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Life Insurance (North Carolina)/LATEST UPDATE
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An agent who sells an individual life insurance policy in NC MUST deliver to the policyowner - ✔✔A policy summary and buyer's guide All of the following actions are considered rebating EXCEPT - ✔✔Sharing commissions with other licensed and appointed agents What benefit does the Payor Clause on a Juvenile Life Policy provide? - ✔✔Premiums are waived if payor becomes disabled An agent who signs a blank contract application or policy of insurance - ✔✔Is guilty of a misdemeanor A person is required to be AT LEAST how old before he or she is licensed as an agent in NC? - ✔✔ 18 In a life insurance policy, which feature states that the policy will not cover certain risks? - ✔✔Exclusion Whole Life insurance are contractually guaranteed to provide each of the following EXCEPT? - ✔✔Partial withdrawal features beyond a surrender charge period A term life insurance policy matures - ✔✔Upon the insured's death during the term of the policy
Which of these provisions require proof of insurability after a policy has lapsed? - ✔✔Reinstatement How does a typical Variable Life Policy Investment account grow? - ✔✔Through mutual funds, stocks, and bonds Circulation of any oral or written statement or any pamphlet, circular, article or literature that is false or maliciously critical of or derogatory to the financial condition of an insurer is known as - ✔✔Defamation All of the following are considered characteristics describing the nature of an insurance contract EXCEPT - ✔✔Bilateral A 15 - year mortgage is best protected by what kind of life policy? - ✔✔ 15 - year decreasing term Companies in NC may transact solicitations for insurance ONLY through - ✔✔Licensed agents Which of these retirement plans can be started by an employee, even if another plan is in existence - ✔✔Individual Retirement Account (IRA) A life policy with a death benefit that can fluctuate according to the performance of its underlying investment portfolio is referred to as - ✔✔Variable life If an annuity is terminated prior to the beginning of the income payment period, the contract owner receives - ✔✔The contract surrender value at that time
S buys a $10,000 Whole Life Policy in 2003 and pays an annual premium of $100. S dies 5 years later in 2008 and the insurer pays the beneficiary $10,500. What kind of rider did S include on the policy? - ✔✔Return of Premium rider One of the stated purposes of the Life and Health Insurance Guaranty Association is to - ✔✔Assist in the prevention of insurer insolvencies The following acts are examples of unfair methods of competition and deceptive practices in the business of insurance EXCEPT the use for - ✔✔Comparisons showing that a policy has higher benefits Which of the following policies combines investment choices with a form of Term coverage? - ✔✔Variable universal life Under a renewable term policy, - ✔✔The renewal premium is calculated on the basis of the insured's attained age Additional coverage can be added to a Whole Life policy by adding a(n) - ✔✔Decreasing term rider The rules and regulations of the Life and Health Insurance Guaranty Association in NC apply to - ✔✔Life and Health policies insured by companies authorized in NC What type of life policy covers 2 people and pays upon the death of the last insured? - ✔✔Survivorship K works for XYZ clothing store from September through December each year. K works 4 hours a week for this period of time. The employer's Group Policy would consider K - ✔✔Not eligible for
the insurance because as a seasonal employee K doesn't meet the definition of "employee" under NC law A written agreement to provide a Life Insurance Policyholder immediate cash in exchange for the sale and transfer of a Life Insurance Policy is a - ✔✔Viatical Settlement When an employee is terminated, which statement about a group term life conversion is true? - ✔✔Policy proceeds will be paid if the employee dies during the conversion period A 42 year old executive wants to purchase life insurance that will allow for increases or decreases to coverage as his/her needs change. Which of the following policies will best meet this need? - ✔✔Universal life What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years? - ✔✔Family Maintenance Policy The fund that assures policyholders payment of death benefits on Life Policies, if the company is insolvent at the same time of the claim, is called the - ✔✔Life and Health Insurance Guaranty Association A policy that becomes a Modified Endowment Contract (MEC) - ✔✔Will lose many of its tax advantage Which provision allows the policy owner to change a term life policy to a permanent one without providing proof of health? - ✔✔Conversion
If a company accepts a renewal premium payment that would extend coverage beyond the policy's MAXIMUM age limit, the company - ✔✔Must continue the coverage to the end of the period of time for which the premium was accepted A vacancy that occurs during the NC Commissioner of Insurance's term of office MUST be filled by the - ✔✔Governor Variable Whole Life insurance can be described as - ✔✔Both an insurance and securities product Which of these statements about a Guaranteed Insurability Option rider is NOT true? - ✔✔Evidence of insurability is required when the option is exercised Which type of policy is considered to be overfunded, as stated by the IRS guidelines? - ✔✔Modified Endowment Contract Which of these insurance riders allows the applicant to have excess coverage? - ✔✔Term rider Which of the following actions requires a policy owner to provide proof of insurability in an Adjustable Life Policy? - ✔✔Increase face amount M purchases a $70,000 Life Insurance Policy with premium payments of $550 a year for the first 5 years. At the beginning of the 6th year, the premium will increase to $800 per year but will remain level thereafter. The face amount will remain at $70,000 throughout the life of the policy. The type of policy that M has purchased is - ✔✔Modified Premium Life; Modified Whole Life policies are distinguished by premiums that are lower than typical whole life premiums during the first few years usually five and higher thereafter.
