Questions I need to review
within how many days must a producer report claims to the insurer?
5 business days
what is the fine for violating the commissioner's cease and desist order?
$5,000
what is the maximum penalty for failing to respond to a subpoena?
$5,000 any person violating an insurance law or regulation is liable to a penalty of no more than $5,000 for a first offense and no more than $10,000 for each subsequent offense
What are the penalties for the first, second, and any subsequent violation of the NJ Fraud Prevention Act, respectively?
$5,000, $10,000, $15,000
The maximum the Insurance Guaranty Association will pay to an individual for life insurance death benefits is
$500,000
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?
0 days discontinuance of the group policy or contract does not reduce the require time limit for providing notice of claim or proof of loss
A group of 4 entrepreneurs decides to open an insurance company. how many must be licensed insurance producers?
1
the four essential elements of all legal contracts
1. Agreement: offer and acceptance 2. Competent parties 3. Legal purpose 4. Consideration
the minimum age at which an individual can purchase a life insurance policy or an annuity contract is
15 payments to minors who are at least 15 yrs old may not exceed $2000 in any calendar year from a single insurer
payments to minors who are at least _____ years of age amy not exceed _____ in any calendar year
18 yrs of age $5000
The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years?
2 years the incontestability clause prevents an insurer from denying a claim due to statements in the application after the policy has been in force for 2 years, even if there has been a material misstatement of facts or concealment of a material fact
a married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. which policy is that? 1 - family income policy 2- joint life policy
2- joint life policy joint life policies cover the lives of two insureds; rates are blended. upon the death of the first insured, the policy ends family income policy is a type of term life insurnace
if a producer has been convicted of a crime, he or she must notify the commissioner within
30 days
if an insured requires an application in order to reinstate a policy, and if the insured request reinstatement in writing, an application must be delivered to the insured within ....
30 days
how many days should a licensees must notify the department within how many days of any change of address?
30 days of any change of address
In the event a policy lapses due to nonpayment of premium, within how many days would the policy be automatically reinstated once the outstanding premium is paid?
45 days if a policy premium is not paid by the end of the grace period, and the policy lapses, an insured may pay the outstanding premium and have the policy reinstated. if the insurer does not refuse reinstatement within 45 days from the date the conditional receipt was issued, the policy will be automatically reinstated
in cases where a producers license has been revoked, the producer must wait how many years before applying for reinstatement
5 years
Medicare supplement policies cannot establish a new deductible or waiting period for the recurrence of a condition for which treatment was given within
6 months
if a credit life policy lapses for nonpayment before the debt is satisfied, within how many days must the creditor either refund the premium paid or apply it against the debt?
60 days the debtor must either refund or apply the premium against the debt within 60 days of the date the policy terminates
in insurance, an offer is usually made when ....
An applicant submits and application to the insurer
An insurer cancelled a contract with a producer on April 1st. By what date must the insurer notify the Commissioner of this action?
April 15th if an insurer cancels an agency contract, it must notify the commissioner in writing within 15 days
The death protection component of a universal life policy is always a- decreasing term b - annually renewable term c - whole life d - adjustable life
B- Annually Renewable Term
When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to a- pay back all premiums owed plus interest b- receive payments for a fixed amount c- purchase a single premium policy for a reduced face amount d- purchase a term rider to attach to the policy
C - purchase a single premium policy for a reduced face amount when a whole life policy lapses or is surrendered prior to maturity, the cash value can be used by the insurer as a single premium to purchase a completely paid up permanent policy that has a reduced face amount from that of the former policy
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- buy sell agreement b- family term rider c- third party ownership d- an irrevocable beneficiary
C - third party ownership contracts that are owned by someone other than the insured are known as third party ownership. Most policies involving third party ownership are written in business situations or for minors in which the parent own the policy
Which of the following statements regarding the taxation of Modified Endowment Contracts is False? a- policy loans are taxable distributions b- accumulations are tax deferred c- withdrawals are not taxable d- distributions before aget 59.5 incur a 10% penalty on policy gains
C - withdrawals are not taxable any distributions from MECs are taxable, including withdrawals and policy loans.
