North Carolina Life Insurance License Test 2025 Preparation Test Bank With 300
Questions and Correct Detailed Answers for Actual Exam Practice| NC Life
Insurance Exam Prep Test Bank (Latest)
Question 1
An agent is required to obtain a signed acceptance from the policyowner when a policy is:
A) Issued as applied for.
B) Renewed.
C) Changed in any way from the original application.
D) Delivered by mail.
Correct Answer: C) Changed in any way from the original application.
Rationale: If the insurer makes any changes to the policy (e.g., rates it higher due to a health
condition), it is considered a counteroffer. The policyowner must formally accept these
changes for the contract to be valid.
Question 2
A life insurance contract consists of the policyowner, the insured, and the insurer. This is known
as a:
A) Unilateral contract
B) Contract of adhesion
C) Third-party contract
D) Bilateral contract
Correct Answer: C) Third-party contract
Rationale: While the policyowner and the insurer are the two primary parties to the
contract, the contract is based on the life of a third individual, the insured.
, Question 3
For an insurance company, the application is the primary source of information for:
A) Marketing
B) Underwriting
C) Claims processing
D) Agent commissions
Correct Answer: B) Underwriting
Rationale: Underwriting is the process of evaluating risk. The application provides the
majority of the essential information about the proposed insured's health, habits, and
occupation needed to assess that risk.
Question 4
A life insurance policy is a unilateral contract because it is an exchange of:
A) A promise for a promise.
B) An act for an act.
C) An act for a promise.
D) A promise for an act.
Correct Answer: C) An act for a promise.
Rationale: The policyowner performs the act of paying the premium. In return, the insurer
makes an enforceable promise to pay the death benefit if the insured dies. Only the
insurer's promise is legally binding.
Question 5
When must the applicant initial any changes made on a life insurance application?
Questions and Correct Detailed Answers for Actual Exam Practice| NC Life
Insurance Exam Prep Test Bank (Latest)
Question 1
An agent is required to obtain a signed acceptance from the policyowner when a policy is:
A) Issued as applied for.
B) Renewed.
C) Changed in any way from the original application.
D) Delivered by mail.
Correct Answer: C) Changed in any way from the original application.
Rationale: If the insurer makes any changes to the policy (e.g., rates it higher due to a health
condition), it is considered a counteroffer. The policyowner must formally accept these
changes for the contract to be valid.
Question 2
A life insurance contract consists of the policyowner, the insured, and the insurer. This is known
as a:
A) Unilateral contract
B) Contract of adhesion
C) Third-party contract
D) Bilateral contract
Correct Answer: C) Third-party contract
Rationale: While the policyowner and the insurer are the two primary parties to the
contract, the contract is based on the life of a third individual, the insured.
, Question 3
For an insurance company, the application is the primary source of information for:
A) Marketing
B) Underwriting
C) Claims processing
D) Agent commissions
Correct Answer: B) Underwriting
Rationale: Underwriting is the process of evaluating risk. The application provides the
majority of the essential information about the proposed insured's health, habits, and
occupation needed to assess that risk.
Question 4
A life insurance policy is a unilateral contract because it is an exchange of:
A) A promise for a promise.
B) An act for an act.
C) An act for a promise.
D) A promise for an act.
Correct Answer: C) An act for a promise.
Rationale: The policyowner performs the act of paying the premium. In return, the insurer
makes an enforceable promise to pay the death benefit if the insured dies. Only the
insurer's promise is legally binding.
Question 5
When must the applicant initial any changes made on a life insurance application?
