Term, whole, universal and variable life, and the general features of group and credit life, are covered in the national Types of Life Insurance Policies guide. North Carolina's Life exam adds state definitions and rules for:

• industrial, credit and variable life
• group life (G.S. 58-58-135 to 58-58-141)
• viatical settlements (58-58-205 to 58-58-250)

Definitions and prohibited plans

• Industrial life insurance has premiums payable monthly or more often, a face amount of no more than $1,000, and the words "Industrial Policy" printed on it (58-58-5).
• Credit life insurance covers the life of a debtor in connection with a debt owed to a creditor. It may include total and permanent disability benefits (58-58-10).
• Survivorship (tontine) funds are banned. A life insurer may not offer a plan that pays accumulated profits only to those who keep their policies to the end of a period (58-58-15).
• Life insurers may not deliver, with a policy, a plan to sell stock or securities as an inducement (58-58-20).

Variable life

• Selling variable life or variable annuities requires the variable life and variable annuity line of authority. A resident producer must hold a life license and meet the FINRA requirements (58-33-26(c1)(8)).
• Free look. A variable life owner may return the policy for a refund of all premiums within 45 days of signing the application or 10 days after receiving the policy, whichever is later (11 NCAC 12 .0436).

Group life

Eligible groups (58-58-135)

Standard provisions (58-58-140)

• Representations. Statements by the policyholder or insureds are representations, not warranties. An insured's statement can be used in a contest only if a copy was given to that person or the beneficiary.
• Facility of payment. Up to $250 may be paid to someone who covered funeral or last-illness expenses.
• Conversion when employment ends:
  • The person may buy an individual policy without evidence of insurability by applying and paying within 31 days.
  • It may be any form except term, for no more than the amount that ended.
  • If the person dies during the 31 days, the amount that could have been converted is paid, whether or not an application was made.
• Conversion when the group policy itself ends. Only people insured for at least five years may convert, and the amount may be limited to $10,000.

Portability (58-58-141). When an insured chooses a portability option after leaving the group, the insurer may not use health questions or health-based eligibility rules.

Viatical settlements

• In a viatical settlement, the owner (the viator) sells or transfers the policy for compensation less than the expected death benefit (58-58-205).
• Providers and brokers need a license from the regulator of the viator's state of residence (58-58-210).
• The viator has an unconditional right to rescind for at least 10 business days after receiving the proceeds.
• The provider notifies the insurer within 20 days after the viator signs the transfer documents (58-58-250).

Common exam traps

• Industrial life: face amount of $1,000 or less, with premiums monthly or more often.
• Group life conversion: 31 days, any form except term. Death during that window pays the convertible amount.
• Union and association groups need 25 members. Associations must be 2 years old.
• Variable life free look: 45 days from application or 10 days from delivery, whichever is later.