17 Free North Carolina Life & Health Practice Questions: Other A&H Topics and North Carolina A&H Rules (2026)
How to Use This Other A&H Topics and North Carolina A&H Rules Set
This set draws on two sections of the Accident and Health or Sickness Agent outline: Other Accident and Health Topics (section III, 8 of the 55 scored items) and North Carolina Statutes and Regulations Pertinent to A&H (section IV, 14 items). It covers coordination of benefits, tax treatment of disability benefits, group contracts, continuation and conversion, and the North Carolina rules for individual health policies.
The 17 questions come from LanePrep's North Carolina L&H quiz bank. Several cite statute articles by number; you do not need to memorise section numbers, but you do need to know what each rule does.
Practice Questions 1-6: Coordination, Taxation, Conversion and Core Individual Provisions
Which group plan pays first, how premiums paid with after-tax dollars affect disability benefits, conversion after group coverage ends, the grace period, misstatement of age and delivery without the initial premium.
Question 1 (Chapter 6)
A North Carolina resident, Michael, is covered by two group health insurance plans: one through his employer and another through his spouse's employer. Both plans include a Coordination of Benefits (COB) provision. If Michael incurs medical expenses, how will the benefits typically be coordinated between the two plans?
- A) The plan that has paid more in the past will be primary, and the other will be secondary.
- B) The plan with the higher deductible will be primary, to ensure the deductible is met first.
- C) The plan that has been in effect for a longer period will be primary.
- D) The plan covering Michael as an employee (his own employer's plan) will be primary, and the plan covering him as a dependent (his spouse's plan) will be secondary.
Show answer & explanation
Answer: D
Under standard Coordination of Benefits (COB) rules, when an individual is covered by two group plans, the plan covering the individual as an employee (their own employer's plan) is typically primary. The plan covering them as a dependent (e.g., through a spouse's employer) would then be secondary. This prevents overpayment and ensures a logical order of benefit payment.
Question 2 (Chapter 6)
A self-employed North Carolina resident, Maria, pays the premiums for her individual disability income policy with after-tax dollars. If Maria becomes disabled and begins receiving benefits from this policy, how will these benefits generally be treated for federal income tax purposes?
- A) The benefits will be fully taxable as ordinary income.
- B) The benefits will be partially taxable, depending on her income level.
- C) The premiums paid will be deductible, and the benefits will be taxable.
- D) The benefits will be tax-free.
Show answer & explanation
Answer: D
For individual disability income policies, if the policyowner pays the premiums with after-tax dollars, the benefits received are generally tax-free. If the premiums were paid with pre-tax dollars (e.g., by an employer where the premiums were a deductible business expense for the employer), the benefits would typically be taxable to the recipient. Since Maria paid with after-tax dollars, her benefits are tax-free.
Question 3 (Chapter 6)
After working for a North Carolina company for 10 years, John's employment is terminated, causing him to lose his group health insurance coverage. Under North Carolina General Statutes Article 53 (G.S. 58-53-45 et seq.), what right does John generally have regarding converting his group coverage to an individual policy?
- A) John has no right to convert; he must find new coverage on the open market.
- B) John can convert to an individual policy, but he must first pass a medical examination.
- C) John has the right to convert to an individual policy with the same insurer, without evidence of insurability, within a specific timeframe.
- D) John can convert to an individual policy, but only if he has a pre-existing condition.
Show answer & explanation
Answer: C
G.S. 58-53-45 et seq. provides individuals who lose group health coverage due to certain qualifying events (like termination of employment) the right to convert to an individual health insurance policy with the same insurer. This conversion must typically be done within a specified timeframe (e.g., 31 days) and, importantly, without requiring evidence of insurability, meaning the insurer cannot deny coverage based on health status.
Question 4 (Chapter 6)
Under North Carolina General Statutes Article 50 (G.S. 58-50-35), what is a common requirement for individual health insurance policies regarding the 'Grace Period' provision?
- A) A grace period of 7 days for weekly premium policies, 10 days for monthly, and 31 days for all other policies.
- B) A universal grace period of 30 days for all types of health insurance policies.
- C) No grace period is required for individual health insurance policies; it is optional.
- D) A grace period of 60 days for all policies, regardless of premium payment frequency.
