North Dakota Life & Health Insurance License, Practice Exams

An applicant pays the initial premium and receives a conditional receipt, then dies before the policy is issued — but would have been insurable. The insurer:

1. Pays the death claim ✓
2. Denies the claim because no policy issued
3. Pays half pending an investigation
4. Refunds the premium and pays nothing

Why: Under a conditional receipt, coverage is effective as of the receipt (or exam) date if the applicant was insurable as applied for, so the claim is paid.

An investigative consumer report differs from an ordinary consumer report in that it:

1. Contains only verified factual data drawn from public records
2. May be obtained without ever notifying the insurance applicant
3. Is based on interviews about the applicant's character and lifestyle ✓
4. Can legally be used only for property and casualty underwriting

Why: An investigative consumer report gathers information through interviews about reputation, character, and habits; the applicant must be notified it may be obtained.

A reciprocal insurer is:

1. An unincorporated group of members who insure each other through an attorney-in-fact ✓
2. A federal chartering agency that licenses insurers under the McCarran-Ferguson Act
3. A stock company whose shareholders elect the board and receive taxable dividends
4. A fraternal benefit society organized in lodges that sells only to its own members

Why: A reciprocal is an unincorporated association whose subscribers exchange insurance among themselves, managed by an attorney-in-fact.

A primary tax advantage of a deferred annuity during accumulation is that earnings:

1. Are taxed each year but at a reduced capital-gains rate
2. Are completely exempt from income tax even when withdrawn
3. Generate an annual deduction equal to the interest credited
4. Grow tax-deferred until they are withdrawn ✓

Why: Annuity earnings accumulate tax-deferred; taxes apply only when distributions are taken.

The 'accidental means' definition of injury (stricter than 'accidental bodily injury') requires that:

1. Only the resulting injury, not its cause, needs to be unexpected
2. Both the cause and the result of the injury were unexpected ✓
3. A physician certify the injury within twenty-four hours of the event
4. The injury occurred while the insured was actively at work

Why: 'Accidental means' requires the cause itself be accidental (stricter); 'accidental bodily injury'/results only requires the result be unintended.

Renewable term insurance lets the owner renew at the end of each term:

1. Only until the insured reaches age 40, when renewal rights end
2. Without evidence of insurability, at a premium that rises each term ✓
3. At the premium fixed at issue, which stays level for the insured's lifetime
4. Only after a fresh medical exam at each renewal date

Why: Renewability guarantees renewal without proving insurability, though the premium rises with age.

Premiums or benefits under a group policy vary by age and a covered person's age has been misstated. What does NDCC 26.1-36-05(6) require?

1. A provision specifying an equitable adjustment of premiums or of benefits, containing a clear statement of the method of adjustment and requiring the method to be filed.
2. A provision that all amounts payable under the policy will be such as the premium paid would have purchased at the correct age of the covered person, as for individual policies.
3. A provision that the insurer may terminate the coverage of the person whose age was misstated and refund the premium that has been paid for that person.
4. A provision specifying an equitable adjustment of premiums or of benefits, or both, containing a clear statement of the method of adjustment to be used. ✓

Why: NDCC 26.1-36-05(6): IF THE PREMIUMS OR BENEFITS VARY BY AGE, the policy must contain a provision specifying an EQUITABLE ADJUSTMENT OF PREMIUMS OR OF BENEFITS, OR BOTH, where a covered person's age has been misstated, and the provision MUST CONTAIN A CLEAR STATEMENT OF THE METHOD OF ADJUSTMENT to be used.

How may a North Dakota continuing education course be advertised?

1. Freely, provided the advertisement does not state the number of credit hours before approval has been granted, a provider being entitled to promote a course while the application is under consideration so long as no claim about credit is made in the material.
2. Only in publications approved by the department, and the advertisement must include the course certification number and the name of the approved coordinator so that a licensee may check the offering against the department's records before enrolling in it.
3. Not at all without written approval. Advertising of an approved offering must carry the prescribed statement that the commissioner has approved the course for the stated hours, and must be truthful, clear and not misleading to the students who read it. ✓
4. In any manner the provider chooses. The rules govern the content and conduct of courses rather than their promotion, and a misleading advertisement is dealt with under the unfair trade practices chapter rather than under these rules.

Why: NDAC 45-02-04-03(14), (14)(a) and (b). Written approval first; the prescribed statement; and truthful, clear advertising.

A 'usual, customary, and reasonable' (UCR) limit means a plan will pay a provider's charge only up to:

1. A reasonable amount for that service in the geographic area ✓
2. The full amount the provider chooses to bill, whatever that charge happens to be
3. Twice the Medicare-approved amount for the same procedure code, nationwide
4. The portion of the annual deductible the insured has already satisfied

Why: UCR caps payment at the prevailing reasonable charge for the service in the area; amounts above may be balance-billed.

After how long must a policy loan be available under NDCC 26.1-33-05(7), and against what security?

1. After the policy has been in force three years, on proper assignment of the policy and on the sole security of the policy. ✓
2. After the policy has been in force one year, on proper assignment of the policy and on the sole security of the policy.
3. After the policy has been in force five years, on proper assignment of the policy and on the personal covenant of the owner.
4. At any time after the first premium is paid, on proper assignment of the policy and on the sole security of the policy.

Why: NDCC 26.1-33-05(7): after the policy has been in force three years, the company at any time while the policy is in force will advance, on proper assignment of the policy and on the sole security thereof, at a specified rate of interest, a sum equal to or less than the reserve at the end of the current policy year on the policy and any dividend additions, less a sum not more than two and one-half per cent of the amount insured. The provision is not required in a policy of term insurance.

Which permanent policy features flexible premiums and an adjustable death benefit?

1. Level term
2. Universal life ✓
3. Whole life
4. Single-premium whole life

Why: Universal life allows the owner to vary premium payments and adjust the death benefit (subject to underwriting); cash value earns a declared interest rate.

