North Dakota Life & Health Insurance License, Practice Exams

A disability buy-sell policy is designed to:

1. Fund the buyout of a disabled owner's business interest ✓
2. Pay the business's monthly rent and employee payroll expenses
3. Cover the medical bills of an owner injured on the job
4. Replace the disabled owner's personal salary and living costs

Why: Disability buy-sell provides funds for the remaining owners to purchase the business interest of an owner who becomes totally disabled.

What does NDCC 26.1-04-03(15)(a) forbid an entity offering a health plan to do?

1. Restrict or interfere with any medical communication, and take any of four listed actions against a health care provider for any reason at all, whether or not a medical communication had anything to do with the entity's decision in the matter.
2. Take any of four listed actions against a health care provider solely on the basis of a medical communication; the subdivision leaves the entity free to restrict or interfere with a medical communication by other means short of those four actions.
3. Restrict or interfere with any medical communication, and take any of four listed actions against a health care provider solely on the basis of a medical communication. ✓
4. Contract with a health care provider on terms that require the provider to participate in a utilisation review programme operated by the health plan for the review of the services its providers deliver.

Why: NDCC 26.1-04-03(15)(a): an entity offering a health plan MAY NOT RESTRICT OR INTERFERE WITH ANY MEDICAL COMMUNICATION, AND MAY NOT take any of the four listed actions against a health care provider SOLELY ON THE BASIS OF A MEDICAL COMMUNICATION. Both limbs bite.

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.

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.

An employee has $100,000 of employer-paid group term life. The amount subject to imputed income is:

1. $50,000 ✓
2. $100,000
3. $0
4. $25,000

Why: The first $50,000 is tax-free; the cost of the remaining $50,000 is imputed taxable income.

What prior institutionalisation conditions does NDCC 26.1-45-07 prohibit?

1. Conditioning eligibility for any benefits on prior hospitalisation alone; the chapter permitting a policy to condition institutional benefits on the prior receipt of a higher level of institutional care and to condition any other benefit on a prior stay.
2. Conditioning eligibility for any benefits at all on a prior institutional stay, without exception, so that a policy may not provide postconfinement, postacute care or recuperative benefits in this state at all.
3. Conditioning eligibility for benefits on a prior stay of more than thirty days, shorter prior stay requirements being permitted by the section.
4. Conditioning any benefits on prior hospitalisation; institutional benefits on a higher level of institutional care; and benefits other than waiver of premium, postconfinement, postacute or recuperative benefits on prior institutionalisation. ✓

Why: NDCC 26.1-45-07(1): no long-term care policy may CONDITION ELIGIBILITY FOR ANY BENEFITS ON A PRIOR HOSPITALISATION REQUIREMENT; condition eligibility for benefits in an INSTITUTIONAL CARE SETTING on the RECEIPT OF A HIGHER LEVEL of such care; or condition eligibility for ANY BENEFITS OTHER THAN waiver of premium, postconfinement, postacute care or recuperative benefits ON A PRIOR INSTITUTIONALISATION REQUIREMENT.

How often are continuing education reports made in North Dakota, and what extension is available, under NDCC 26.1-26-31.1?

1. Reports must be made annually, before May first in each year, and the commissioner may extend the reporting deadline by up to thirty-six months on the licensee's written application supported by evidence of hardship, the extension being available as often as the hardship continues to be shown by that licensee.
2. Reports must be made at the end of a two-year period, and the commissioner may provide extensions of that requirement of up to thirty-six months whenever additional time is necessary for any reason, the transition to reporting by birth month being one example of such a reason rather than the only ground for an extension.
3. Reports of continuing education must be made at the end of a two-year period. The commissioner may provide a one-time extension of that requirement, not to exceed thirty-six months, if additional time is needed to implement the transition to reporting by birth month, which the commissioner shall provide for by rule. ✓
4. Reports must be made at the end of a two-year period, and no extension of that requirement is available. The commissioner shall by rule provide for reporting by birth month, and a licensee whose birth month falls before the end of the period must report early rather than late under the rules made for that purpose.

Why: NDCC 26.1-26-31.1(1): REPORTS OF CONTINUING EDUCATION MUST BE MADE AT THE END OF A TWO-YEAR PERIOD. THE COMMISSIONER MAY PROVIDE A ONE-TIME EXTENSION OF THE TWO-YEAR REPORTING REQUIREMENT, NOT TO EXCEED THIRTY-SIX MONTHS, IF ADDITIONAL TIME IS NECESSARY IN ORDER TO IMPLEMENT THE TRANSITION TO REPORTING CONTINUING EDUCATION BY BIRTH MONTH. (2): THE COMMISSIONER SHALL BY RULE PROVIDE FOR REPORTING BY BIRTH MONTH OF COMPLIANCE WITH THE CONTINUING EDUCATION REQUIREMENTS OF THIS SECTION. ONE-TIME, and tied to the birth-month transition alone.

