North Dakota Life & Health Insurance License, Practice Exams

What is UNFAIR COMPENSATION under NDCC 26.1-04-03(21)?

1. Basing the compensation, including performance bonuses, of claims employees or contracted claims personnel on the number of policies canceled, the number of times coverage is denied, a quota limiting the number or volume of claims, or an arbitrary cap on claims payments without regard to the merits. ✓
2. Paying a claims employee any performance bonus or incentive at all, the compensation of claims personnel being required by this subsection to be by salary alone so that nothing in the way in which a claims handler is paid can bear upon the handling of any particular claim in this state.
3. Basing the compensation of claims employees on the number of policies cancelled or the number of times coverage is denied. A quota limiting the number or volume of claims, or a cap limiting the amount of claims payments, is a matter of the insurer's internal budgeting and is outside the subsection entirely.
4. Basing the compensation of any employee of the insurer, in claims or otherwise, on the number of policies cancelled or the number of times coverage is denied, and using any quota of any kind in the management of the insurer's claims department, whether or not the quota is an arbitrary one.

Why: NDCC 26.1-04-03(21), UNFAIR COMPENSATION: BASING THE COMPENSATION, INCLUDING PERFORMANCE BONUSES OR INCENTIVES, OF CLAIMS EMPLOYEES OR CONTRACTED CLAIMS PERSONNEL ON THE FOLLOWING: (a) THE NUMBER OF POLICIES CANCELED; (b) THE NUMBER OF TIMES COVERAGE IS DENIED; (c) USE OF A QUOTA LIMITING OR RESTRICTING THE NUMBER OR VOLUME OF CLAIMS; (d) USE OF AN ARBITRARY QUOTA OR CAP LIMITING OR RESTRICTING THE AMOUNT OF CLAIMS PAYMENTS WITHOUT DUE CONSIDERATION TO THE MERITS OF THE CLAIM. Paragraph (d) is qualified by ARBITRARY and by WITHOUT DUE CONSIDERATION TO THE MERITS. NDCC 26.1-04-03(20), UNFAIR REFERRAL, is the neighbouring practice: AN INSURER, INSURANCE PRODUCER, OR THIRD-PARTY ADMINISTRATOR REFERRING AN INDIVIDUAL EMPLOYEE TO THE ASSOCIATION, OR ARRANGING FOR AN INDIVIDUAL EMPLOYEE TO APPLY TO THE ASSOCIATION, FOR THE PURPOSE OF SEPARATING THAT EMPLOYEE FROM GROUP HEALTH INSURANCE COVERAGE PROVIDED IN CONNECTION WITH THE EMPLOYEE'S EMPLOYMENT.

What do NDCC 26.1-04-03(9)(e) to (h) forbid?

1. Making any offer of settlement which is less than the amount the insured has claimed; appealing from any arbitration award made in favour of an insured or a claimant; altering an application in any respect after it has been signed; and settling any claim for less than the policy limit applicable to it under the contract.
2. Compelling insureds to sue by offering substantially less than the amounts ultimately recovered; and attempting settlement on the basis of altered applications. An insurer's policy of appealing from arbitration awards is a matter of litigation strategy and is outside the claim settlement practices which this subsection defines.
3. Compelling insureds to sue by offering substantially less than the amounts ultimately recovered; making known a policy of appealing from arbitration awards to compel acceptance of less than the award; settling on applications altered without notice to the insured; and settling for less than the advertising promised. ✓
4. Compelling insureds to institute suits by offering substantially less than is ultimately recovered; making known a policy of appealing from arbitration awards; and attempting settlement on the basis of altered applications, but only where the alteration was made with intent to deceive the insured who signed the application.

Why: NDCC 26.1-04-03(9)(e) to (h): (e) COMPELLING INSUREDS TO INSTITUTE SUITS TO RECOVER AMOUNTS DUE UNDER ITS POLICIES BY OFFERING SUBSTANTIALLY LESS THAN THE AMOUNTS ULTIMATELY RECOVERED IN SUITS BROUGHT BY THEM WHEN THE INSUREDS HAVE MADE CLAIMS FOR AMOUNTS REASONABLY SIMILAR TO THE AMOUNTS ULTIMATELY RECOVERED; (f) MAKING KNOWN TO INSUREDS OR CLAIMANTS A POLICY OF APPEALING FROM ARBITRATION AWARDS IN FAVOR OF INSUREDS OR CLAIMANTS FOR THE PURPOSE OF COMPELLING THEM TO ACCEPT SETTLEMENTS OR COMPROMISES LESS THAN THE AMOUNT AWARDED IN ARBITRATION; (g) ATTEMPTING SETTLEMENT OR COMPROMISE OF CLAIMS ON THE BASIS OF APPLICATIONS WHICH WERE ALTERED WITHOUT NOTICE TO, OR KNOWLEDGE OR CONSENT OF, INSUREDS; (h) ATTEMPTING TO SETTLE A CLAIM FOR LESS THAN THE AMOUNT TO WHICH A REASONABLE PERSON WOULD HAVE BELIEVED ONE WAS ENTITLED BY REFERENCE TO WRITTEN OR PRINTED ADVERTISING MATERIAL ACCOMPANYING OR MADE A PART OF AN APPLICATION.

What do NDCC 26.1-33-05(10) and (11) require a life policy to carry?

1. A table of guaranteed cash surrender values for each of the first twenty policy years, and a title on the face of the policy correctly describing the plan of insurance.
2. A table showing the amounts of the instalments in which the proceeds may be payable, and a title on the face and on the back of the policy correctly describing it. ✓
3. A schedule of the premiums payable in each policy year, and a title on the face and on the back of the policy giving the name and address of the insurer.
4. A table showing the amounts of the instalments in which the proceeds may be payable, and a statement of the mortality table and interest rate used in the policy.

Why: NDCC 26.1-33-05(10): a table showing the amounts of installments in which the policy may provide its proceeds may be payable. NDCC 26.1-33-05(11): a title on the face and on the back of the policy correctly describing the policy.

A producer tells a client false negative information about a competing insurer to win the sale. This is:

1. Twisting
2. Rebating
3. Defamation ✓
4. Coercion

Why: Making false, maligning statements about another insurer is defamation, an unfair trade practice.

What must a person who is NOT closely related to the individual insured show, under NDCC 26.1-29-09.1(3)(b), to have an insurable interest?

1. A lawful and substantial economic interest in having the life, health or bodily safety of the individual insured continue, as distinguished from an interest that would arise only by, or be enhanced in value by, that individual's death, disablement or injury. ✓
2. A lawful and substantial economic interest in having the life, health or bodily safety of the individual insured continue, or alternatively an interest that would be enhanced in value by that individual's death or disablement, provided the individual insured consents in writing.
3. A creditor relationship with the individual insured, the amount of the insurance being limited to the outstanding balance of the debt together with the interest on it and the costs of collecting it from the estate.
4. Any economic interest of a lawful kind, the section drawing no distinction between an interest in the continuation of the individual's life and one that arises only on that individual's death.

Why: NDCC 26.1-29-09.1(3)(b): for a person other than a close relative, insurable interest means a lawful and substantial economic interest in having the life, health or bodily safety of the individual insured CONTINUE, as distinguished from an interest that would arise only by, or would be enhanced in value by, the death, disablement or injury of that individual.

An insurer denies one claim without just cause and has never done anything like it before. Is that an unfair claim settlement practice in North Dakota?

1. Yes. Each of the listed acts is an unfair claim settlement practice in its own right, and the words about frequency in the opening of the subsection go to the penalty which the commissioner may impose rather than to whether the practice has been committed by the insurer on the occasion complained of.
2. Yes, provided the insured complains to the commissioner about it. A single act done without just cause becomes a general business practice within the meaning of the subsection once it has been drawn to the commissioner's attention and the insurer has failed to put the matter right upon being asked to do so.
3. No. NDCC 26.1-04-03(9) reaches the listed acts only if done without just cause and if performed with a frequency indicating a general business practice, and a single act satisfies the first condition but not the second, so a single denial may be wrong on its own merits and still not be an unfair practice. ✓
4. No, and it would not be one however often it were repeated, since the opening words require the act to be done without just cause and with a frequency indicating a general business practice and to have caused actual loss to the claimant, all three of which must be proved by the commissioner at the hearing.

Why: NDCC 26.1-04-03(9): COMMITTING ANY OF THE FOLLOWING ACTS, IF DONE WITHOUT JUST CAUSE AND IF PERFORMED WITH A FREQUENCY INDICATING A GENERAL BUSINESS PRACTICE. Two conditions, joined by AND, and only two. There is no third condition of actual loss.

When must the outline of coverage for a Medicare supplement policy be delivered, under NDCC 26.1-36.1-05(1)?