which universal life option has a gradually increasing cash value and a level death benefit? a- term insurance b- option B c- option A d- Juvenile life
C- option A the death benefit remains level while the cash value gradually increases. the death benefit will increase at a later date in order to maintain a gap between the cash value and the death benefit before the policy matures
which of the following would not be considered rebating? a- sending $150 gift card to the insured'semployee as a thank you for the referral b- sharing commission with the insured c- collecting a lower premium that what's specified in a policy as a token of client appreciation d- giving a client. $50 pen with the insurer's logo during the insurance application process
D - giving a client. $50 pen with the insurer's logo during the insurance application process promotional materials, articles of merchandise or gifts that have a redeemable value of $100 or less are not considered ' valuable consideration' and no allowed
what type of insurance would be used for a return of premium rider? a- level term b- decreasing term c - annually renewable term d- increasing term
D- increasing term when added to a whole life policy it provides that at death prior to a given agem not only is the original face amount payable but also all premiums previously paid are payable to the beneficiary
if a settlement option is not chosen by the policy owner or the beneficiary, which option will be used? a- life income b- fixed period c- fixed amount d- lump sum
D- lump sum upon the death of the insured or endowment, the contract is designed to pay the proceeds in cash, called a lump sum, unless the recipient chooses an optional mode of settlement
a guaranteed renewable disability insurance policy
Is renewable at the insured's option to a specified age. Guaranteed renewable means that the insured has the right to keep the policy until a specific age; however, while the insurer cannot increase the rates on an individual basis, the insurer can increase the rates for all insureds by class.
what significance did Paul vs. Virginia have on the insurance industry?
It was decided that insurance was not interstate commerce and could not be regulated by the federal government
the federal fair credit reporting act
Regulates consumer reports aka consumer investigative reports or credit reports
the paid up addition option uses the dividend
To purchase a smaller amount of the same type of insurance as the original policy.
Solicitation rules would apply to which of the following types of coverage?
Whole life solicitation rules do not apply to annuities, credit life insurance, group policies, variable life insurance, or life insurance policies issued in connection with pension and welfare plans
according to the entire contract provision, what document must be made part of the insurance policy? a- copy of the original application b - buyer's guide c- agent's report d- outline of coverage
a - copy of the original application
which of the following statements is correct regarding a whole life policy? a- the policy owner is entitled to policy loans b- cash values are not guaranteed c - the policy premium is based on the attained age d- the death benefit may increase or decrease during the policy period
a - the policyowner is entitled to policy loans whole life policices offer level premium based on the issue age, guaranteed, level death benefit, cash value that is scheduled to equal the face amount at the insured's age 100, and living benefits, which include policy loans
which is true about a spouse term rider? a- the rider is usually level term insurance b- coverage is allowed for an unlimited time c- the rider is decreasing term insurance d- coverage is allowed up to age 75
a - the rider is usually level term insurance spouse term rider allows a spouse to be added for coverage. it is available for a limited amt of time. typically expiring at age 65. a spouse term rider is usually a level term insurance
an insurance producer is acting as a broker when he/she negotiates for an insurance contract on behalf of
a client
what best describe total disability?
a person's ability to work is significantly reduced or eliminated for the rest of his/her life
all of the following could own group life insurance EXCEPT a- a group needing low cost life insurance b - a group sponsored by an employer c- an alumni group d - a debtor group
a- a group needing low cost life insurance groups purchasing group life insurance must be formed for a reason other than purchasing insurance
While a claim is pending, an insurance company may require
an independent examination as often as reasonably required
All of the following are examples of third party ownership of a life insurance policy except
an insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan
acceptance takes place when
an insurer underwriter approves the application and issues a policy
representations...
are statements that are true to the best of the applicant's knowledge
what is the maximum period of time during which an insurer may contest fraudulent misstatements made in a health insurance application?
