25 Free North Carolina Life & Health Exam Practice Questions (2026)
How to Use This North Carolina Question Set
North Carolina does not issue a single Life & Health exam. To hold both lines of authority, you sit two separate Pearson VUE exams: the Life Agent exam and the Accident and Health or Sickness Agent exam. Each has 55 scored questions (plus up to 5 additional unscored pretest questions mixed in without being labeled), 75 minutes on the clock, and a $45 fee per attempt. Passing either one is a scaled score of 70 on a 0-100 scale, not a raw percentage or a fixed count of correct answers. There is no combined sitting and no discount for taking both — a candidate who wants the full Life & Health license has to pass both exams on their own terms.
Pearson VUE's content outline #123415, effective March 2, 2026, splits each exam by section. On the Life Agent exam: Types of Individual Life Insurance (17 of 55 items), North Carolina Statutes and Regulations Pertinent to Life (14), Life Insurance Policy Provisions, Options and Riders (11), Other Life Topics (8), and Annuities (5). On the Accident and Health or Sickness Agent exam: Accident and Health Insurance Policies (22 of 55), North Carolina Statutes and Regulations Pertinent to Accident and Health (14), Accident and Health Insurance Policy Provisions (11), and Other Accident and Health Topics (8).
These 25 questions come from LanePrep's North Carolina Life & Health quiz bank and sample both exams in roughly that proportion: 12 questions from the four Life Agent chapters (types of life insurance, annuities and other life topics, policy provisions, and North Carolina life statutes), 10 from the three Accident and Health chapters (A&H policies, A&H provisions, and other A&H topics plus North Carolina A&H statutes), and 3 from the chapter of North Carolina insurance law that sits underneath both exams rather than belonging to either one — licensing, unfair trade practices and the Commissioner's own authority. Each question shows its chapter, so a miss tells you exactly which chapter of the course to go back to.
North Carolina has not required a pre-licensing course since October 1, 2025, when Session Law 2025-45 repealed the old 20-hour requirement. That makes a self-check like this one more useful, not less: nobody sits through a state-mandated class that would otherwise have flagged the gaps for you first.
Work them before you read the answer. Every question has the explanation folded underneath it. Guessing and then reading is worth more than reading and then agreeing.
Practice Questions 1-12: Life Agent Exam Sample
The Life Agent exam leans hardest on policy types and North Carolina's own statutes. These twelve questions move through term and permanent life products, annuity payout options and the business and retirement uses of life insurance, the provisions that govern a policy once it is in force, and two of the North Carolina unfair-trade-practice questions that sit in the Life Agent exam's state-law section.
Question 1 (Chapter 1)
Sarah, a 35-year-old North Carolina resident, is seeking life insurance coverage primarily to protect her family financially if she were to pass away prematurely, but she has a limited budget. She anticipates her need for this specific level of coverage will diminish significantly in 20 years. Which type of policy would best suit her immediate needs and budget, offering the highest death benefit for the lowest initial premium?
- A) Whole Life Insurance
- B) 20-Year Level Term Life Insurance
- C) Endowment Policy
- D) Universal Life Insurance
Show answer & explanation
Answer: B
20-Year Level Term Life Insurance provides coverage for a specific period (20 years) and offers the largest death benefit for the lowest initial premium because it does not build cash value and is temporary. This aligns with Sarah's limited budget and temporary need for a high level of coverage. Whole Life and Universal Life are permanent policies with cash value accumulation, making them more expensive initially. An Endowment Policy matures at a specific age or time, paying out a lump sum if the insured is alive, which is not her primary goal of pure protection.
Question 2 (Chapter 1)
Mr. and Mrs. Johnson, North Carolina residents, recently purchased a new home with a 30-year mortgage. They want to ensure that if either of them passes away before the mortgage is paid off, the remaining mortgage balance will be covered. They are looking for a life insurance policy where the death benefit aligns with the decreasing mortgage debt over time. Which type of term life insurance would be most suitable for their situation?
- A) Decreasing Term Insurance
- B) Level Term Insurance
- C) Increasing Term Insurance
- D) Annual Renewable Term Insurance
Show answer & explanation
Answer: A
Decreasing Term Insurance is specifically designed for situations where the need for coverage decreases over time, such as covering a mortgage. The death benefit gradually reduces over the term of the policy, typically matching the amortization schedule of a loan. Level Term Insurance maintains a constant death benefit, while Increasing Term Insurance has a death benefit that grows over time. Annual Renewable Term is a type of level term that renews annually, but its death benefit does not automatically decrease with a mortgage.