1. At the time the application is made, or with the policy when it is sold by direct response.
2. Within thirty days after the policy has been delivered to the applicant by the insurer.
3. At the time of initial solicitation, through means that direct the recipient's attention to it.
4. At the time the application is made, that being the point at which the section requires the outline to be delivered to the applicant. ✓

Why: NDCC 26.1-36.1-05(1): no Medicare supplement policy or certificate may be delivered or issued for delivery in this state UNLESS AN OUTLINE OF COVERAGE IS DELIVERED TO THE APPLICANT AT THE TIME APPLICATION IS MADE. Compare long-term care under 26.1-45-09(2)(a), where the outline goes out at the time of INITIAL SOLICITATION.

Retirement plan 'catch-up' contributions allow individuals to contribute additional amounts once they reach age:

1. 50 ✓
2. 40
3. 59 and one half
4. 65

Why: Participants age 50 and older may make catch-up contributions above the standard annual limits to IRAs and employer plans.

Which of these is NOT a member insurer of the association, under the definition in NDCC 26.1-38.1-02(13)?

1. An insurer excluded from the member definition because its certificate of authority in this state has been suspended or revoked since it issued the policies.
2. A fraternal benefit society, which the definition expressly excludes from the term member insurer. ✓
3. A health maintenance organization holding a certificate of authority for a kind of business that the chapter covers.
4. An insurer that has voluntarily withdrawn from this state but wrote covered business here while it was licensed.

Why: NDCC 26.1-38.1-02(13): 'member insurer' includes an insurer or health maintenance organization licensed or holding a certificate of authority for a kind of business covered by 26.1-38.1-01, and expressly INCLUDES one whose licence has been suspended, revoked, not renewed or voluntarily withdrawn. It EXCLUDES a FRATERNAL BENEFIT SOCIETY, a mandatory state pooling plan, a mutual assessment company, an insurance exchange, a charitable gift annuity issuer and any similar entity.

An occupational classification system in disability underwriting means that:

1. More hazardous occupations are charged higher premiums ✓
2. Only office workers are eligible for any coverage
3. Every applicant pays exactly the same premium rate
4. The benefit period is set by the insured's job title

Why: Insurers group occupations into classes by risk; higher-risk occupations receive higher premiums or more limited benefits.

What further statement must the contract carry under NDCC 26.1-34-01(4)?

1. That the paid-up annuity, cash surrender and death benefits available are not less than the minimum benefits required by any law of this state, and that the company has filed the contract with the commissioner and obtained approval of it before its issue.
2. That the paid-up annuity, cash surrender and death benefits available are not less than the minimum benefits required by any law of this state, with an explanation of how they are altered by additional amounts credited, indebtedness or prior withdrawals. ✓
3. That the benefits are guaranteed by the North Dakota life and health insurance guaranty association up to the limits that chapter 26.1-38.1 sets out for annuity contracts and for life policies.
4. That the contract is subject to the nonforfeiture provisions of chapter 26.1-34 unless the commissioner has granted the company an exemption from them on a written application.

Why: NDCC 26.1-34-01(4): the contract must state that any paid-up annuity, cash surrender or death benefits available are NOT LESS THAN THE MINIMUM BENEFITS REQUIRED BY ANY LAW OF THIS STATE, and must explain the manner in which the benefits are ALTERED by any additional amounts credited by the company, any indebtedness to the company, or any prior withdrawals from or partial surrenders of the contract.

An equity-indexed annuity with a 0% floor credits no negative interest. In a year the index drops 12%, the contract is credited:

1. 0% (principal is protected by the floor) ✓
2. -12% (the account value drops by the full index decline)
3. -6% (half the index loss, after a 50% participation rate)
4. +12% (the floor credits the inverse of the index decline)

Why: The floor (commonly 0%) prevents negative crediting, so a down year credits the floor rather than a loss.

Premium financing refers to:

1. Paying each premium out of accumulated policy dividends
2. An insurer advancing the overdue premium as a loan against the policy's cash value
3. A state subsidy that offsets premiums for low-income applicants
4. Borrowing to pay large insurance premiums, repaid with interest ✓

Why: Premium financing involves a third-party loan to pay (often large) premiums; the policy may serve as collateral.

In which policy does the owner bear the investment risk, with cash value fluctuating based on separate-account performance?

1. Whole life
2. Term life
3. Variable life ✓
4. Universal life

Why: Variable life invests cash value in separate accounts; the owner bears investment risk, so cash value (and sometimes death benefit) can rise or fall. It requires a securities license to sell.

Under the entire contract provision, the contract consists of the policy and:

1. The attached copy of the application for the policy ✓
2. A separate buyer's guide kept on file by the agent
3. The insurer's internal underwriting guidelines manual
4. Any verbal promises the producer made at the sale

Why: The entire contract is the policy plus the attached application; no outside documents can be incorporated by reference.

A North Dakota business entity's principal producer learns of an individual licensee's violation, reports it to the commissioner and takes corrective action. What follows under NDCC 26.1-26-43?

1. The entity's licence must still be suspended or revoked, the knowledge of the partner, officer or manager being the whole of the ground, and the reporting of the violation and the taking of corrective action go only to the sanction which the commissioner imposes after the hearing rather than to liability under the section.
2. The entity's licence is unaffected, but the partner, officer or manager who knew of the violation is personally liable to a civil fine not exceeding ten thousand dollars for each violation, the reporting and correction relieving the entity while leaving the individual who knew of it answerable to the commissioner.
3. The entity's licence may still be refused on renewal, though it may not be suspended or revoked, since a refusal on renewal under section 26.1-26-39 does not require the commissioner to find that the violation went unreported or uncorrected by the business entity which employed the individual licensee.
4. Nothing. The entity's licence may be suspended, revoked or refused only where the violation was known or should have been known by a partner, officer or manager and the violation was not reported to the commissioner nor corrective action taken. Reporting it or else correcting it removes that second element. ✓

Why: NDCC 26.1-26-43: THE LICENSE OF A BUSINESS ENTITY MAY BE SUSPENDED, REVOKED, OR REFUSED IF THE COMMISSIONER FINDS, AFTER HEARING, THAT AN INDIVIDUAL LICENSEE'S VIOLATION WAS KNOWN OR SHOULD HAVE BEEN KNOWN BY ONE OR MORE OF THE PARTNERS, OFFICERS, OR MANAGERS ACTING ON BEHALF OF THE BUSINESS ENTITY AND THE VIOLATION WAS NOT REPORTED TO THE COMMISSIONER NOR CORRECTIVE ACTION TAKEN IN RELATION TO THE VIOLATION. The two elements are joined by AND, so either reporting it or correcting it defeats the second.

For how long must the former spouse's conversion coverage be renewable under NDCC 26.1-36-23.1(3)?

1. At the former spouse's option, as long as the former spouse is not covered under another accident and health plan, up to age seventy or to the day before the date of eligibility for coverage under title XVIII of the Social Security Act, whichever is the later.
2. At the insurer's option, which may decline to renew the coverage on any anniversary on giving the former spouse thirty-one days' written notice of its intention not to renew the conversion coverage for a further year.
3. At the former spouse's option, as long as the former spouse is not covered under another accident and health plan, up to age sixty-five or to the day before the date of eligibility for coverage under title XVIII of the Social Security Act. ✓
4. For thirty-six months from the date the conversion coverage takes effect, whatever other accident and health coverage the former spouse may obtain in that time, and whether or not the former spouse is then covered under another accident and health plan.

Why: NDCC 26.1-36-23.1(3): the conversion policy, contract or evidence of coverage must be RENEWABLE AT THE OPTION OF THE FORMER SPOUSE AS LONG AS THE FORMER SPOUSE IS NOT COVERED UNDER ANOTHER accident and health insurance plan, policy or contract, UP TO AGE SIXTY-FIVE OR TO THE DAY BEFORE THE DATE OF ELIGIBILITY FOR COVERAGE UNDER TITLE XVIII of the Social Security Act.

How long does a North Dakota certificate of authority remain in force under NDCC 26.1-02-02, and what happens if the renewal fee is late?