If after satisfactory proof of loss, and insurer fails or refuses to pay death proceeds, the insurer must pay interest on the proceeds after how many days? - ✔✔ 30 days The Insurance Information and Privacy Protection Act is designed to limit or direct the information collection activities of all of the following EXCEPT - ✔✔Insurance regulators All of these insurance products require an agent to have proper FINRA securities regulation in order to sell them EXCEPT for - ✔✔Modified Whole Life Which settlement option pays a stated amount to an annuitant, but no residual value to a beneficiary? - ✔✔Life income Life insurance that covers an insured's Whole Life with level premiums paid over a limited time is called - ✔✔Limited pay life W is a 39-year old female who just purchased an annuity to provide income for life starting at age60. All of these would be acceptable annuity choices EXCEPT a(n) - ✔✔Immediate annuity; start providing income pay N purchases an annuity by making payments in an amount no less than $100 quarterly. This describes which of the following annuities? - ✔✔Flexible Installment Deferred How would a contingent beneficiary receive the policy proceeds in an Accidental Death and Dismemberment (AD&D) policy? - ✔✔If the primary beneficiary dies before the insured Which of the following is an element of a Variable Life policy? - ✔✔A fixed, level premium
On January 8, an applicant filled out an application for a life insurance policy but did not include the initial premium. The insurance company approved the application January 14 and issued the policy January 15. The producer delivered the policy on January 26 and collected the first premium. When did the coverage become effective? - ✔✔January 26 When must insurable interest be present in order for a life insurance policy to be void? - ✔✔When the application is made Which of these are NOT an example of a Non-forfeiture option? - ✔✔Life income A policy owner is allowed to pay premiums more than once a year under which provision? - ✔✔Mode of Premium If the Commissioner of Insurance finds that a licensed person has used fraudulent, coercive, or dishonest practices or has proved to be incompetent, untrustworthy, or financially irresponsible the law allows the Commissioner to - ✔✔Suspend, revoke, or refuse to renew the agent's license An agent that has been or engaged in conduct that violates the Insurance Information and Privacy Protection Act shall be issued and served a statement of charges and notice of hearing by the Commissioner of Insurance. The date of such hearing shall be AT LEAST how many days after service of charges? - ✔✔ 10 A Whole Life insurance policy owner does not risk to continue making premiums payments. Which of the following enables the policy owner to sell the policy for more than its cash value?
- ✔✔Life settlement contract Every insurance agent/broker MUST maintain all records, books, and documents for insurance transactions for a period of not less than - ✔✔ 5 years
P is a 40-year woman and would like to purchase an annuity that will provide a lifetime income stream beginning at 60-years old. Which of the following did she NOT buy? - ✔✔An immediate annuity What determines the full amount of social security retirement benefits a qualified individual is entitled to receive? - ✔✔Primary Insurance Amount (PIA) K purchased a $10,000 Life Policy that will pay the face amount to her if she lives to age 65, or to her beneficiary if she dies before age 65. K purchased which of the following types of policies? - ✔✔Endowment at Age 65; cash values that grow at a rapid pace so that the policy matures or endows at a specified date before age 100. Inducing or attempting to induce any insured person through misrepresentation to lapse, forfeit, or surrender insurance is - ✔✔Twisting Equity indexed annuities are invested in which of the following? - ✔✔S & P 500 How does an indexed annuity differ from a fixed annuity? - ✔✔Indexed annuity owners receive credited interest tied to the fluctuations of the linked indexed D needs life insurance that provides coverage for only a limited amount of time where also paying the lowest possible premium. What kind of policy is needed? - ✔✔Level term
Which of the following provisions guarantees that premiums will be waived if a Juvenile Life policy owner becomes disabled? - ✔✔Payor clause When is the face amount paid under a Joint Life and Survivor policy? - ✔✔Upon death of the last insured A policy owner would like to change the beneficiary on a life insurance policy and make the change permanent. Which type of designation would fulfill this need? - ✔✔Irrevocable What kind of life insurance policy pays a specified monthly income to a beneficiary for 30 years and then pays a lump sum benefit at the end of that 30 years? - ✔✔Family Maintenance Policy All these statements concerning Settlement Options are true EXCEPT - ✔✔Only the beneficiary may select Which of these is NOT a reason for a business to buy key person life insurance? - ✔✔A pension deficiency if the key employee dies Which statement regarding a key employee life policy is NOT true? - ✔✔The beneficiary is named by the key employee Which of these is NOT considered to be an element of an insurance contract? - ✔✔Negotiating
K works for XYZ clothing store from September-December each year. K works 45 hours a weeks for this period of time. The employer's Group Policy would consider K - ✔✔Not eligible for the insurance because as a seasonal K does not meet the definition of "employee" under NC law An agent who sells an individual life insurance policy in NC MUST deliver to the policy owner - ✔✔A policy summary and buyer's guide What type of annuity has a cash value that is based upon the performance of it's underlying investment funds? - ✔✔Variable Which of these actions should a producer take when submitting an insurance application to an insurer? - ✔✔Inform insurer of relevant information not included on the application? On delivery of a policy, a signed statement of good health is typically requested if - ✔✔The application was submitted without the initial premium From what authority derives the requirement that an insurance application contains a disclosure stating that an investigative consumer report may be obtained on an applicant? - ✔✔Fair Credit Reporting Act Inducing or attempting to induce any insured person through misrepresentation to lapse, forfeit or surrender insurance is - ✔✔Twisting Tom has a qualified retirement plan with his employer that is currently considered to be 80% "vested". How can this be interpreted? - ✔✔If Tom's employment is terminated, 20% of the funds would be forfeited
