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NC Life Insurance Licensing ACTUAL EXAM QUESTIONS AND
CORRECT VERIFIED SOLUTIONS LATEST UPDATE THIS YEAR –
JUST RELEASED
EXAM COVERAGE: NC Life Insurance Licensing Exam
The North Carolina Life Insurance Agent licensing exam tests candidates on two main content
areas: General (National) Life Insurance Principles and North Carolina-Specific Laws &
Regulations . The exam consists of multiple-choice questions administered by PSI or Pearson
VUE . Key topics include:
General Life Insurance Principles — Types of policies (term, whole, universal, variable,
adjustable, survivorship, joint, and juvenile life); policy provisions, options, and riders (including
waiver of premium, accidental death, guaranteed insurability, payor benefit, family term, and
disability income); annuity products (fixed, variable, immediate, deferred, and TSA/403(b));
beneficiary designations (revocable, irrevocable, primary, contingent); settlement options
(interest only, fixed period, fixed amount, life income); nonforfeiture provisions (cash surrender,
reduced paid-up, extended term); underwriting and application process (conditional receipt,
insuring clause, misrepresentation); premium modes and payment structures; taxation of life
insurance policies, annuities, and proceeds (including MEC rules, policy loans, accelerated
benefits, and rollovers) .
NC LIFE INSURANCE EXAM — 200 RANDOMIZED SCENARIO-BASED MCQS
1. A 45-year-old applicant wants a life insurance policy with level premiums, permanent
protection, and coverage that ends at age 70 when he plans to retire. Which policy should he
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purchase?
A) Term to age 70
B) Whole life paid-up at 70
C) 30-pay whole life
D) Adjustable life
Answer: B — RATIONALE: Life paid-up at age 70 provides level premiums, permanent
protection, and full coverage until age 70 when premiums stop.
2. An insured dies 18 months after purchasing a life policy. During the claim investigation, the
insurer discovers the applicant lied about having heart disease on the application. What will the
insurer likely do?
A) Pay the full death benefit because the contestable period has passed
B) Rescind the policy and deny the claim
C) Pay a reduced benefit
D) Request additional medical records
Answer: B — RATIONALE: Within the 2-year contestable period, insurers can rescind policies for
material misrepresentations discovered during application.
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3. A policyowner stops paying premiums on a whole life policy with $10,000 cash value and
$50,000 face amount. She does not want to continue coverage. What nonforfeiture option
provides the highest immediate payment?
A) Reduced paid-up insurance
B) Extended term insurance
C) Cash surrender
D) Life income option
Answer: C — RATIONALE: Cash surrender provides the full cash value immediately, terminating
coverage entirely.
4. A licensee decides to move from North Carolina to another state and permanently end his NC
residency. What action must he take regarding his NC insurance license?
A) Keep it active as a non-resident license
B) Surrender it to the Commissioner within 30 days
C) Transfer it to the new state
D) Let it expire naturally
Answer: B — RATIONALE: North Carolina requires terminating resident licensees to deliver the
license to the Commissioner within 30 days.
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5. A 60-year-old annuitant dies during the accumulation period of his deferred annuity. Who
receives the annuity benefits?
A) The insurance company keeps the accumulated value
B) The named beneficiary
C) The annuitant's estate
D) The contract owner's spouse
Answer: B — RATIONALE: Annuity contracts name a beneficiary who receives the accumulated
value if the annuitant dies during accumulation.
6. An insured has a life insurance policy with an Accidental Death and Dismemberment rider.
The primary beneficiary dies before the insured. What happens to the AD&D benefit?
A) It is paid to the insured's estate
B) It is paid to the contingent beneficiary if the insured dies accidentally
C) It is cancelled automatically
D) It becomes payable to the original primary beneficiary's heirs
Answer: B — RATIONALE: Contingent beneficiaries receive policy proceeds when the primary
beneficiary predeceases the insured.