as long as the policy is in force
in a replacement situation, all of the following must be considered except
assets the agent must be careful to compare the benefits, limitations and exclusions found in the current and the proposed replacement policy
what kind of policy allows withdrawals or partial surrenders? a- variable whole life b- universal life c- 20 pay life d- term policy
b - universal life universal life products allow the partial withdrawal or surrender of the policy cash value
To attain currently insured status under Social Security, a worker must have earned at least how many credits during the last 13 quarters? a- 4 credits b- 6 credits c- 10 credits d- 40 credits
b- 6 credits to be considered currently (or partially) insured, an individual must have earned 6 credits during the last 13 quarter period
which of the following is not a type of whole life insurance? a- limited payment b- level term c- single premium d- straight life
b- level term
what is the legal name of a corporation or partnership under which a licensee conducts insurance business?
business name a business name is the legal name of a corporation or partnership or any trade of fictitious name under which a license conducts insurance business
how is the insurance guaranty association funded?
by its members- authorized insurers
which of the following riders would not increase the premium for a policyowner? a- waiver of premium rider b- multiple indemnity rider c- impairment rider d- payor benefit rider
c- impairment rider the impairment rider excludes a specified condition from coverage, therefore reducing benefits
the premium of a survivorship life policy compared with that of a joint life policy would be a- as high b- half the amount c- lower d- higher
c- lower since the death benefit is not paid until the last death, the joint life expectancy in a sense is extended, resulting in a lower premium than that which is typically charged for joint life
if a violation of the new jersey insurance code were to occur, a cease and desist order and/or penalty may be issued. who may issue a cease and desist order?
commissioner
what is the contract provision that allows the insurer to nonrenew health coverage if certain events occur?
conditionally renewable may be canceled for specific conditions contained in the policy but optionally renewable policies do not specify a condition or reason for cancellation
When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?
consideration consideration is something of value that each party gives to the other. the consideration on the part of the insured is the payment of premium and the representations made in the application
An insurer neglects to pay a legitimate claim that is covered under the terms of the policy. Which of the following insurance principles has the insurer violated?
consideration the binding force in any contract is consideration. consideration on the part of the insured is the payment of premiums and the health representations made in the application. consideration on the part of the insurer is the promise to pay in the event of loss
the type of policy that can be changed from one that does not accumulate cash value
convertible term policy has a provision that allows the policyowner to convert to permanent insurance
if an insurer and insured have a dispute about whether a particular loss is covered under a policy, which authority will settle the dispute?
court system
What type of insurance can be written by a limited lines agent?
credit insurance Limited lines agent can write the following types of insurance: bail bonds, car rental insurance, credit insurance, ticket insurance, travel insurance, group mortgage cancellation, legal insurance, self storage personal property insurance, and special non resident limited lines
the type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is called
credit life
who is the beneficiary in credit life insurance?
creditor
what is the advantage of reinstating a policy instead of applying for a new one? a- proof of insurability is not required b- the face amount can be increased c- the cash values have gained interest while the policy was lapsed d- the original age is used for premium determination
d- the original age is used for premium determination the reinstatement provision allows the policyowner an opportunity to put a lapsed policy back in force, subject to proving continued insurability. if the policyowner elects to reinstate the policy, as opposed to purchasing a new policy, the reinstated policy is restored to its original status
the insurance policy, together with the policy application and any added riders form what is known as
entire contract when a policy is.issued, a copy of the application, any riders and amendments are attached to the back of the policy and become part of the entire contract
the provision in a health insurance policy that ensures that the insurer cannot refer to any document that is not contained in the contract is the
entire contract clause is a mandatory provision that is required by law
When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount?
equal to the original policy for as long as the cash values will purchase
Using names or titles that have tendency to misrepresent the true nature of a policy is an example of what illegal practice?
false advertising
using names or titles that have tendency to misrepresent the true nature of a policy is an example of what illegal proactice?
