17 Free North Carolina Life & Health Practice Questions: North Carolina Insurance Law Common to Both Exams (2026)

Question 1 (Chapter 7)

An applicant for a life insurance producer license has a prior conviction for a misdemeanor involving financial dishonesty. Under G.S. 58-33-30, what must the Commissioner consider when deciding whether to issue the license?

• A) The applicant's current credit score.
• B) Whether the applicant has completed a pre-licensing education course.
• C) The applicant's political affiliation.
• D) The nature, severity, and recency of the conviction, and its relevance to the duties of a producer.

Question 2 (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.

Question 3 (Chapter 7)

The Commissioner of Insurance is:

• A) Appointed by the Governor.
• B) Appointed by the State Legislature.
• C) Appointed by the NAIC.
• D) Elected by the citizens of North Carolina.

Question 4 (Chapter 7)

Which of the following activities would constitute an Unfair Trade Practice under G.S. 58-63-15?

• A) Charging different premiums for different risk classes.
• B) Offering a policyholder a gift worth $5 as a token of appreciation.
• C) Providing a copy of the policy to the insured.
• D) Discriminating between individuals of the same class and risk in the rates charged for life insurance.

Question 5 (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.

Question 6 (Chapter 7)

An applicant applies for a disability income policy. During underwriting, the insurer orders an investigative consumer report. Under the North Carolina Insurance Information and Privacy Protection Act (Article 39), what must the insurer provide to the applicant prior to collecting this information?

• A) A complete copy of the insurer's annual financial statement
• B) A certified check covering any administrative costs of the background check
• C) A written notice of information practices detailing the sources and types of information that may be collected and disclosed
• D) A binding guarantee that the policy will be issued at standard rates

Question 7 (Chapter 7)

A producer includes a clause in agency contracts requiring all staff members to engage in exclusive marketing campaigns that disparage a rival insurer's management team. Under G.S. 58-63-15, which unfair trade practice does this fall under?

• A) Rebating
• B) Controlled business
• C) Defamation
• D) Intimidation

Question 8 (Chapter 7)

An insurance agent intentionally submits an insurance application containing fabricated medical histories and forged customer signatures to meet monthly sales quotas and receive bonus commissions. Under G.S. 14-100, how is this criminal offense classified in North Carolina?

• A) A minor administrative infraction handled solely by the NCDOI
• B) Civil breach of contract
• C) Misdemeanor trespass
• D) Felony obtaining property by false pretenses

Question 9 (Chapter 7)

Under G.S. 58-33-40, under what circumstances may the Commissioner of Insurance issue a temporary producer license without requiring an examination?

• A) When any applicant wants to bypass the Pearson VUE testing process to save money.
• B) To any corporate executive officer who has been employed by the insurance industry for at least six months.
• C) To college students completing a summer internship at an insurance agency.
• D) To the surviving spouse, personal representative, or employee of a licensed producer who dies or becomes disabled, to allow adequate time for business continuation or sale.

Question 10 (Chapter 7)

A consumer submits a written request to an insurance company demanding access to recorded personal information held in an underwriting file under the North Carolina Insurance Information and Privacy Protection Act (Article 39). The insurer refuses to grant access or correct the information. What specific recourse does the consumer have under G.S. 58-39-110?

• A) File a direct lawsuit in a North Carolina superior court seeking punitive damages of up to one million dollars.
• B) Instantly revoke the insurer's certificate of authority to do business in the state without Commissioner approval.
• C) File a written complaint with the Commissioner of Insurance, who may investigate and issue administrative orders or penalties.
• D) Seize company assets equal to the disputed personal information file value.

Question 11 (Chapter 7)

An insurance investigator conducts an interview as part of an underwriting investigation for a health insurance application. The investigator conceals their true identity and falsely claims to be conducting a routine credit check. Under the North Carolina Insurance Information and Privacy Protection Act (Article 39), what is this prohibited practice called?

• A) Adverse underwriting decision
• B) Pretext interview
• C) Consumer reporting disclosure
• D) Information-sharing breach

Question 12 (Chapter 7)

A life insurance company offers lower premium rates to individuals within the same risk and mortality class based solely on their geographic zip code within a specific minority neighborhood. Under G.S. 58-63-15(7), how is this practice classified?

• A) Standard actuarial underwriting rating
• B) Unfair discrimination
• C) Permissible risk classification
• D) Group conversion privilege

Question 13 (Chapter 7)

An insurance producer fails to respond to an official written inquiry sent by the Commissioner of Insurance regarding a consumer complaint within the timeframe specified by NCDOI rules. Under G.S. 58-2-50 and G.S. 58-33-130, what potential disciplinary consequence does the producer face?

• A) Mandatory promotion to agency director.
• B) Administrative penalties, including license suspension or revocation and monetary fines.
• C) Automatic waiver of all future continuing education requirements.
• D) Immunity from any future civil lawsuits.

Question 14 (Chapter 7)

A producer unintentionally misrepresents a policy provision during a sales presentation. The client suffers no financial loss. Has the producer violated the Unfair Trade Practices Act (Article 63)?

• A) No, because there was no intent to defraud.
• B) No, because the client suffered no financial loss.
• C) Yes, misrepresentation of policy terms is a prohibited unfair trade practice regardless of intent or loss.
• D) Yes, but only if the producer is a broker and not an agent.

Question 15 (Chapter 7)

Which entity is responsible for the administration of Continuing Education (CE) requirements for insurance producers in North Carolina?

• A) The North Carolina State Legislature.
• B) The National Association of Insurance Commissioners (NAIC).
• C) The North Carolina Department of Insurance (NCDOI).
• D) The individual insurance company that appoints the producer.

Question 16 (Chapter 7)

A producer is found to have committed 'premium diversion.' What is the most accurate description of this act?

• A) Charging a client a fee for policy delivery without insurer approval.
• B) Switching a client from one company to another to get a higher commission.
• C) Providing incorrect information on a claim form.
• D) Misappropriating or withholding premium funds that belong to the insurer or the insured.

Question 17 (Chapter 7)

A producer is investigated for 'coercion.' What does this involve?

• A) Using physical force to make a client buy a policy.
• B) Entering into an agreement to commit any act of boycott, coercion, or intimidation resulting in the unreasonable restraint of trade.
• C) Charging a client an extra fee for processing paperwork.
• D) Failing to disclose the terms of a policy.