What restitution may the North Dakota commissioner require under NDCC 26.1-01-03.3(2), and what may the commissioner NOT do?

1. In addition to a monetary fine, but never in lieu of one, the commissioner may require restitution of the direct financial loss and of any consequential loss suffered by a person harmed by a violation. The commissioner may also determine whether an obligation is owed under a policy and may order the insurer to pay the amount claimed.
2. In addition to or in lieu of a monetary fine, and after a hearing, the commissioner may require restitution in the amount of direct financial loss to any person directly harmed by a violation. The commissioner may not determine or adjudicate whether an obligation is owed under a policy, or require a person to pay an amount claimed owed under one. ✓
3. In addition to or in lieu of a monetary fine, the commissioner may require restitution in the amount of direct financial loss to any person harmed by a violation, whether the harm was direct or indirect, and may order an insurer to pay a claim where the commissioner finds after a hearing that the claim was unreasonably denied.
4. Restitution may be required only by a court on the application of the attorney general, the commissioner's power under this section being confined to the administrative monetary fine. The commissioner may, however, determine whether an obligation is owed under a policy and may require a person to pay an amount claimed owed under it.

Why: NDCC 26.1-01-03.3(2): IN ADDITION TO OR IN LIEU OF A MONETARY FINE, THE COMMISSIONER, AFTER A HEARING, MAY REQUIRE RESTITUTION IN THE AMOUNT OF DIRECT FINANCIAL LOSS BE MADE TO ANY PERSON DIRECTLY HARMED BY A VIOLATION OF THIS TITLE. THE COMMISSIONER MAY NOT DETERMINE OR ADJUDICATE WHETHER AN OBLIGATION IS OWED UNDER A POLICY OR CONTRACT OF INSURANCE, OR REQUIRE A PERSON TO PAY A CLAIM OR AN AMOUNT CLAIMED OWED UNDER A POLICY OR CONTRACT OF INSURANCE. DIRECT financial loss to a person DIRECTLY harmed, and the coverage question is for the courts.

Transfers of property to a surviving spouse at death generally escape federal estate tax because of the:

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

Why: The unlimited marital deduction lets a decedent pass any amount to a surviving (citizen) spouse free of federal estate tax.

An insured has died. What refund does NDCC 26.1-36-04(1)(n) require, and when?

1. The portion of premium, fees or other sum paid beyond the month of death, without any deduction, refunded within thirty days after notice to the insurer of the death of the insured person under the policy.
2. The whole of the premium paid for the current policy term, refunded within sixty days after notice to the insurer of the death of the insured person.
3. The portion of premium paid beyond the date of death, refunded within thirty days after the insurer has settled the death claim under the policy.
4. The portion of premium, fees or other sum paid beyond the month of death, less any claim for losses during the current term, refunded within thirty days after notice to the insurer of the death. ✓

Why: NDCC 26.1-36-04(1)(n): on the death of an insured, the insurer will refund WITHIN THIRTY DAYS AFTER NOTICE to it of the death the portion of the PREMIUM, FEES OR OTHER SUM PAID BEYOND THE MONTH OF DEATH, AFTER DEDUCTING ANY CLAIM FOR LOSSES during the current term. The provision does not apply if the insurer has a VALID DEFENCE to payment of benefits.

For how long must an insurance consultant keep the signed agreement, and who may see it, under NDCC 26.1-26-35?

1. Not less than five years after completion of the services; the copy must be available to the commissioner.
2. Not less than two years after the agreement is signed; the copy must be filed with the commissioner.
3. Not less than two years after completion of the services; the copy must be available to the commissioner. ✓
4. For as long as the consultant holds a licence; the copy is the consultant's own record alone.

Why: NDCC 26.1-26-35: the consultant SHALL RETAIN A COPY OF THE AGREEMENT FOR NOT LESS THAN TWO YEARS AFTER COMPLETION OF THE SERVICES, and THIS COPY MUST BE AVAILABLE TO THE COMMISSIONER. Two years from completion, not from signature.

