Chapter 8: Exam (Attempt #1)

How many days before conducting business must a branch office registration form be filed? A) 60 B) 30 C) 45 D) 10

B) 30 A licensee must file a branch office registration form with a processing fee to the Department of Banking and Insurance within 30 days before business is conducted.

Which of the following is not considered insurance-related conduct? A) Processing claims B) Underwriting an insurance application C) Collecting premiums D) Binding a policy

B) Underwriting an insurance application Selling, soliciting, and negotiating insurance policies, communicating with insureds regarding policy terms and conditions, and office management affecting insureds are other examples of insurance-related conduct.

A former licensee whose license was revoked in May 2015 may apply for reinstatement in: A) May 2014 B) May 2013 C) May 2015 D) May 2020

D) May 2020 A person whose license has been revoked may apply for reinstatement after 5 years from the revocation date.

All of the following are true regarding a nonresident license, except: A) A person residing in another state may be licensed as a nonresident producer if the person is currently licensed in his/her home state B) A nonresident licensee may be authorized for any line of insurance for which the licensee is not authorized in his/her home state C) A person licensed as a surplus lines or limited lines insurance producer in his/her home state may receive a nonresident license D) A person residing in another state may be licensed as a nonresident producer if the person's home state issues nonresident producer licenses to New Jersey residents on a reciprocal basis

B) A nonresident licensee may be authorized for any line of insurance for which the licensee is not authorized in his/her home state A nonresident licensee may only be authorized for the line(s) of insurance for which the licensee is authorized in his/her home state.

A producer replacing a life policy must give the applicant all of the following, except: A) Comparison statement B) Copy of each sales proposal C) Buyer's Guide D) Signed replacement notice

C) Buyer's Guide The producer is not required to provide an applicant pursuant to a replacement with a copy of a Buyer's Guide.

Which of the following statements is false? A) Insurance-related conduct includes selling, soliciting, negotiating insurance, but not binding policies of insurance B) An insurance broker acts as the representative of an insured C) A certificate issued by the Commissioner evidencing the authority of an insurer to transact insurance D) Soliciting is attempting to sell insurance, or inducing a person to apply for a particular kind of insurance from a particular insurer

A) Insurance-related conduct includes selling, soliciting, negotiating insurance, but not binding policies of insurance Insurance-related conduct includes selling, soliciting, negotiating insurance, and binding policies of insurance.

A producer's license that has been suspended may be reinstated: A) After 5 years B) After submitting a completed application and required affidavit C) On what would have been the next renewal date D) After one year

B) After submitting a completed application and required affidavit A producer's license that has been suspended may be reinstated after submitting a completed application and required affidavit. A license that has been revoked may be reinstated after 5 years

Which of the following statements is true? A) A pretext interview is a preliminary fact-finding process prior to a needs analysis B) No producer may prepare an investigative consumer report without informing the individual who is the subject of such investigation C) A producer is allowed to use a pretext interview if he/she believes a prospect has a substantial need of insurance D) A producer is prohibited from releasing information regarding the reason for an adverse underwriting decision to an applicant or insured

B) No producer may prepare an investigative consumer report without informing the individual who is the subject of such investigation A producer is not allowed to use a pretext interview. A producer is required to provide an applicant or insured the reason for an adverse underwriting decision. A pretext interview is an interview conducted under false pretenses.

Inducing a person to lapse an existing life insurance policy in order to take out a new life insurance policy is called: A) Intimidation B) Twisting C) Misrepresentation D) Coercion

B) Twisting When an agent makes any misleading representations or comparisons of policies for the purpose of inducing any person to terminate or convert a contract, or to take out a policy of life insurance with another insurer, this is referred to as twisting.

Which of the following correctly sets forth the penalties that may be imposed on a person who violates the Fraud Act? A) 1,000 for the first violation, $5,000 for the second violation and $10,000 for each subsequent violation B) $10,000 for the first violation and $15,000 for each subsequent violation C) $5,000 for the first violation, $10,000 for the second violation and $15,000 for each subsequent violation D) $5,000 per violation

C) $5,000 for the first violation, $10,000 for the second violation and $15,000 for each subsequent violation The penalties that may be imposed on a person who violates the Fraud Act are $5,000 for the first violation, $10,000 for the second violation, and $15,000 for each subsequent violation.

Who among the following would not have an insurable interest in an insured under a life insurance policy? A) A lender on the life of a borrower B) A corporation on the life of directors, officers or key employees of such corporation C) Employee on the life of his/her employer D) Individual on the life of his/her spouse

C) Employee on the life of his/her employer A corporation has an insurable interest on the life of directors, officers or key employees. A lender would have an insurable interest on the life of a borrower and an individual on his/her spouse. Under most circumstances, no insurable interest would exist with an employee on the life of his/her employer.

A nonresident producer or nonresident business entity will not qualify for a nonresident license if the producer: A) Pays a fee B) Provides a copy of the home state application for licensing C) Lives in a non-reciprocity state D) Is currently licensed as a resident producer in good standing in the home state

C) Lives in a non-reciprocity state In order to be a nonresident producer or business entity in New Jersey, the person's home state must award nonresident insurance producer licenses to New Jersey residents on the same basis.

The Court ruled the insurance industry was not subject to the commerce clause in the Constitution in which of the following court cases? A) U.S. vs. South-Eastern Underwriters Association B) Ferguson vs. NAIC C) Paul vs. Virginia D) McCarran-Ferguson Act

C) Paul vs. Virginia In 1869 the Court ruled the insurance industry was not subject to the commerce clause of the Constitution.

Which of the following is true regarding the duties of replacing insurers? A) The replacing insurer must retain records relating to replacements for 3 years B) The replacing insurer must notify the existing insurer of a policy being replaced within 5 calendar days C) The replacing insurer must retain records relating to replacements for 5 years D) The replacing insurer must notify the existing insurer of a policy being replaced within 30 days

C) The replacing insurer must retain records relating to replacements for 5 years Replacement records must be maintained for 5 years by replacing insurers. The replacing insurer would be required to notify the existing insurer of a policy being replaced within 5 working days.

The Department may revoke, suspend, or refuse to renew a license for all the following, except: A) Been convicted of a felony B) Cheated on an insurance examination C) Having failed to pay income tax D) Issued insufficient coverage to a customer through apparent authority

D) Issued insufficient coverage to a customer through apparent authority If a licensee issues insufficient coverage to an individual through apparent authority, this is not grounds for license suspension, non-renewal or revocation. Being convicted of a felony, failing to pay income tax, and cheating on an insurance examination are all grounds for license suspension, non-renewal or revocation.