NJ Heath & Life Insurance Exam

If a person violates a cease and desist order, the Commissioner can turn the matter over to the New Jersey Superior Court for further legal action and can assess a fine for each violation of up to

$5,000.

What percentage of a company's employees must take part in a noncontributory group life plan?

100%

A licensed insurance producer must notify the Department of a change in mailing address within how many days and by what method?

30 days, by mail or electronically

An insurer is attempting to determine the insurability of an applicant and decides to obtain medical information from several different sources. Which of the following must be notified of the investigation? A. The State Department of Insurance B. The medical examiner C. The applicant D. The Medical Information Bureau

C. The applicant

1: Which of the following is NOT true regarding Equity Indexed Annuities? A. They have guaranteed minimum interest rates. B. They are less risky than variable annuities. C. They earn lower interest rates than fixed annuities. D. The insurance company keeps a percentage of the returns.

C. They earn lower interest rates than fixed annuities.

What is the purpose of a benefit schedule? A. To provide the dates for the payment of benefits B. To list the insured's copayments and deductibles C. To state what and how much is covered in the plan D. To include the average charges for procedures

C. To state what and how much is covered in the plan

What is the term for how frequently a policyowner is required to pay the policy premium?

Mode

If the issuance of a license is denied and a hearing is requested, which entity will be making determination whether or not the license should be issued?

The Department of Insurance

The primary beneficiary of her husband's life policy found that no settlement option was stated in the policy on the date of her husband's death. Who will select the settlement option in this case?

The beneficiary

When may an insurance company use suicide as a defense against paying a death claim?

When death occurs within a specified period of time after the policy was issued

Which of the following is TRUE about nonforfeiture values? a)A table showing nonforfeiture values for the next 10 years must be included in the policy. b)Policyowners do not have the authority to decide how to exercise nonforfeiture values. c)They are required by state law to be included in the policy. d)They are optional provisions.

c)They are required by state law to be included in the policy.

All of the following statements concerning dividends are true EXCEPT a)Dividend amounts are guaranteed in the policy. b)Lower insurance company costs generate higher dividends. c)They stem from favorable underwriting experience. d)Favorable investment results generate higher dividends.

c)They stem from favorable underwriting experience.

The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called a)Waiver of cost of insurance. b)Payor benefit. c)Waiver of premium. d)Guaranteed insurability.

c)Waiver of premium.

The main difference between immediate and deferred annuities is a)The number of insureds. b)The amount of each payment. c)When the income payments begin. d)How the annuity is purchased.

c)When the income payments begin.

When would a 20-pay whole life policy endow? a)After 20 payments b)In 20 years c)When the insured reaches age 100 d)At the insured's age 65

c)When the insured reaches age 100

Which is TRUE about the cash surrender nonforfeiture option? a)After the cash surrender, the insured is covered for a grace period of one month. b)The policy remains active for some time after the policyholder opts for cash surrender. c)The policyholder receives the original cash value of the policy. d)Funds exceeding the premium paid are taxable as ordinary income.

d)Funds exceeding the premium paid are taxable as ordinary income.

Which of the following is NOT true regarding Equity Indexed Annuities? a)The insurance company keeps a percentage of the returns. b)They have guaranteed minimum interest rates. c)They are less risky than variable annuities. d)They earn lower interest rates than fixed annuities.

d)They earn lower interest rates than fixed annuities.

10: Which of the following riders would NOT cause the Death Benefit to increase? A. Cost of Living Rider B. Accidental Death Rider C. Payor Benefit Rider D. Guaranteed Insurabilit Rider

C. Payor Benefit Rider

All of the following are features of catastrophic plans EXCEPT A. High premiums. B. Out-of-pocket costs. C. High deductibles D. Essential benefits.

A. High premiums.

Which of the following is NOT true regarding an optionally renewable policy? A. Insurer can only cancel the policy for reasons stipulated in the contract. B. Renewability is at the option of the insurer. C. Nonrenewal can happen on the policy anniversary date. D. Policy premiums can increase at renewal.

A. Insurer can only cancel the policy for reasons stipulated in the contract.

Which of the following is NOT a type of whole life insurance? A. Level term B. Single premium C. Straight life D. Limited payment

A. Level term

In contrasting stock insurers with mutual insurers, which statement is true? A. Stock insurers are owned by the shareholders and issue nonparticipating policies. B. Stock dividends are tax free while policy dividends are taxable. C. Nonparticipating policies can pay out dividends to the policyholders. D. Mutual insurers are owned by the shareholders and issue participating policies.

A. Stock insurers are owned by the shareholders and issue nonparticipating policies.

Which of the following is a key distinction between variable whole life and variable universal life products? A. Variable whole life has a guaranteed death benefit. B. Variable universal life is regulated solely through FINRA. C. Variable whole life allows policy loans from the cash value. D. Variable universal life has a fixed premium.