Medicare Part A 'lifetime reserve days' are:

1. Unlimited days of fully covered skilled nursing facility care
2. 60 extra hospital days usable once over the beneficiary's lifetime ✓
3. Days the beneficiary may transfer to a spouse or dependent
4. Renewed automatically at the start of every new benefit period

Why: After 90 days in a benefit period, a beneficiary may draw on 60 lifetime reserve days (with higher coinsurance); once used, they are not replaced.

In a typical dental plan, routine cleanings and exams fall under which category?

1. Orthodontic treatment subject to a separate lifetime maximum
2. Basic services such as fillings and routine tooth extractions
3. Major restorative services such as crowns, bridges, and full dentures
4. Preventive care ✓

Why: Preventive care (cleanings, exams, x-rays) is usually covered at the highest level; basic and major services and orthodontia follow with greater cost sharing.

With respect to any one life, whatever the number of policies, what are the association's limits on LIFE insurance benefits under NDCC 26.1-38.1-01(4)(b)(1)(a)?

1. Three hundred thousand dollars in death benefits and three hundred thousand dollars in net cash surrender and net cash withdrawal values for life insurance.
2. One hundred thousand dollars in death benefits and one hundred thousand dollars in net cash surrender and net cash withdrawal values for life insurance.
3. Three hundred thousand dollars in life insurance death benefits, but not more than one hundred thousand dollars in net cash surrender and net cash withdrawal values. ✓
4. Five hundred thousand dollars in death benefits, with no separate limit at all on net cash surrender and net cash withdrawal values.

Why: NDCC 26.1-38.1-01(4)(b)(1)(a): with respect to one life, regardless of the number of policies or contracts, THREE HUNDRED THOUSAND DOLLARS in life insurance death benefits, but NOT MORE THAN ONE HUNDRED THOUSAND DOLLARS in net cash surrender and net cash withdrawal values for life insurance. The two figures are different and both are per life.

Money left in a typical health flexible spending account (FSA) at year-end is:

1. Always rolled over indefinitely with no limit
2. Transferred automatically into the employee's HSA
3. Generally forfeited under the use-it-or-lose-it rule ✓
4. Paid out to the employee as taxable cash

Why: FSAs are generally use-it-or-lose-it, though plans may allow a limited carryover or grace period.

An individual health policy is 'guaranteed renewable.' This means the insurer:

1. May cancel mid-term on 30 days' written notice to the insured
2. Must hold the premium at the issue rate for the life of the contract
3. May decline renewal at any policy anniversary
4. Must renew it but may raise premiums by class ✓

Why: Guaranteed renewable guarantees renewal to a stated age while permitting class-wide premium increases (not individual ones).

When are assessments due under NDCC 26.1-38.1-06(1), and what happens if one is not paid on time?

1. Not less than sixty days after prior written notice to the member insurers, an unpaid assessment accruing interest at twelve per cent per annum from the date of the notice.
2. Not less than thirty days after prior written notice to the member insurers, an unpaid assessment accruing interest at eighteen per cent per annum on and after the due date. ✓
3. Not less than thirty days after prior written notice, an unpaid assessment being recoverable only by suit, the chapter providing for no interest on it at all.
4. Immediately on the board's resolution authorising the assessment, interest running at eighteen per cent per annum from the date of that resolution.

Why: NDCC 26.1-38.1-06(1): assessments must be due NOT LESS THAN THIRTY DAYS after prior written notice to the member insurers, and must accrue interest at EIGHTEEN PER CENT PER ANNUM on and after the due date. Note the taxonomy in subsection 2: class A assessments meet administrative and legal costs and need not relate to a particular insurer; class B assessments carry out the association's duties as to an impaired or insolvent insurer.

Nonoccupational disability coverage pays benefits for disabilities that occur:

1. Only from sickness, since accidental injuries fall to the workers' compensation system
2. At any time, on or off the job, exactly as 24-hour occupational coverage does
3. Off the job (work-related injuries are covered by workers' compensation) ✓
4. Only while the insured is performing assigned duties during scheduled work hours

Why: Nonoccupational coverage excludes on-the-job injuries (covered by workers' compensation); occupational/24-hour coverage applies both on and off the job.

A specific premium is required to cover a child. What does NDCC 26.1-36-07(3) permit the policy to require, and by when?

1. Notification of the birth or placement and payment of the required premium within sixty days after the date of birth or of physical placement of the child, in order for the coverage of the child to continue beyond that sixty-day period under the policy.
2. Notification of the birth or placement within thirty-one days after the date of birth or of physical placement, the premium for the child being payable at the next premium due date under the policy or contract after that notification has been given.
3. Notification of the birth or placement before the child is born or placed with the family, the insurer being entitled to decline the coverage of that child otherwise.
4. Notification of the birth or placement and payment of the required premium within thirty-one days after the date of birth or of physical placement, in order for the coverage to continue beyond that thirty-one-day period. ✓

Why: NDCC 26.1-36-07(3): if payment of a specific premium or subscription fee is required to provide coverage for a child, the policy may require that NOTIFICATION of the birth or of the placement AND PAYMENT of the required premium or fees be FURNISHED WITHIN THIRTY-ONE DAYS after the date of birth or the date of physical placement, IN ORDER TO HAVE THE COVERAGE CONTINUE BEYOND THE THIRTY-ONE-DAY PERIOD.

Within what period may an applicant return a long-term care policy or certificate under NDCC 26.1-45-09(1)?

1. Within thirty days of the date of its delivery, or within thirty days of its effective date, whichever occurs earlier, with the notice of that right printed on the first page of the policy or certificate.
2. Within thirty days of the date of its delivery in every case, the effective date of the policy or certificate having no bearing at all on the running of the period.
3. Within thirty days of the date of its delivery, or within thirty days of its effective date, whichever occurs later, with the notice prominently printed on or attached to the first page. ✓
4. Within ten days of the date of its delivery, with the notice of that right prominently printed on the first page of the policy or certificate.