A single-premium immediate annuity (SPIA) begins income payments:

1. After the contract's surrender-charge schedule has completely expired
2. Within one payment period of purchase ✓
3. Only after a mandatory deferral period of at least ten years has elapsed
4. Once the annuitant reaches the age of fifty-nine and one-half years old

Why: An immediate annuity starts paying within one payment interval (e.g., within a month) of the lump-sum purchase.

Survivorship (second-to-die) life insurance is most commonly used to:

1. Fund a child's future college costs through the policy's accumulated cash value
2. Provide estate liquidity after the second insured dies ✓
3. Replace the income of a sole wage earner who has several young children at home
4. Cover a short-term business loan that must be fully repaid within five years

Why: It pays at the second death and is widely used to fund estate taxes and costs.

What must a licensed individual North Dakota producer file under NDCC 26.1-26-13.4, and what notice is given?

1. A biennial license continuation in the form and manner prescribed by the commissioner, together with a fee as prescribed in section 26.1-01-07. The commissioner shall give a licensee not less than sixty days' notice of the biennial license continuation filing deadline. ✓
2. An annual licence continuation in the form prescribed by the commissioner, together with the prescribed fee, to be filed before May first of each year, the commissioner being required to give not less than thirty days' notice of that deadline to each licensee affected by it in this state.
3. A biennial licence continuation and the prescribed fee. The commissioner is under no duty to give notice of the filing deadline, the responsibility for knowing and meeting it resting on the licensee, whose licence ends under section 26.1-26-31 if the continuation is not filed and the fee is not paid.
4. A biennial licence continuation together with evidence of the continuing education completed in the two-year period and the prescribed fee. The commissioner shall give not less than sixty days' notice of the deadline, and shall extend it on the licensee's written request made before the deadline has passed.

Why: NDCC 26.1-26-13.4: A LICENSED INDIVIDUAL INSURANCE PRODUCER SHALL FILE A BIENNIAL LICENSE CONTINUATION IN THE FORM AND MANNER PRESCRIBED BY THE COMMISSIONER AND PAY A FEE AS PRESCRIBED IN SECTION 26.1-01-07. THE COMMISSIONER SHALL GIVE A LICENSEE NOT LESS THAN SIXTY DAYS' NOTICE OF THE BIENNIAL LICENSE CONTINUATION FILING DEADLINE. NDCC 26.1-26-31(6) makes a failure to file it and pay the fee a ground on which the licence ceases to continue in force.

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).

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.

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 HMO member sees an out-of-network specialist for a non-emergency without a referral. The plan typically:

1. Pays 80% after the deductible
2. Pays the full billed amount anyway
3. Pays only the specialist's travel costs
4. Pays nothing for that out-of-network visit ✓

Why: HMOs generally cover only in-network, referred care; non-emergency out-of-network care without a referral is not covered.

Private duty nursing coverage pays for:

1. Over-the-counter drugs bought at home
2. Elective cosmetic surgery and follow-up office visits
3. One-on-one skilled nursing care for a patient ✓
4. Routine annual physical exams

Why: Private duty nursing provides individualized skilled nursing (often in the home), distinct from general facility care.

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.

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.

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.

Federal anti-money-laundering rules require life insurers, for covered products, to:

1. Refuse to sell any permanent life insurance to new applicants
2. Verify a buyer's citizenship before issuing any annuity
3. Maintain an AML program and report suspicious transactions ✓
4. Report every policy sold, regardless of size, to the Treasury

Why: Insurers must maintain AML programs and file suspicious activity reports; permanent life and annuities are 'covered products' producers help monitor.

NDCC 26.1-33-05(3) makes an individual life policy incontestable. After how long, and what is excepted?

1. After one year from its date during the lifetime of the insured; nonpayment of premiums and fraudulent misstatement in the application are excepted, and no other exception may be taken by the company.
2. After two years from its date whether or not the insured is living; nonpayment of premiums alone is excepted, disability and accidental death benefits being contestable only in the first year.
3. After three years from its date during the lifetime of the insured; nonpayment of premiums, military service in time of war and any misstatement of age are excepted from the provision.
4. After two years from its date during the insured's lifetime; nonpayment of premiums and naval or military service in time of war are excepted, and disability and accidental death benefits may be too. ✓

Why: NDCC 26.1-33-05(3): the policy constitutes the entire contract between the parties and is incontestable after it has been in force during the lifetime of the insured for two years from its date, except for nonpayment of premiums and except for violations of the policy relating to naval or military service in time of war; at the company's option, provisions relative to benefits in the event of total and permanent disability and provisions granting additional insurance specifically against death by accident may also be excepted.

