NC Life Agent Exam
A "jumping juvenile" whole life insurance policy typically increases its face amount when the
insured reaches:
age 16
age 18
age 21
age 26 - ANS-21
A life insurance application's main purpose is to provide underwriters with information regarding:
the applicant's personal risk data and health
the reason for the requested coverage
the type of policy being applied for
the applicant's wealth - ANS-the applicant's personal risk data and health
A term life insurance policy in which the protection and premium amounts stay the same during
the term period is known as:
a level term policy
a renewable decreasing term policy
a decreasing term policy
an increasing term policy - ANS-a level term policy
Abby lives in Maryland, where she is licensed as an insurance agent. She wants to apply for a
nonresident license in North Carolina. Which of the following conditions must she satisfy?
She must move to North Carolina.
She must show her license to be in good standing in Maryland.
She must surrender her Maryland license.
She must be sponsored by an agent licensed in North Carolina. - ANS-She must show her
license to be in good standing in Maryland.
Acme Insurance and Apogee Insurance agree to offer different premium rates for persons of
equal risk within a particular class. They also agree to limit benefits paid to insureds within this
class if the insureds live in certain counties of North Carolina. What are Acme and Apogee
engaging in?
acceptable marketing and underwriting practices
unfair and prohibited business practices
false advertising
insurance fraud - ANS-unfair and prohibited business practices
Actuaries base traditional life insurance premiums on all of the following factors, EXCEPT:
mortality
sales projections
,interest rates
expenses - ANS-sales projections
Actuaries calculate net life insurance premiums based on which of the following?
morbidity and interest assumptions
interest and expense assumptions
mortality and interest assumptions
mortality and expense assumptions - ANS-mortality and interest assumptions
Agent Johns started offering potential clients courtside tickets to a professional basketball game
in exchange for purchasing a life insurance policy. Which ethical sales practice has Agent Johns
violated?
rebating
controlled business
churning
replacement - ANS-rebating
Alice wants to spread her life insurance premiums over the year, rather than pay a single annual
premium. She asks her agent what that would mean in terms of the sum of premiums paid.
Which of the following is the correct response?
The sum of premiums will be higher than if she paid a single annual premium.
The sum of premiums may be higher or lower than the single annual premium, depending on
whether the annual premium is paid at the start or end of the policy year.
Whichever mode of premium she chooses, the sum of premiums over the course of the year is
the same.
The sum of premiums will be lower than if she paid a single annual premium. - ANS-The sum of
premiums will be higher than if she paid a single annual premium.
All of the following are automatically deemed to represent an insurable interest EXCEPT:
ABC Corp. (the applicant) and its key executive
Frank (the applicant) and his elderly neighbor
Karen (the disabled applicant, age 28), and her father who cares for her.
Sue (the applicant) and her husband - ANS-Frank (the applicant) and his elderly neighbor
All of the following are characteristics of a mutual insurance company EXCEPT:
They may issue policy dividends.
They are governed by a board of directors.
They are owned by stockholders.
They have minimum financial capital requirements that must be met before they can conduct
business. - ANS-They are owned by stockholders.
All of the following are characteristics of a stock insurance company EXCEPT:
They may issue dividends.
They are governed by a board of directors.
,They have minimum financial capital requirements that must be met before they can conduct
business.
They are owned by policyowners. - ANS-They are owned by policyowners.
All of the following are elements of an insurable risk EXCEPT:
Any losses resulting from the insured peril must be definable as to time, cause, and location.
The loss must be measurable.
The insured peril must be outside of the insured's control.
Losses resulting from the insured peril must be potentially catastrophic. - ANS-Losses resulting
from the insured peril must be potentially catastrophic.
All of the following must sign life insurance applications, EXCEPT:
the insured (if not the applicant)
the agent
the beneficiary
the applicant - ANS-the beneficiary
All of the following statements about binding receipts are correct EXCEPT:
If underwriters determine the applicant is uninsurable, then a binding receipt terminates
coverage when that determination is made.
Binding receipts are the most common type of premium receipt used with life insurance sales.
A binding receipt guarantees coverage from the time the applicant completes the application
through the underwriting process, even if the applicant is found to be uninsurable.
An alternative to a binding receipt is the temporary insurance agreement. - ANS-Binding
receipts are the most common type of premium receipt used with life insurance sales.
All of the following statements about key person life insurance are correct, EXCEPT:
Upon the insured employee's death, the employee's surviving family receives the policy's death
benefit.
Key person, or key employee, life insurance is an example of third-party ownership.
Life insurance used as key person life is normally owned by the business rather than the
insured.
The business applies for, owns, and is the beneficiary of the policy covering the life of a key
employee. - ANS-Upon the insured employee's death, the employee's surviving family receives
the policy's death benefit.
All of the following statements comparing whole life insurance and term life insurance are
correct EXCEPT:
Term life insurance is designed for temporary needs while whole life insurance is designed to
cover the insured's entire life.
Both whole life insurance and term life insurance build a cash value.
Both whole life and term life insurance have level premiums, but only whole life guarantees a
level premium for as long as the insured lives.
, Only term life insurance has a renewal provision. - ANS-Both whole life insurance and term life
insurance build a cash value.
All of the following statements regarding joint life insurance and survivorship life insurance are
correct EXCEPT:
Joint life insurance is especially popular in the estate planning market.
Joint life insurance lets the surviving insured purchase an individual policy without having to
prove insurability upon the first insured's death.
Survivorship life insurance pays the death benefit upon the death of the second insured.
Both joint life and survivorship life have a lower premium than two comparable individual
policies covering the two insureds. - ANS-Joint life insurance is especially popular in the estate
planning market.
All of the following statements regarding life insurance premium modes are correct EXCEPT:
The sum of premiums paid monthly over the course of a year will be greater than the annual
premium for that policy.
There is no additional cost for paying premiums more frequently than annually.
common premium modes include monthly, quarterly, and semi-annually
Actuaries base premium calculations on the assumption that the premium will be paid annually,
at the start of the policy year. - ANS-There is no additional cost for paying premiums more
frequently than annually.
All of the following statements regarding the career agency distribution system are correct
EXCEPT:
The managerial form of career agency system uses company employees as the agency
managers.
There are two types, the general agency system and the managerial system.
It uses agents who primarily if not exclusively represent one insurer.
Personal producing general agents (PPGAs) are commonly hired to manage career agencies. -
ANS-Personal producing general agents (PPGAs) are commonly hired to manage career
agencies.
All of the following statements regarding the money laundering process and anti-money
laundering efforts are correct EXCEPT:
Money laundering is the process of integrating illegally obtained money into the legal monetary
system in a way that hides its illegal origins.
There are three basic levels of the money laundering process: placement, layering, and
integration.
Permanent life insurance can be used to launder money.
Insurance companies are exempt from the need to create and maintain anti-money laundering
programs. - ANS-Insurance companies are exempt from the need to create and maintain
anti-money laundering programs.
All the following are standard types of term life insurance EXCEPT:
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