is referred to as a temporary or collateral assignment. If a nonresident licensee moves to North Carolina and desires licensure in this state, he/she must apply for resident licensure within ______ days of establishing legal residence.
A
Committing dishonest or fraudulent practices in the insurance business B Forging another's name on an insurance document C Cheating on an insurance exam D Knowingly accepting business from an appropriately licensed broker - ANSWER Knowingly accepting business from an appropriately licensed broker All of the following are duties of the Commissioner, except: A Issuing licenses to insurance agents B Selling contracts of insurance C Arresting any person suspected of violating insurance laws D Extending times for filing proofs of loss in declared disaster areas - ANSWER Selling contracts of insurance
An adjuster is a person who investigates all of the following types of insurance claims, except: A Casualty B Health C Property D Life - ANSWER Life Which of the following is considered 'twisting'? A Accepting premiums by credit card but charging a fee for the service B Willfully misrepresenting or incompletely comparing the terms of an insurance policy to induce the policyholder to replace it C Refusing to approve a loan unless the applicant buys insurance from an affiliated insurer D Discriminating between individuals of the same class in the amount of premium charged or benefits paid
- ANSWER Willfully misrepresenting or incompletely comparing the terms of an insurance policy to induce the policyholder to replace it
they do not receive commissions therefore they do not require an agents license. Provisions and clauses, unlike riders, are included in the contract for: A A premium B A nominal charge C A slight fee D No additional charge - ANSWER No additional charge Which of the following is FALSE regarding Settlement Options? A Both principal and interest received as a result of a settlement option are taxed as ordinary income to the beneficiary B Settlement Options are used when the owner wants to convert a lump sum death benefit to an income stream for the beneficiary C A policyowner may change a previously chosen settlement option before the insured dies
D
If the policyowner has chosen an option prior to death, the beneficiary cannot change it at time of claim
- ANSWER Both principal and interest received as a result of a settlement option are taxed as ordinary income to the beneficiary Only the interest would be taxed to the beneficiary, not the principal. Which one of the following would not exempt a person from the examination requirement if applying for a life and health agent license? A A ChFC B A GED C A CLU D A LUTCF - ANSWER A GED Each life agent licensee must obtain how many insurance continuing education credits during each biennial compliance period? A 15 B 24
