Free North Dakota Life practice questions

Answer: C. Twenty days, beginning on delivery to the purchaser

North Dakota lets the purchaser of a life policy return it within 20 days of its delivery and receive a refund of the premium if, after examining it, the purchaser is not satisfied for any reason. The period is counted from delivery, not from the application, the issue date or the first premium payment, and it is 20 days rather than 10 or 30. The policy must carry a notice of this right printed on or attached to its first page.

Answer: B. They are inventoried as estate assets but are not subject to the decedent's debts

When life policy proceeds are payable to the insured's estate, heirs, or personal representatives, North Dakota law requires them to be inventoried as part of the decedent's estate and treated as part of its general assets, yet they are not subject to the decedent's debts unless a special contract says so. Proceeds do not skip the inventory, so the choice sending them straight to the heirs fails. Applying them first to debts contradicts the exemption from the decedent's debts. Nothing in the section limits estate-payable proceeds to a surviving spouse; the section only clarifies that it does not affect a policy made payable to a designated person such as a spouse.

Answer: C. A notice telling the policyowner that, without more premium, coverage will not last to the next period

Among the required contents of the periodic report, the report for a flexible premium policy must include a notice when, on guaranteed interest, mortality and expense loads, the net cash surrender value will not keep the insurance in force until the end of the next reporting period unless further premiums are paid. What the rule requires is a notice of that shortfall, not a cancellation and not an automatic payment arrangement. Reporting only the usual figures leaves out the required notice.

Answer: A. The group policy is exempt from them, but the certificates are subject to them

North Dakota's simplification standards exclude a group life policy that covers one thousand or more lives at its date of issue, so a 1,400-life policy itself is outside them. The same provision states that this exclusion does not reach certificates issued under a group policy delivered or issued for delivery in the state, so the certificates remain subject to the standards. Treating both as exempt ignores the certificate rule, treating both as subject ignores the large-group exclusion, and the threshold is one thousand lives, not five thousand.

Answer: C. Buying one-year term insurance equal to the cash value

North Dakota's required-provisions statute names four standard dividend options: payment in cash, application toward premiums, purchase of paid-up additions, and accumulation with interest at the rate the policy provides. A participating policy that offers options other than cash must say which of the four takes effect if the owner elects none. Cash, premium reduction and accumulation at interest are all on that list; buying one-year term insurance is not one of the four standard options.

Answer: C. It must be printed in at least ten-point type and signed by the applicant

The rule requires the insurer to give the applicant an informed consent form and obtain the applicant's signature on it, with the required language printed in type no smaller than ten point. The applicant, not the agent, signs the form, and the rule sets no notarization or advance filing with the Department of Health. An oral consent does not satisfy a rule that requires a signed form.

Answer: D. It must notify the state health department in writing of the result, tests used and all recipients

When testing under this chapter produces a result other than normal, the insurer must notify the North Dakota state department of health. The written notice must state the specific nature of the abnormal result, every person to whom the result has been disclosed, and the specific tests and procedures used to reach it. The duty runs from the insurer to the department directly, with no physician, commissioner or MIB intermediary. The prescribed consent form adds that an insurer belonging to MIB, Inc. reports an abnormal HIV result there only as a generic code signifying a nonspecific test abnormality, so the specific result does not go to MIB.

Answer: C. It must avoid suggesting the insurer holds a license in states where it is not licensed

When an advertisement is intended to be seen or heard outside the jurisdiction where the insurer is licensed, it may not imply that the insurer is licensed beyond those limits. The rule does not require a list of unlicensed states, and an intention to apply elsewhere does not permit a licensing claim. The same section separately bars an ad from suggesting that competing insurers may lack a license in the state where the ad appears.

Answer: B. As one word, the same way a contraction is counted

For the Flesch test used under North Dakota's life policy simplification standards, a contraction, a hyphenated word, or numbers and letters set off by spaces each count as one word. Splitting a hyphenated word into its parts overstates the word count, and leaving it out understates it. The counting rule puts no dictionary condition on hyphenated words; the dictionary matters only for how syllables are divided.

Answer: D. An annual charge of fifty dollars

For contracts issued after July 31, 2005, North Dakota's minimum nonforfeiture formula subtracts an annual contract charge of fifty dollars, accumulated at the nonforfeiture interest rates. The thirty dollar annual charge, the seventy-five dollar single consideration charge, and the lesser of thirty dollars or ten percent of gross annual considerations all come from the rules for contracts issued before August 1, 2003.