Show answer & explanation
Answer: A
G.S. 58-50-35 sets out the mandatory uniform provisions for individual accident and health insurance policies, including the grace period: 7 days for policies with weekly premiums, 10 days for policies with monthly premiums, and 31 days for all other policies. This provision ensures that coverage remains in force for a short period after the premium due date, preventing immediate lapse.
Question 5 (Chapter 6)
A North Carolina producer is completing a health insurance application with a client. The client answers all questions truthfully, but the producer mistakenly records an incorrect age on the application. The policy is issued. If a claim is later filed and the error is discovered, what action is the insurer most likely to take due to the misstatement of age, according to the standard optional provisions in G.S. 58-50-40?
- A) Deny the claim and rescind the policy.
- B) Charge the client for the difference in premiums for all past policy years.
- C) Adjust the benefits payable to what the premium paid would have purchased at the correct age.
- D) Pay the claim in full, as the error was the producer's.
Show answer & explanation
Answer: C
The 'Misstatement of Age' optional provision in G.S. 58-50-40 states that if the age of the insured has been misstated, all benefits payable under the policy will be such as the premium paid would have purchased at the correct age. The policy is not typically rescinded for an innocent misstatement of age, but benefits are adjusted accordingly.
Question 6 (Chapter 6)
An applicant for an individual health policy in North Carolina submits the application without the initial premium. When is the policy considered 'delivered' and in effect?
- A) When the producer receives the policy from the insurer.
- B) As soon as the insurer approves the underwriting.
- C) When the policy is delivered to the applicant and the first premium is paid.
- D) Three days after the insurer mails the policy.
Show answer & explanation
Answer: C
If the initial premium is not paid with the application, the policy is not effective until it is delivered to the applicant and the first premium is collected, ensuring the applicant is in good health.
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Practice Questions 7-12: Entire Contract, Illegal Occupation, Group Contracts and Continuation
The entire contract statute, the illegal occupation provision, Social Security disability eligibility, the master policy compared with certificates, continuation of group benefits and key person disability.
Question 7 (Chapter 6)
In the context of the 'Entire Contract' provision (G.S. 58-50-25), what constitutes the entire health insurance contract?
- A) The policy, the application, and any attached riders or endorsements.
- B) Only the policy document itself.
- C) The policy and the producer's sales brochure.
- D) The policy and the company's internal underwriting manual.
Show answer & explanation
Answer: A
G.S. 58-50-25 states that the policy, the application (if attached), and any riders or endorsements constitute the complete agreement between the parties.
Question 8 (Chapter 6)
Under North Carolina law, what is the purpose of the 'Illegal Occupation' provision in a health insurance policy?
- A) To deny coverage for losses resulting from the insured's commission of a felony.
- B) To increase premiums for those in dangerous jobs.
- C) To require the insured to report all job changes.
- D) To allow the insurer to cancel the policy if the insured is fired.
Show answer & explanation
Answer: A
The Illegal Occupation provision allows the insurer to deny liability if the loss is sustained while the insured is committing or attempting to commit a felony or engaging in an illegal occupation.
Question 9 (Chapter 6)
A North Carolina resident, age 50, is seeking Social Security Disability Income (SSDI). Which of the following is an eligibility requirement?
- A) The disability must be total and permanent, expected to last at least 12 months or result in death.
- B) The disability must be expected to last at least 6 months.
- C) The applicant must have worked for at least 20 years.
- D) The applicant must be over 65.
Show answer & explanation
Answer: A
SSDI requires that the disability be 'total and permanent,' meaning it prevents any substantial gainful activity and is expected to last at least 12 months or result in death.
Question 10 (Chapter 6)
A North Carolina employer provides group health insurance. What is the primary document that defines the coverage for the group?
- A) The master policy.
- B) The certificate of insurance.
- C) The employee handbook.
- D) The summary plan description.
Show answer & explanation
Answer: A
The master policy is the actual contract between the insurance company and the group sponsor (the employer). Employees receive certificates, which are evidence of coverage but not the contract itself.
Question 11 (Chapter 6)
A North Carolina employer terminates its group health insurance plan. What does G.S. 58-53-1 et seq. require regarding the continuation of benefits for employees?
- A) The employer must pay the premiums for 5 years.
- B) The law provides for an 18-month extension of benefits for qualified employees upon termination of employment.
- C) The employer must offer a conversion policy to all employees.
- D) The insurer must cover the employees for free for 6 months.
Show answer & explanation
Answer: B
North Carolina law provides for an 18-month extension of group health benefits for employees who lose their coverage due to termination of employment, provided they meet certain criteria.