What is a MEDICAL COMMUNICATION under NDCC 26.1-04-03(14)(d), and what is excluded from it?

1. Any communication made by a health care provider to a patient regarding the patient's health care needs or treatment options and the applicability of the health plan to them, including a knowing and wilful misrepresentation made to that patient by the provider.
2. Any communication between a health care provider and an entity concerning a patient's treatment, the definition being aimed at what passes between the provider and the plan rather than at what the provider says to the patient about the patient's own care.
3. Any written communication a health care provider gives a patient about treatment options, an oral discussion between them being outside the definition the subdivision gives for these purposes.
4. Any communication made by a health care provider to a patient regarding the patient's health care needs or treatment options and the applicability of the health plan to them, other than a knowing and wilful misrepresentation. ✓

Why: NDCC 26.1-04-03(14)(d): 'medical communication' means ANY COMMUNICATION, OTHER THAN A KNOWING AND WILFUL MISREPRESENTATION, MADE BY A HEALTH CARE PROVIDER TO A PATIENT REGARDING THE HEALTH CARE NEEDS OR TREATMENT OPTIONS OF THE PATIENT AND THE APPLICABILITY OF THE HEALTH PLAN to the patient's needs or treatment. Written or oral makes no difference; the one exclusion is the knowing and wilful misrepresentation.

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.

Two or more accident and health policies issued by the same insurer to the same insured are in force together and exceed the maximum limit of indemnity. What does NDCC 26.1-36-04(2)(c) permit the policy to say?

1. That the excess insurance is void and all premiums paid for the excess will be retained by the insurer as earned, the insured having concealed the other policies when applying for the later of them, whatever the policy itself may say.
2. That the insurer will pay under each of the policies in the proportion that its own limit of indemnity bears to the total of the limits of indemnity of all the policies then in force on the insured.
3. That the insurer may cancel all but the earliest issued of the policies and return the unearned portion of the premium for each of the policies that it has cancelled.
4. That the excess is void and its premiums returned to the insured or estate; or, instead, that cover is limited to one policy elected by the insured, beneficiary or estate, other premiums returned. ✓

Why: NDCC 26.1-36-04(2)(c): where previously issued policies of the same insurer are concurrently in force so that the AGGREGATE INDEMNITY EXCEEDS THE MAXIMUM LIMIT, the EXCESS INSURANCE IS VOID and ALL PREMIUMS PAID FOR THE EXCESS will be RETURNED to the insured or the estate. IN LIEU of that, the policy may limit insurance to the ONE POLICY ELECTED by the insured, the beneficiary or the estate, with all premiums paid for the others returned.

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.

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.

A distinguishing feature of adjustable life insurance is that the owner can:

1. Only ever convert it into a fixed single-premium immediate annuity
2. Invest the cash value directly in stocks and bonds of their choosing
3. Receive guaranteed dividends regardless of the insurer's experience
4. Change the premium, face amount, or coverage period as needs change ✓

Why: Adjustable life lets the owner modify premium, face amount, and protection period, effectively shifting between term and permanent coverage.

The 'reduced paid-up' nonforfeiture option uses the policy's cash value to:

1. Pay the entire surrender value to the owner in one lump sum
2. Buy a smaller, fully paid-up permanent policy ✓
3. Convert the coverage into an immediate lifetime income annuity
4. Keep the full face amount in force as term insurance for a limited time

Why: Reduced paid-up uses the net cash value as a single premium to purchase a smaller amount of fully paid-up permanent insurance; extended term instead keeps the full face for a limited period.

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.

Pension maximization is a strategy in which a retiree:

1. Takes the larger single-life pension and buys life insurance to protect the spouse ✓
2. Delays starting the pension indefinitely in order to keep earning additional years of service credit
3. Withdraws the entire pension as a lump sum, drops all coverage, and self-insures the survivor need
4. Always elects the reduced joint-and-survivor pension on the view that it is the safest possible choice

Why: Pension max takes the higher single-life payout and uses life insurance to provide for the surviving spouse, instead of accepting a smaller joint-and-survivor benefit.

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.

A premium is still unpaid at the end of the grace period, but the policy has sufficient cash value. The automatic premium loan provision:

1. Converts the coverage to extended term insurance
2. Doubles the next premium billed as a reinstatement penalty
3. Surrenders the policy and pays the net cash value to the owner as a refund
4. Pays the overdue premium from the cash value to prevent a lapse ✓

Why: APL borrows from the cash value to pay the overdue premium, keeping the policy in force.