A. Variable whole life has a guaranteed death benefit.

A disability income policy has a waiting period of 7 days. If the insured is disabled for 15 days, how many days of benefits will the policy pay? A. 7 days B. 8 days C. 15 days D. 22 days

B. 8 days

Which of the following statements is INCORRECT concerning business operations in a branch office in New Jersey? A. Licensees must file a branch office registration form 30 days before business is conducted at said office. B. A branch office certificate expires 2 years from the date of filing, regardless of the producer's own license expiration. C. A branch office is any office other than a principal office where a resident licensee conducts insurance business. D. Licensees must register with the Department to obtain a branch office certificate.

B. A branch office certificate expires 2 years from the date of filing, regardless of the producer's own license expiration.

In increasing and decreasing term policies, which policy component fluctuates during the policy term? A. Nonforfeiture values B. Death benefit C. Premium D. Cash value

B. Death benefit

All of the following statements concerning dividends are true EXCEPT A. Favorable investment results generate higher dividends. B. Dividend amounts are guaranteed in the policy. C. Lower insurance company costs generate higher dividends. D. They stem from favorable underwriting experience.

B. Dividend amounts are guaranteed in the policy.

An applicant for surplus lines authority must do all of the following EXCEPT A. Be allowed to write business in this state. B. Be considered a resident of this state. C. Possess a certificate of authority in this state. D. Hold a property and casualty license.

C. Possess a certificate of authority in this state.

The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this? A. Cash option B. Reduction of premium C. Paid-up addition D. Accumulation at interest

B. Reduction of premium

What is another name for interest-sensitive whole life insurance? A. Term life B. Adjustable life C. Current assumption life D. Variable life

C. Current assumption life

Under the Temporary Disability Law, two periods of disability due to the same cause and separated by not more than 14 days will be considered A. Two separate periods of disability, and will be paid as such. B. Two separate periods of disability, unless the insured did not file his first period of disability. If the first period was not claimed, both time periods will be treated as one. C. One continuous period of disability, as long as the insured earned wages during the 14-day period with the same employer before the first period of disability. D. One continuous period of disability, as long as the insured earned wages during the 14-day period with any employer between the periods of disability.

C. One continuous period of disability, as long as the insured earned wages during the 14-day period with the same employer before the first period of disability.

Producer licenses will NOT be issued to business entities in which of the following cases? A. One partner holds 10% share in another licensed business entity. B. The business has only one licensed producer. C. One partner's license was revoked in the previous 5 years. D. The business is not authorized by the Secretary of State.

C. One partner's license was revoked in the previous 5 years.

A rider attached to a life insurance policy that provides coverage on the insured's family members is called the A. Juvenile rider. B. Payor rider. C. Other-insured rider. D. Change of insured rider.

C. Other-insured rider.

Your client is sole proprietor and wishes to include his family on a medical expense plan. How much of the cost of the medical expense plan can be deducted (since he is considered self-employed)? A. 0% B. 85% C. 90% D. 100%

D. 100%

When must an insurer report to the Commissioner a listing of individuals who have more than one Medicare supplement policy in force? A. Biannually B. Every 5 years C. Immediately upon recognition D. Annually

D. Annually

In order for an alumni association to be eligible to purchase group health insurance for its members, all of these statements must be true EXCEPT when the association A. Has a constitution, by-laws, and must hold at least annual meetings. B. Is organized for reasons other than buying insurance. C. Has at least 100 members. D. Has been active for five years minimum.

D. Has been active for five years minimum.

Which of the following settlement options in life insurance is known as straight life? A. Single life B. Life with period certain C. Fixed amount D. Life income

D. Life income

A core Medicare supplement policy (Plan A) will cover all of the following expenses EXCEPT A. The first 3 pints of blood. B. 20% of Part B coinsurance amounts for Medicare-approved services. C. Part A coinsurance. D. Part A deductible.

D. Part A deductible.

All of the following are types of term policies based on what happens to the face amount during the policy term EXCEPT A. Decreasing. B. Level. C. Increasing. D. Renewable.

D. Renewable.

Which of the following is NOT true regarding the annuitant? A. The annuitant's life expectancy is taken into consideration for the annuity. B. The annuitant receives the annuity benefits. C. The annuitant must be a natural person. D. The annuitant cannot be the same person as the annuity owner.

D. The annuitant cannot be the same person as the annuity owner.

An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries? A. The beneficiary will receive 2/3 of the lump sum up front, and the remaining 1/3 will be paid over time. B. The beneficiary will receive 2/3 of the total benefit, with the final 1/3 payable when the first beneficiary dies. C. One of the beneficiaries will receive 1/3 and the other 2/3 of the proceeds when the insured dies. D. The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.

D. The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.

Which is TRUE about the cash surrender nonforfeiture option? a)After the cash surrender, the insured is covered for a grace period of one month. b)The policy remains active for some time after the policyholder opts for cash surrender. c)The policyholder receives the original cash value of the policy. d)Funds exceeding the premium paid are taxable as ordinary income.

Funds exceeding the premium paid are taxable as ordinary income.