Why: NDCC 26.1-45-09(1): long-term care applicants have the right to return the policy or certificate WITHIN THIRTY DAYS OF THE DATE OF ITS DELIVERY OR WITHIN THIRTY DAYS OF ITS EFFECTIVE DATE, WHICHEVER OCCURS LATER, and to have the premium refunded. The notice must be PROMINENTLY PRINTED ON THE FIRST PAGE OR ATTACHED to it.

A 'life with 10-year period certain' annuity:

1. Pays for life but guarantees at least ten years of payments ✓
2. Pays income for only ten years and then stops entirely
3. Pays nothing at all if the annuitant dies during payout
4. Is functionally identical to a straight life-only annuity

Why: It pays for the annuitant's life and guarantees a minimum number of years of payments to a beneficiary.

How is the earned premium computed on cancellation under NDCC 26.1-36-04(2)(e)?

1. Pro rata whichever party cancels the policy, the short-rate table being used only where the insurer cancels the policy for the insured's nonpayment of premium.
2. By the short-rate table in every case, whichever of the two parties to the policy gives the notice of cancellation to the other of them.
3. Pro rata where the insurer cancels, and by the short-rate table last filed in the state where the insured resided when the policy was issued where the insured cancels. ✓
4. Pro rata where the insured cancels the policy, and by the short-rate table where the insurer cancels it.

Why: NDCC 26.1-36-04(2)(e): on cancellation the insurer will PROMPTLY RETURN the unearned portion of any premium paid. IF THE INSURED CANCELS, the earned premium is computed by the SHORT-RATE TABLE last filed in the state where the insured resided when the policy was issued. IF THE INSURER CANCELS, the earned premium is computed PRO RATA.

Under a term insurance 're-entry' option, the insured can obtain lower 'select' renewal rates by:

1. Automatically renewing without any proof of good health
2. Converting the policy to whole life at the original age
3. Paying a single lump-sum premium for the entire new term
4. Providing new evidence of insurability at the end of the term ✓

Why: Re-entry term lets an insured requalify with fresh evidence of insurability for lower select rates; without requalifying, higher rates apply.

Within what time must written notice of claim be given under NDCC 26.1-36-04(1)(g), and what is the effect of giving it late?

1. Within twenty days after the occurrence or commencement of any covered loss; late notice invalidates the claim unless the insurer waives the requirement in writing, whatever the reason for the delay.
2. Within thirty days after the occurrence or commencement of any covered loss; late notice reduces the claim in proportion to the prejudice the insurer is able to show that it has suffered.
3. Within twenty days after the occurrence or commencement of any covered loss; late notice is excused if timely notice was not reasonably possible and it was given as soon as reasonably possible. ✓
4. Within ninety days after the occurrence of the loss, the subdivision fixing the same period for written notice of claim as it does for furnishing written proof of loss to the insurer.

Why: NDCC 26.1-36-04(1)(g): written notice of claim must be given to the insurer WITHIN TWENTY DAYS after the occurrence or commencement of any loss covered by the policy. FAILURE to give notice in that time DOES NOT INVALIDATE OR REDUCE any claim IF it is shown that it was NOT REASONABLY POSSIBLE to give it and that notice WAS GIVEN AS SOON AS WAS REASONABLY POSSIBLE.

A comprehensive major medical plan is distinguished by the fact that it:

1. Responds only to catastrophic bills above a very high corridor deductible set by the insurer
2. Pays only after all other coverage is exhausted
3. Pays a fixed daily indemnity regardless of actual charges
4. Combines basic first-dollar and major medical coverage under one deductible ✓

Why: Comprehensive major medical integrates basic and major medical benefits into a single plan with one deductible and coinsurance, simplifying the structure.

If a policyowner stops paying premiums and makes no nonforfeiture election, most policies automatically apply:

1. Reduced paid-up insurance
2. The cash surrender option
3. An automatic dividend payout
4. Extended term insurance ✓

Why: Extended term is the usual automatic (default) nonforfeiture option, keeping the full face amount in force as term for a limited period.

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.

Which managed-care plan typically requires members to select a primary care physician and obtain referrals to see specialists?

1. EPO
2. HMO ✓
3. Indemnity plan
4. PPO

Why: An HMO uses a primary care physician 'gatekeeper' and referrals, with care generally limited to the network; a PPO allows out-of-network care at higher cost without referrals.

A variable life insurance policy typically guarantees:

1. A fixed cash value that can never decline in any market
2. That the policy can never become a modified endowment contract
3. A level premium that is invested entirely in government bonds
4. A minimum death benefit regardless of separate-account performance ✓

Why: Variable life guarantees a minimum death benefit, but the cash value (and any benefit above the minimum) varies with the separate accounts the owner directs.

For how long may a pre-existing condition exclusion operate under NDCC 26.1-36-04(1)(d)?

1. It may not apply to loss incurred or disability commencing after the end of the one-year period beginning on the effective date of the person's coverage under the policy.
2. It may apply for as long as the policy remains in force, the subdivision limiting only the look-back period and not the period during which the exclusion may be relied on.
3. It may not apply once the policy has been in force for two years, unless the condition was named or specifically described in an endorsement to it.
4. It may not apply to loss incurred or disability commencing after the end of the two-year period beginning on the effective date of the person's coverage. ✓

Why: NDCC 26.1-36-04(1)(d): the exclusion or limitation MAY NOT APPLY TO LOSS INCURRED OR DISABILITY COMMENCING AFTER THE END OF THE TWO-YEAR PERIOD commencing on the effective date of the person's coverage. Two years back for the advice or treatment, and two years forward for the operation of the exclusion.