Question 3 (Chapter 1)
A North Carolina couple purchases a life insurance policy designed to pay out a lump sum of $250,000 to them if one of them is still alive on the policy's maturity date, which is set for 20 years from now. If either dies before this date, the death benefit would be paid to the surviving spouse. What type of policy have they most likely purchased?
- A) Endowment Policy
- B) Whole Life Insurance
- C) Term Life Insurance
- D) Universal Life Insurance
Show answer & explanation
Answer: A
An Endowment Policy is characterized by its maturity date, at which point the face amount is paid to the insured if they are still living. If the insured dies before the maturity date, the death benefit is paid to the beneficiary. This 'living benefit' at maturity is the defining feature distinguishing it from other permanent policies like Whole Life, which typically mature at age 100 or 121. Term Life offers no living benefit. Universal Life is a flexible permanent policy but doesn't typically have a specific, relatively short maturity date for a living benefit payout like an endowment.
Question 4 (Chapter 1)
After holding a 10-year term life insurance policy in North Carolina, John's policy term is expiring. He wants to continue his coverage for another 10 years without undergoing a new medical exam, even though his health has worsened. He understands that his premiums will likely increase. Which feature of his original term policy allows him to do this?
- A) Renewability
- B) Convertibility
- C) Reinstatement
- D) Automatic Premium Loan
Show answer & explanation
Answer: A
The renewability feature allows a policyowner to extend the term of a term life insurance policy for another period without providing new evidence of insurability. The premium for the renewed term will be based on the insured's attained age, which means it will be higher. Convertibility allows changing to a permanent policy. Reinstatement is for lapsed policies, and Automatic Premium Loan is a nonforfeiture option for permanent policies.
Question 5 (Chapter 2)
Sarah, a 35-year-old North Carolina resident, recently received a significant inheritance. She wants to use a portion of it to guarantee a steady income stream for her retirement, which she plans to begin at age 65. She is looking for a product that will allow her funds to grow tax-deferred until then, at which point she wants to start receiving payments. Which type of annuity would best suit Sarah's needs?
- A) A deferred variable annuity
- B) An immediate fixed annuity
- C) An immediate variable annuity
- D) A single premium immediate annuity
Show answer & explanation
Answer: A
Sarah needs a deferred annuity because she plans to start receiving payments at age 65, which is many years in the future. Immediate annuities begin payments within one year of purchase. A variable annuity allows her funds to grow based on market performance, which aligns with long-term growth goals, although it carries investment risk. A fixed annuity would offer guaranteed growth but potentially lower returns. Since the question emphasizes growth until retirement, a deferred annuity is key. The choice between fixed and variable depends on her risk tolerance, but 'deferred' is the crucial element here. Option A, a deferred variable annuity, allows for tax-deferred growth over 30 years and then income payments.
Question 6 (Chapter 2)
Mrs. Rodriguez, a 70-year-old widow in Greensboro, North Carolina, has purchased an annuity to provide income for her retirement. She wants to ensure that if she dies shortly after payments begin, her beneficiaries will continue to receive payments for a guaranteed minimum period, such as 15 years. Which annuity payout option should she select?
- A) Straight (pure) life annuity
- B) Cash refund annuity
- C) Joint and survivor annuity
- D) Life annuity with period certain
Show answer & explanation
Answer: D
A life annuity with period certain guarantees payments for the annuitant's lifetime, but if the annuitant dies before the end of the specified period (e.g., 15 years), the remaining payments for that period will be paid to the beneficiary. A straight life annuity (A) provides the highest payout but stops payments immediately upon the annuitant's death, with no benefits for beneficiaries. A cash refund annuity (B) guarantees that the total amount paid into the annuity will be returned, but not necessarily for a fixed period. A joint and survivor annuity (C) is for two lives, not a single annuitant with a beneficiary guarantee for a specific period.
Question 7 (Chapter 2)
John and Mary, a married couple in Asheville, North Carolina, are planning for retirement. They want to purchase an annuity that will provide income for as long as either of them is alive. Upon the death of one spouse, they want the payments to continue to the surviving spouse, possibly at a reduced amount. Which annuity payout option should they choose?
- A) Joint and survivor annuity
- B) Straight life annuity
- C) Life annuity with period certain
- D) Cash refund annuity
Show answer & explanation
Answer: A
A joint and survivor annuity is designed to cover two or more lives. Payments continue until the last annuitant dies. Often, the payments are reduced upon the first death, but they continue for the lifetime of the survivor. A straight life annuity (B) covers only one life. A life annuity with period certain (C) guarantees payments for a minimum period, but is primarily for a single annuitant. A cash refund annuity (D) ensures the principal is returned, but not necessarily for two lives.
