NC LIFE INSURANCE STATE EXAM STUDY GUIDELINE EXAM

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NC LIFE INSURANCE STATE EXAM STUDY GUIDELINE EXAM

QUESTIONS

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

-Format: Multiple-choice / Flashcard

Question 1: Combinations of Policies and Varations in the Basic Forms

Answer:

Double or Triple Protection: A combination life insurance policy, where in an ordinary or straight life insurance is married to a double term policy to provide triple coverage with in a certain coverage period

Question 2: Level Term Insurance

Answer:

Term insurance can be Renewed annually. Has a level Face Amount at renewal, Premiums goes up.Can be purchased for a Year or as often as 5, 10, 15, to 20 years inclements with average premium.Premiums and Face Amounts are "Level" for a period of "Time".

Question 3: Mutual insurers

Answer:

Issue Participating policies.Policyholder might participate by recieving a dividend. Dividends paid are not taxable. IRS has ruled they are merely a Return of Premium. Insured paid initial premium in after tax dollars.

Question 4: Common disaster Clause

Answer:

Uniform States Common Disaster Law, Uniform Simultaneous Death Law Applies if insured and primary beneficiary both die as a result of the same accident. States that the insured always dies last, even if that is not true. Proceeds will go to the insureds contingent beneficiary

instead of heirs of the primary beneficiary. Most states have a time period in which the primary beneficiary must die in order for this clause to take effect.

Question 5: Graded

Answer:

The policy usually pays out limited death benefits during the first few years and usually requires premiums that are somewhat higher than standard life insurance policies. Does not require medical exams or a medical questionaire.Starts out with a lower usual premium which increases every year for a certain number of years, and then levels off and remains level for as long as you own the policy.

Question 6: Cash

Answer:

Cash

Question 7: Mode of payments

Answer:

Optional methods of paying premiums. Monthly, quarterly, semiannually or annually. The more frequent the mode, the higher the premium > Insurers add fees for billings Annual mode of payment has lowest cost >No service fee added

Question 8: Adjustable/Flexible

Answer:

Adjustable: Adjust Face Amount, Premiums or Term of protection

Flexible: Fluctating incomes

Question 9: Return of Premium (ROP)

Answer:

A type of term insurance in which the insured gets back the premiums paid in at the end of the term, IF they are still alive.Premiums returned to the insured tax-free as the premium is paid with after tax dollars.The premium for a return of premium is generally more than that for a term policy, but less than that of a traditional whole life policy.

Question 10: Extended term

Answer:

Insured exchanges cash value for a new term life policy. The policy has same face amount as original policy. Does not cover to age 100-only for a period of Time. Provides the most protection Also known as Automatic option Insurer must Give this option if the insured does not select 1 of the others, when the policy lapses.

Question 11: Dividends

Answer:

May be paid by a mutual insurance company. Paid to policyholders. They can not be guaranteed. May be Projected into the future. Past dividends may be stated, if accurate.

Question 12: Entire Contract Clause

Answer:

Defines what is admissable in court.Only the policy, endorsements and attached papers, if any.Applications may be attached, but does not have to be.If it is, it becomes part of the entire contract, most insurers attach application for this reason.Prevents insurers from CHANGING the policy after policy delivery. No changes are valid until approved by company officer. After approval, changes must be endorsed to the policy.PRODUCERS do NOT have authority to change the policy.Insured may request a change in the policy, Producers will send change request to the company.Changes not effective unless company approves by countersigning the request and endorsing the policy.Protects both the insured and the insurer from unilateral changes in coverage after the policy is issued.

Question 13: Decreasing Term Insurance

Answer:

It is NOT Annual Renewable term. Face Amount goes down, while Premiums remain the same.Decreasing Term insurance is often used as a mortage redemption. Can be converted to Whole Life, regardless of health. Premiums stays the same. Costs increases as Face Amount decreases, by expiration the Face Amount is Zero.

Question 14: Universal Whole Life

(Flexible Premiums)

Answer:

Guaranteed "Minimum" Interest Rate. Current interest rate which varies year to year. Has Extreme Flexibilty regarding premiums payments.Insured does not have to pay annual premium ( Cash Value may be debited to pay cost of protection) "THIS WOULD NOT BE A LOAN" Protection portion of policy is actually term insurance ( cost

increases) Target Premium based on projected earnings.

Option A: Universal Life has a level death benefit (term)

Face Amount is made of term insurance

Option B: Universal Life will pay beneficiary both Face Amount PLUS Cash Value.

Question 15: Paid-up addition

Answer:

Insured uses dividends to purchase small paid up policy, regardless of health. New policy is WL, paid up to age 100. Allows insured to obtain more insurance, even if sick.

Question 16: Individual Policies

Answer:

30 day grace period

Question 17: Face Amount plus Cash Value

Answer:

A common benefit option on life insurance policies wherein the policy owner allows the dividends from policy to be used for the purpose of accumulating cash values.On death the beneficiaries recieve an increases death benefit from the cash value amount that was accured during the policy.

Question 18: Beneficiary/Beneficiaries

Answer:

Can be Spouse, child, friend, Business partner etc..Guardian must be appointed for children.

Question 19: Which life insurance policies has a Flexible premium?

Answer:

>Adjustable whole life >Universal whole life >Variable/universal whole life >Interest-sensitive whole life

Question 20: Revocable beneficiary

Answer:

May be changed anytime by the policy owner, as well as sent to the insurer for countersigning. If you, as the owner and would like to maintain all of your owners right you would want to have a revocable beneficiary.