NC LIFE AND HEALTH INSURANCE STUDY QUESTIONS

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NC LIFE AND HEALTH INSURANCE STUDY QUESTIONS

EXAM QUESTIONS

Actual Qs and Ans - Expert-Verified Explanation -Guaranteed passing score -100 Questions and Answers

-Format: Multiple-choice / Flashcard

Question 1: The premiums paid by the employer in a business life insurance policy are ATax deductible by the employee.BAlways taxable to the employee.CNever taxable to the employee.DTax deductible by the employer.

Answer:

D Question 2: When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy as well as a refund of all of the premiums paid. Which rider is attached to the policy?APremature death BReturn of premium CCost of living DDecreasing term

Answer:

B Question 3: All of the following are TRUE statements regarding the accumulation at interest option EXCEPT AThe policyholder has the right to withdraw the accumulations at any time.BThe interest credited under this option is not taxable since it remains inside the insurance policy.

CThe annual dividend is retained by the company.DThe interest is credited at a rate specified by the policy

Answer:

B Question 4: A father purchases a life insurance policy on his teenage daughter and adds the Payor Benefit rider. In which of the following scenarios will the rider waive the payment of premium?AIf the daughter is disabled for more than 3 months BIf the daughter is disabled for any length of time CIf the father is disabled for more than 6 months DIf the father is disabled for at least a year

Answer:

C Payor benefit only pays if the owner, the father in this example, is disabled for at least 6 months.Question 5: All of the following statements are true regarding installments for a fixed amount

EXCEPT

AThe payments will stop when the annuitant dies.BValue of the account and future earnings will determine the time period for the benefits.CThis option pays specific amount until the funds are exhausted.DThe annuitant may select how big the payments will be.

Answer:

A Question 6: Which of the following is true of a children's rider added to an insured's permanent life insurance policy?AThe policy covers only the natural children of the insured.BEach child covered must show evidence of insurability.CIt is term coverage that is convertible to permanent insurance at or prior to the child reaching the maximum coverage age.DIt is permanent insurance.

Answer:

C Question 7: What is the purpose of establishing the target premium for a universal life policy?ATo pay up the policy faster BTo cover all policy expenses CTo keep the policy in force DTo accumulate cash value faster

Answer:

C The target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime.Question 8: Which of the following is another term for the accumulation period of an annuity?APay-in period BPremium period CLiquidation period DAnnuity period

Answer:

A Question 9: Which of the following is TRUE regarding the accumulation period of an annuity?AIt is also referred to as the annuity period.BIt is a period of time during which the beneficiary receives income CIt is limited to 10 years.DIt is a period during which the payments into the annuity grow tax deferred.

Answer:

D Question 10: Which of the following best defines target premium in a universal life policy?AThe maximum amount the policyowner may pay on a policy BThe minimum amount to make sure the policy is annually renewable CThe corridor of insurance DThe recommended amount to keep the policy in force throughout its lifetime

Answer:

D The target premium is a recommended amount that should be paid on a policy in order to cover the cost of insurance protection and to keep the policy in force throughout its lifetime.Question 11: The president of a company is starting an annuity and decides that his corporation will be the annuitant. Which of the following statements is true?AThe contract can be issued without an annuitant.BThe annuitant must be a natural person.CA corporation can be an annuitant as long as it is also the owner.DA corporation can be an annuitant as long as the beneficiary is a natural person.

Answer:

B

Question 12: An insured committed suicide one year after his life insurance policy was issued.The insurer will APay nothing.BRefund the premiums paid.CPay the policy's cash value.DPay the full death benefit to the beneficiary.

Answer:

B

Question 13: What are the two components of a universal policy?

AInsurance and investments BMortality cost and interest CSeparate account and policy loans DInsurance and cash account

Answer:

D A universal policy has two components: an insurance component and a cash account. The insurance component of a universal life policy is always annual renewable term insurance. The cash account accumulates on a tax deferred basis each year and earns either the guaranteed contract rate or the current rate, whichever is higher.Question 14: During partial withdrawal from a universal life policy, which portion will be taxed?ALoan BInterest CCash value DPrincipal

Answer:

B During the withdrawal, the interest earned on the withdrawn cash value may be subject to taxation.Question 15: All other factors being equal, the least expensive first-year premium payment is found in AAnnually Renewable Term.BIncreasing Term.CDecreasing Term.DLevel Term.

Answer:

A Annually renewable term is the purest form of term insurance. The death benefit remains level, but the premium increases each year with the insured's attained age. In decreasing policies, while the face amount decreases, the premium remains constant throughout the life of the contracts. In level term and