An IRA owner can start making withdrawals and NOT be subjected to a tax penalty beginning at what age? - ✔✔ 59 1/ A young, married teacher has 2 children and owns a Whole Life Policy. If the teacher wants an increasing death benefit to protect against inflation, the teacher showed select which of the following Dividend Options? - ✔✔Paid-up Additional Insurance P died 5 years later after purchasing a life policy. While investigating the claim, the insurer discovered material misrepresentations made by P during the application process. Which of these actions will the insurer take? - ✔✔Beneficiary will be paid the Death Benefit K applies for a life insurance policy on herself and submits the initial premium with the application. She is given a receipt by the agent stating that coverage begins immediately if the application is approved. What kind of receipt was used? - ✔✔Conditional A life insurance arrangement which circumvents (avoid) insurable interest statutes is called - ✔✔Investor-Originated Life Insurance How do life insurance companies handle cases where the insured commits suicide within the contract's stated contestable period? - ✔✔Claims are denied under the Suicide Clause (1 year) of the policy Which action can a policy owner take if an application for a bank loan requires collateral? - ✔✔Assign policy ownership to the bank All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for - ✔✔Modified Whole Life
J let her life insurance policy lapse 8 months ago due to nonpayment. She can reestablish coverage under which of the following provisions? - ✔✔Reinstatement Provision One becomes eligible for Social Security disability benefits after having been disabled for - ✔✔ 5 months How long does the coverage normally remain on limited-pay life policy? - ✔✔Age 100 W is a 39-year old female who just purchased an annuity to provide income for life starting at age 60. All of these would be acceptable annuity choices EXCEPT a(n) - ✔✔Immediate annuity What does the Ownership Clause in a life insurance policy state? - ✔✔Who the policy owner is and what rights the policy owner is entitled to An agent that has been or is engaged in conduct that violates the Insurance Information and Privacy Protection Act shall be issued and served a statement of charges and notice of hearing by the Commissioner of Insurance. The date of such hearing shall be AT LEAST how many days after service of charges? - ✔✔ 10 No insurer shall refuse to issue an individual policy because of - ✔✔Race An insurance company MUST clearly specify questions designed to obtain information solely for marketing research - ✔✔In any insurance transaction An annuity promises that, if the annuitant dies before receiving payments equal to the correct value, the payments will be continued to a beneficiary until an amount equal to the contract value has been paid. This type of annuity is called - ✔✔An Installment Refund annuity
If after satisfactory proof of loss, an insurer fails or refuses to pay death proceeds, the insurer must pay interest on the proceeds after how many days? - ✔✔ 30 days The following acts are examples of unfair methods of competition and deceptive practices in the business if insurance EXCEPT the use of - ✔✔Comparisons showing that a policy has higher benefits If the Commissioner of Insurance finds that a licensed person has used fraudulent, coercive, or dishonest practices or has proved to be incompetent, untrustworthy, or financially irresponsible, the law allows the Commissioner to - ✔✔Suspend, revoke, or refuse to renew the agent's license An insured covered by life insurance just died. What will happen if the primary beneficiary had already died before the insured and contingent beneficiary? - ✔✔Proceeds will go to the contingent beneficiary Which type of plan allows an employer to give money to an employee for buying a life insurance policy and also permits the employee to select the beneficiary? - ✔✔Split-dollar plan Which of these life insurance riders allows the applicant to have excess coverage? - ✔✔Term rider Which of the following best describes a contingent beneficiary? - ✔✔Person designated by the insured to receive policy proceeds in the event that the primary beneficiary dies before the insured K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable? - ✔✔Level
Which of the following annuities pays benefits based on units rather than specific dollar amounts? - ✔✔A variable annuity All of these are considered sources of underwriting information about an applicant EXCEPT - ✔✔Rating services P completes an application for a $10,000 life policy, but doesn't give the producer the initial premium. P's coverage becomes effective when - ✔✔P receives the policy and pays the premium Insurance contracts are know as because certain future conditions or acts must occur before any claims can be paid. - ✔✔Conditional Which Federal Law allows an insurer to obtain an inspection report on a potential insured? - ✔✔Fair Credit Reporting Act When is the face amount paid under a Joint Life and Survivor policy? - ✔✔Upon death of the last insured The Consideration Clause of an insurance contract includes - ✔✔The buyer's guide What kind of life insurance beneficiary requires his/her consent when a change of beneficiary is made? - ✔✔Irrevocable beneficiary