1. It remains in force for one year from the date of issue and must be applied for afresh each year, the application to be made and the fee paid by April thirtieth. A company which neglects to pay the renewal fee by that date forfeits its certificate of authority immediately and may not transact any further business in this state.
2. It remains in force in perpetuity if the renewal fee is paid by June thirtieth of each year and the commissioner is satisfied that the requirements of law are met. A company which neglects to pay the renewal fee by that date forfeits one hundred dollars for each day's neglect and its certificate is suspended until the arrears are paid.
3. It remains in force in perpetuity whether or not any renewal fee is paid, the fee being recoverable by the commissioner as a debt due to the state, and a company which neglects to pay it by April thirtieth forfeits twenty-five dollars for each day's neglect but suffers no consequence to the certificate of authority itself.
4. It remains in force in perpetuity if the required renewal fee is paid by April thirtieth of each year and the commissioner is satisfied that the required statements and evidences of investment have been furnished and that all other requirements of law are met. Neglect to pay by April thirtieth forfeits twenty-five dollars a day. ✓

Why: NDCC 26.1-02-02: A CERTIFICATE OF AUTHORITY ISSUED UNDER THIS TITLE REMAINS IN FORCE IN PERPETUITY IF THE REQUIRED RENEWAL FEE IS PAID BY APRIL THIRTIETH OF EACH YEAR AND THE COMMISSIONER IS SATISFIED THAT THE STATEMENTS AND EVIDENCES OF INVESTMENT REQUIRED OF THE COMPANY HAVE BEEN FURNISHED, THE REQUIRED CAPITAL OR SURPLUS OR BOTH, SECURITIES, AND INVESTMENTS REMAIN SECURE, AND ALL OTHER REQUIREMENTS OF LAW ARE MET. ANY COMPANY WHICH NEGLECTS TO PAY THE RENEWAL FEE BY APRIL THIRTIETH FORFEITS TWENTY-FIVE DOLLARS FOR EACH DAY'S NEGLECT.

A whole life policyowner borrows against the cash value and does not repay it. At death, the death benefit is:

1. Paid in full, with the loan forgiven
2. Forfeited entirely because of the loan
3. Replaced by a refund of premiums
4. Reduced by the outstanding loan and interest ✓

Why: An unpaid policy loan plus interest is subtracted from the death benefit paid to the beneficiary.

An insurer withdraws from the market entirely under NDCC 26.1-36.4-05(1)(f). What follows?

1. Notice to all affected persons at least ninety days before the nonrenewal, discontinuance of all its health insurance in that market, and a bar on writing new business in that market in this state for five years from the date of the notice to the commissioner.
2. Notice to all affected persons at least one hundred eighty days before the nonrenewal and discontinuance of all its health insurance in that market, the insurer being free to re-enter the market at any time after the withdrawal has taken effect in this state.
3. Notice to the commissioner alone, at least one hundred eighty days before the nonrenewal, and a bar on writing new business in that market for two years from the date of the notice given to the commissioner of this state.
4. Notice to all affected persons at least one hundred eighty days before the nonrenewal, discontinuance of all its health insurance in that market, and a bar on writing new business in that market in this state for five years from the notice to the commissioner. ✓

Why: NDCC 26.1-36.4-05(1)(f) and (2): the insurer must give advance notice to the commissioner in each state where it is licensed; notice to all affected persons and to the commissioner AT LEAST ONE HUNDRED EIGHTY DAYS before the nonrenewal, the commissioner again notified at least THREE WORKING DAYS earlier; and must DISCONTINUE ALL health insurance in that market. Under subsection 2 it MAY NOT WRITE NEW BUSINESS in that market in this state FOR FIVE YEARS from the date of notice to the commissioner.

Is a debt cancellation contract between a bank and its debtor INSURANCE for the purposes of NDCC ch. 26.1-02.1?

1. No. NDCC 26.1-02.1-01(6) expressly excludes a debt cancellation contract and a debt suspension contract between a bank, a credit union or a savings association and its debtor, so the fraud chapter does not reach conduct concerning such a contract however the contract pays out. ✓
2. No, because such a contract is a banking product regulated by the department of financial institutions, and the definition of insurance excludes every contract written by a bank, a credit union or a savings association whatever the contingency upon which it pays.
3. Yes. The contract between the debtor and the seller for debt cancellation undertakes to indemnify the debtor against loss from a contingency and therefore falls squarely within the definition of insurance, which the chapter draws by reference to the substance of the arrangement rather than by reference to the character of the party which has entered into it.
4. Yes, but only where the bank has been licensed by the commissioner to offer the contract, an unlicensed bank's debt cancellation contract being a nullity rather than a contract of insurance and its holder having no claim upon the guaranty association.

Why: NDCC 26.1-02.1-01(6). The exclusion covers both DEBT CANCELLATION and DEBT SUSPENSION contracts, and all three kinds of institution - bank, credit union, savings association.

For how long are court proceedings involving an insolvent insurer stayed under NDCC 26.1-38.1-15?

1. One hundred eighty days from the date on which an order of liquidation, rehabilitation or conservation becomes final, to permit legal action by the association. ✓
2. One hundred eighty days from the date on which the association becomes obligated with respect to the policies and contracts of that insolvent insurer.
3. One hundred twenty days from the date an order of liquidation, rehabilitation or conservation is final, the same period the liquidator has to apply to disburse marshalled assets.
4. Sixty days from the date on which the association receives notice of the order from the receivership court.

Why: NDCC 26.1-38.1-15: all proceedings in which the insolvent insurer is a party in any court in this state must be stayed ONE HUNDRED EIGHTY DAYS from the date an order of liquidation, rehabilitation or conservation is FINAL, to permit proper legal action by the association. The association may also apply to have a default judgment set aside and defend on the merits. Do not confuse this with the 120-day period in 26.1-38.1-11(4) for the liquidator's application to disburse marshalled assets.

A contract provision violates NDCC 26.1-04-03(16), (17) or (19). What is the consequence?

1. The provision is void, and that consequence is in addition to the proceedings and the penalties that the chapter separately provides for a breach of it. ✓
2. The provision is void, and that is instead of the proceedings and penalties the chapter provides for a breach of those paragraphs for a breach of those three paragraphs of the section.
3. The provision is voidable at the option of the health care provider, who may enforce the rest of the contract against the entity while treating that provision as of no effect.
4. The provision remains enforceable between the parties, the commissioner's proceedings being the only consequence of a breach of any of those three paragraphs of the section.

Why: NDCC 26.1-04-03(16), (17) and (19) each close with the same words: IN ADDITION TO THE PROCEEDINGS AND PENALTIES PROVIDED IN THIS CHAPTER, A CONTRACT PROVISION VIOLATING THIS SUBSECTION IS VOID. Void, not voidable, and in addition to the chapter's remedies, not instead of them.

An employee's spouse loses group coverage because the couple divorces. The maximum COBRA continuation period is:

1. 36 months ✓
2. 18 months
3. 12 months
4. 6 months

Why: Divorce is a qualifying event that allows the affected dependent up to 36 months of COBRA continuation.

In an 'entity' (stock redemption) buy-sell agreement funded with life insurance:

1. The agreement applies only to sole proprietorships, never partnerships
2. The business owns one policy on each owner and buys the deceased owner's interest ✓
3. A bank or other third party holds all of the policies in trust until the business is sold or dissolved
4. Each owner personally owns a policy on every other owner of the firm

Why: In an entity plan the business owns the policies and purchases a deceased owner's share; in a cross-purchase plan the owners insure each other.

What is a BREACH OF TRUST under NDCC 26.1-02.1-01(1)?

1. Any breach by a producer of the duty of good faith owed to a client, whether or not the breach is a criminal act, the definition being drawn broadly enough to reach the mishandling of a client's premium and the placing of business with an insurer chosen for the size of the commission rather than for the protection it offers the client.
2. Any criminal act, or an element of a criminal act, involving the misuse, misapplication or misappropriation of anything of value held as a fiduciary, or of anything of value of any public, private or charitable organization. Fiduciary there includes a trustee, administrator, executor, conservator, receiver, guardian, agent, employee, partner, officer, director or public service. ✓
3. A criminal act involving property held as a trustee or executor only, the definition being confined to those two formal fiduciary offices and not extending to an agent, an employee or an officer of a corporation.
4. The conversion of money belonging to an insurer by a person engaged in the business of insurance, which is the only breach of trust the chapter defines and which it defines for the purpose of the penalty grid in section 26.1-02.1-05 rather than for the licensing bar.

Why: NDCC 26.1-02.1-01(1). The width of FIDUCIARY is the point: trustee, administrator, executor, conservator, receiver, guardian, AGENT, EMPLOYEE, PARTNER, OFFICER, DIRECTOR, or public service; and paragraph b adds anything of value of any public, private or charitable organization.

Which North Dakota producers are exempt from continuing education under NDCC 26.1-26-31.1(1)?