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.

A joint and survivor annuity continues payments:

1. To the couple's children after both annuitants die
2. As long as either annuitant is still living ✓
3. Only until the first of the two annuitants dies
4. For a fixed ten-year period regardless of survival

Why: A joint and survivor annuity pays as long as either annuitant lives (often reducing to a percentage for the survivor).

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.

An 'other-insured' (e.g., spouse) rider on a life policy provides:

1. Automatic conversion of the base policy into a survivorship plan
2. A second death benefit payable only if both spouses die together
3. Waiver of premium whenever the additional insured is hospitalized
4. Term life coverage on a family member other than the base insured ✓

Why: An other-insured rider adds term coverage on a spouse or other family member to the base insured's policy.

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.

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.

A plan has a $2,000 deductible and 90/10 coinsurance. On a $12,000 covered bill, the insured pays:

1. $3,000 ✓
2. $2,000
3. $1,000
4. $1,200

Why: Deductible $2,000 + 10% of the remaining $10,000 ($1,000) = $3,000.

A withdrawal of gain from a nonqualified deferred annuity before age 59½ generally triggers:

1. Tax-free treatment because annuities are always exempt
2. A flat 20% capital-gains tax on the entire account value
3. Loss of the contract and forfeiture of all principal paid in
4. A 10% IRS penalty plus ordinary income tax on the gain ✓

Why: Premature distributions of annuity gain before 59½ incur a 10% penalty plus ordinary income tax; nonqualified annuity earnings come out LIFO (gain first).

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.

An insured dies in the first policy year and the insurer discovers material fraud on the application. The insurer may:

1. Contest the claim, because fraud is an exception to incontestability ✓
2. Cancel the policy but must still pay the full benefit
3. Only reduce the benefit, never deny the claim
4. Do nothing, since all first-year claims are automatically paid

Why: During the contestable period (and, for material fraud, often beyond it) the insurer may contest or deny a claim involving fraudulent misstatements.

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.

The continuation period has ended. What does NDCC 26.1-36-23(8) give the member, surviving spouse or dependent?

1. The right to exercise any conversion option the group plan provides, on notifying the carrier of the election and paying the required premium within sixty days of the termination of the continued coverage under the group contract.
2. The right to a further period of continuation of thirty-nine weeks, on payment of the required contribution to the group policyholder or the employer monthly in advance of each month of the further period.
3. The right to exercise any conversion option the group plan provides, on notifying the carrier of the election and paying the required premium within thirty-one days of the termination of the continued coverage. ✓
4. No further right at all; the coverage simply ends at the close of the continuation period that the section provides for the member and the dependants of that member.

Why: NDCC 26.1-36-23(8): upon termination of the continuation period, the MEMBER, SURVIVING SPOUSE OR DEPENDENT is entitled to EXERCISE ANY OPTION PROVIDED IN THE GROUP PLAN TO ELECT A CONVERSION POLICY. The member electing a conversion policy shall NOTIFY THE CARRIER of the election and PAY THE REQUIRED PREMIUM WITHIN THIRTY-ONE DAYS of the termination of the continued coverage under the group contract.

In a cross-purchase buy-sell agreement funded with life insurance:

1. A bank holds the policies in trust until an owner retires fully
2. Each owner buys a policy on each of the other owners ✓
3. The business entity itself owns one policy on every individual owner
4. The policies must always be term insurance with no cash value

Why: In a cross-purchase plan, each owner owns a policy on each other owner; in an entity plan, the business owns the policies.

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.

Within what period may a purchaser return an annuity policy or certificate under NDCC 26.1-34-01.1, and what is refunded?

1. Within twenty days of delivery; the purchaser gets a refund of the premium, except on a variable annuity, where the purchaser takes the value of the annuity plus all expense charges. ✓
2. Within twenty days of delivery; the purchaser is entitled to a refund of the premium in every case, a variable annuity being refunded on the same basis as a fixed one under this section of the chapter.
3. Within ten days of delivery; the purchaser is entitled to the value of the annuity plus all expense charges, whether the contract is a fixed annuity or a variable one.
4. Within thirty days of delivery; the purchaser is entitled to a refund of the premium less a reasonable administrative charge stated in the annuity contract.

Why: NDCC 26.1-34-01.1: the purchaser may return the policy within TWENTY DAYS of delivery and is entitled to a refund of the PREMIUM, EXCEPT in the sale of VARIABLE ANNUITIES, where the purchaser is entitled to the VALUE OF THE ANNUITY PLUS ALL EXPENSE CHARGES.