A Medicare Part D late enrollment penalty generally results in:

1. A complete and permanent denial of any future drug coverage
2. A one-time flat fee paid at the first prescription fill
3. A reduction in the beneficiary's Social Security retirement check
4. A permanently higher monthly premium for prescription drug coverage ✓

Why: Going without creditable drug coverage after eligibility generally adds a permanent surcharge to the Part D premium.

What insurable interest does NDCC 26.1-29-09.1(3)(a) recognise in the case of an individual closely related by blood or by law?

1. A lawful and substantial economic interest in having that individual's life, health or bodily safety continue, proved to the insurer's satisfaction.
2. An interest presumed in law, which the insurer may rebut with evidence that the relationship had broken down before the contract was made.
3. No interest at all, unless the related individual also depends on the individual insured for support or maintenance in some degree.
4. A substantial interest engendered by love and affection, no economic interest in the life's continuation being required. ✓

Why: NDCC 26.1-29-09.1(3)(a): in the case of an individual related closely by blood or by law, insurable interest is a SUBSTANTIAL INTEREST ENGENDERED BY LOVE AND AFFECTION. No economic interest need be shown. The economic test in subdivision b applies to everyone else.

During the contestable period, the insurer discovers a material misrepresentation on the application. The insurer may:

1. Rescind the policy and deny the claim ✓
2. Reduce benefits but must keep the policy
3. Only raise the premium going forward
4. Do nothing, since the policy is already issued

Why: A material misrepresentation discovered within the contestable period lets the insurer rescind the contract.

What grace period must an individual life policy give under NDCC 26.1-33-05(2), and what may the provision add about a death during it?

1. Thirty-one days for every premium including the first, which may not carry an interest charge; the provision may stipulate that coverage lapses at once if the insured dies during the grace period.
2. Sixty days for every premium after the first, which may carry an interest charge; the provision may stipulate that the overdue premium is waived entirely and the full face amount paid if the insured dies during the grace period.
3. Thirty-one days for every premium after the first, which may carry an interest charge; the provision may stipulate that an overdue premium is deducted from any settlement if the insured dies during the grace period. ✓
4. Thirty days for every premium after the first, which may carry an interest charge; the provision must stipulate that the insurer will refund the overdue premium to the beneficiary on settlement.

Why: NDCC 26.1-33-05(2): the policyholder is entitled to a thirty-one-day grace period for the payment of every premium after the first, which may be subject to an interest charge, during which the insurance continues in force; the provision may contain a stipulation that if the insured dies during the grace period the overdue premium will be deducted in any settlement under the policy.

Nonforfeiture provisions in an annuity guarantee the owner:

1. A doubling of the account value after ten years
2. Free withdrawals of the entire balance in the first year
3. A minimum surrender value if the contract is cashed in ✓
4. The full original premium back with no charges at any time

Why: Annuity nonforfeiture laws guarantee a minimum cash surrender value, protecting the owner's accumulated funds.

A flexible spending account (FSA) is characterized by which feature?

1. Generally 'use it or lose it' — unused funds may be forfeited each year ✓
2. Full portability, moving with the employee from job to job for life
3. Eligibility only for those enrolled in a high-deductible health plan
4. Tax-free growth of invested balances over the employee's career

Why: An FSA is employer-established, funded with pre-tax salary deferrals, and is generally use-it-or-lose-it within the plan year (limited carryover/grace).

A mortgage protection (mortgage redemption) policy is usually written as decreasing term, and its death benefit is paid to:

1. The insured's family or estate ✓
2. The producer who arranged the original mortgage loan
3. The lending bank as the named first-position beneficiary on the policy contract
4. The state insurance guaranty fund

Why: Mortgage protection is owned by the borrower and pays the family/estate (who then choose to pay off the loan); credit life, by contrast, pays the creditor directly.

Under the HIPAA Privacy Rule, a health plan that wants to use a member's protected health information to market a third party's product generally needs:

1. The member's written authorization ✓
2. Only a notice in its privacy policy
3. Approval from the plan's board of directors
4. The member's verbal consent on a call

Why: Marketing is one of the uses for which HIPAA requires a signed authorization, not merely a disclosure in the plan's notice of privacy practices. Verbal consent does not satisfy the rule.

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.

The elimination period in a disability income policy functions as:

1. A flat dollar deductible the insurer subtracts from every monthly benefit check before paying
2. A time deductible the insured must wait through before benefits begin ✓
3. The outside limit, stated in years, on how long monthly benefits will ever be paid
4. A 31-day window for paying an overdue premium

Why: The elimination (waiting) period is a 'time deductible'; a longer elimination period lowers the premium because the insurer pays for fewer short claims.

Under federal law, an insurer that sells any Medicare Supplement policy must also make which plan available?

1. Plan A, the basic core-benefit plan ✓
2. Plan F, the most comprehensive plan
3. Plan G, covering all but the Part B deductible
4. Plan N, with copayments for some visits

Why: Every Medigap issuer must offer Plan A, which contains the core benefits found in all standardized plans. An issuer that sells richer plans must also offer certain others (Plan D or G for those newly eligible since 2020), but Plan A is the one plan every issuer must make available.

Benefits have been paid under a personal insurance contract made in violation of NDCC 26.1-29-09.1. What does subsection 2 of that section provide?

1. The insurer may maintain an action to recover the benefits from the person who received them, and the individual insured has no independent right of recovery against that person.
2. The contract is void from the beginning and the insurer must refund all premiums paid, the benefits already paid out being irrecoverable by anyone.
3. The individual insured, or that individual's executor or administrator, may maintain an action to recover the benefits from the person who received them. ✓
4. The commissioner may order restitution of the benefits after a hearing, and no private right of action arises under the section at all.

Why: NDCC 26.1-29-09.1(2): where the beneficiary, assignee or other payee under a contract made in violation of the section receives benefits on the death, disablement or injury of the individual insured, the INDIVIDUAL INSURED or that individual's executor or administrator may maintain an action to recover the benefits from the person receiving them.

Does an administrative fine under NDCC ch. 26.1-02.1 protect a person from criminal prosecution?