1. An insurance producer who is at least sixty-two years of age at any time, whenever that age is reached, and whose combined years of continuous licensure and years of age equal eighty-five, the exemption being a continuing one available to every producer who comes to satisfy the two conditions.
2. An insurance producer who is at least sixty-five years of age as of January 1, 2010, or whose combined total years of continuous licensure and years of age equals eighty, either condition being sufficient on its own to relieve that producer of the continuing education requirement in this state.
3. An insurance producer whose licence is limited to a specific product type, the commissioner having power to waive the requirement entirely for such a producer, and an insurance producer who is at least sixty-two years of age as of January 1, 2010, whatever that producer's years of continuous licensure may be.
4. An insurance producer who, as of January 1, 2010, is at least sixty-two years of age and who has a combined total years of continuous licensure as an insurance producer and years of age which equals eighty-five. The test is taken as of that one date, and both of its two conditions have to be met. ✓

Why: NDCC 26.1-26-31.1(1): NO CONTINUING EDUCATION IS REQUIRED OF AN INSURANCE PRODUCER WHO, AS OF JANUARY 1, 2010, IS AT LEAST SIXTY-TWO YEARS OF AGE AND WHO HAS A COMBINED TOTAL YEARS OF CONTINUOUS LICENSURE AS AN INSURANCE PRODUCER AND YEARS OF AGE WHICH EQUALS EIGHTY-FIVE. The test is taken AS OF JANUARY 1, 2010 and BOTH conditions must be met. The commissioner's power to REDUCE OR WAIVE for a licence LIMITED TO A SPECIFIC PRODUCT TYPE is a separate thing in the same subsection.

What declaration must an individual make on the uniform application under NDCC 26.1-26-13.3(1)?

1. A declaration sworn before a notary public that the statements made in the application are true, correct and complete, a false statement in the application being punishable as perjury under the criminal laws of this state rather than by any action taken against the licence by the commissioner of insurance.
2. A declaration that the statements made in the application are true and correct to the best of the individual's knowledge and belief. Completeness is not declared, since the commissioner may contact an applicant in writing about an incomplete application and may deem it withdrawn if no response is received within twenty days.
3. A declaration under penalty of refusal, suspension, or revocation of the license that the statements made in the application are true, correct, and complete to the best of the individual's knowledge and belief. The sanction which that declaration itself names is an administrative one rather than a criminal charge. ✓
4. A declaration, countersigned by an appointing insurer, that the statements made in the application are true, correct and complete, the insurer thereby accepting responsibility for the accuracy of the application which it has countersigned and for the conduct of the applicant in obtaining the licence applied for.

Why: NDCC 26.1-26-13.3(1): AN INDIVIDUAL APPLYING FOR A RESIDENT INSURANCE PRODUCER LICENSE SHALL MAKE APPLICATION TO THE COMMISSIONER ON THE UNIFORM APPLICATION AND DECLARE UNDER PENALTY OF REFUSAL, SUSPENSION, OR REVOCATION OF THE LICENSE THAT THE STATEMENTS MADE IN THE APPLICATION ARE TRUE, CORRECT, AND COMPLETE TO THE BEST OF THE INDIVIDUAL'S KNOWLEDGE AND BELIEF. The sanction named in the declaration is administrative - REFUSAL, SUSPENSION, OR REVOCATION.

An employee's dependent child loses coverage by aging out of the plan. The maximum COBRA continuation for that child is:

1. 36 months ✓
2. 18 months
3. 12 months
4. 6 months

Why: A dependent aging out is a qualifying event allowing up to 36 months of COBRA continuation.

An insurer decides to discontinue ONE type of health benefit plan in a market. What notice does NDCC 26.1-36.4-05(1)(e) require?

1. Advance notice to the commissioner in each state where it is licensed, and notice to all affected persons at least one hundred eighty days before the nonrenewal, the commissioner being notified at least three working days before the affected persons are.
2. Notice to all affected persons at least ninety days before the nonrenewal, the section requiring no separate notice to the commissioner of any state in which the insurer holds a licence to transact the business of insurance at that time.
3. Advance notice to the commissioner in each state where it is licensed, and notice to all affected persons and to the commissioner at least ninety days before the nonrenewal, the commissioner being notified at least three working days before the affected persons. ✓
4. Notice to all affected persons at least sixty days before the nonrenewal, together with an offer of the insurer's other plans in that market, together with an offer of the insurer's other plans currently available in that market.

Why: NDCC 26.1-36.4-05(1)(e): the insurer must give ADVANCE NOTICE of the decision TO THE COMMISSIONER IN EACH STATE in which it is licensed; give notice to ALL AFFECTED individuals, employers, participants and beneficiaries and to the commissioner in each state where an affected insured is known to reside AT LEAST NINETY DAYS before the nonrenewal, with the COMMISSIONER NOTIFIED AT LEAST THREE WORKING DAYS BEFORE the affected persons; OFFER each affected group or individual all its other plans in that market; and ACT UNIFORMLY without regard to claims experience or health status.

What does NDCC 26.1-04-07 forbid?

1. An insurance or surety company, its officers, directors and agents, and an insurance producer, may not issue, circulate or use any written or oral statement or circular misrepresenting the terms or the benefits of any policy, estimate future dividends with intent to deceive, or misname a policy's true nature. ✓
2. The making of any estimate of future dividends or shares of surplus, whether or not with intent to deceive, an estimate of what a participating policy will pay in the future being inherently misleading and therefore forbidden outright to every insurer and producer doing business in this state.
3. The issuing or circulating of any written statement misrepresenting the terms of a policy already issued. An oral statement is outside the section, as is a statement about a policy which has not yet been issued, the mischief being the circulation of misleading written material about existing contracts.
4. The use of any name or title of a policy which misrepresents its true nature, and the making of an estimate of future dividends with intent to deceive, but not the misrepresentation of the terms or benefits of a policy, which is dealt with as an unfair trade practice under subsection 1 of section 26.1-04-03 instead.

Why: NDCC 26.1-04-07: AN INSURANCE OR SURETY COMPANY, RECIPROCAL, BENEVOLENT SOCIETY, OR ANY OTHER INSURANCE ORGANIZATION OR ASSOCIATION, HOWEVER CONSTITUTED OR ENTITLED, DOING BUSINESS IN THIS STATE, AND AN OFFICER, DIRECTOR, AGENT, OR SOLICITOR OF THE COMPANY, SOCIETY, OR ORGANIZATION, AND AN INSURANCE PRODUCER, MAY NOT ISSUE, CIRCULATE, OR USE, OR CAUSE OR PERMIT TO BE ISSUED, CIRCULATED, OR USED, ANY WRITTEN OR ORAL STATEMENT OR CIRCULAR MISREPRESENTING THE TERMS OF ANY POLICY ISSUED OR TO BE ISSUED BY THE COMPANY, SOCIETY, OR ORGANIZATION, OR THE BENEFITS OR ADVANTAGES, PROMISED THEREBY, OR MAKE AN ESTIMATE, WITH INTENT TO DECEIVE, OF THE FUTURE DIVIDENDS OR SHARES OF SURPLUS PAYABLE UNDER THE POLICY, OR USE ANY NAME OR TITLE OF ANY POLICY OR CLASS OF POLICIES MISREPRESENTING THE TRUE NATURE THEREOF. WRITTEN OR ORAL, and the intent to deceive attaches to the dividend estimate limb alone.

What rulemaking power does NDCC 26.1-02.1-11 give the commissioner?

1. Power to adopt rules necessary for the administration of the chapter, subject to the attorney general's prior approval in each case case where the rule bears on the investigation or the prosecution of a fraudulent insurance act in this state.
2. Power to adopt rules defining additional fraudulent insurance acts beyond those the chapter itself lists in its definitions definitions, which is what the section is directed at rather than the administration of the chapter as enacted of this state, which is what the section is aimed at rather than at administration.
3. No rulemaking power at all; the chapter is administered on its own terms and by the fraud unit established under it, with no general power of rulemaking given to the commissioner by the section at all, whether general or particular, and none by implication either.
4. Power to adopt rules the commissioner determines necessary for the administration of the chapter, with no approval requirement attached to it by the section, and no power to enlarge the list of fraudulent insurance acts the chapter sets out. ✓

Why: NDCC 26.1-02.1-11: THE COMMISSIONER MAY ADOPT RULES DETERMINED NECESSARY BY THE COMMISSIONER FOR THE ADMINISTRATION OF THIS CHAPTER. It is a plain administration power, with no approval requirement and no power to enlarge the list of fraudulent insurance acts.

How does NDCC 26.1-36-04(2)(h)(4)(a) define 'earned income' for the overinsurance adjustment?

1. The greater of the insured's monthly earnings when disability commences and the insured's average monthly earnings for the two years immediately preceding, excluding investment income and any other income not derived from vocational activities. ✓
2. The lesser of the insured's monthly earnings when disability commences and the insured's average monthly earnings for the two years immediately preceding the commencement of the disability, excluding any investment income.
3. The insured's average monthly earnings for the two years immediately preceding the commencement of the disability, including investment income and any other income received then.
4. The insured's monthly earnings at the time the disability commences, whatever the insured's earnings from vocational activities may have been in the earlier years.

