NC Life Insurance Exam Review

This flashcard set covers essential vocabulary and concepts for the NC Life Insurance Exam, including policy types, annuity features, state regulations, and business insurance rules.

Unbundled

A characteristic of insurance where mortality, expenses, and interest are shown separately.

Universal Life

A type of policy known as unbundled and characterized by flexibility.

Equity Indexed Annuity

An annuity tied to a stock market index such as the S&P 500.

Separate account

The type of account used by variable products.

General account

The type of account used by fixed products.

Flexible premium

Usually refers to Universal Life or a Flexible Premium Annuity.

Expense charges

In Universal Life, these are used for administrative costs.

Straight Life

A policy with level premiums paid for life.

Decreasing Term

A term policy that decreases over time; it is considered the best type of insurance for mortgage protection.

Term insurance

Insurance that provides pure death protection.

Grace period death benefit

If the insured dies during the grace period, the death benefit is paid minus the overdue premium.

Extended Term

A nonforfeiture option that provides the highest continued death benefit.

Limited pay life

Whole life insurance with a shortened premium payment period.

C (Dividend Option)

Stands for Cash.

R (Dividend Option)

Stands for Reduce Premium.

A (Dividend Option)

Stands for Accumulate at Interest.

P (Dividend Option)

Stands for Paid-Up Additions.

O (Dividend Option)

Stands for One-Year Term.

Deferred annuity

An annuity where income payments start at a future date.

Straight Life Annuity

An annuity that provides the highest monthly payment, but payments stop when the annuitant dies.

Life with Period Certain

An annuity that guarantees payments for a minimum number of years.

Joint & Survivor annuity

An annuity where payments continue until both annuitants die.

Installment refund annuity

An annuity where remaining payments go to a beneficiary if the annuitant dies.

Replacement policy free look

A period of $30$ days.

Incontestability period

A period of $2$ years / $24$ months.

Attorney General

The official who handles criminal prosecution for insurance-related illegal actions.

Restraining order / cease and desist

Orders the Commissioner can issue for illegal actions.

Conservation

The effort to stop a policy from being replaced.

Viatical settlement

Selling a life insurance policy for immediate cash.

Notice of Information Practices

A notice that applicants must receive under privacy laws.

Certificate of Insurance

What employees receive under a group life insurance plan.

Fully insured status

Requires $40$ quarters of coverage to be achieved under Social Security.

Group life grace period

A period of $31$ days.

Contributory plan participation

Requires involvement from $75\%$ of eligible members.

Noncontributory plan participation

Requires involvement from $100\%$ of eligible members.

Group coverage conversion

An individual has $31$ days to convert their group coverage.

Employer-paid group term tax limit

The first $50,000$ is tax free.

Key person insurance

A business policy taken out on an important employee.

3-person cross purchase

A business insurance arrangement requiring $6$ policies.

Buy-sell agreement

A business arrangement that does NOT apply to a sole proprietorship.

Tax Sheltered Annuities

Retirement products used by public schools and nonprofits.

IRA

A tax-qualified retirement plan.

SEP and Keogh plans

Retirement plans designed for self-employed individuals.

Policy dividends taxation

Usually NO, they are not taxable.

Life insurance death benefits

Are income-tax free.

Graded Premium

A policy characterized by several premium increases.

Modified Life

A policy characterized by one premium increase.

Whole Life

Provides permanent coverage.