NC Insurance Exam: Life
Insurance Questions and Answers
100% PASS
insurable interest—ANSWER--an insurance policyowner's financial interest in the person or
property being insured. In general insurance policy applicants must have insurable interest in
the person or property they are seeking to insure
assignee—ANSWER--person whom the policyowner assigns the rights in an insurance policy
business insurable interest—ANSWER--Exists between the business owner's and between
the business and its employees. Businesses rely on life insurance to make up for the financial
losses that might occur should a key employee or owner die prematurely
automatic insurable interest—ANSWER--individuals in themselves, spouses in each other,
parents in their children, children in their parents or grandparents (or someone else in the
case of financial dependency)
group insurance—ANSWER---One master policy covers multiple people-from 10 to hundreds
-Policy is owned by the organization that sponsors coverage
-Covered individuals are NOT policyowners and Individual certificates of coverage are
provided to show they are insured
,-Group generally LESS expensive
-Must be a natural group-not formed for the purpose of insurance
individual insurance—ANSWER--covers one or maybe 2 people
joint life insurance—ANSWER--permanent coverage that insures 2 persons under one policy.
Policy pays death benefit when the first insured dies
permanent life insurance—ANSWER--lasts the insured's entire lifetime or until age 120. As
long as premiums are paid, the insurance stays in force and its guaranteed to pay death
benefit
level premium—ANSWER--insureds pays the same (level) premium over the life of the policy.
At any time, the insured never pays more in premium than he or she paid in the early years
of the policy, when he or she was young
accumulation of cash value—ANSWER--the investment part of a whole life insurance policy,
the money that builds within the policy over the policy's life. Policyowner owns it and has
access to it while the policy is in force which provides a "living benefit"
term life insurance—ANSWER--provides protection for a specified, limited period. The term
can be defined in years or by the age of the insured. The time limit can be as short as one
year and as long as 20 or the insured reaches a specified age (like 65)
-Policy expires at end of term
-Policy pays a death benefit ONLY if the insured dies during the term
-if alive at end, policy terminates without value
© 2026 Copyright. All Rights Reserved. This document is
protected by copyright law, Copyrighted By Brittie Donald
, -No cash value-no $ accumulates in the policy so at the end of the term, the policy expires
with nothing owed the policyowner
-Face amount costs LESS than permanent at pretty much all issue ages which makes it
popular and suitable for relatively temporary financial protection needs
Term life premiums increase with every renewal making them difficult to maintain when
older
Noncancelable—ANSWER--All life insurance is this, meaning the policy can't be canceled if
premiums are paid on time. Insurers cannot cancel any life insurance policy for any reason
other than the nonpayment of premiums
participating whole life insurance—ANSWER--class of life insurance policy in which the
owner is paid a dividend out of the insurance company's earnings that are available for
distribution(divisible surplus)
-Commonly issued by mutual insurance companies-policyowner is eligible for policy
dividends declared by insurance company
-Dividends not guaranteed, essentially represent a return of premiums that exceed all
company expenses and liabilities
nonparticipating policies—ANSWER--policy in which the owner is not entitled to be paid a
dividend
-Issued by stock insurance companies
-Do not pay policy dividends
-Profits are distributed to their stockholders as stock dividends
Insurance Questions and Answers
100% PASS
insurable interest—ANSWER--an insurance policyowner's financial interest in the person or
property being insured. In general insurance policy applicants must have insurable interest in
the person or property they are seeking to insure
assignee—ANSWER--person whom the policyowner assigns the rights in an insurance policy
business insurable interest—ANSWER--Exists between the business owner's and between
the business and its employees. Businesses rely on life insurance to make up for the financial
losses that might occur should a key employee or owner die prematurely
automatic insurable interest—ANSWER--individuals in themselves, spouses in each other,
parents in their children, children in their parents or grandparents (or someone else in the
case of financial dependency)
group insurance—ANSWER---One master policy covers multiple people-from 10 to hundreds
-Policy is owned by the organization that sponsors coverage
-Covered individuals are NOT policyowners and Individual certificates of coverage are
provided to show they are insured
,-Group generally LESS expensive
-Must be a natural group-not formed for the purpose of insurance
individual insurance—ANSWER--covers one or maybe 2 people
joint life insurance—ANSWER--permanent coverage that insures 2 persons under one policy.
Policy pays death benefit when the first insured dies
permanent life insurance—ANSWER--lasts the insured's entire lifetime or until age 120. As
long as premiums are paid, the insurance stays in force and its guaranteed to pay death
benefit
level premium—ANSWER--insureds pays the same (level) premium over the life of the policy.
At any time, the insured never pays more in premium than he or she paid in the early years
of the policy, when he or she was young
accumulation of cash value—ANSWER--the investment part of a whole life insurance policy,
the money that builds within the policy over the policy's life. Policyowner owns it and has
access to it while the policy is in force which provides a "living benefit"
term life insurance—ANSWER--provides protection for a specified, limited period. The term
can be defined in years or by the age of the insured. The time limit can be as short as one
year and as long as 20 or the insured reaches a specified age (like 65)
-Policy expires at end of term
-Policy pays a death benefit ONLY if the insured dies during the term
-if alive at end, policy terminates without value
© 2026 Copyright. All Rights Reserved. This document is
protected by copyright law, Copyrighted By Brittie Donald
, -No cash value-no $ accumulates in the policy so at the end of the term, the policy expires
with nothing owed the policyowner
-Face amount costs LESS than permanent at pretty much all issue ages which makes it
popular and suitable for relatively temporary financial protection needs
Term life premiums increase with every renewal making them difficult to maintain when
older
Noncancelable—ANSWER--All life insurance is this, meaning the policy can't be canceled if
premiums are paid on time. Insurers cannot cancel any life insurance policy for any reason
other than the nonpayment of premiums
participating whole life insurance—ANSWER--class of life insurance policy in which the
owner is paid a dividend out of the insurance company's earnings that are available for
distribution(divisible surplus)
-Commonly issued by mutual insurance companies-policyowner is eligible for policy
dividends declared by insurance company
-Dividends not guaranteed, essentially represent a return of premiums that exceed all
company expenses and liabilities
nonparticipating policies—ANSWER--policy in which the owner is not entitled to be paid a
dividend
-Issued by stock insurance companies
-Do not pay policy dividends
-Profits are distributed to their stockholders as stock dividends
