Free North Dakota Life Practice Exam — 20 Questions, No Signup

1. A rider paying monthly income to the family for a set period after death is
Family income riderPayor benefitFamily maintenance riderCost of living
2. Under the NAIC Life Insurance and Annuities Replacement Model Regulation, 'replacement' generally means a transaction in which a new life policy is purchased and, in connection with the sale, an existing policy is or will be:
Reinstated within the contract's three-year reinstatement window upon evidence of insurability and payment of all back premiums with interestRenewed at the end of its level term under the standard renewability provision attached to the existing in-force life policy at issueLapsed, surrendered, forfeited, assigned, reduced, paid up, converted, borrowed against in excess of 25% of the loan value, or otherwise terminatedAudited by the state department of insurance during a routine periodic market-conduct review of the insurer's individual in-force life book
3. The minimum credit, often 0%, that protects indexed cash value from market loss is the
BonusCapSpreadFloor
4. A statement the insured signs at delivery confirming no change in health is a
Delivery receiptConditional receiptAgent's reportStatement of good health
5. The provision adjusting benefits if the insured's age was misstated is
ReinstatementMisstatement of ageIncontestabilityEntire contract
6. On a non-MEC universal life policy, a policyowner takes a partial WITHDRAWAL (not a loan) of $15,000 from a $50,000 cash value. Her cumulative premiums to date total $40,000. How much of the withdrawal is taxable income?
$10,000 — only the gain portion of the contract is taxed.$5,000 — only the cost-recovery shortfall is taxed.$15,000 — all withdrawals from life insurance are immediately taxable.$0 — withdrawals from a non-MEC are FIFO and recover basis first.
7. Which entity bears the investment risk in a traditional fixed deferred annuity?
The beneficiaryThe ownerThe insurerThe annuitant
8. Transferring all ownership rights in a policy to another party is an
Beneficiary changeReinstatementAbsolute assignmentCollateral assignment
9. Verifying the identity of each new customer is the
Suitability reviewKnow your agent programAdverse action processCustomer identification program
10. An owner exchanges one non-qualified deferred annuity for another non-qualified deferred annuity directly between insurers. Which Internal Revenue Code section provides for the tax-free treatment of this exchange?
IRC § 72IRC § 1035IRC § 401(k)IRC § 501(c)(3)
11. The person whose life determines annuity payments is the
BeneficiaryOwnerAnnuitantPayee
12. On a participating whole life policy, dividends are best described as:
Contractually guaranteed interest credited under §7702 minimum-rate rules for life policiesTaxable income to the policy owner, reportable as ordinary income each contract anniversaryGuaranteed annual interest computed on the cash value at the contract's stated minimum rateA return of unused premium based on the insurer's mortality, expense, and investment experience
13. An employee leaves her job and wants to keep her group term life coverage. What is her statutory right under typical state group life laws?
She may continue the existing group term policy at the original group rate indefinitely under federal portability rulesShe has no continuation rights once employment ends, and the certificate lapses without a refund of her share of premiums paidShe may convert to an individual permanent policy without evidence of insurability within 31 days of terminationShe may transfer the master-policy certificate directly to her new employer's group plan upon written request to the insurer
14. The part of the application where the agent gives impressions of the applicant is the
Agent's reportStatement of good healthDelivery receiptMedical history
15. A report based on interviews about an applicant's character and lifestyle is an
Investigative consumer reportConsumer credit reportMIB reportAttending physician statement
16. An owner takes a withdrawal from a non-qualified deferred annuity at age 55. In addition to ordinary income tax on earnings, which federal penalty generally applies?
0% — there is no penalty5%20%10%
17. An owner fully surrenders a non-MEC whole-life policy, receiving $90,000 in net cash. Cumulative net premiums paid were $70,000. How much, if any, is taxable?
$20,000 of ordinary income (gain over basis).$20,000 of long-term capital gain.$0 — surrender proceeds are tax-free.$90,000 of ordinary income, with no basis recovery.
18. A report from the applicant's own doctor is an
Paramedical examInspection reportMIB reportAttending physician statement
19. An insured purchases a 20-year level term policy with a $500,000 face amount. Five years in, the insured is diagnosed with a terminal illness. Which feature, required on most modern term policies, lets the insured switch to permanent coverage without proving insurability?
Reinstatement provisionConvertibility provisionRenewability provisionWaiver of premium rider
20. The period when money is paid into an annuity and grows is the
Payout phaseSurrender periodAnnuitization phaseAccumulation phase