1. No, but the administrative fine must be credited against any criminal penalty imposed on prosecution for the same conduct, so that a person who has paid an administrative penalty of ten thousand dollars cannot be fined that sum again in the criminal proceeding which follows it.
2. Yes. The administrative penalty is imposed only with the consent of the county state's attorney, and that consent operates as an election by the prosecuting authority to deal with the matter administratively rather than criminally, which bars a later prosecution for the same fraudulent insurance act.
3. Yes, where the fine was imposed after a hearing rather than by consent order. A determination made after notice and hearing is an adjudication, and the constitutional protection against being twice put in jeopardy prevents the state from prosecuting the same conduct afterwards.
4. No. NDCC 26.1-02.1-05.3 provides that the imposition of a fine or other sanction under the chapter does not preclude prosecution for a violation of a criminal law of the state, so a person who has paid an administrative penalty may still be charged with a crime for the same conduct. ✓

Why: NDCC 26.1-02.1-05.3. The consent of the county state's attorney is a condition of the administrative penalty; it is not an election which bars a prosecution.

Under a group AD&D plan, the 'capital sum' is the amount paid for:

1. Voluntary surrender of the certificate for its accumulated cash value
2. A covered dismemberment, such as loss of a hand, foot, or sight ✓
3. Any illness-related hospital stay that lasts longer than one week
4. The accidental death of the insured employee while actively at work

Why: The capital sum is a stated percentage of the principal sum, paid for a covered dismemberment (e.g., loss of a limb or sight); the principal sum is paid for accidental death.

The grace period in a typical life insurance policy is:

1. Only available once during the entire life of the policy
2. Exactly 24 hours from the date the premium first becomes due
3. About 31 days, during which an overdue premium may still be paid ✓
4. A full 12 months following any missed premium payment

Why: The grace period (commonly 31 days) keeps coverage in force after a missed premium; a death during it pays the benefit minus the premium owed.

Under a group insurance plan, the certificate of insurance is:

1. A document that must be filed with the state before any claim
2. A separate policy each member negotiates and owns independently
3. The full master contract issued to the employer or group sponsor
4. Evidence of coverage given to each individual covered member ✓

Why: The master contract is issued to the group sponsor; each covered member receives a certificate as evidence of their coverage.

What may the North Dakota commissioner recover as department costs under NDCC 26.1-02.1-05.1(3)?

1. The department's expenses, but only from a person who has violated an order of the commissioner. A person who simply committed a fraudulent insurance act and paid the administrative penalty assessed for it may not be assessed for the department's costs as well.
2. The expenses incurred by the department, at the commissioner's discretion, from a person assessed an administrative penalty or one who violated an order made about such a penalty; but the assessment for costs may not exceed fifteen percent of each penalty assessed under the section. ✓
3. The department's actual expenses of the investigation, including the salaries of the fraud unit investigators who worked upon it, without any ceiling, the section leaving the amount to the commissioner's discretion and requiring only that the expenses claimed have in fact been incurred in the matter.
4. Nothing. The expenses of the department are met from the insurance regulatory trust fund, and the administrative penalty is the only money the commissioner may take from a person who has committed a fraudulent insurance act under this chapter of the Century Code.

Why: NDCC 26.1-02.1-05.1(3): the assessment for costs MAY NOT EXCEED FIFTEEN PERCENT OF EACH PENALTY ASSESSED under the section.

The federal Genetic Information Nondiscrimination Act (GINA) generally restricts the use of genetic information in:

1. Health insurance and employment decisions ✓
2. Setting state automobile insurance premium rates
3. Property and casualty insurance underwriting only
4. Determining eligibility for federal student loans

Why: GINA limits how genetic information may be used in health coverage and employment, prohibiting discrimination based on genetic test results.

In a disability income policy, the 'benefit period' is:

1. The waiting time after a disability before any benefit is payable
2. The maximum length of time benefits will be paid for a disability ✓
3. The number of days the insured has to file written proof of loss
4. The period after issue during which sickness claims are excluded

Why: The benefit period is the maximum duration benefits are paid (e.g., 2 years, 5 years, to age 65); the elimination period is the waiting time before they start.

What does the optional provision in NDCC 26.1-36-04(2)(d) allow the insurer to do when it pays a claim?

1. Deduct from the payment any premium then due and unpaid or covered by any note or written order given for it. ✓
2. Deduct from the payment any premium then due and unpaid, but not a premium covered by a note or written order given for it.
3. Deduct from the payment the whole of the premium for the current policy term, whether or not it is then due and payable.
4. Deduct nothing at all; an unpaid premium must be recovered separately from the insured.

Why: NDCC 26.1-36-04(2)(d): upon the payment of a claim under the policy, ANY PREMIUM THEN DUE AND UNPAID OR COVERED BY ANY NOTE OR WRITTEN ORDER MAY BE DEDUCTED from the payment.

The Health Insurance Portability and Accountability Act (HIPAA) primarily:

1. Limits pre-existing condition exclusions and protects coverage portability ✓
2. Sets the exact premium rates insurers may charge in each state
3. Eliminates the need for any individual health underwriting nationwide
4. Requires every employer to fully pay all employee health premiums

Why: HIPAA limited pre-existing condition exclusions, gave credit for prior creditable coverage, and protects the privacy of health information.

What does INSURANCE mean in NDCC ch. 26.1-26, and what power does 26.1-26-11.1 give the commissioner?

