Life Insurance

An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. What amount would his beneficiary receive as a settlement?

$200,000

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

100%

By how many days does the discontinuance of a group insurance policy reduce the time limit for providing notice of claim or proof of loss?

30 days

How is an insurance consultant different from an insurance producer?

A consultant does not sell policies, but only offers advice

All of the following could own group life insurance EXCEPT

A group needing low-cost life insurance

Which of the following persons is required to hold a producer license?

A person who negotiates insurance contracts

Which of the following would be required to be licensed as an insurance producer?

A salaried employee who advertises and solicitis insurance

Presenting any written or oral statement in support of or in opposition to a claim payment, while knowing that the statement contains false or misleading information material to the claim, would be best considered

A violation of the New Jersey Insurance Fraud Prevention Act

At age 30, an applicant wants to start an insurance program, but realizing that his insurance needs will likely change, he wants a policy that can be modified to accommodate those changes as they occur. Which of the following policies would most likely fit his needs?

Adjustable Life

All of the following are examples of third-party ownership of a life insurance policy EXCEPT

An insured couple purchases a life insurance policy insuring the life of their grandson

Under which of the following circumstances would an insurer pay accelerated benefits?

An insured is diagnosed with cancer and needs help paying for her medical treatment

What is a foreign insurer?

An insurer with licensed agents doing business in other countries

The LEAST expensive first-year premium is found in which of the following policies?

Annually Renewable Term

In classifying a risk, the Home Office underwriting department will look at all of the following EXCEPT

Applicant's past income

All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT

At distribution, all amounts received by the employee are tax free

Which of the following would NOT be considered an exception to the National Do Not Call List?

Calls based from outside of the United States

All of the following are characteristics of group life insurance EXCEPT

Certificate holders may convert coverage to an individual policy without evidence of insurability

To legally transact insurance in this state, an insurer must obtain which of the following?

Certification of Authority

If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to

Charge a higher premium

In accordance with the Administrative Procedure Act, what entity has the authority to make and enforce rules and regulations to implement and carry out the purposes of the Insurance laws of New Jersey?

Commissioner

Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid?

Consideration clause

Which of the following would NOT be considered an unfair and deceptive practice?

Controlled business

What happens when a policy is surrendered for its cash value?

Coverage ends and the policy cannot be reinstated

Circulating deceptive sales material to the public is what type of Unfair Trade Practice?

False advertising

Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member?

Family term rider

In a direct transfer, how is money transferred from one retirement plan to a traditional IRA?

From trustee to trustee

Which of the following is a duty of the Commissioner of insurance in this state?

Imprison Insurance Code violators

Life income joint and survivor settlement option guarantees

Income for 2 or more recipients until they die

Who makes up the Medical Information Bureau?

Insurers

Which of the following is TRUE about the 10-day free-look period in a Life Insurance policy?

It begins when the policy is delivered

What is the purpose of a conditional receipt?

It is intended to provide coverage on a date prior to the policy issue

Which of the following is NOT true regarding a Certificate of Authority?

It is issued to group insurance participants

A life insurance policy has lapsed, and the policyowner would like to reinstate it. In order to initiate the reinstatement process, he must submit an application to his insurer. Which of the following is true?

It is the policy owner's responsibility to request the reinstatement application; the insurer must then deliver it within 30 days.

Which of the following statements about the reinstatement provision is true?

It requires the policy owner to pay all overdue premiums with interest before the policy is reinstated

Twin brothers are starting a new business. They know it will take several years to build the business to the point that they can pay off the debt incurred in starting the business. What type of insurance would be the most affordable and still provide a death benefit should one of them die?

Joint Life

An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act?

Legal, provided that the information can be verified

Which of the following settlement options in life insurance is known as straight life?

Life income

The premium of a survivorship life policy compared with that of a joint life policy would be

Lower

Which of the following provide(s) funding for the New Jersey Life and Health Guaranty Association?

Member insurers

Which of the following insurers are owned by stockholders?

Mutual

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are

Not taxable since the IRS treats them as a return of a portion of the premium paid

An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called

Paid-up additions

What describes the specific information about a policy?

Policy summary

Which of the following will be included in a policy summary?

Premium amounts and surrender values

Which of the following is NOT required information a producer must provide before soliciting insurance?

Producer contact information

When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to

Purchase a single premium policy for a reduced face amount

It would be considered unfair discrimination to ask an insurance applicant about which of the following and then use that information as a rating factor to determine insurability?

Sexual orientation

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

The McCarran Act stated that the federal government would not regulate insurance as long as an adequate job of regulating the industry was done by the

States

All of the following are considered limited lines of authority EXCEPT

Surplus Lines

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then

The benefit is received tax free

An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term?

The insured may renew the policy for another 10 years, but at a higher premium rate

All of the following are true regarding a decreasing term policy EXCEPT

The payable premium amount steadily declines throughout the duration of the contract

What is the purpose of a disclosure statement in life insurance policies?

To explain features and benefits of a proposed policy to the customer

Which of the following is included in the term "insurance-related conduct"?

Transmitting funds between producers and the insurance company

An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have?

Universal Life

A producer's appointment lasts for how long?

Until it is terminated

Which of the following life insurance policies allows a policyowner to take out a loan from the policy's cash value?

Variable universal life

The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called

Waiver of premium

Which of the following types of insurance policies is most commonly used in credit life insurance?

Whole life

If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant no later than

With the policy

An insurer cancelled a contract with a producer on April 1st. By what date must the insurer notify the Commissioner of this action?

April 30th

When a producer was reviewing a potential customer's coverage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of

Defamation

When the policyowner specifies a dollar amount in which installments are to be paid, he/she has chosen which settlement option?

Fixed amount

At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called

Guaranteed insurability

What type of insurance would be used for a Return of Premium rider?

Increasing Term

An underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering a(n)

Inspection report

What is the other term for the cash payment settlement option?

Lump sum

Untrue statements on the application unintentionally made by insureds that, if discovered, would alter the underwriting decision of the insurance company, are called

Material misrepresentation

A life insurance policy insures against several different perils. If the policyowner wants to cancel the coverage for one of those perils, can that be done?

Only if the policy specifies that a separate premium for that peril coverage is separately cancelable.

Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?

Option B

Which of the following explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy?

Owner's Rights

A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy

Required a premium increase each renewal

The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT

The insured's age at death

The sole beneficiary of a life insurance policy dies before the insured. If the policyowner fails to change the beneficiary before the insured's death, the proceeds of the policy will go to

The insured's estate

An organization licensed as a producer business entity based in New York would like to transact insurance in New Jersey. Which of the following is true?

The organization will need to obtain a nonresident business entity license, and its producers will need to obtain nonresident licenses

All of the following are general requirements of a qualified plan EXCEPT

The plan must provide an offset for social security benefits

If an applicant for a life insurance policy and person to be insured by the policy are two different people, the underwriter would be concerned about

Wether an insurable interest exists between the individuals

When is the earliest a policy may go into effect?

When the application is signed and a check is given to the agent

An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy?

$9,800

When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered

Discrimination

Which of the following is true regarding taxation of dividends in participating policies?

Dividens are not taxable