NORTH CAROLINA Life Insurance exam
questions with solved solutions
______________ authority is established through verbalization and occurs when
appropriate actions are taken to carry out the authority granted to fulfill the
principal's goals. - ANSWER>>Implied
The appearance of power on behalf of the insurer through the actions or use of
identifying materials by the agent, such as company advertising material, is called
_____________ authority. - ANSWER>>Apparant
____________ authority spells out in contract form the activities that the agent
has the power to perform on behalf of the insurer? - ANSWER>>Express
Purchasers of life insurance policies are _____________, but are not necessarily
_______________. - ANSWER>>policy owners; policyholders
T/F: Since a mutual insurance company has no stockholders, it cannot be
considered a corporation. - ANSWER>>False
T/F: Proceeds of a life insurance policy paid as a lump sum death benefit are
exempt from federal income tax. - ANSWER>>True
_____________ health plans are sometimes called "wholesale plans" and provide
health insurance coverage to members of an association or professional society. -
ANSWER>>Franchise
A life insurance policy under which the amount a policy owner pays in during the
first years exceeds the sum of net level premiums that would have been payable
to provide paid-up future benefits in seven years is called: - ANSWER>>A Modified
Endowment (MEC) contract.
,The type of annuity that provides a guaranteed rate of return is called a
______________ annuity. - ANSWER>>Fixed
T/F: "Partnerships" usually are made up of two or more owners who contribute
and share profits. - ANSWER>>True
What are the two features that have the greatest effect on the amount of
additional interest that may be credited to an equity-indexed annuity? -
ANSWER>>The Indexing Method and the Participation Rate
A Salary Continuation Plan is set up between the employer and employees and is
funded by - ANSWER>>The Employer
T/F: Most adjustable life policies are more expensive than conventional term
policies or whole life policies. - ANSWER>>True
The exclusion ratio is always considered 100% in _________ annuities. -
ANSWER>>Variable
____________ term insurance provides a level amount of protection for a
specified period, after which the policy expires. - ANSWER>>Level
The period between the time a life insurance premium is due and the time the
policy lapses is called the: - ANSWER>>Grace Period
On a reinstated health policy when no new application is requested, how long
after the policy's reinstatement will coverage for accidents become effective? -
ANSWER>>Immediately
T/F: Proceeds of a life insurance policy paid as a lump sum death benefit are
exempt from federal income tax. - ANSWER>>True
,The type of annuity that provides a guaranteed rate of return is called a
______________ annuity. - ANSWER>>Fixed
T/F: "Partnerships" usually are made up of two or more owners who contribute
and share profits. - ANSWER>>True
A Salary Continuation Plan is set up between the employer and employees and is
funded by: - ANSWER>>The Employer
According to N.C. law, all group life policies must contain a conversion provision
which allows the covered individual _______ to convert the group coverage to an
individual plan without evidence of insurability if their employment is terminated.
- ANSWER>>31 days
T/F: SIMPLE plans can be structured as an IRA or a 401(k). - ANSWER>>True
Equity indexed annuities are a form of: - ANSWER>>Fixed Rate Annuity
Assessment Mutual Insurers, Reinsurers, and Home Service Insurers are all
examples of what type of insurer? - ANSWER>>Private Insurers
T/F: The key factor behind ERISA's development was to encourage employers to
establish employee health plans allowing them to self-insure. - ANSWER>>True
What type of life insurance refers to temporary coverage of a specific hazard for a
specific group? - ANSWER>>Blanket Insurance Policies
Which organization regulates the separate account in variable annuities? -
ANSWER>>The SEC
According to the Social Security Department, the inability to engage in any
substantial gainful work is known as: - ANSWER>>Disability
, A __________ plan is a qualified plan that allows unincorporated business owners
to participate in a retirement plan as an employee. - ANSWER>>Keogh
T/F: "Replacement" means a transaction in which a new policy is purchased by a
person who has never had insurance before. - ANSWER>>False
Which ANSWER best completes the following sentence? "In the insurance
business, risk can best be defined as ___________________________." -
ANSWER>>Uncertainty regarding financial loss
The face value on industrial insurance policies is usually ___________ than most. -
ANSWER>>smaller
T/F: If an insurance policy contains an incontestable clause, it means that the
insurer CANNOT contest any claim under any circumstances. - ANSWER>>False
Buy-sell agreements can only be drafted by: - ANSWER>>An Attourney
The goals of _________ were to encourage individual employers to establish
employee health plans. - ANSWER>>ERISA
T/F: If an employee pays a percentage of their paycheck every month to a
retirement plan and the employer contributes or matches the percentage, the
amount the company pays is tax deductible. - ANSWER>>True
Social Security is based on a __________ system. - ANSWER>>pay as you go
If a disabled worker covered under Social Security disability benefits recovers and
then is disabled again within five years, a new waiting period is required before
benefits begin again. - ANSWER>>False
T/F: A Waiver of Premium rider is usually included with guaranteed renewable
and noncancelable individual disability income policies. - ANSWER>>True
questions with solved solutions
______________ authority is established through verbalization and occurs when
appropriate actions are taken to carry out the authority granted to fulfill the
principal's goals. - ANSWER>>Implied
The appearance of power on behalf of the insurer through the actions or use of
identifying materials by the agent, such as company advertising material, is called
_____________ authority. - ANSWER>>Apparant
____________ authority spells out in contract form the activities that the agent
has the power to perform on behalf of the insurer? - ANSWER>>Express
Purchasers of life insurance policies are _____________, but are not necessarily
_______________. - ANSWER>>policy owners; policyholders
T/F: Since a mutual insurance company has no stockholders, it cannot be
considered a corporation. - ANSWER>>False
T/F: Proceeds of a life insurance policy paid as a lump sum death benefit are
exempt from federal income tax. - ANSWER>>True
_____________ health plans are sometimes called "wholesale plans" and provide
health insurance coverage to members of an association or professional society. -
ANSWER>>Franchise
A life insurance policy under which the amount a policy owner pays in during the
first years exceeds the sum of net level premiums that would have been payable
to provide paid-up future benefits in seven years is called: - ANSWER>>A Modified
Endowment (MEC) contract.