1. Insurance means any contract whereby one undertakes to indemnify another against loss, that being the general definition in NDCC ch. 26.1-01 and carried into this chapter. The commissioner may adopt rules for licensing procedures but may not make requirements specific to a particular product type within a line of insurance.
2. Insurance means any of the lines of authority in section 26.1-26-11, and the commissioner may adopt rules to implement licensing procedures specific to each line, but may not create any requirement beyond those the chapter itself lays down, rulemaking under this section being confined to matters of procedure only.
3. Insurance means any of the lines of authority in section 26.1-26-11 together with surplus lines insurance and insurance consulting, and the commissioner may adopt rules to implement licensing procedures and requirements specific to each of them and to each product type within each of them in this state.
4. Insurance means any of the lines of authority in section 26.1-26-11. And the commissioner may adopt rules to implement licensing procedures and requirements specific to each line of insurance and each product type within each line of insurance. ✓

Why: NDCC 26.1-26-02(4): INSURANCE MEANS ANY OF THE LINES OF AUTHORITY IN SECTION 26.1-26-11. NDCC 26.1-26-11.1: THE COMMISSIONER MAY ADOPT RULES TO IMPLEMENT LICENSING PROCEDURES AND REQUIREMENTS SPECIFIC TO EACH LINE OF INSURANCE AND EACH PRODUCT TYPE WITHIN EACH LINE OF INSURANCE. PROCEDURES AND REQUIREMENTS, and down to the PRODUCT TYPE.

Annuity suitability rules require a producer recommending an annuity to:

1. Recommend whichever annuity product happens to pay the producer the highest available commission
2. Have reasonable grounds that it fits the consumer's financial needs and situation ✓
3. Sell only immediate annuities to consumers over the age of sixty
4. Guarantee the annuity will outperform every available alternative

Why: Suitability standards require the recommendation be appropriate based on the consumer's financial situation, needs, and objectives.

Under a universal life policy's Option A (Option 1), the death benefit is:

1. Reduced each year by the amount of interest the policy earns
2. Equal to the face amount plus the entire accumulated cash value at all times
3. Level, while the cash value grows inside it ✓
4. Tied directly to the performance of a chosen stock-market index

Why: Option A keeps a level death benefit (cash value accumulates within it); Option B pays the face amount plus the cash value, so it increases.

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.

A North Dakota cease and desist order has issued. What must an aggrieved party do, and how soon must the hearing be held, under NDCC 26.1-01-03.1?

1. The party must make written application for a hearing within ten days of the date of the order, stating the grounds for relief, and a hearing must be held not later than thirty days after the application is received unless the commissioner in the commissioner's sole discretion grants a delay on the application of any person named in the order.
2. The party must make written application for a hearing within thirty days of the date of the order, briefly stating the respects in which the applicant is aggrieved and the grounds for relief to be relied upon. A hearing must be held not later than ten days after an application is received unless a delay is requested by all persons named in the order. ✓
3. The party must make written application for a hearing within thirty days of the date of the order, and a hearing must then be scheduled by the commissioner at a time convenient to the parties, this section setting no outer limit on the period between the application and the hearing on a cease and desist order issued under it.
4. The party must file a petition in the district court of Burleigh County within thirty days of the date of the order, the commissioner having no power to hear an appeal from the commissioner's own order, and the court must hear the petition not later than ten days after it is received unless all persons named in the order request a delay.

Why: NDCC 26.1-01-03.1: ANY PARTY AGGRIEVED BY THE COMMISSIONER'S ORDER MAY MAKE WRITTEN APPLICATION FOR A HEARING ON THE ORDER WITHIN THIRTY DAYS OF THE DATE OF THE ORDER. THE APPLICATION FOR A HEARING MUST BRIEFLY STATE THE RESPECTS IN WHICH THE APPLICANT IS AGGRIEVED BY THE ORDER AND THE GROUNDS FOR RELIEF TO BE RELIED UPON AT THE HEARING. A HEARING MUST BE HELD NOT LATER THAN TEN DAYS AFTER AN APPLICATION FOR HEARING IS RECEIVED UNLESS A DELAY IS REQUESTED BY ALL PERSONS NAMED IN THE ORDER. THIRTY to ask, TEN to be heard, and the delay needs ALL of them.

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.

Key person disability insurance provides benefits to:

1. The business, to offset the loss when a key employee is disabled ✓
2. Every employee of the firm equally, regardless of their role
3. A lender, to pay off the company's outstanding commercial loans
4. The disabled employee's family, to replace their lost personal income

Why: Key person disability is owned by and paid to the business to cover losses and the cost of replacing an essential employee who becomes disabled.

What must an annuity contract subject to NDCC 26.1-34-01 provide on cessation of payment of considerations?

1. That the company will grant a paid-up annuity benefit on the plan stipulated in the contract and, in addition, refund the considerations paid in the first contract year with interest.
2. That the company will return the gross considerations paid, less any withdrawals and any indebtedness, the chapter setting no other minimum for a contract on which payment has ceased.
3. That the company will grant a paid-up annuity benefit on a plan stipulated in the contract, of the value specified in sections 26.1-34-03 through 26.1-34-06 and 26.1-34-08. ✓
4. That the company will continue the contract in force as extended term coverage for the period the accumulated value will purchase at the attained age.

Why: NDCC 26.1-34-01(1): upon cessation of payment of considerations, the company will grant a PAID-UP ANNUITY BENEFIT on a plan stipulated in the contract, of such value as is specified in sections 26.1-34-03 through 26.1-34-06 and section 26.1-34-08. The contract must contain that provision in substance, or one the commissioner considers at least as favourable.

Concurrent utilization review in a managed-care plan assesses:

1. Whether the group's premium rate should be adjusted at renewal
2. The commission owed to the producer on each enrolled member
3. Whether continued care is necessary while a patient is being treated ✓
4. Which providers will accept a capitation payment before joining the network

Why: Concurrent review evaluates the necessity and appropriateness of care during treatment (e.g., an ongoing hospital stay); prospective review occurs before, retrospective after.

Many states and federal law require that group health plans covering dependents include newborn children:

1. Beginning at the start of the next plan year following the birth
2. From the moment of birth, with a short window to formally add them ✓
3. Only after the child reaches thirty days of age and is examined
4. Solely if the newborn passes an individual medical underwriting review

Why: Newborns must be covered from birth (including congenital conditions), with a limited period (often 31 days) to notify the insurer and add the child.

