North Carolina Life, Accident & Health Practice Test

Answer choices

1. A. Both are identical because state law prohibits any network-based difference in benefits, under the plan's existing benefit terms.
2. B. A PPO, because it commonly provides out-of-network benefits at a higher member cost than in-network care.
3. C. Neither; only a health FSA can pay for out-of-network health services.
4. D. An HMO, because HMOs are defined by unrestricted nationwide out-of-network benefits.

Wrong-answer review

• A. Both are identical because state law prohibits any network-based difference in benefits, under the plan's existing benefit terms.: Incorrect. Network structure is a core distinction between managed-care plan types.
• C. Neither; only a health FSA can pay for out-of-network health services.: Incorrect. An FSA is a tax-favored spending arrangement, not a health-insurance network.
• D. An HMO, because HMOs are defined by unrestricted nationwide out-of-network benefits.: Incorrect. HMOs generally emphasize network care.

Answer choices

1. A. It is the annual inflation adjustment applied to the daily benefit.
2. B. It is the waiting period that must be satisfied under the policy before covered long-term-care benefits become payable.
3. C. It is the time the producer has to replace the policy without the client's consent, during the same coverage period.
4. D. It is the maximum number of days the policy can ever pay benefits.

Answer choices

1. A. Permit the spouse to sell indefinitely without any license because family members inherit the producer's authority.
2. B. Automatically transfer the deceased producer's individual license to the spouse for life.
3. C. Require the spouse to close the agency immediately because temporary producer licenses are prohibited.
4. D. Issue an appropriate temporary producer license, generally for up to 180 days or longer for good cause, if needed to service the business during the transition.

Answer choices

1. A. A fixed-amount settlement that pays a selected dollar amount until proceeds are exhausted.
2. B. A life-income settlement that continues based on the beneficiary's lifetime.
3. C. An interest-only settlement that preserves principal and distributes only credited interest.
4. D. A fixed-period settlement that pays proceeds over the selected 15-year period.

Answer choices

1. A. The insurer must continue the policy to the stated age if premiums are paid, although it may have contractually permitted class-based premium changes.
2. B. The insurer can cancel the insured individually at any renewal because guaranteed renewable means only that the insurer must consider, not accept, a renewal request.
3. C. The insurer can never change premium rates for any insured in the policy class.
4. D. The insured can stop paying premiums and still require the insurer to renew coverage.

Answer choices

1. A. Process the change immediately because any policyowner may change any beneficiary at any time.
2. B. Cancel the policy and issue a new one automatically with the charity as beneficiary.
3. C. Change the designation to revocable first and then substitute the charity on the same request
4. D. Explain that an irrevocable beneficiary has a vested interest and the requested change generally requires that beneficiary's consent under the contract.

Answer choices

1. A. Continuation can extend to 18 months after the coverage would otherwise have terminated because of employment termination.
2. B. Continuation always lasts exactly 36 months regardless of the qualifying event or other coverage.
3. C. Continuation is limited to 31 days because that is the maximum period for every group-health right, during the same coverage period.
4. D. Continuation must remain available for the former employee's lifetime.

Answer choices

1. A. Promise that all existing policy values and issue-date protections transfer automatically to the new contract.
2. B. Review material differences and replacement risks, including existing cash values, possible surrender charges, and the new policy's own contestability or suicide periods.
3. C. Limit discussion to first-year premium because North Carolina replacement rules prohibit discussing the old policy
4. D. Encourage immediate surrender before comparison so the client cannot change the decision after underwriting.

Answer choices

1. A. Partnership policies cannot be issued after age 75.
2. B. Compound annual inflation protection is mandatory for every Partnership applicant regardless of age, for the transaction already described.
3. C. Simple inflation protection is mandatory after age 76, while compound protection is prohibited.
4. D. Inflation protection may be offered, but it is not required for Partnership qualification at that issue age.

Answer choices

1. A. A late-enrollment penalty can apply when a beneficiary goes without Part D or other creditable drug coverage for the relevant period.
2. B. There is no penalty because Part D premiums are fixed forever once the person turns 65, during the same coverage period.
3. C. The only consequence is loss of Part A hospital coverage until the drug plan begins.
4. D. Late Part D enrollment automatically makes the beneficiary eligible for Medicaid.