Why: NDCC 26.1-36-04(2)(h)(4)(a): 'earned income', except where otherwise specified, means the GREATER of the MONTHLY EARNINGS OF THE INSURED AT THE TIME DISABILITY COMMENCES and the INSURED'S AVERAGE MONTHLY EARNINGS FOR THE TWO YEARS IMMEDIATELY PRECEDING the commencement of the disability, and DOES NOT INCLUDE investment income or any other income not derived from the insured's vocational activities.

What must a group life certificate set out under NDCC 26.1-33-11(8)?

1. A statement of the premium payable by the insured person, a statement of the commission payable to the producer on that premium, and the rights and conditions that are set out in subsections 9 to 12 of the section.
2. A statement of the insurance protection to which the person is entitled, a statement as to any dependent's coverage included in it, and the rights and conditions set out in subsections 9 to 12. ✓
3. A copy of the group policy in full, together with a statement of the insurance protection to which the person is entitled and a statement as to any dependent's coverage included in that protection under the policy.
4. A statement of the insurance protection to which the person is entitled and of the policyholder's right to discontinue the policy on written notice to the insurer.

Why: NDCC 26.1-33-11(8): the insurer will issue to the policyholder for delivery to each insured a certificate setting forth a statement as to the insurance protection to which that person is entitled, a statement as to any dependent's coverage included in the certificate, and the rights and conditions set forth in subsections 9, 10, 11 and 12.

A two-tier annuity is one in which the contract has:

1. Two named annuitants, both of whom must survive for the income payments to continue
2. Two declared interest rates, one for new deposits and one for older money, that the owner switches between each year
3. A higher value if annuitized and a lower value if surrendered for cash ✓
4. A death benefit equal to twice the account value if the owner dies during the accumulation period

Why: A two-tier annuity credits a higher value when the owner annuitizes and a lower value on cash surrender, incentivizing annuitization.

What is a POLICY for the purposes of the North Dakota insurance fraud chapter?

1. An individual or group policy or certificate delivered or issued for delivery in North Dakota. A policy issued elsewhere is outside the chapter and governed by the fraud law of the state in which it was delivered, and the commissioner's fraud unit has no jurisdiction over an act committed in relation to it however closely the policy may touch a resident of this state.
2. Any contract of insurance delivered in this state to a resident of this state. The definition is confined to residents, so a policy covering property situated here which is owned by a nonresident falls outside the chapter however closely it may bear upon this state.
3. An individual or group policy, group certificate, contract or arrangement of insurance or reinsurance affecting the rights of a resident of this state or bearing a reasonable relation to this state, regardless of whether delivered or issued for delivery in this state. The last clause is what gives the chapter its reach over a policy written elsewhere which affects a North Dakota resident. ✓
4. A contract of insurance issued by an insurer holding a certificate of authority in this state. An arrangement made with a surplus lines insurer or with an unauthorized insurer is not a policy within the definition, though the producer who placed it may be dealt with under the producer licensing chapter for having placed it.

Why: NDCC 26.1-02.1-01(9). REGARDLESS OF WHETHER DELIVERED OR ISSUED FOR DELIVERY IN THIS STATE - the chapter follows the resident, not the place of delivery.

Pledging a life insurance policy to a bank as security for a loan is a:

1. Change of ownership
2. Viatical settlement
3. Collateral assignment ✓
4. Absolute assignment

Why: A collateral assignment transfers limited rights to a lender as security; an absolute assignment transfers all ownership rights.

Current assumption (interest-sensitive) whole life differs from traditional whole life because its premiums and cash values:

1. Adjust with current interest and mortality experience ✓
2. Are fixed by contract and can never be changed for the life of the policy
3. Decrease automatically each year until the policy becomes paid up
4. Are invested entirely in equity sub-accounts selected by the policyowner

Why: Current assumption whole life uses current interest and mortality assumptions, so premiums and cash values can be redetermined periodically.

What must the rules the North Dakota commissioner adopts under NDCC 26.1-02-27(2) look like?

1. They must be consistent with and may be more restrictive than the national association of insurance commissioners' model regulation, the model being a floor rather than a ceiling, and they may not in any circumstances require an authorization from the individual before nonpublic personal health information concerning that individual is disclosed.
2. They must be identical to the model regulation adopted by the national association of insurance commissioners, the commissioner having no discretion to depart from it in any respect, and they may not preserve the affiliate sharing exception, which the legislative assembly of this state has declined to adopt for insurance companies here.
3. They must be consistent with and not more restrictive than the national association of insurance commissioners' model regulation. The commissioner may not require an authorization from the individual before disclosure of that individual's nonpublic personal health and financial information, since such a requirement would be more restrictive than the model.
4. They must be consistent with and not more restrictive than the model regulation adopted by the national association of insurance commissioners. Notwithstanding that, and subject to the model's own exceptions including the affiliate sharing exception, the rules may still prohibit any disclosure unless an authorization is obtained from the individual. ✓

Why: NDCC 26.1-02-27(2): THE COMMISSIONER SHALL ADOPT RULES NECESSARY TO CARRY OUT THIS SECTION. (a) THE RULES MUST BE CONSISTENT WITH AND NOT MORE RESTRICTIVE THAN THE MODEL REGULATION ADOPTED BY THE NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS ENTITLED 'PRIVACY OF CONSUMER FINANCIAL AND HEALTH INFORMATION REGULATION'. (b) NOTWITHSTANDING SUBDIVISION a AND SUBJECT TO THE EXCEPTIONS, INCLUDING THE AFFILIATE SHARING EXCEPTION PROVIDED FOR IN THE MODEL REGULATION, THE RULES MAY PROHIBIT THE DISCLOSURE OF NONPUBLIC PERSONAL HEALTH AND FINANCIAL INFORMATION CONCERNING AN INDIVIDUAL UNLESS AN AUTHORIZATION IS OBTAINED FROM THE INDIVIDUAL WHOSE INFORMATION IS SOUGHT TO BE DISCLOSED. Subdivision (b) is the one express departure the statute allows from (a).

The Medicare Supplement (Medigap) open enrollment period:

1. Occurs every fall and lets enrollees switch among all Medigap plans
2. Is available only to people who also qualify for full Medicaid benefits
3. Is a one-time 30-day window that opens at the person's 70th birthday
4. Lasts six months, starting when the person is 65 and enrolled in Part B ✓

Why: During the 6-month Medigap open enrollment (beginning at 65 and enrolled in Part B), insurers must issue any plan regardless of health (guaranteed issue).

Is restitution discretionary when a person is convicted under NDCC 26.1-02.1-02.1?

1. No, but restitution is limited to the insurance proceeds actually paid out. It does not extend to the insurer's investigation costs or to the lost earnings of any other person, those being recoverable only in a civil action brought by the person who lost them.
2. Yes. The court may order restitution where the victim has not been made whole by the insurer or by a civil judgment, the criminal penalty being the primary sanction and restitution an additional remedy which the court will consider on the application of the person who suffered the loss.
3. No. NDCC 26.1-02.1-05(3) provides that in addition to any other punishment the person must be ordered to make restitution to the insurer or to any other person for any financial loss sustained as a result of the violation, and leaves to the court only the extent and method of the restitution rather than whether it is to be ordered at all. ✓
4. Yes, and it is available only against a practitioner. Restitution in this chapter is a professional sanction rather than a criminal one, and it is ordered by the licensing authority after the administrative hearing which subsection 2 requires that authority to hold.

Why: NDCC 26.1-02.1-05(3): MUST BE ORDERED TO MAKE RESTITUTION. FINANCIAL LOSS is itself defined in 26.1-02.1-01(4) - loss of earnings, out-of-pocket and other expenses, repair and replacement costs, and claims payments.

Under the fixed-amount settlement option, the insurer pays:

1. A guaranteed income for the entire remaining lifetime of the payee
2. A set dollar amount each period until the proceeds and interest run out ✓
3. Only the interest earned, leaving the principal untouched indefinitely
4. Equal payments over a fixed number of years stated in advance by the owner

Why: Fixed-amount pays a chosen dollar amount each period until the proceeds plus interest are exhausted; fixed-period instead fixes the duration.

Under NDCC 26.1-29-09.1(1), for whose benefit may an individual of competent legal capacity procure insurance on that individual's own life or body?

1. For the benefit of any person, no insurable interest being required of the beneficiary where the individual insured is the one who procures the contract. ✓
2. For the benefit of any person who has an insurable interest in that individual's life at the time the contract is made, and for the benefit of no other person at all.
3. For the benefit of a relative by blood or by law only, unless the commissioner approves the designation of some other person as the beneficiary of the contract.
4. For the benefit of the individual's own estate only, a third party being able to take the proceeds solely by a later assignment.