What does NDCC 26.1-34-11 authorise a domestic life insurance company to do?

1. Establish one or more separate accounts and allocate amounts to them to provide annuities payable in variable amounts only, a fixed annuity having to be written in the company's general account rather than in a separate account under this section of the chapter.
2. Establish one or more separate accounts and allocate amounts to them, including proceeds applied under optional modes of settlement or dividend options, to provide annuities and incidental benefits payable in fixed or variable amounts or both. ✓
3. Establish separate accounts for variable annuities with the prior written approval of the commissioner in each case, which the section requires before any amount may be allocated to such an account by the company or by a fraternal benefit society.
4. Issue variable annuities without complying with the separate account requirements that apply to variable life insurance policies, the section exempting annuities from the subsections that govern those policies.

Why: NDCC 26.1-34-11: any domestic life insurance company, INCLUDING a domestic fraternal benefit society operating on a legal reserve basis, may establish ONE OR MORE SEPARATE ACCOUNTS and allocate amounts to them, including proceeds applied under optional modes of settlement or dividend options, to provide annuities and benefits incidental to them, PAYABLE IN FIXED OR VARIABLE AMOUNTS OR BOTH, subject to subsections 1 through 7 of the variable life policy section the chapter cross-refers to.

A Medicare supplement policy is delivered in violation of NDCC ch. 26.1-36.1. What is the effect, under NDCC 26.1-36.1-08?

1. The policy is void from the beginning and the insurer must refund the whole of the premium paid for it, the insured having no rights under it at all and the beneficiary taking nothing under it by way of benefit or otherwise.
2. The policy is valid but must be construed as provided in the chapter, and where a policy provision conflicts with the chapter the rights, duties and obligations of the insurer, the insured and the beneficiary are governed by the chapter. ✓
3. The policy is voidable at the option of the insured, who may elect within thirty days of discovering the violation either to affirm the policy as written or to rescind it and recover the premium that has been paid to the insurer for the coverage.
4. The policy is valid and is construed as written, the chapter's requirements being enforceable only by the commissioner against the insurer.

Why: NDCC 26.1-36.1-08: a policy delivered or issued for delivery in violation of the chapter IS VALID BUT MUST BE CONSTRUED AS PROVIDED IN THE CHAPTER. Where a provision of the policy is in CONFLICT with the chapter, the RIGHTS, DUTIES AND OBLIGATIONS of the insurer, the insured and the beneficiary ARE GOVERNED BY THE CHAPTER. Under 26.1-36.1-09 a WILFUL violation is a CLASS A MISDEMEANOUR and the commissioner may also suspend or revoke the licence.

When does continuation under NDCC 26.1-36-23(6) come to an end?

1. At the first to occur of eighteen months after the date insurance would otherwise have terminated, the end of the period for which contributions were made if payment is not timely, and termination of the group policy or of the employer's participation in it.
2. At the end of thirty-nine weeks after the date insurance would otherwise have terminated, whatever may happen to the group policy or to the employer's participation under it in the meantime, and whether or not contributions continue to be paid when they fall due.
3. When the person becomes eligible for any other group coverage, or at the end of thirty-nine weeks after the date the insurance would otherwise have terminated, whichever of the two is later.
4. At the first to occur of thirty-nine weeks after the date insurance would otherwise have terminated, the end of the period for which contributions were made if payment is not timely, and termination of the group policy or of the employer's participation. ✓

Why: NDCC 26.1-36-23(6): continuation terminates when the person fails to satisfy subsection 2 or, if earlier, at the FIRST TO OCCUR of (a) THE DATE THIRTY-NINE WEEKS after the date the insurance would otherwise have terminated; (b) where a required contribution is not timely, THE END OF THE PERIOD FOR WHICH CONTRIBUTIONS WERE MADE; and (c) the date THE GROUP POLICY IS TERMINATED or the EMPLOYER TERMINATES PARTICIPATION.

Workers' compensation insurance covers:

1. Job-related injuries and occupational illnesses ✓
2. Any injury an employee suffers, whether on or off the job
3. Only injuries that occur during an employee's commute home
4. Medical costs of an employee's dependents and family members

Why: Workers' compensation is a no-fault, state-mandated coverage for work-related injuries and occupational diseases; off-the-job losses are not covered.

What is the North Dakota appointment RENEWAL cycle under NDAC 45-02-02-07?

1. The department invoices each company on the anniversary of its certificate of authority and the fees are due within thirty days of the invoice, appointments lapsing automatically if the invoice is not paid by the end of that period.
2. Appointments run for two years from the date of filing and are renewed by the producer rather than by the insurer, the producer paying the renewal fee at the same time as the licence renewal fee so that one payment covers both.
3. The preliminary list is furnished by March first, the invoice by May first and the fees are payable before July first, the cycle being timed to follow the filing of the annual statement by the companies which must pay the fees.
4. A preliminary renewal list by December first, an electronic renewal invoice through the NAIC subsidiary by March fifteenth, and payment of the fees before may first each year. ✓

Why: NDAC 45-02-02-07(1) to (3). December 1, March 15, May 1.

What do NDCC 26.1-45-05.1(4) and (5) provide about field issue and about benefits already paid?

1. A long-term care policy may not be field-issued based on medical or health status; and where benefits have been paid, the insurer may recover them as a debt if the policy is afterwards rescinded for a material misrepresentation by the insured person.
2. A long-term care policy may be field-issued by an agent or third-party administrator on any basis the insurer authorises; and benefits already paid may not be recovered by the insurer where the policy is afterwards rescinded on any ground at all.
3. A long-term care policy may not be field-issued at all; and benefits already paid must be repaid to the insurer as a debt if the policy or certificate is rescinded.
4. A long-term care policy may not be field-issued based on medical or health status; and where benefits have been paid, the insurer may not recover them if the policy is afterwards rescinded. ✓

Why: NDCC 26.1-45-05.1(4): a long-term care policy or certificate MAY NOT BE FIELD-ISSUED BASED ON MEDICAL OR HEALTH STATUS, 'field-issued' meaning issued by an agent or third-party administrator under underwriting authority granted by the insurer. Subsection 5: IF AN INSURER HAS PAID BENEFITS, THE BENEFIT PAYMENTS MAY NOT BE RECOVERED in the event the policy is rescinded.