A long-term care policy has a 90-day elimination period. Benefits begin:

1. After 90 days of qualifying care the insured pays for ✓
2. After a one-year waiting period measured from the policy's effective date
3. Only after the insured turns 80
4. Immediately on the first day of any care, because the 90 days apply only to the policy's lifetime maximum

Why: The elimination period is a deductible in days; the insured covers care during it, and benefits start afterward.

The 'conformity with state statutes' provision states that any policy provision in conflict with the law of the state where the insured lives is:

1. Enforceable exactly as written, since the parties' own agreement overrides state insurance law
2. Grounds for the insurer to cancel the policy
3. Void, voiding the entire policy back to its issue date
4. Automatically amended to meet the minimum requirements of that statute ✓

Why: This provision deems any conflicting provision amended to conform to the minimum statutory requirements of the insured's state.

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 North Dakota period is twenty days, and which is thirty?

1. Twenty days is the period in which the commissioner must hold a hearing after a request for one is received, and thirty days is the period in which a licensee must respond to a written request for information about a potential violation and in which a producer must report an administrative action taken elsewhere.
2. Twenty days is the period for a producer to report a criminal conviction in any jurisdiction, and thirty days is the period for responding to the commissioner's written request for information, for requesting a hearing on a refusal and for the commissioner to hold that hearing once the request has been received.
3. Twenty days is the time to answer the commissioner's written request for information on a potential violation; thirty days is the time to request a hearing on a refused initial licence, to hold it, and to report an administrative action or a conviction. ✓
4. Twenty days is the period allowed to a licensee to respond to the commissioner's written request for information, and thirty days is the written notice the commissioner must give of a hearing on the refusal of an initial licence, the hearing itself being held within sixty days of the receipt of the request for it.

Why: NDCC 26.1-26-42(14): REFUSED TO RESPOND WITHIN TWENTY DAYS TO A WRITTEN REQUEST BY THE COMMISSIONER FOR INFORMATION REGARDING ANY POTENTIAL VIOLATION OF THIS SECTION. NDCC 26.1-26-40: THE APPLICANT MAY REQUEST A HEARING WITHIN THIRTY DAYS FROM THE DATE OF ISSUANCE OF THE NOTICE, and the commissioner SHALL HOLD A HEARING WITHIN THIRTY DAYS OF THE RECEIPT OF THE REQUEST AND UPON TEN DAYS' WRITTEN NOTICE. NDCC 26.1-26-45.1: WITHIN THIRTY DAYS of the final disposition of an administrative action, and WITHIN THIRTY DAYS AFTER A CRIMINAL CONVICTION.

An applicant for an initial North Dakota license is refused and does not request a hearing within thirty days. What is the position?

1. The refusal stands. The right given by NDCC 26.1-26-40 is a right to request a hearing within thirty days from the date of issuance of the notice, and the commissioner's duty to hold one arises only if requested by the applicant. All fees accompanying the application remain not refundable under 26.1-26-39. ✓
2. The commissioner must hold a hearing in any event within thirty days of the issuance of the notice, the refusal of an initial licence being a matter which this chapter requires to be determined after a hearing whether or not the applicant asks for one, and the fees accompanying the application are refunded.
3. The refusal stands, but the applicant may request a hearing at any later time while the ground of refusal continues to exist, the thirty days being directory rather than mandatory, and the fees accompanying the application are held to the applicant's credit against a fresh application made afterwards.
4. The refusal is void for want of a hearing. A licence may be refused only after notice to the applicant and a hearing under section 26.1-26-42, and an applicant who does not request a hearing is treated as having had the matter determined in the applicant's favour by the commissioner of this state.

Why: NDCC 26.1-26-40: THE COMMISSIONER SHALL HOLD A HEARING, IF REQUESTED BY THE APPLICANT, WITHIN THIRTY DAYS OF THE RECEIPT OF THE REQUEST FOR A HEARING AND UPON TEN DAYS' WRITTEN NOTICE TO THE APPLICANT - the duty is conditional on the request. NDCC 26.1-26-39: ALL FEES ACCOMPANYING THE APPLICATION FOR LICENSE ARE NOT REFUNDABLE.

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.

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.

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 retiree takes a distribution from a traditional (qualified) 401(k). The distribution is:

1. Subject to capital-gains rates only
2. Fully taxable as ordinary income ✓
3. Completely income-tax-free
4. Taxed only on the growth portion

Why: Pre-tax qualified plan distributions are fully taxable as ordinary income when received.