Question 8 (Chapter 3)
A policyowner has a whole life policy and decides to stop paying premiums. If they do not select a nonforfeiture option, which option will the insurer automatically apply under North Carolina law?
- A) Cash surrender value
- B) Extended term insurance
- C) Reduced paid-up insurance
- D) Automatic premium loan
Show answer & explanation
Answer: B
Extended term is the default nonforfeiture option in most life policies. It uses the cash value to purchase term insurance with the same face amount as the original policy for as long a period as the cash value will buy.
Question 9 (Chapter 3)
A husband and wife are both named as primary beneficiaries on a life policy. The husband dies in an accident, and the wife dies 24 hours later. Under the Uniform Simultaneous Death Act, how are the proceeds distributed?
- A) The proceeds are paid to the husband's estate
- B) The proceeds are paid to the wife's estate
- C) The proceeds are split equally between the estates of both beneficiaries
- D) The proceeds are paid as if the insured survived the beneficiaries
Show answer & explanation
Answer: D
The Uniform Simultaneous Death Act assumes the insured survived the beneficiary if it cannot be determined who died first, meaning proceeds would go to the contingent beneficiary or the insured's estate.
Question 10 (Chapter 3)
A life insurance policy's 'free look' provision allows the policyowner to:
- A) Change the beneficiary without notice
- B) Borrow against the cash value without interest
- C) Return the policy for a full refund of premiums within a specified number of days
- D) Add a rider without underwriting
Show answer & explanation
Answer: C
The free look provision allows the policyowner to review the policy and return it for a full refund if they are not satisfied, typically within 10 to 30 days of delivery.
Question 11 (Chapter 8)
A life insurance agent tells a prospect that their policy will 'pay for itself' through dividends, knowing full well that dividends are not guaranteed and are dependent on company performance. Under G.S. 58-58-15, this action constitutes which of the following?
- A) Twisting
- B) Misrepresentation
- C) Rebating
- D) Unfair discrimination
Show answer & explanation
Answer: B
Misrepresentation involves making false or misleading statements about policy benefits or terms. Twisting requires a misleading comparison to induce a policy change, while rebating involves offering inducements outside the contract.
Question 12 (Chapter 8)
An individual with a terminal illness enters into a contract to sell their life insurance policy to a third party for a lump sum that is less than the death benefit. This transaction is known as:
- A) A policy replacement
- B) An assignment of benefits
- C) A surrender for cash value
- D) A viatical settlement
Show answer & explanation
Answer: D
A viatical settlement (G.S. 58-58-205) is the sale of a life insurance policy by a policyowner who is terminally or chronically ill to a third party.
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Practice Questions 13-22: Accident and Health Exam Sample
The Accident and Health exam opens with disability-income definitions and major medical arithmetic, moves through the standard policy provisions, then closes on North Carolina's own statutes governing group continuation, policy form approval and AD&D payouts.
Question 13 (Chapter 4)
A surgeon suffers a severe hand injury and can no longer perform surgery, but begins teaching medical students. Her disability policy pays full benefits because she cannot perform her 'own occupation.' What type of disability definition is this policy using?
- A) Any occupation definition
- B) Presumptive disability definition
- C) Residual disability definition
- D) Own occupation definition
Show answer & explanation
Answer: D
The 'own occupation' definition is the most favorable to the insured, as it pays benefits if the insured cannot perform the specific duties of their current profession, regardless of whether they can work in another field. 'Any occupation' is much more restrictive, and 'presumptive' refers to specific severe losses like blindness.
Question 14 (Chapter 4)
Under the Affordable Care Act (ACA), which of the following is true regarding dependent coverage on a parent's health insurance plan?
- A) Dependents are covered only until age 21.
- B) Dependents are covered until age 26, regardless of marital or student status.
- C) Dependents must be full-time students to be covered until age 26.
- D) Dependents are only covered if they are financially dependent on the parent.
Show answer & explanation
Answer: B
The ACA mandates that health plans offer dependent coverage for children up to age 26, regardless of their employment, marital, or student status.
Question 15 (Chapter 4)
Which of the following is a key difference between an HMO and a PPO?
- A) PPOs require a gatekeeper; HMOs do not.
- B) HMOs provide coverage for out-of-network providers; PPOs do not.
- C) HMOs are always more expensive than PPOs.
- D) PPOs generally offer more flexibility in choosing providers than HMOs.
Show answer & explanation
Answer: D
PPOs allow members to choose between in-network and out-of-network providers (though in-network is cheaper), whereas HMOs typically require the use of in-network providers to receive any coverage.
