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Free Life Insurance Basics Practice Questions

North Carolina Life exam — 79 practice questions.

Subtopics: Purpose, Human life value, Needs approach, Parties, Field underwriting, Risk classification, Premium factors, Consideration, Insurable interest, Insurable interest parties, Personal uses, Liquidity, Buy-sell funding, Key person, Term vs permanent, Participating policies, Separate account, Variable products licensing, Mortality, Interest assumption, Premium mode, Advertising, Application accuracy, Sources of underwriting, Substandard risk, Effective date, Statement of good health, Backdating, MIB, Unfair discrimination underwriting, Group vs individual, Warranties vs representations, Disclosure statement, Estate conservation, Executive compensation, Expense factor, Declined risk, Surrender comparison index, Net amount at risk, Legal reserve, CSO mortality table, Level premium funding, Cash value accumulation, Endowment maturity, Free look period, Policy replacement rules, Twisting, Churning, Rebating, Defamation, Binding receipt, Insuring clause, Consideration clause, Owner vs insured, Stranger-originated life insurance, Suitability, Sales illustration, Producer appointment, Paramedical exam, Inspection report, Nonmedical limit, Split-dollar plan, Section 162 executive bonus, Dependency period need, Social Security blackout period, Capital retention approach, Final expense need, Insurance age, Flat extra premium, Postponed risk, Agent's report, Policy summary, Material misrepresentation

Read the Life Insurance Basics study guide

Sample questions & answers

1. The primary purpose of life insurance is to:

Provide financial protection against the economic loss caused by death

Life insurance is designed to create an immediate estate and replace lost income or cover obligations resulting from the insured's death.

2. The human life value approach to determining life insurance needs focuses on:

The present value of the insured's future earnings

The human life value approach estimates coverage based on the present value of income the insured would earn over the remaining working years, net of personal consumption.

3. The needs approach to life insurance planning determines the amount of coverage by:

Estimating the survivors' financial needs and resources

The needs approach analyzes the financial obligations and goals of survivors (such as final expenses, income, and education) against existing resources to set coverage amounts.

4. In a life insurance contract, the person whose life is covered is the:

Insured

The insured is the person whose life the policy covers; the owner controls the policy and the beneficiary receives the death benefit.

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Practice: Life Insurance Basics

Take a randomized, timed-style practice test. Answer choices are shuffled and your results are scored instantly with an explanation for every question.

Practice questions are study aids generated for exam preparation and are not actual exam questions. Content is provided for educational purposes and is not legal advice. Verify current statutes, rules, and exam specifications with the Insurance Department and the exam administrator before relying on it.