NC Life Insurance Licensing ACTUAL EXAM QUESTIONS AND
CORRECT VERIFIED SOLUTIONS LATEST UPDATE THIS YEAR –
JUST RELEASED
EXAM COVERAGE: NC Life Insurance Licensing Exam
The North Carolina Life Insurance Agent licensing exam tests candidates on two main content
areas: General (National) Life Insurance Principles and North Carolina-Specific Laws &
Regulations . The exam consists of multiple-choice questions administered by PSI or Pearson
VUE . Key topics include:
General Life Insurance Principles — Types of policies (term, whole, universal, variable,
adjustable, survivorship, joint, and juvenile life); policy provisions, options, and riders (including
waiver of premium, accidental death, guaranteed insurability, payor benefit, family term, and
disability income); annuity products (fixed, variable, immediate, deferred, and TSA/403(b));
beneficiary designations (revocable, irrevocable, primary, contingent); settlement options
(interest only, fixed period, fixed amount, life income); nonforfeiture provisions (cash surrender,
reduced paid-up, extended term); underwriting and application process (conditional receipt,
insuring clause, misrepresentation); premium modes and payment structures; taxation of life
insurance policies, annuities, and proceeds (including MEC rules, policy loans, accelerated
benefits, and rollovers) .
NC LIFE INSURANCE EXAM — 200 RANDOMIZED SCENARIO-BASED MCQS
1. A 45-year-old applicant wants a life insurance policy with level premiums, permanent
protection, and coverage that ends at age 70 when he plans to retire. Which policy should he
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purchase?
A) Term to age 70
B) Whole life paid-up at 70
C) 30-pay whole life
D) Adjustable life
Answer: B — RATIONALE: Life paid-up at age 70 provides level premiums, permanent
protection, and full coverage until age 70 when premiums stop.
2. An insured dies 18 months after purchasing a life policy. During the claim investigation, the
insurer discovers the applicant lied about having heart disease on the application. What will the
insurer likely do?
A) Pay the full death benefit because the contestable period has passed
B) Rescind the policy and deny the claim
C) Pay a reduced benefit
D) Request additional medical records
Answer: B — RATIONALE: Within the 2-year contestable period, insurers can rescind policies for
material misrepresentations discovered during application.
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3. A policyowner stops paying premiums on a whole life policy with $10,000 cash value and
$50,000 face amount. She does not want to continue coverage. What nonforfeiture option
provides the highest immediate payment?
A) Reduced paid-up insurance
B) Extended term insurance
C) Cash surrender
D) Life income option
Answer: C — RATIONALE: Cash surrender provides the full cash value immediately, terminating
coverage entirely.
4. A licensee decides to move from North Carolina to another state and permanently end his NC
residency. What action must he take regarding his NC insurance license?
A) Keep it active as a non-resident license
B) Surrender it to the Commissioner within 30 days
C) Transfer it to the new state
D) Let it expire naturally
Answer: B — RATIONALE: North Carolina requires terminating resident licensees to deliver the
license to the Commissioner within 30 days.
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5. A 60-year-old annuitant dies during the accumulation period of his deferred annuity. Who
receives the annuity benefits?
A) The insurance company keeps the accumulated value
B) The named beneficiary
C) The annuitant's estate
D) The contract owner's spouse
Answer: B — RATIONALE: Annuity contracts name a beneficiary who receives the accumulated
value if the annuitant dies during accumulation.
6. An insured has a life insurance policy with an Accidental Death and Dismemberment rider.
The primary beneficiary dies before the insured. What happens to the AD&D benefit?
A) It is paid to the insured's estate
B) It is paid to the contingent beneficiary if the insured dies accidentally
C) It is cancelled automatically
D) It becomes payable to the original primary beneficiary's heirs
Answer: B — RATIONALE: Contingent beneficiaries receive policy proceeds when the primary
beneficiary predeceases the insured.
