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NC State LIFE Insurance Exam Study Guide Solutions
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NC State LIFE Insurance Exam Study Guide Solutions Insurable Interest - ANSWER-Something of value that, if lost, would cause you financial harm. Must exist upfront at time of application. Legitimate financial reason for buying insurance. Impersonation - ANSWER-Wrong person takes medical examin...

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  • November 19, 2024
  • 21
  • 2024/2025
  • Exam (elaborations)
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  • nc state life insurance exam study guide solutions

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NC State LIFE Insurance Exam Study
Guide Solutions

Insurable Interest - ANSWER✔✔-Something of value that, if lost, would cause you

financial harm. Must exist upfront at time of application. Legitimate financial reason for

buying insurance.


Impersonation - ANSWER✔✔-Wrong person takes medical examination/test in

connection with application for insurance. **Can be contested beyond 2 year

incontestable clause**


Adhesion - ANSWER✔✔-Ins. Co. designs original contract. Insured has little or no

control of content, no room for bargaining, no negotiations. Insured must take it or

leave it.


Indemnity - ANSWER✔✔-Person restored to original condition he/she enjoyed prior to

loss. Does not profit a gain from the insurance.


Aleatory - ANSWER✔✔-Ins. contract is "out of balance". Insured or bene might receive

much more than he she pays into the policy or may pay premiums for a long time and

yet have no loss.




Copyright ©SOPHIABENNETT 2025 ACADEMIC YEARALL RIGHTS RESERVED. Page 1/21

,Conditional - ANSWER✔✔-Ins. contract is conditional. Both parties must meet

conditions. Even when a loss occurs. Ex) Life Ins. policy only pays on condition that

proof of death is provided.


Reinsurance - ANSWER✔✔-Ins. between ins. co's. Ins. co's go to each other for help. Ex)

A given risk is not acceptable to an ins. co. due to adverse medical/underwriting

considerations or large amt of ins. involved is over co's retention limit


Misrepresentation/Concealment - ANSWER✔✔-Making misleading statements.

Intentionally misrepresenting benefits, terms of policy. Concealing known material

facts. Ex) Implying ins. policy equates shares of stock, implying dividends are

guaranteed, overstating future values


Interested Adjusted Cost Comparisons - ANSWER✔✔-Similar policies are compared &

int. is taken into account. Cost determined by considering int. that might have been

earned on premiums had they been invested. (Surrender Cost Index measured at 10 &

20 years)


Traditional Net Cost Comparisons - ANSWER✔✔-Similar policies compared without

taking the effect of int. into account. (Net Payment Cost Index measured at 10 & 20 yrs)


Capital Stock ("Stock") - ANSWER✔✔-Ins. Co. owned by stockholders. Ex) Lincoln

Financial


Mutual Insurance Company - ANSWER✔✔-Ins. Co. owned by the policyholders. Ex)

State Farm, NW Mutual
Copyright ©SOPHIABENNETT 2025 ACADEMIC YEARALL RIGHTS RESERVED. Page 2/21

, Fraternal Benefit Societies - ANSWER✔✔-Under jurisdiction of Dept. of Ins.


-nonprofit org.


-a society, voluntary assoc. or corp.


-cannot issue capital stock


-org. solely for mutual benefit of members & their families


-must have lodge system w/ ritualistic form of work


-do not issue any prop/liability pol. (No homeowners/auto ins)


-agents who sell to captive audience must be licensed by NCDOI


Ex) International Order if the Forester, Woodland of the World


Health Maintenance Organization (HMO) - ANSWER✔✔-Form of Ins. Co. Ownership


Commissioner of Insurance - ANSWER✔✔-Elected by the ppl for period of 4 yrs.

Oversees state's dept. of ins. Approves rates, but does not set them. Authority to give

notice of hearing regarding violation, notice must specify time & place of hearing & take

place no less than 10 days after notice served.


Keep on file list of rates & explanations of coverages. Examine each annual statement,

reports all violations to attorney general. May petition court for restraining order if

public is in danger. If unable to fulfill term = governor appoints someone else.




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