Question 12 (Chapter 6)
A North Carolina business owner is concerned about the loss of a top executive and purchases a 'Key Person' disability policy. Who is the beneficiary of this policy?
- A) The business entity
- B) The executive's family
- C) The executive
- D) The state insurance guaranty fund
Show answer & explanation
Answer: A
In a Key Person disability policy, the business is the owner and the beneficiary. The purpose is to provide the business with funds to cover the loss of services or the cost of finding a replacement if the key employee becomes disabled.
Practice Questions 13-17: Free Look, Conversion and Delivery of the Policy
The free look period, conversion privileges when a group plan ends, the entire contract once more, why the application is attached and what a producer does when a policy is delivered as amended.
Question 13 (Chapter 6)
Under North Carolina law, what is the 'Free Look' period for a standard individual health insurance policy?
- A) 5 days
- B) 10 days
- C) 20 days
- D) 30 days
Show answer & explanation
Answer: B
North Carolina individual health insurance policies must include a 'Free Look' period of at least 10 days, allowing the policyholder to return the policy for a full refund of premiums.
Question 14 (Chapter 6)
A North Carolina resident is covered by a group health plan. If the plan is terminated, what does G.S. 58-53-45 require regarding conversion privileges?
- A) The insurer must provide a conversion policy without evidence of insurability.
- B) The employee must pass a new physical exam.
- C) The employee must pay a penalty fee to convert.
- D) The insurer is not required to offer conversion.
Show answer & explanation
Answer: A
Under North Carolina law, if an individual's group coverage ends, they generally have the right to convert to an individual policy without providing evidence of insurability, provided they meet specific time requirements.
Question 15 (Chapter 6)
Under North Carolina G.S. 58-50-25, which of the following is NOT required to be part of the 'Entire Contract' of a health insurance policy?
- A) The policy document itself
- B) The producer's personal notes from the sales meeting
- C) The application (if attached)
- D) Any riders or endorsements
Show answer & explanation
Answer: B
The 'Entire Contract' provision states that the policy, the application (if attached), and any attached riders or endorsements constitute the entire contract. The producer's notes are not part of the contract.
Question 16 (Chapter 6)
In the context of the 'Entire Contract' provision, what is the primary reason the application must be attached to the policy?
- A) To ensure that all representations made by the applicant are part of the legal contract.
- B) To ensure the producer gets paid their commission.
- C) To comply with federal banking regulations.
- D) To allow the insurer to change the terms after delivery.
Show answer & explanation
Answer: A
By attaching the application, the insurer ensures that the contract includes the applicant's statements, which prevents the insurer from later claiming that oral statements or unattached documents are part of the agreement.
Question 17 (Chapter 6)
A North Carolina producer is assisting a small business owner, Mr. Davis, with setting up a group health insurance plan for his five employees. Which of the following is a key characteristic of group underwriting that the insurer will primarily consider?
- A) The individual health history of each of Mr. Davis's employees.
- B) The personal financial stability of Mr. Davis as the business owner.
- C) The individual hobbies and lifestyle choices of Mr. Davis's employees.
- D) The average age, gender distribution, and industry of Mr. Davis's employee group.
Show answer & explanation
Answer: D
Group underwriting focuses on the group as a whole, not on individual health histories. Key factors include the group's size, average age, gender distribution, industry, and prior claims experience. This approach allows for broader coverage and often makes it easier for individuals with pre-existing conditions to obtain insurance. Options A, C, and D are considerations for individual underwriting or are irrelevant to group underwriting.
The Mistakes That Cost Marks
These are the slips this set is built to expose.
- Reversing coordination of benefits. The plan that covers the person as an employee normally pays before the plan that covers the person as a dependent.
- Getting disability taxation backwards. Who paid the premium, and with pre-tax or after-tax dollars, decides how benefits are taxed.
- Confusing the master policy with the certificate. The group sponsor holds the master policy; members receive certificates as evidence of cover.
- Mixing continuation with conversion. Continuation extends the group cover for a time; conversion moves a person to an individual policy.
- Ignoring the producer's duty at delivery. If the policy was amended from the application, the producer explains the changes and obtains a signed acknowledgement.
Your Next Step
If these questions exposed a gap, listen to the matching lesson in the North Carolina Life & Health course preview, then come back and rework the questions you missed. For more topics, see all of our free North Carolina Life & Health practice questions.
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