,The type of annuity that provides a guaranteed rate of return is called a
______________ annuity. - ANSWER>>Fixed
T/F: "Partnerships" usually are made up of two or more owners who contribute
and share profits. - ANSWER>>True
What are the two features that have the greatest effect on the amount of
additional interest that may be credited to an equity-indexed annuity? -
ANSWER>>The Indexing Method and the Participation Rate
A Salary Continuation Plan is set up between the employer and employees and is
funded by - ANSWER>>The Employer
T/F: Most adjustable life policies are more expensive than conventional term
policies or whole life policies. - ANSWER>>True
The exclusion ratio is always considered 100% in _________ annuities. -
ANSWER>>Variable
____________ term insurance provides a level amount of protection for a
specified period, after which the policy expires. - ANSWER>>Level
The period between the time a life insurance premium is due and the time the
policy lapses is called the: - ANSWER>>Grace Period
On a reinstated health policy when no new application is requested, how long
after the policy's reinstatement will coverage for accidents become effective? -
ANSWER>>Immediately
T/F: Proceeds of a life insurance policy paid as a lump sum death benefit are
exempt from federal income tax. - ANSWER>>True
,The type of annuity that provides a guaranteed rate of return is called a
______________ annuity. - ANSWER>>Fixed
T/F: "Partnerships" usually are made up of two or more owners who contribute
and share profits. - ANSWER>>True
A Salary Continuation Plan is set up between the employer and employees and is
funded by: - ANSWER>>The Employer
According to N.C. law, all group life policies must contain a conversion provision
which allows the covered individual _______ to convert the group coverage to an
individual plan without evidence of insurability if their employment is terminated.
- ANSWER>>31 days
T/F: SIMPLE plans can be structured as an IRA or a 401(k). - ANSWER>>True
Equity indexed annuities are a form of: - ANSWER>>Fixed Rate Annuity
Assessment Mutual Insurers, Reinsurers, and Home Service Insurers are all
examples of what type of insurer? - ANSWER>>Private Insurers
T/F: The key factor behind ERISA's development was to encourage employers to
establish employee health plans allowing them to self-insure. - ANSWER>>True
What type of life insurance refers to temporary coverage of a specific hazard for a
specific group? - ANSWER>>Blanket Insurance Policies
Which organization regulates the separate account in variable annuities? -
ANSWER>>The SEC
According to the Social Security Department, the inability to engage in any
substantial gainful work is known as: - ANSWER>>Disability
, A __________ plan is a qualified plan that allows unincorporated business owners
to participate in a retirement plan as an employee. - ANSWER>>Keogh
T/F: "Replacement" means a transaction in which a new policy is purchased by a
person who has never had insurance before. - ANSWER>>False
Which ANSWER best completes the following sentence? "In the insurance
business, risk can best be defined as ___________________________." -
ANSWER>>Uncertainty regarding financial loss
The face value on industrial insurance policies is usually ___________ than most. -
ANSWER>>smaller
T/F: If an insurance policy contains an incontestable clause, it means that the
insurer CANNOT contest any claim under any circumstances. - ANSWER>>False
Buy-sell agreements can only be drafted by: - ANSWER>>An Attourney
The goals of _________ were to encourage individual employers to establish
employee health plans. - ANSWER>>ERISA
T/F: If an employee pays a percentage of their paycheck every month to a
retirement plan and the employer contributes or matches the percentage, the
amount the company pays is tax deductible. - ANSWER>>True
Social Security is based on a __________ system. - ANSWER>>pay as you go
If a disabled worker covered under Social Security disability benefits recovers and
then is disabled again within five years, a new waiting period is required before
benefits begin again. - ANSWER>>False
T/F: A Waiver of Premium rider is usually included with guaranteed renewable
and noncancelable individual disability income policies. - ANSWER>>True
