CH 6: NJ Laws, Rules, and Regulations Pertinent to Life Insurance Only
Twisting
A misrepresentation, or incomplete or fraudulent comparison of insurance policies that persuades an insured/owner, to his or her detriment, to cancel, lapse, switch policies, or take out a policy with another insurer; PROHIBITED
All of the following could own group life insurance EXCEPT
-A group needing low-cost life insurance -CORRECT: a debtor group, a group sponsored by an employer, an alumni group
Proceeds from life insurance policies are protected from the beneficiary's debts under all of the following circumstances EXCEPT
-Some of the premiums were paid in an attempt to defraud creditors -CORRECT: there are no circumstances under which proceeds are protected from the beneficiary's, the amount of debt exceeds the policy's face value, the amount of debt exceeds 50% of the policy's face value
o The buyer's guide and policy summary can be delivered with the policy or earlier if the policy contains an unconditional refund provision of at least
10 days
Minimum age at which an NJ individual can purchase life insurance
15
During policy replacement, the replacing insurer must notify existing insurers within what time period?
5 business days
An insurer must keep all sales materials for at least how long?
5 years
How is credit life insurance usually written?
Decreasing term insurance
Which of the following documents must be provided to the policyowner or applicant during policy replacement?
Notice Regarding Replacement
During a replacement of life insurance, a replacing insurer must do which of the following?
Obtain a list of all life insurance policies that will be replaced
An individual wants to purchase a life insurance policy. His agent asks if the transaction will involve replacing an existing life insurance policies. If the customer replies, "Yes," which of the following best describes the agent's next step?
The agent must provide a replacement notice to the application
An insured replaces his current policy w/ one offered by another insurer. If he finds that he is unsatisfied w/ the new policy, within what period of time can he return it and receive a full refund?
30 days
Which of the following is true regarding the insurance amount in a credit life policy?
Creditor can only insure the debtor for the amount owed
Which of the following entities is held responsible for the contents of an insurer's advertisement on local TV station?
The insurance company
Advertisement
o Means any material designed to persuade the public to purchase life insurance, including Printed/published material - mail, newspaper, magazines, radio/television, billboards Descriptive literature & sales aids Prepared sales talks, presentation, and material for use by insurance agents o ALL advertisements are the responsibility of the insurer
Who is the creditor and beneficiary in this case (cred life insurance) and who pays the premiums?
Creditor is the owner & beneficiary of the policy; the premiums are generally paid by the borrower (debtor). -Credit life insurance cannot pay out more than the balance of the debt
Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?
Replacement rule
What is credit life insurance used for?
To insure the life of the debtor & pay off the balance of a loan in the event of the death of the debtor
Misrepresenting an insurance policy as a share of stock is an example of which of the following?
False advertisement
If an insurer requires an application in order to renew a life insurance policy, it is the insurer's responsibility to send one to the insured
Within 30 days of the insured's request