Question 16 (Chapter 4)
A hospital indemnity policy is designed to pay:
- A) A fixed daily dollar amount directly to the insured while hospitalized.
- B) A percentage of the actual hospital bill.
- C) The surgeon's fees for complex procedures.
- D) The cost of outpatient diagnostic testing.
Show answer & explanation
Answer: A
Hospital indemnity policies provide a fixed daily benefit for each day the insured is hospitalized, regardless of the actual medical costs incurred.
Question 17 (Chapter 4)
Under the ACA, which of the following is true regarding preexisting conditions?
- A) Insurers can exclude them for the first 12 months.
- B) Insurers can charge higher premiums for them.
- C) Insurers can deny coverage if the condition was not disclosed.
- D) Insurers cannot deny or limit coverage for them.
Show answer & explanation
Answer: D
The ACA prohibits health insurance plans from denying coverage, limiting coverage, or charging higher premiums based on an individual's preexisting health conditions.
Question 18 (Chapter 5)
An insured individual has a policy that is 'Noncancelable.' What does this classification guarantee regarding the policy's continuation?
- A) The insurer can increase premiums only if the entire class of insureds experiences a rate hike.
- B) The insurer cannot cancel the policy, but may increase premiums based on the individual's health changes.
- C) The insurer can cancel the policy only for nonpayment of premiums or fraud.
- D) The insurer cannot cancel the policy and cannot increase the premium for any reason until the insured reaches age 65.
Show answer & explanation
Answer: D
A 'Noncancelable' policy guarantees the insurer cannot cancel the policy and cannot increase the premium, typically until a specified age (often 65). This is the most restrictive form of continuation for the insurer.
Question 19 (Chapter 5)
What is the primary purpose of the 'Insuring Clause' in an accident and health policy?
- A) It defines the scope of coverage, including the parties involved and the perils covered.
- B) It lists the exclusions and limitations of the policy.
- C) It outlines the procedure for filing a claim.
- D) It states the conditions under which the insurer can cancel the policy.
Show answer & explanation
Answer: A
The 'Insuring Clause' is the heart of the policy; it identifies the parties, the scope of coverage, and the perils that are insured against.
Question 20 (Chapter 6)
Sarah works for a small business in North Carolina that provides group health insurance. She recently left her job to start her own consulting firm. Under North Carolina law, what is the maximum period Sarah's former employer's group health plan must offer her the option to continue her group health benefits, assuming she pays the full premium?
- A) 9 months
- B) 12 months
- C) 36 months
- D) 18 months
Show answer & explanation
Answer: D
North Carolina law, specifically G.S. 58-53-1 et seq., mandates that group health plans must offer a continuation of benefits for up to 18 months for eligible individuals who lose coverage due to termination of employment or reduction in hours, provided they pay the full premium. This is often referred to as the '18-month extension of benefits'.
Question 21 (Chapter 6)
A North Carolina company provides a group Accidental Death and Dismemberment (AD&D) policy for its employees. An employee, David, suffers an accident that results in the loss of one hand. The policy specifies a principal sum of $100,000 and a capital sum for loss of one hand at 50% of the principal sum. How much would David receive from this AD&D policy?
- A) $100,000
- B) $0, as AD&D only covers death.
- C) A percentage determined by a medical review, up to $100,000.
- D) $50,000
Show answer & explanation
Answer: D
In an AD&D policy, the principal sum is paid for accidental death. The capital sum is a percentage of the principal sum paid for specific types of dismemberment or loss of sight, speech, or hearing due to an accident. Since the loss of one hand is specified at 50% of the principal sum ($100,000), David would receive $50,000.
Question 22 (Chapter 6)
Under North Carolina General Statutes Article 50 (G.S. 58-50-20), which of the following statements is TRUE regarding the approval of health insurance policy forms by the Commissioner of Insurance?
- A) Insurers are not required to submit policy forms for approval; they only need to file them for informational purposes.
- B) Only major medical policy forms require approval; other health policy forms are exempt.
- C) Policy forms are automatically approved if the Commissioner does not respond within 15 days of submission.
- D) Policy forms must be submitted to and approved by the Commissioner of Insurance before they can be issued or delivered in North Carolina.
Show answer & explanation
Answer: D
G.S. 58-50-20 requires that all health insurance policy forms, riders, and endorsements be filed with and approved by the Commissioner of Insurance before they can be issued or delivered in North Carolina. G.S. 58-50-5 only defines the scope of the article and what counts as a 'policy of accident and health insurance.' Option C is incorrect because approval, not a deemed-approval deadline, is the rule.