The death benefit under the Universal Life Option B

Gradually increases each year by the amount that the cash value increases.

#15. Under which of the following circumstances would a nonresident producer NOT required to complete CE hours in New Jersey? a) Any time nonresident producers satisfy CE requirements in their home state b) under no circumstances: all producers must meet CE requirements in this state c) If a waiver is received from the Commissioner d) If the producer's home state has the same CE requirements and the producer satisfies them

If the producer's home state has the same CE requirements and the producer satisfies them

What is the main purpose of the Seven-pay Test?

It determines if the insurance policy is a MEC.

An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident, and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do? a)Pay nothing; there was a misrepresentation on the application b)Pay the full death benefit and refund excess premium c)Pay a reduced death benefit d)Pay the full death benefit

Pay a reduced death benefit

Who might receive dividends from a mutual insurer?

Policyholders

What does The Federal Fair Credit Reporting Act do?

Regulates consumer reports.

Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean? A. The beneficiary must pay interest to the insurer. B. The beneficiary will receive the lump sum, plus interest. C. The primary beneficiary will receive the death benefit and the secondary beneficiaries will share the interest pavments. D. The beneficiary will only receive payments of the interest earned on the death benefit.

The beneficiary will only receive payments of the interest earned on the death benefit.

When a life insurance policy was issued, the policyowner designated a primary and a contingent beneficiary. Several years later, both the insured and the primary beneficiary died in the same car accident, and it was impossible to determine who died first. Which of the following would receive the death benefit?

The insured's contingent beneficiary

What is the advantage of reinstating a policy instead of applying for a new one?

The original age is used for premium determination.

All of the following are true about variable products EXCEPT a)The cash value is not guaranteed. b)Policyowners bear the investment risk. c)The premiums are invested in the insurer's general account. d)The minimum death benefit is guaranteed.

The premiums are invested in the insurer's general account.

Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of

Twisting.

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply? a)5 days b)7 days c)10 days d)3 days

a)5 days

A rider attached to a life insurance policy that provides coverage on the insured's family members is called the a)Other-insured rider. b)Change of insured rider. c)Juvenile rider. d)Payor rider.

a)Other-insured rider.

In which of the following instances would the premium be tax deductible? a)Premiums paid by an employer on a $30,000 group term life insurance plan for employees b)Premiums paid by an individual on his/her own life insurance c)Premiums paid by a mother on her son's policy d)Premiums paid by an employer on the life of a key person

a)Premiums paid by an employer on a $30,000 group term life insurance plan

Which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policyowner? a)Third-party ownership b)An irrevocable beneficiary c)A buy-sell agreement d)Family term rider

a)Third-party ownership

Producer licenses are valid for a)1 year. b)2 years. c)5 years. d)Unlimited amount of time.

b)2 years.

What happens when a policy is surrendered for its cash value? a)The policy can be converted to term coverage. b)Coverage ends and the policy cannot be reinstated. c)Coverage ends but the policy can be reinstated at any time. d)The policy can be reinstated by paying back all policy loans and premiums.

b)Coverage ends and the policy cannot be reinstated.

Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? a)Slandering b)Defamation c)Undercutting d)Twisting

b)Defamation

Which of the following best describes a misrepresentation? a)Discriminating among individuals of the same insuring class b)Issuing sales material with exaggerated statements about policy benefits c)Making a deceptive or untrue statement about a person engaged in the insurance business d)Making a maliciously critical statement that is intended to injure another person

b)Issuing sales material with exaggerated statements about policy benefits

Death benefits payable to a beneficiary under a life insurance policy are generally a)Exempt from income taxation if over $10,000. b)Not subject to income taxation by the Federal Government. c)Subject to income taxation by the Federal Government. d)Exempt from income taxation if under $10,000.

b)Not subject to income taxation by the Federal Government.

All of the following employees may use a 403(b) plan for their retirement EXCEPT a)The vice president of a charitable organization. b)The CEO of a private corporation. c)A school bus driver. d)A part-time classroom aide.

b)The CEO of a private corporation.

A "certification of license status" report can be run on any currently licensed New Jersey producer, but can only contain information on formal disciplinary actions taken within the past a)10 years. b)6 months. c)4 years. d)7 years.

c)4 years.

The term "fixed" in a fixed annuity refers to all of the following EXCEPT a)Equal annuity payments b)Amount and length of payments c)Death benefit d)Guaranteed rate of interest

c)Death benefit

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT a)Stocks, securities, or bonds. b)An offer to share in commissions generated by the sale. c)Dividends from a mutual insurer. d)An offer of employment.

c)Dividends from a mutual insurer.

Who does an insurance agent represent? a)The Department b)Him/herself c)The insurer d)The insured

c)The insurer

All of the following would be eligible to establish a Keogh retirement plan EXCEPT a)A sole proprietor of film development store with no employees. b)A hair dresser who operates her business at her house. c)The president and employee of a family corporation. d)A sole proprietor of a service station who employs four employees.

c)The president and employee of a family corporation.