Why: NDCC 26.1-29-09.1(1): an individual of competent legal capacity may procure or effect an insurance contract upon that individual's own life or body for the benefit of ANY person. The insurable interest restriction in the same subsection applies to a contract procured by one person on the life or body of ANOTHER, not to one's own life.

To be 'fully insured' for Social Security, a worker generally needs 40 quarters of coverage, whereas 'currently insured' status:

1. Requires 60 quarters of coverage and pays the full range of benefits
2. Pays no survivor benefits of any kind
3. Is limited to workers who have reached age 65
4. Requires fewer quarters and provides limited survivor benefits ✓

Why: Currently insured status (about 6 of the last 13 quarters) provides limited survivor benefits; fully insured (40 quarters) provides the full range.

What must the North Dakota commissioner be satisfied of before granting a certificate of authority under NDCC 26.1-02-02?

1. That an insurance company is legally qualified to transact business in this state, on the strength of the company's own sworn application and the certificate of the insurance department of the company's state of domicile, no examination by this state being made before a certificate of authority is granted to a foreign insurance company.
2. Before granting it, that an insurance company has satisfied the minimum basic paid-in capital or surplus required by section 26.1-05-04, that being the only matter of which the commissioner must be satisfied before a certificate of authority is granted, the legal qualification of the company to transact business here being presumed from its incorporation.
3. That an insurance company is legally qualified to transact business in this state, and the commissioner must be satisfied by examination and evidence, before granting a certificate of authority to the company to issue policies or make insurance contracts. By examination and by evidence, both of them, and the test is the company's legal qualification. ✓
4. That an insurance company is legally qualified to transact business in this state and that it has filed its articles of incorporation with the secretary of state, the commissioner being required to accept the company's evidence of investment without examination once those articles have been filed and the initial fee has been paid.

Why: NDCC 26.1-02-02: THE COMMISSIONER MUST BE SATISFIED BY EXAMINATION AND EVIDENCE THAT AN INSURANCE COMPANY IS LEGALLY QUALIFIED TO TRANSACT BUSINESS IN THIS STATE BEFORE GRANTING A CERTIFICATE OF AUTHORITY TO THE COMPANY TO ISSUE POLICIES OR MAKE INSURANCE CONTRACTS. BY EXAMINATION AND EVIDENCE - both.

Which type of care is generally NOT covered by Medicare?

1. Inpatient hospital care following an approved admission
2. Physician services and outpatient diagnostic testing
3. Long-term custodial care ✓
4. Hospice care for a terminally ill beneficiary

Why: Medicare generally does not pay for long-term custodial care (help with daily living); it covers hospital, physician, and hospice care.

What character requirement does NDCC 26.1-26-15 lay on an applicant for a North Dakota license?

1. The applicant must be deemed by the commissioner to be competent, trustworthy, financially responsible, and of good personal and business reputation. If the commissioner does not deem an applicant to be competent, trustworthy, financially responsible, of good personal reputation, or of good business reputation, the commissioner may deny the application for licensure. ✓
2. The applicant must not have been convicted of a felony involving dishonesty or a breach of trust, that being the whole of the character requirement under this chapter, and the commissioner may not refuse a licence on any broader ground of competence, trustworthiness or reputation than the conviction which the statute names.
3. The applicant must be deemed competent, trustworthy and financially responsible. Reputation, personal or business, is not a matter the commissioner may weigh at the licensing stage, since a reputation is not a fact which the commissioner can find, and a licence may be denied only for want of competence or of financial responsibility.
4. The applicant must furnish three letters of reference from licensed producers of this state attesting to the applicant's competence, trustworthiness, financial responsibility and good personal and business reputation, and the commissioner must deny the application where fewer than three such letters accompany it.

Why: NDCC 26.1-26-15: AN APPLICANT FOR ANY LICENSE UNDER THIS CHAPTER MUST BE DEEMED BY THE COMMISSIONER TO BE COMPETENT, TRUSTWORTHY, FINANCIALLY RESPONSIBLE, AND OF GOOD PERSONAL AND BUSINESS REPUTATION. IF THE COMMISSIONER DOES NOT DEEM AN APPLICANT TO BE COMPETENT, TRUSTWORTHY, FINANCIALLY RESPONSIBLE, OF GOOD PERSONAL REPUTATION, OR OF GOOD BUSINESS REPUTATION, THE COMMISSIONER MAY DENY THE APPLICATION FOR LICENSURE.

A Medicare Special Enrollment Period (SEP) without penalty is available to a person who:

1. Simply forgot to sign up during their initial enrollment window
2. Has decided to drop Medicare entirely and rely on Medicaid
3. Delayed Part B because of active employer group coverage past age 65 ✓
4. Wishes to switch from one Medigap letter plan to a different one

Why: Those who kept employer group coverage (their own or a spouse's) past 65 may enroll later during a SEP without a late penalty.

To keep a producer license active, most states require the producer to:

1. Maintain membership in a fraternal benefit society or trade association
2. Re-take and pass the original state licensing examination every two years
3. Sell a minimum of $250,000 in new annual premium each calendar year
4. Complete continuing education and renew the license periodically ✓

Why: License renewal generally requires periodic continuing education; specific hours and cycles are set by each state.

If an annuitant dies during the accumulation phase of a deferred annuity, the contract typically pays the beneficiary:

1. Nothing, because annuities have no death benefit before payout
2. At least the premiums paid (or current value, if greater) ✓
3. Triple the account value as a guaranteed accidental death bonus
4. Only the surrender value after deducting all future charges

Why: Most deferred annuities guarantee the beneficiary the greater of premiums paid or current account value if the owner dies before annuitization.

What must the North Dakota commissioner do on finding that an applicant has not met the requirements for licensing or renewal, under NDCC 26.1-26-39?

1. Refuse to issue or renew the licence, and notify the applicant in writing within thirty days, stating the grounds. The fees accompanying the application must be refunded to the applicant, the licence for which they were paid not having been issued, less the department's reasonable costs of processing the application.
2. Give the applicant an opportunity to cure the deficiency within twenty days before refusing the licence, and refuse it only if the deficiency is not cured within that time, the refusal then being notified in writing with the grounds stated and the fees accompanying the application being retained by the department.
3. Refuse to issue the licence and notify the applicant in writing, stating the grounds. The section governs an initial licensing application only, not a renewal; a refusal to renew an existing licence is governed by section 26.1-26-42 and may be made only after notice to the licensee and a hearing before the commissioner of this state.
4. Refuse to issue or renew the license, and promptly notify the applicant in writing of the refusal, stating the grounds for the refusal. All fees accompanying the application for license are not refundable. The section covers licensing and renewal alike. ✓

Why: NDCC 26.1-26-39: IF THE COMMISSIONER FINDS THE APPLICANT HAS NOT MET THE REQUIREMENTS FOR LICENSING OR LICENSE RENEWAL, THE COMMISSIONER SHALL REFUSE TO ISSUE OR RENEW THE LICENSE. THE COMMISSIONER SHALL, IN WRITING, PROMPTLY NOTIFY THE APPLICANT OF THE REFUSAL, STATING THE GROUNDS FOR THE REFUSAL. ALL FEES ACCOMPANYING THE APPLICATION FOR LICENSE ARE NOT REFUNDABLE. The section covers LICENSING OR LICENSE RENEWAL, both.

A policy has a 60-day elimination period and a $4,500 monthly benefit. If the insured is disabled for 10 months, the approximate total paid is:

1. $36,000 ✓
2. $45,000
3. $27,000
4. $40,500

Why: The first ~2 months (60-day elimination) pay nothing; 8 months × $4,500 = $36,000.

A Medicare Supplement (Medigap) policy must provide a free-look period of at least:

1. 30 days ✓
2. 10 days
3. 24 hours
4. 6 months

Why: Medicare Supplement policies carry a 30-day free-look, longer than the typical 10-day individual health free-look.

An owner withdraws from a deferred annuity during its surrender-charge period. The result is:

1. Forfeiture of all interest credited to date
2. No charge at all, because annuity withdrawals are always penalty-free
3. A surrender charge on the amount above any free-withdrawal allowance ✓
4. Immediate annuitization of the entire contract into a life income option

Why: Withdrawals beyond the free-withdrawal amount during the surrender period incur a declining surrender charge.

Within what period may an applicant return a Medicare supplement policy under NDCC 26.1-36.1-06, and where must the notice appear?