Practice Questions 23-25: North Carolina Law Common to Both Exams
Both exams drop 14 of their 55 items into state-specific statutes, but the chapter underneath both — the Commissioner's authority, the Guaranty Association and who can even hold a producer license in the first place — does not belong to either exam alone. These three come from there.
Question 23 (Chapter 7)
A producer is investigated by the NCDOI for allegedly misrepresenting policy benefits to seniors. During the investigation, the Commissioner of Insurance issues a cease and desist order. According to G.S. 58-2-70, what is the primary purpose of this order?
- A) To immediately revoke the producer's license permanently.
- B) To force the producer to pay a fine before a formal hearing occurs.
- C) To prevent the producer from continuing the alleged unfair trade practice while the investigation is pending.
- D) To notify the public that the insurer is insolvent.
Show answer & explanation
Answer: C
A cease and desist order is a temporary measure used by the Commissioner to stop a potentially harmful practice while an investigation or hearing is ongoing. It does not automatically revoke a license or impose final penalties.
Question 24 (Chapter 7)
An insurance company becomes insolvent. A policyholder is worried about their claim. Which entity is responsible for protecting the policyholder up to statutory limits, per Article 62?
- A) The Commissioner of Insurance personally.
- B) The North Carolina Attorney General's office.
- C) The insurance company's parent corporation.
- D) The Life and Health Insurance Guaranty Association.
Show answer & explanation
Answer: D
The Life and Health Insurance Guaranty Association is a non-profit legal entity created to protect policyholders against the insolvency of their insurance company.
Question 25 (Chapter 7)
Which of the following is a requirement for a person to be licensed as an insurance producer in North Carolina?
- A) Must be at least 21 years old.
- B) Must be a resident of North Carolina.
- C) Must be competent, trustworthy, and financially responsible.
- D) Must have a college degree in business.
Show answer & explanation
Answer: C
The Commissioner requires that applicants demonstrate they are competent, trustworthy, and financially responsible as a condition of licensure; this is the core regulatory requirement under North Carolina law.
The Mistakes That Cost Marks
Mixing up renewability and convertibility. Renewability extends a term policy for another term at a higher, attained-age premium without new evidence of insurability. Convertibility swaps term for a permanent policy, also without new evidence of insurability. They solve different problems, and the exam trades on the difference constantly.
Assuming a lapsed whole life policy just stops. Unless the policyowner elects otherwise, North Carolina law defaults a lapsed policy to extended term insurance — the cash value buys term coverage at the original face amount for as long as it lasts, not a smaller permanent policy and not nothing.
Collapsing misrepresentation, twisting, rebating and defamation into one idea. Misrepresentation is a false statement about a policy's terms; twisting is a misleading comparison used to get a client to replace a policy; rebating is an inducement not stated in the contract; defamation is a false statement about a competing insurer's finances. Match the fact pattern to the specific term rather than the general feeling that something dishonest happened.
Treating a probationary period and an elimination period as the same thing. A probationary period is a one-time window after a health policy's effective date during which sickness claims are not paid at all. An elimination period is the waiting period before a disability claim starts paying once a qualifying disability has occurred. Confusing the two costs a question almost every time they appear together.
Reading a cease and desist order as a revocation. It is not. It is a temporary order that stops an alleged practice while the Commissioner's investigation or hearing is still open — the license action, if any, comes later and separately.
Your Next Step
How did you score?
- 20 or more correct (80%+): You are comfortably above the scaled-70 target on both exams. Book whichever exam you are closer to finishing your prep for, then work the two topic sets that go deeper on each one: the Life Agent exam and the Accident and Health exam.
- 17-19 correct: You are in range but without much margin, especially since 25 questions here stand in for two 55-question exams. Note the chapter of every question you missed and work that chapter's audio lesson again before moving to the topic sets above.
- Under 17 correct: You need the material, not more questions. Start with the study plan in how to pass the North Carolina Life & Health exam on your first try and work through the audio chapters before testing yourself again. First-time pass rates run 51-55% on the Life Agent exam and 61-63% on the Accident and Health exam — there is no reason to expect a second attempt with the same preparation to go better.
Chapters 1 and 9 of the LanePrep North Carolina course are free at /nc/l-and-h/preview — full audio and the chapter quiz, no signup. For a full-length timed run on either exam, try the practice exam.
Exam structure and fees from the NCDOI/Pearson VUE candidate guide #123400 (October 2025 edition). Question counts and content weighting from Pearson VUE content outline #123415 (effective March 2, 2026). Pass rates from the NAIC compiled pass-rate reports for 2024 and 2025. Read October 2026.
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