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.

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.

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.

A North Dakota fraudulent insurance act involves four hundred dollars. How is it punished?

1. As a class a misdemeanor, that being the residual rung - A class a misdemeanor in all other cases - which catches every violation of section 26.1-02.1-02.1 whose value is too small for any of the five felony rungs above it. The value of property and services is determined in accordance with NDCC 12.1-23-05. ✓
2. As an infraction. The residual rung of the grid is an infraction rather than a misdemeanor, which is why the limitation period in subsection 5 speaks of a misdemeanor or infraction, and that two-year period runs from the date of discovery of the fraud.
3. It is not punished under this chapter. The grid begins at one thousand dollars, and a fraudulent insurance act below that figure is left to the commissioner's administrative penalty under section 26.1-02.1-05.1, the legislature having taken the view that a fraud of that size is not worth a prosecution.
4. As a class B misdemeanor. The class A misdemeanor is reserved for a second or subsequent violation, a first violation involving less than one thousand dollars being punished one class lower under the general grading provisions of title 12.1 which the chapter adopts for the purpose.

Why: NDCC 26.1-02.1-05(1)(a)(6): A CLASS A MISDEMEANOR IN ALL OTHER CASES. And (1)(b): value is determined in accordance with section 12.1-23-05.

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.

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.

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.

Group life insurance is most commonly written as:

1. A single-premium endowment that is paid up at issue
2. Annually renewable term that renews each year ✓
3. Decreasing term tied to a mortgage balance
4. A paid-up whole life policy with no premiums

Why: Employer group life is typically annually renewable term; individual evidence of insurability is usually not required up to a guaranteed-issue limit.

For which lines may a North Dakota business entity be licensed, and what must it report, under NDCC 26.1-26-13.3(4)(c)?

1. The business entity may only be licensed for those lines of insurance for which one or more of its principal insurance producers is licensed, and it shall inform the commissioner within ten working days of any change in the status of its principal insurance producer or producers. ✓
2. The business entity may be licensed for any line of insurance for which any of its licensed producers is licensed, whether or not that producer is a designated principal, and it shall inform the commissioner within thirty days of any change in the status of any of its licensed producers in this state.
3. The business entity may only be licensed for those lines for which one or more of its principal insurance producers is licensed, and it shall inform the commissioner within ten working days of any change in the status of any of its producers, principal or otherwise, including the termination of any individual producer's employment with it.
4. The business entity may be licensed for every line of insurance named in section 26.1-26-11 once any one of its principal insurance producers is licensed for any one of them, and it shall inform the commissioner within ten working days of a change in its designated principal only where the entity has just one principal producer.

Why: NDCC 26.1-26-13.3(4)(c): THE BUSINESS ENTITY MAY ONLY BE LICENSED FOR THOSE LINES OF INSURANCE FOR WHICH ONE OR MORE OF ITS PRINCIPAL INSURANCE PRODUCERS IS LICENSED. THE BUSINESS ENTITY SHALL INFORM THE COMMISSIONER WITHIN TEN WORKING DAYS OF ANY CHANGE IN THE STATUS OF ITS PRINCIPAL INSURANCE PRODUCER OR PRODUCERS. (4)(d): THE COMMISSIONER MAY REQUIRE ANY DOCUMENTS REASONABLY NECESSARY TO VERIFY THE INFORMATION CONTAINED IN AN APPLICATION. TEN WORKING DAYS, and the trigger is a change in a PRINCIPAL producer's status.

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 so deem the applicant, 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.

What does NDCC 26.1-04-05 forbid a life insurance company and its producers to do?

1. A life insurance company may not discriminate between insureds of the same class, and may not pay any rebate of premium. A special advantage in the date of the policy or in the age at which it is issued is a matter of underwriting practice rather than a rebate and is not forbidden by this section of the chapter.
2. A life insurance company may not discriminate between insureds of different classes or with different expectations of life, classification itself being the mischief at which the section is aimed, and may not accept a bona fide obligation with legal interest in payment of any premium due upon a policy which it has issued.
3. A life insurance company may not discriminate between insureds of the same class and equal expectation of life; and neither it nor its producer may make any contract other than as plainly expressed in the policy, pay any rebate, give any special advantage in the policy date, or give any other inducement. ✓
4. A life insurance company may not pay any rebate of premium or commission, but a producer of such a company may do so out of that producer's own commission, the commission being the producer's own property once it has been earned and paid over by the company which issued the policy in this state.

