NC LIFE INSURANCE STATE EXAM EXAM QUESTIONS

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NC LIFE INSURANCE STATE EXAM EXAM QUESTIONS

Actual Qs and Ans - Expert-Verified Explanation -Guaranteed passing score -73 Questions and Answers

-Format: Multiple-choice / Flashcard

Question 1: AUTOMATIC PREMIUM LOAN

Answer:

Loan that prevents the unintentional lapse of a policy due to nonpayment of the premium.

Question 2: MISREPRESENTATION

Answer:

statement that if discovered would alter the underwriting decision of the insurance company

Question 3: Single Premium Whole Life (SPWL)

Answer:

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.

Question 4: LAST SURVIVOR/SURVIVORSHIP LIFE

Answer:

(Second to Die) much the same as joint life in that it insures two or more lives for a premium that is based on a joint age. The major difference is that survivorship life pays on the last death rather than upon the first death

Question 5: LIMITED BENEFIT

Answer:

These policies cover certain expenses from specifically named illnesses, injuries, or circumstances.Cancer policies pay benefits for the actually treatment of cancer and cover no other illness.

Question 6: REINSTATMENT CLAUSE

Answer:

requires evidence of insurability and the policy owner is also required to pay back premiums plus interest and any outstanding loans with interest; the policy will be restored to its original status and retain all the values that were established at the insured's issue age

Question 7: NONFORFEITURE VALUES

Answer:

certain guarantees that are built into the policy that cannot be forfeited by the policy owner. Required by state law

Question 8: UNILATERAL

Answer:

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

Question 9: MISSTATEMENT OF AGE CLAUSE

Answer:

provision which allows the insurer to adjust the policy at any time due to a misstatement of age or gender is included in the policy

Question 10: ALEATORY

Answer:

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.

Question 11: ADHESION

Answer:

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

Question 12: CHANGE OF PLAN PROVISION

Answer:

allows the policy owner to change the policy form, usually at a higher premium rate.

Question 13: FAMILY MAINTENANCE

Answer:

life insurance based on a family income policy which combines whole life with level term insurance to provide a beneficiary with income over a specified period of time (15 or 20 years) if the insured dies during that period of time. If the insured dies within that period of time, the level term insurance is sufficient to pay the monthly income portion of the contract

Question 14: COST OF LIVING RIDER

Answer:

addresses the inflation factor by automatically increasing the amount of insurance without evidence of insurability from the insured

Question 15: OWNERSHIP CLAUSE

Answer:

the policy owner has the responsibility of paying the policy premiums, and is also the person who must have an insurable interest in the insured at the time of application for the insurance

Question 16: ENDOWMENT

Answer:

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.

Question 17: ELEMENTS OF A VALID CONTRACT

Answer:

Agreement - Offer and Acceptance, Consideration, Competent Parties, Legal Purpose Question 18: INDETERMINATE (NONGUARANTEED):

Answer:

premiums that may vary from year to year

Question 19: Primary Beneficiary

Answer:

has first claim to the proceeds following the death of the insured

Question 20: Juvenile

Answer:

any life insurance written on the life of a minor

Question 21: VARIED

Answer:

serves as a hedge against inflation and is variable from the standpoint that the annuitant may receive different rates of return on the funds that are paid into the annuity

Question 22: INSURING AGREEMENT/CLAUSE

Answer:

sets for the basic agreement between the insurer and the insured. It states that the insurer's promise to pay the death benefit upon the insured's death.

Question 23: FREE LOOK PROVISION

Answer:

this provision allows the policy owner 10 days from receipts to look over the policy

Question 24: ADDITIONAL INSURED

Answer:

provides coverage for one or more family members other than the insured. The rider is usually level term insurance, attached to the base policy covering the insured

Question 25: FAMILY INCOME

Answer:

a combination of decreasing term insurance and whole life insurance on the breadwinner of the family.The policy is designed to provide an income period which begins from the effective date of the policy and commonly runs for twenty years