1. Within thirty days of its delivery or within thirty days of its effective date, whichever occurs later, the notice being prominently printed on or attached to the first page.
2. Within ten days of its delivery, the notice being prominently printed on or attached to the first page of the policy or certificate as issued.
3. Within thirty days of its delivery, the notice being prominently printed on or attached to the first page of the policy and having the premium refunded if the applicant is not satisfied for any reason. ✓
4. Within twenty days of its delivery, the notice being set out in the outline of coverage delivered with the policy of the policy or certificate, and the premium refunded to the applicant.

Why: NDCC 26.1-36.1-06: Medicare supplement policies or certificates must have a notice PROMINENTLY PRINTED ON OR ATTACHED TO THE FIRST PAGE stating in substance that the applicant may return the policy or certificate WITHIN THIRTY DAYS OF ITS DELIVERY and have the premium refunded. Note the contrast: ordinary accident and health is TEN days under 26.1-36-02.1, and LONG-TERM CARE is thirty days from the LATER of delivery and the effective date under 26.1-45-09(1).

A $500,000 death benefit is paid to a surviving spouse. For federal estate tax, the amount qualifies for the:

1. Annual gift tax exclusion
2. Transfer-for-value exception
3. Three-year ownership rule
4. Unlimited marital deduction ✓

Why: Transfers to a surviving (citizen) spouse qualify for the unlimited marital deduction, passing estate-tax-free.

A person automatically receives Medicare Part A and Part B at 65 (no separate sign-up) if they:

1. Are already receiving Social Security benefits ✓
2. Have earned the 40 quarters of Medicare-covered work credit
3. Delay their Social Security claim past age 65
4. Are covered only by a state Medicaid program

Why: Those already drawing Social Security are enrolled automatically in Parts A and B at 65; others must actively enroll.

When must a North Dakota producer become an appointed agent of an insurer under NDCC 26.1-26-13.1(1)?

1. Every licensed insurance producer must hold at least one appointment at all times, a licence without an appointment being of no effect in this state, and a producer whose last appointment is terminated must obtain another within thirty days or the licence ceases to continue in force under section 26.1-26-31.
2. An insurance producer may not act as an agent of an insurer unless appointed by that insurer, and a producer who is not acting as an agent of an insurer must still become appointed by at least one insurer in order to sell, solicit or negotiate insurance for any person in this state under this chapter of the Century Code.
3. An insurance producer may not act as an agent of an insurer unless the producer becomes an appointed agent of that insurer. An insurance producer who is not acting as an agent of an insurer is not required to become appointed. The second sentence is the one usually forgotten. ✓
4. An insurance producer must become appointed before submitting the first insurance application to an insurer, and a producer who has executed an agency contract with an insurer is appointed by that contract, the filing of the notice of appointment being a matter of record only and not a condition of the producer's authority to act.

Why: NDCC 26.1-26-13.1(1): AN INSURANCE PRODUCER MAY NOT ACT AS AN AGENT OF AN INSURER UNLESS THE INSURANCE PRODUCER BECOMES AN APPOINTED AGENT OF THAT INSURER. AN INSURANCE PRODUCER WHO IS NOT ACTING AS AN AGENT OF AN INSURER IS NOT REQUIRED TO BECOME APPOINTED. The second sentence is the one that is usually forgotten: a producer acting for the INSURED under 26.1-26-07 needs no appointment.

When must a death claim be settled under NDCC 26.1-33-05(9), and what interest is payable?

1. On receipt of due proof of death, or not later than two months after receipt of the proof; with reasonable interest accrued from the date of death so long as proof is filed within one hundred eighty days of the death. ✓
2. On receipt of due proof of death, or not later than thirty days after receipt of the proof; with reasonable interest accrued from the date the proof of death was received by the insurer at its home office rather than from the date of death.
3. Not later than two months after the date of death whether or not proof has been received; with reasonable interest accrued from the date of death in every case.
4. On receipt of due proof of death, or not later than six months after receipt of the proof; with interest at the rate stated in the policy from the date proof is filed.

Why: NDCC 26.1-33-05(9): when a policy becomes a claim by the death of the insured, settlement must be made upon receipt of due proof of death, or not later than two months after receipt of the proof, and must include reasonable interest accrued from the date of death so long as a proof of death is filed within one hundred eighty days after the date of the death. NDCC 26.1-33-11(13) imposes the same rule on a group policy.

A waiver of premium provision in a long-term care policy:

1. Cancels the policy automatically after the first claim
2. Refunds every premium the insured has paid once they reach the age of eighty
3. Lowers the premium each year the insured stays healthy
4. Stops premium payments while the insured is receiving covered benefits ✓

Why: LTC waiver of premium suspends premium payments while the insured is confined or receiving qualifying benefits.

Which provisions of NDCC 26.1-36-05 do not apply to credit accident and health insurance policies?

1. Subsections 5, 7 and 12, together with subsection 2, the incontestable provision of the group policy, which the preamble excepts along with them.
2. Subsections 5, 7 and 12 - pre-existing conditions, the certificate, and payment of loss of life benefits. ✓
3. Subsections 1, 2 and 3 - the grace period, the incontestable provision and the entire contract provision of the group policy as it is issued.
4. None of them; a credit accident and health policy must contain every provision the section lists, whether in substance or in a more favourable form.

Why: NDCC 26.1-36-05, preamble: SUBSECTIONS 5, 7 AND 12 DO NOT APPLY TO CREDIT ACCIDENT AND HEALTH INSURANCE POLICIES - the pre-existing condition provision, the certificate provision and the loss of life benefit provision. The preamble also states that THE STANDARD PROVISIONS REQUIRED FOR INDIVIDUAL HEALTH POLICIES DO NOT APPLY to group health policies.

Which of the following arrangements does NDCC 26.1-38.1-01(3)(d) put outside the association's protection?

1. A portion of a policy or contract issued to an employer or association plan to the extent it is self-funded or uninsured, including a multiple employer welfare arrangement, a minimum premium plan, a stop-loss plan or an administrative services only contract. ✓
2. A portion of a policy issued to an employer plan where the employer has fewer than twenty-five employees, the chapter treating a small employer plan as self-funded for these purposes whatever its actual funding arrangement.
3. A group life or group health policy issued to an employer, the chapter protecting only individual nongroup policies and contracts written by the member insurer in this state.
4. Any policy issued to an employer plan whose principal place of business is outside this state, wherever the individual participants in that plan may happen to reside.

Why: NDCC 26.1-38.1-01(3)(d): the chapter does not cover a portion of a policy or contract issued to a plan or programme of an employer, association or other person TO THE EXTENT THAT THE PLAN IS SELF-FUNDED OR UNINSURED, including benefits payable under a multiple employer welfare arrangement, a minimum premium group plan, a stop-loss group plan or an administrative services only contract.

Which term life policy has a face amount that declines over the term and is commonly used to cover a mortgage balance?

1. Increasing term
2. Decreasing term ✓
3. Level term
4. Renewable term

Why: Decreasing term's face amount drops over time (premium usually level), matching a declining debt such as a mortgage.

The Medical Information Bureau (MIB) helps insurers:

1. Set the exact premium rate an applicant will be charged
2. Skip the application's medical questions, because MIB supplies full records
3. Detect omissions or fraud by sharing coded prior medical information ✓
4. Decline an applicant outright whenever an adverse MIB code is returned

Why: The MIB is a member-supported database of coded medical information; an insurer may use it as an alert but cannot decline coverage solely on an MIB report.

A market value adjusted (MVA) annuity differs from a standard fixed annuity because, on early surrender, its value:

1. Is exactly the premiums paid, free of any surrender charge
2. Is raised by a bonus rate if the contract is surrendered in its first year
3. Is moved automatically into a variable separate account before payout
4. Is adjusted up or down depending on how interest rates have moved ✓

Why: An MVA annuity applies a market value adjustment at surrender — increasing or decreasing the value based on interest-rate changes since issue.

What does NDAC 45-02-04-03 say about correspondence courses and about courses approved by other North Dakota bodies?

1. Correspondence courses earn credit on enrolment rather than on completion, since attendance cannot be measured, and courses approved by other state bodies earn no credit at all because the commissioner has no power to accept another agency's approval.
2. Correspondence courses are not approved for credit in this state, the rules requiring classroom attendance which can be verified, and reciprocity being confined to insurance courses approved by the insurance regulator of another state.
3. Credit for a correspondence course requires a proctored examination, and the commissioner must approve courses of the real estate commission and the state bar association whenever a licensee asks, the reciprocity provision being mandatory rather than discretionary.
4. Credit for a correspondence course must be based on successful completion as prescribed by the provider and approved by the commissioner; and the commissioner may approve credit for insurance-related courses approved by the North Dakota real estate commission and the North Dakota state bar association. ✓

Why: NDAC 45-02-04-03(4) and (5). The reciprocity is a MAY, and it names two bodies: the real estate commission and the state bar association.