Why: NDCC 26.1-04-05: A LIFE INSURANCE COMPANY DOING BUSINESS IN THIS STATE MAY NOT MAKE OR PERMIT ANY DISTINCTION OR DISCRIMINATION BETWEEN INSUREDS OF THE SAME CLASS AND WITH EQUAL EXPECTATION OF LIFE IN THE AMOUNT OR PAYMENT OF PREMIUMS OR RATE CHARGES FOR POLICIES OF LIFE OR ENDOWMENT INSURANCE, OR IN THE DIVIDENDS OR OTHER BENEFITS PAYABLE THEREON, OR IN ANY OTHER OF THE TERMS OR CONDITIONS OF THE CONTRACTS WHICH IT MAKES. NO LIFE INSURANCE COMPANY, AND NO INSURANCE PRODUCER THEREFOR, EITHER PERSONALLY OR BY ANY OTHER PERSON, MAY (1) MAKE ANY INSURANCE CONTRACT, OR AGREEMENT WITH REFERENCE THERETO, OTHER THAN SUCH AS IS EXPRESSED PLAINLY IN THE POLICY; (2) OFFER, PROMISE, ALLOW, GIVE, SET OFF, OR PAY ANY REBATE OF THE WHOLE OR ANY PART OF THE PREMIUM OR THE PRODUCER'S COMMISSION, OR ANY SPECIAL FAVOR OR ADVANTAGE IN THE DIVIDENDS, EARNINGS, PROFITS, OR OTHER BENEFIT; (3) OFFER, PROMISE, ALLOW, OR GIVE ANY SPECIAL ADVANTAGE IN THE DATE OF THE POLICY OR THE AGE AT WHICH THE SAME IS ISSUED; (4) OFFER, PROMISE, ALLOW, OR GIVE ANY PAID EMPLOYMENT OR CONTRACT FOR SERVICES OF ANY KIND, OR ANY OTHER VALUABLE INDUCEMENT NOT SPECIFIED IN THE POLICY; (5) OFFER, PROMISE, GIVE, OPTION, SELL, OR PURCHASE ANY STOCKS, BONDS, SECURITIES, OR PROPERTY AS INDUCEMENT TO INSURANCE. THIS SECTION DOES NOT PREVENT THE TAKING OF A BONA FIDE OBLIGATION, WITH LEGAL INTEREST, IN PAYMENT OF ANY PREMIUM.

In an equity-indexed annuity, the 'cap rate' is the:

1. Maximum interest rate credited even if the index rises more ✓
2. Share of the index gain that the insurer credits to the contract
3. Guaranteed minimum rate credited when the index loses value in a year
4. Fee deducted on surrender in year one

Why: The cap is the ceiling on credited interest; the participation rate sets the share of the gain and the floor sets the minimum.

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.

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.

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.

What do grounds 11 and 12 of NDCC 26.1-26-42 cover?

1. Being found guilty of any unfair trade practice defined in this title, or of fraud; and a violation of any insurance law of this state or of a lawful rule or order of this state's commissioner, an order of another state's commissioner falling outside the ground.
2. Being convicted of any unfair trade practice defined in this title; and a violation of any insurance law of this state, a mere noncompliance with a rule or an order falling short of the ground the chapter lays down for suspension or revocation of the licence.
3. Being found guilty of fraud in a criminal court alone; and a violation of any rule the commissioner of this state has adopted under this title, an order being outside the ground.
4. Being found guilty of any unfair trade practice defined in this title, or of fraud; and a violation of or noncompliance with any insurance law of this state, or with any lawful rule or order of the commissioner or of a commissioner of another state. ✓

Why: NDCC 26.1-26-42: ground (11) is that THE LICENSEE HAS BEEN FOUND GUILTY OF ANY UNFAIR TRADE PRACTICE DEFINED IN THIS TITLE OR FRAUD; ground (12) is A VIOLATION OF OR NONCOMPLIANCE WITH ANY INSURANCE LAWS OF THIS STATE OR A VIOLATION OF OR NONCOMPLIANCE WITH ANY LAWFUL RULES OR ORDERS OF THE COMMISSIONER OR OF A COMMISSIONER OF ANOTHER STATE. Another state's commissioner is expressly within ground 12.

State guaranty association protection may NOT be:

1. Used by producers as a selling point in advertising ✓
2. Subject to statutory coverage limits
3. Available to policyholders of an insolvent insurer
4. Funded by assessments on member insurers

Why: Using guaranty fund protection to induce a sale is prohibited; the fund exists to protect policyholders of insolvent insurers, within limits.

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.