North Dakota Life Insurance Practice Exam Free - 2026

• A. 10 days
• B. 20 days
• C. 30 days
• D. 15 days

Correct answer: B. 20 days

Explanation: North Dakota gives every purchaser of a life insurance policy or certificate the right to return it within twenty days of delivery and receive a refund of the premium, and the notice must appear on the first page. Ten days is the free-look period for accident and health policies under § 26.1-36-02.1, not life; thirty days applies to Medicare supplement (§ 26.1-36.1-06) and long-term care policies (§ 26.1-45-09); fifteen days is not a North Dakota free-look period for any product. See N.D.C.C. § 26.1-33-02.1.

• A. 31 days, which may be subject to an interest charge
• B. 30 days with no interest permitted
• C. 60 days
• D. One month, but only if the insurer elects to offer it

Correct answer: A. 31 days, which may be subject to an interest charge

Explanation: North Dakota requires every life policy to grant a thirty-one-day grace period for each premium after the first, during which the insurance continues in force; the statute expressly allows the grace period to be subject to an interest charge and lets the insurer deduct the overdue premium from any death settlement. B is wrong because the period is 31 days and interest is permitted; 60 days is not a North Dakota life figure; D is wrong because the provision is mandatory, not optional. See N.D.C.C. § 26.1-33-05.

• A. One year
• B. Two years
• C. Three years
• D. Five years

Correct answer: C. Three years

Explanation: The required reinstatement provision states that when, on default, the policy value has been applied to other insurance and the original policy has not been surrendered and canceled, the policy may be reinstated within three years from the default upon satisfactory evidence of insurability and payment of arrears with interest. One year is the suicide-defense period (§ 26.1-33-37), two years is the incontestability period, and five years is the minimum time limit the policy may set for bringing suit (§ 26.1-33-06). See N.D.C.C. § 26.1-33-05.

• A. Pay within 30 days of proof; no interest is owed
• B. Pay within 60 days of death; interest runs only if payment is late
• C. Pay within 15 business days of proof, with interest from the date of proof
• D. Pay on receipt of proof or within two months, including reasonable interest from the date of death because proof was filed within 180 days

Correct answer: D. Pay on receipt of proof or within two months, including reasonable interest from the date of death because proof was filed within 180 days

Explanation: The life policy must provide that a death claim is settled upon receipt of due proof or not later than two months after receipt of the proof, and the settlement must include reasonable interest accrued from the date of death as long as proof is filed within one hundred eighty days after death. A is wrong on both the period and the interest; B measures from death rather than proof and makes interest conditional; fifteen business days is the health-claim payment rule in § 26.1-36-37.1, and interest runs from death, not from proof. See N.D.C.C. § 26.1-33-05.

• A. converted into auto insurance
• B. paid to the producer
• C. ignored for all tax purposes
• D. taxable as ordinary income

Correct answer: D. taxable as ordinary income

Explanation: When a policy is surrendered, any amount received above the policyowner's cost basis is generally taxable as ordinary income.

• A. They may receive special tax treatment under retirement-plan rules
• B. They are taxed in the year contributed and again when distributed
• C. They are treated the same as premiums on a nonqualified annuity
• D. They produce earnings that are taxed annually as ordinary income

Correct answer: A. They may receive special tax treatment under retirement-plan rules

Explanation: Qualified annuities are connected to retirement-plan rules and may receive special tax treatment. Taxes usually apply when distributions are taken, depending on the arrangement.

• A. the income tax treatment of the death benefit
• B. the tax treatment of distributions from the policy
• C. the guaranteed cash value schedule in the contract
• D. the contestability period the insurer may rely on

Correct answer: B. the tax treatment of distributions from the policy

Explanation: A MEC is a life insurance contract that fails certain funding tests. Distributions from a MEC can be taxed less favorably than distributions from a non-MEC policy.

• A. Proceeds paid to a named beneficiary are excluded from the estate regardless of who owned the policy
• B. Proceeds are subject to federal estate tax whenever the beneficiary is a family member
• C. Ownership and incidents of ownership can affect whether proceeds are included in an estate
• D. Transferring ownership of the policy to another person is disregarded for estate tax purposes

Correct answer: C. Ownership and incidents of ownership can affect whether proceeds are included in an estate

Explanation: For estate-tax concepts, ownership and incidents of ownership are important. Exam candidates should know that tax results depend on policy ownership and applicable law.

• A. a homeowners policy form
• B. a court order after the insured dies
• C. a separate policy mailed to each beneficiary only
• D. a master policy issued to the group sponsor

Correct answer: D. a master policy issued to the group sponsor

Explanation: Group life insurance is commonly issued as a master policy to an employer or other eligible group sponsor, with certificates provided to covered members.

• A. a certificate of insurance
• B. the original master policy
• C. the insurer's corporate charter
• D. a state exam outline

Correct answer: A. a certificate of insurance

Explanation: The employer or sponsor holds the master policy. Covered employees generally receive certificates explaining their coverage.

• A. only one employee's favorite hobby
• B. the group as a whole
• C. the producer's continuing education record
• D. the beneficiary's credit card limit

Correct answer: B. the group as a whole

Explanation: Group underwriting evaluates the group characteristics, participation, eligibility, and overall risk rather than fully underwriting each person in the same way as individual coverage.

• A. the employer pays nothing and no one is insured
• B. only retirees may enroll
• C. covered members pay part or all of the premium
• D. the insurer pays the employee's salary

Correct answer: C. covered members pay part or all of the premium

Explanation: In a contributory plan, employees or members contribute toward the premium. Participation requirements often help prevent adverse selection.