Under a 'per capita' beneficiary designation, if one of several named beneficiaries dies before the insured, that share:

1. Passes down to that deceased beneficiary's own children
2. Is retained by the insurer as an unclaimed windfall
3. Is divided among the surviving named beneficiaries ✓
4. Reverts to the policyowner's estate for probate handling

Why: Per capita splits proceeds equally among the surviving named beneficiaries; per stirpes instead sends a deceased beneficiary's share to that person's descendants.

When must the outline of coverage for long-term care insurance be delivered under NDCC 26.1-45-09(2)(a)?

1. At the time the application is made, which is the same point at which the outline for a Medicare supplement policy must be delivered to the applicant under the code.
2. With the policy or certificate when it is delivered, so that the applicant may consider it during the thirty-day period allowed for returning the policy under the chapter.
3. Within thirty days after the application has been taken by the insurance producer or received by the insurer on a direct response sale, shorter prior stay requirements being permitted by the section as it is drawn.
4. At the time of initial solicitation, through means that prominently direct the recipient's attention to the document and its purpose; a producer must deliver it before presenting an application, and on a direct response sale it goes out with the application or enrolment form. ✓

Why: NDCC 26.1-45-09(2)(a): an outline of coverage must be DELIVERED TO A PROSPECTIVE APPLICANT AT THE TIME OF INITIAL SOLICITATION through means that PROMINENTLY DIRECT THE ATTENTION of the recipient to the document and its purpose. On a PRODUCER solicitation the producer must deliver it BEFORE THE PRESENTATION OF AN APPLICATION; on a DIRECT RESPONSE solicitation it must be presented IN CONJUNCTION WITH the application or enrolment form.

In a variable annuity, the contract value during the accumulation phase is held in:

1. Separate accounts whose value fluctuates with investment performance ✓
2. An escrow account managed by the state insurance department
3. The insurer's general account with a fully guaranteed minimum interest rate
4. A federally insured bank deposit account protected against any loss

Why: Variable annuity funds are in separate accounts (sub-accounts); the owner bears investment risk, unlike a fixed annuity's guaranteed general-account return.

A partial 1035 exchange allows a contract owner to:

1. Exchange an annuity tax-free into a new life insurance policy
2. Move part of one annuity's value tax-free into another annuity ✓
3. Withdraw all annuity gains with no tax and no penalty
4. Convert a traditional IRA into a Roth IRA without any tax

Why: The IRS permits tax-free partial exchanges of annuity value under Section 1035, subject to rules on subsequent withdrawals.

The insured has changed to an occupation the insurer classifies as more hazardous. What does the optional provision in NDCC 26.1-36-04(2)(a) allow the insurer to do?

1. Pay only such portion of the indemnities provided as the premium paid would have purchased at the rates and within the limits fixed by the insurer for the more hazardous occupation. ✓
2. Pay only such portion of the indemnities provided as the premium paid would have purchased at the rates fixed by the insurer for the more hazardous occupation, and in addition recover the difference in premium.
3. Deny the claim entirely, a change of occupation made without notice to the insurer being treated by the subdivision as a breach of a condition of the policy by the insured person.
4. Cancel the policy from the date of the change of occupation and return the unearned portion of the premium to the insured person.

Why: NDCC 26.1-36-04(2)(a): if the insured is injured or contracts sickness after changing to an occupation classified as MORE HAZARDOUS, or while doing anything for compensation pertaining to such an occupation, the insurer will PAY ONLY SUCH PORTION OF THE INDEMNITIES as the PREMIUM PAID WOULD HAVE PURCHASED AT THE RATES AND WITHIN THE LIMITS fixed by the insurer FOR THE MORE HAZARDOUS OCCUPATION.

From which policies may the sixty-day premium application sentence be omitted, under NDCC 26.1-36-04(1)(f)?

1. A policy the insured has the right to continue in force by timely payment of premiums until at least age sixty-five, or, where the policy was issued after age forty-four, for at least ten years from its date of issue to the insured.
2. A policy the insured has the right to continue in force by timely payment of premiums until at least age fifty, or, where issued after age forty-four, for at least five years from its date of issue. ✓
3. A policy that is guaranteed renewable for life, that being the only class of policy from which the sentence may be omitted under the subdivision.
4. Any policy the commissioner approves for issue without the sentence, on the insurer's written application showing that it is inappropriate to it.

Why: NDCC 26.1-36-04(1)(f): the statement may be omitted from any policy WHICH THE INSURED HAS THE RIGHT TO CONTINUE IN FORCE, subject to its terms, by the TIMELY PAYMENT OF PREMIUMS UNTIL AT LEAST AGE FIFTY or, in the case of a policy ISSUED AFTER AGE FORTY-FOUR, FOR AT LEAST FIVE YEARS from its date of issue.

NDCC 26.1-33-05(12) allows a policy to restrict liability by reason of travel, occupation, change of residence or suicide. For how long may those restrictions be effective?

1. Two years after issuance for suicide, and one year after issuance in all other instances, except in the case of armed forces or military service in time of war.
2. Two years after issuance for every such restriction, including suicide, except in the case of armed forces or military service in time of war.
3. One year after issuance for suicide, and two years after issuance in all other instances, except in the case of armed forces or military service in time of war. ✓
4. One year after issuance for every such restriction, including suicide, whether or not the insured is in armed forces or military service in time of war.

Why: NDCC 26.1-33-05(12): the policy must state whether any conditions or restrictions of liability by reason of travel, occupation, change of residence or suicide are provided; those restrictions, except in the case of armed forces or military service in time of war, may only be effective during the first year after issuance for suicide and for two years after issuance in all other instances.

A flexible-premium deferred annuity allows the owner to:

1. Make varying contributions over time before payouts begin ✓
2. Fund the contract with a single premium at issue and make no further deposits, as an SPDA requires
3. Direct every dollar into FDIC-insured bank certificates
4. Start income payments within 30 days of the first deposit

Why: An FPDA accepts ongoing, variable contributions during accumulation, with income deferred to a later date.

In a cross-purchase buy-sell agreement among four business owners, the number of life insurance policies required is:

1. 12 ✓
2. 4
3. 8
4. 16

Why: Cross-purchase requires each owner to insure every other owner: n(n−1) = 4 × 3 = 12 policies; an entity plan would need only 4.

'Churning' as an unfair practice refers to:

1. Mixing a client's premium funds with the producer's own money
2. Replacing a policy within the same insurer through misrepresentation ✓
3. Refusing to renew a policy after the insured files a large claim
4. Charging higher premiums to applicants with poor health histories

Why: Churning is using misrepresentation to replace a policy with another from the same insurer to generate new commissions; twisting involves different insurers.

What may a North Dakota producer do after receiving a termination notification, under NDCC 26.1-26-34(4)(b)?

1. Within thirty days, file written comments with the commissioner. The comments are held on a separate file and are disclosed only if the producer afterwards asks for them to be released, since a report about a producer is confidential and privileged under the confidentiality subsection of this same section of the chapter.
2. Within fifteen days, file written comments with the commissioner and send a copy to the reporting insurer. The comments are considered by the commissioner in deciding whether to open an investigation but do not become part of the commissioner's file and do not accompany any report distributed about the producer.
3. Within thirty days after receiving the original or additional notification, file written comments concerning the substance of the notification with the commissioner, and simultaneously send a copy by the same means to the reporting insurer. The comments become part of the commissioner's file and must accompany every copy of a report distributed or disclosed about the producer. ✓
4. Nothing after receiving it. The producer's remedy against an inaccurate termination notification is an action against the reporting insurer, which is protected from civil liability only where it acted without actual malice, and the commissioner has no power to receive or to file comments from the producer about it.

Why: NDCC 26.1-26-34(4)(b): WITHIN THIRTY DAYS AFTER THE INSURANCE PRODUCER HAS RECEIVED THE ORIGINAL OR ADDITIONAL NOTIFICATION, THE INSURANCE PRODUCER MAY FILE WRITTEN COMMENTS CONCERNING THE SUBSTANCE OF THE NOTIFICATION WITH THE COMMISSIONER. THE INSURANCE PRODUCER SHALL, BY THE SAME MEANS, SIMULTANEOUSLY SEND A COPY OF THE COMMENTS TO THE REPORTING INSURER, AND THE COMMENTS BECOME A PART OF THE COMMISSIONER'S FILE AND MUST ACCOMPANY EVERY COPY OF A REPORT DISTRIBUTED OR DISCLOSED FOR ANY REASON ABOUT THE INSURANCE PRODUCER AS PERMITTED UNDER SUBSECTION 6.