An insured becomes totally disabled and, after the waiting period, the life policy's waiver of premium applies. The insured:

1. Owes no premiums while disabled, and coverage stays in force ✓
2. Receives an accelerated payout of the death benefit in cash
3. Must keep paying premiums, but the insurer refunds half each year
4. Loses coverage until premium payments resume after recovery

Why: Waiver of premium keeps the policy in force without premium payments during the insured's continued total disability.

Compared with an HMO, a PPO generally:

1. Is offered only to Medicare-eligible senior enrollees
2. Provides no coverage at all outside its provider network
3. Allows out-of-network care at higher cost without referrals ✓
4. Requires a primary care physician and referrals to specialists

Why: A PPO offers more flexibility: out-of-network care is covered at higher cost, with no gatekeeper or referrals required.

Before a producer can legally transact business on behalf of an insurer, the insurer generally must:

1. Obtain written consent from every existing policyholder
2. Pay the producer a guaranteed minimum annual salary
3. File an appointment authorizing the producer to represent it ✓
4. Conduct a medical examination of the producer

Why: An appointment is the insurer's authorization (filed with the state) allowing a licensed producer to act as its representative.

Who MUST report a suspected fraudulent insurance act to the North Dakota commissioner, and who MAY?

1. A person engaged in the business of insurance having knowledge or a reasonable belief that a fraudulent insurance act is being, will be, or has been committed shall provide the commissioner the information required, in the manner prescribed; any other person may do so. ✓
2. A person engaged in the business of insurance shall report an act committed against that person's own insurer and may report any other act; a member of the public has no standing to report at all and must complain to the county state's attorney instead.
3. Any person with knowledge or a reasonable belief that a fraudulent insurance act has been committed shall report it, the duty being a general one imposed on the public at large, and a person engaged in the business of insurance being required in addition to report a suspicion which falls short of a reasonable belief.
4. An insurer shall report an act committed against it by a claimant, and a producer shall report an act committed by a client, but neither is required to report an act committed by the other, the chapter leaving the regulation of persons in the business of insurance to the commissioner's own examinations.

Why: NDCC 26.1-02.1-06(1) and (2). SHALL for a person engaged in the business of insurance; MAY for anyone else. Note the trigger: KNOWLEDGE OR A REASONABLE BELIEF, and the act may be one which IS BEING, WILL BE, OR HAS BEEN committed.

Omar went 14 months after his Initial Enrollment Period without Part D or other creditable drug coverage. His Part D late enrollment penalty equals what percentage of the national base beneficiary premium?

1. 1%
2. 10%
3. 14% ✓
4. 20%

Why: Part D charges 1% of the national base beneficiary premium for each full month without creditable coverage, so 14 months gives 14%. Candidates who pick 10% are applying the Part B rule, which counts whole 12-month periods.

A salary continuation plan funded with life or disability insurance is designed to:

1. Pay the business's monthly rent, utilities, and supplier invoices while the owner is away on a long vacation
2. Provide every employee a guaranteed annual cost-of-living raise
3. Continue income to a key employee (or their family) during disability or after death ✓
4. Refund payroll taxes the employer paid during a profitable year

Why: A salary continuation plan provides continued income to a selected employee or their survivors upon disability, retirement, or death.

A state Long-Term Care Partnership program allows a policyholder to:

1. Buy long-term care coverage with no medical underwriting whatsoever, at any age the applicant chooses
2. Protect an amount of assets equal to the benefits the policy paid, if they later need Medicaid ✓
3. Receive double benefits from both the insurer and the state at once
4. Avoid ever having to pay any long-term care premiums

Why: Partnership policies let insureds shelter assets equal to the LTC benefits paid when qualifying for Medicaid, encouraging private LTC coverage.

Accelerated death benefits paid to a terminally ill insured are generally:

1. Fully taxable to the insured as ordinary earned income for the year
2. Subject to a mandatory flat 20% federal income-tax withholding
3. Taxed as a long-term capital gain on the policy's accumulated cash value
4. Received income-tax-free ✓

Why: They are generally received income-tax-free, similar to a death benefit, when the insured is terminally ill.

What does NDCC 26.1-26-13.3(3) permit the commissioner to do about fingerprints?

1. Require an applicant to attend at the commissioner's own office for the collection of fingerprints, with no contracting out of that work to any outside service or agency, at the applicant's expense or otherwise.
2. Make arrangements, including contracting with an outside service, for the collection and transmission of fingerprints for conducting criminal history record checks. ✓
3. Waive the fingerprint requirement for an applicant who has held a licence in another state for at least five years without discipline without any disciplinary action having been taken against that licence.
4. Charge the cost of the criminal history record check to the insurer that has appointed the applicant as its producer, rather than to the applicant.

Why: NDCC 26.1-26-13.3(3): the commissioner MAY MAKE ARRANGEMENTS, INCLUDING CONTRACTING WITH AN OUTSIDE SERVICE, FOR THE COLLECTION AND TRANSMISSION OF FINGERPRINTS for conducting criminal history record checks. Under subsection 2 ALL COSTS of the check are the APPLICANT'S responsibility.

An owner assigns a policy to a bank only as security for a loan. This is a(n):

1. Irrevocable beneficiary designation
2. Change of insured
3. Collateral assignment ✓
4. Absolute assignment

Why: A collateral assignment is a partial, temporary transfer for loan security; the lender is entitled only to the amount owed.