Free North Carolina Life practice questions

Answer: C. They are paid to or for the husband and children, free of claims by Dana's creditors and representatives.

A person may insure his or her own life for the sole benefit of a spouse, children, or both, and North Carolina directs that on the insured's death the proceeds go to or for those family members free from every claim of the insured's creditors or personal representatives. The option paying creditors ahead of the family is wrong because the protection is complete; creditors take no share ahead of the family. The right-to-change option is wrong because the same section keeps such a policy out of the insured's creditors' reach even where the insured reserved policy rights during life, and nothing in the death-proceeds rule turns on that right. The estate option is wrong because the proceeds are paid to or for the spouse and children, not into the estate for distribution after debts.

Answer: C. It fails, because the statute requires those terms to be defined to imply "result" language and bars words that establish an accidental means test.

North Carolina settled the accidental-means argument by statute rather than leaving it to policy drafting. For the group contracts the section lists - group life, group accident, group health, group accident and health, and group annuities - issued on or after October 1, 1989, the three terms must be given a definition that implies result language, and wording that sets up a means test is forbidden. A policy issued in 2019 sits inside that reach, so the insurer cannot read its own wording as imposing a means test, and the statute bites whether or not the policy carries a definition of its own. What the statute governs is how those terms are defined; it does not forbid an accidental death benefit.

Answer: D. By the Governor, whose appointee serves for the unexpired term rather than for a fresh four-year term.

The Commissioner of Insurance heads the Insurance Department and reaches the office by popular election, held in the way the law prescribes for members of the General Assembly and other State officers. The term opens on January 1 following the election and runs four years, or until a successor has been elected and qualified. For a vacancy arising mid-term the statute names the Governor as the appointing authority and limits what the appointee gets to the remainder of the term, so no fresh four-year term begins and no special election is called for.

Answer: B. Not less than one thousand dollars and not more than five thousand dollars for each violation, recoverable in a civil action in the Superior Court of Wake County if it is not paid.

The penalty section of the Unfair Trade Practices Article attaches to willfully violating a cease and desist order of the Commissioner once that order is final and while it remains in effect. The violator forfeits and pays the Commissioner a sum of at least one thousand dollars and at most five thousand dollars for each violation, and if it goes unpaid the Commissioner recovers it by civil action brought in the Commissioner's own name in the Superior Court of Wake County, the clear proceeds going to the Civil Penalty and Forfeiture Fund. The hundred-to-one-thousand-dollar range is not the range this section fixes. The ten-thousand and fifty-thousand-dollar figures, and the general-business-practice test that lifts one to the other, belong to the penalty section of the Insurance Information and Privacy Protection Act.

Answer: B. Thirty months from the date the authorization is signed, because the application involves life, health, or disability insurance.

The Act lists what a disclosure authorization form must contain, and one of the required items is the length of time the authorization remains valid, with a statutory ceiling that depends on why it was signed. For an authorization signed to collect information in connection with an application for a policy, a policy reinstatement, or a request for a change in policy benefits, the ceiling is thirty months from the date of signature where the application or request involves life, health, or disability insurance, and one year where it involves property or casualty insurance. The term-of-coverage ceiling applies to an authorization signed in connection with a claim for a health insurance benefit, which is a different purpose. So the length must be stated on the form, but the insurer cannot state a longer one than the Act allows.

Answer: A. A policy paying a disability income benefit, because the life line of authority is described as covering human lives including benefits for disability income.

The statute lists the lines of authority a producer may hold and describes each one. Life is described as coverage written on human lives, taking in a death benefit, a benefit for dismemberment by accident, and a disability income benefit, so disability income sits inside the life line as the statute describes it. Variable life and variable annuity products are a separate listed line, and a licensee may sell, solicit, or negotiate only the lines for which that person is licensed. Medicare supplement and long-term care insurance are listed as a supplement to the accident and health or sickness line rather than to the life line. Coverage against legal liability, including liability for death or disability, is what the casualty line is described as carrying.

Answer: C. The agent's National Producer Number, plus the Department's web address and telephone number so that licensure status can be checked there, the rule separately obliging the agent to give his or her name and occupation when conducting insurance business with a member of the public.

The ethical standards rule places two duties on every licensee it names - agent, limited representative, broker, adjuster or appraiser, or other insurer's representative - who conducts insurance business with a member of the public. The identification duty is to say who they are and what their occupation is. The proof-of-licensure duty is to give the National Producer Number together with the Department's web address and telephone number, so that licensure status can be checked there. The rule attaches that proof-of-licensure duty to a request from any claimant, any repairer investigating a claim or loss, any Department representative, or anyone else the agent is in contact with while performing insurance business. Verification is routed to the Department rather than to the license document, to the producer number standing alone, or to the appointing insurer.

Answer: A. Nothing on its own, because the statute says that proof a contract obligation went unfulfilled, standing by itself, does not establish the element of intent to defraud.

The offense is knowingly and designedly obtaining, or attempting to obtain, money, goods, property, services, a chose in action, or another thing of value from a person within this State by a false pretense, with intent to cheat or defraud. The statute does reach a pretense about a future fulfillment or event as well as one about a past or subsisting fact, which is why a broken promise can serve as the pretense. It then shuts the obvious shortcut: proof that a contract obligation went unfulfilled, standing by itself, does not establish the element of intent to defraud. On the remaining points the statute runs the other way from the other options. The State need not prove an intent to defraud any particular person. And the hundred-thousand-dollar figure sorts the offense between a Class C and a Class H felony rather than supplying any element of it.

Answer: B. The definition is satisfied, because the defined term covers the Commissioner of Insurance and equally an authorized designee acting for the Commissioner.

In the Insurance Law the defined term is wider than the elected office: it covers the Commissioner of Insurance and equally an authorized designee acting for the Commissioner. So an act the statutes assign to the Commissioner is validly done by such a designee, and the definition itself is what supplies that reach. It names no particular office as the designee, so it is not confined to the chief deputy commissioner, and it conditions the designation on the Commissioner's own authorization rather than on any act of the General Assembly.

Answer: A. The insurer is bound to pay money or do some act of value by way of indemnity or reimbursement for the destruction of, loss of, or injury to a thing in which the other party holds an interest.

A contract of insurance is defined in North Carolina as an agreement under which the insurer must pay money, or its equivalent, or perform some act of value for the insured, and must do so by way of indemnity or reimbursement for the destruction of, loss of, or injury to a thing in which the other party holds an interest. Two elements carry the definition. The obligation runs as indemnity or reimbursement rather than as a bare promise to pay, and it is tied to a thing in which the other party holds an interest. A promise to pay on demand whether or not anything has been destroyed, lost, or injured indemnifies nothing, so it sits outside the definition. The statute neither caps the obligation at the premiums paid in nor makes the agreement turn on a promise of further purchases.