false advertising using names or titles that have tendency to misrepresent the true nature of a policy is an example of false advertising
If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a
guaranteed insurability rider The guaranteed insurability rider allows the policyowner to purchase specific amounts of additiona insurance at specific dates or events, without proving continued insurability. rates for the additions are base upon attained age
the medical information bureau (MIB) was created to protect
insurance companies from adverse selection by high risk persons the MIB makes information availbale to underwriters to assist them in the underwriting process. it is a nonprofit trade organization which receives adverse medical information from insurance companies and maintains confidential medical impairment information on individuals
which of the following is an insurance professional who offers advice regarding benefits or advantages of an insurance policy to clients for a fee?
insurance consultant is a person who, for a fee, commission or other consideration, acts or holds himself out to the public or to any licensee as offering any advice, counsel, opinion, or service with respect to the benefits, advantages or disadvantages under any insurance policy or contract
the section of a health policy that states the causes of eligible loss under which an insured is assumed to be disabled is the
insuring clause
What is twisting?
is a misrepresentation or incomplete or fradulent 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.
a guaranteed renewable disability insurance policy
is renewable at the insured's option to a specified age guaranteed renewable means ht the insured has the right to keep the policy until a specific age, however while the insurer cannot increase the rates on an individual basis, the insurer can increase the rates for all insureds by class
Twisting is
misrepresentation that persuades an insured or a policyowner to his or her detriment to cancel, lapse or switch policies
Under an individual disability policy, the MINIMUM schedule of time in which claim payments must be made to an insured is
monthly if a claim involves disability income benefits, the policy must pay those benefits not less frequently than monthly. i all other cases, the company may specify the time period of 45 or 60 days for payment of claims
which of the following riders will provide benefits above the base policy amount?
multiple indemnity rider which is included in some life and accidental death policies, can confer double or triple the amount of a benefit when death of the insured is due to specified circumstances. usually the insured must be below a specified age, and death cannot be a result of preventable causes
which provision concerns the insured's duty to provife the insurer with reasonable notice in the event of a loss?
notice of claim
During 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
during 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 the replacing insurance company must require from the producer a list of the applicant's life insurance policies to be replaced and a copy of the replacement notice provided to the applicant, and send each existing insurance company a written communication advising of the proposed replacmenet
when are rebates allowed?
only allowed if specifically stated in the policy a rebate is an illegal act which involves returning something of value to the client as an inducement to buy, such as the commission Insurance dividends are not considered rebates as the IRS considered it as a return of overpaid premium
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 if a policy insures against more than one hazard or peril, the insurance for a specific hazard can only be cancelled if the policy specifies that a separate premium for any such insurance is separately cancelable
Which renewability provision allows an insurer to terminate a policy for any reason, and to increase the premiums for any class of insureds?
optionally renewable gives the insurer the option to terminate the policy for any reason on the date specified in the contract (usually a renewal date) . the provision allows the insurer to increase the premium for any class of optionally renewable insureds
A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will
pay the policy proceeds only if it would have issued the policy
a guaranteed renewable health insurance policy allows the
policyholder to renew the policy to a stated age, with the company having the right to increase premiums on the entire class coverage is guaranteed, but rates can be adjusted for the entire class
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 these will be owed with interest from the proceeds of the policy
The transfer of an insured's right to seek damages from a negligent party to the insurer is found in which of the following clauses?
subrogation
which of the following, when attached to a permanent life insurance policy, allows the policyowner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members?
term rider term riders may be used to customize a permanent life insurance policy to meet the needs of the policy owner
The paul vs. virginia case was decided i 1869. to what extent does the supreme court's decision still apply to insurance today?
the decision has changed. insurance is considered to be interstate commerce and is subject to regulation by the federal government
which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information
the fair credit reporting act
a small employer owns a group health insurance policy. the employer does not pay the premium by the premium due date and fails again to pay by the end of the grace period. the insurer cancels the policy.
the insurer will pay all losses through the end of the grace period if a group life or group health policy provides for automatic discontinuance of the policy for nonpayment of premium (after the grace period), the insurer is still liable for valid claims of covered loses incurred before the end of the grace period
If an insured continually uses the automatic premium loan option to pay the policy premium,
the policy will terminate when the cash value is reduced to nothing
under an extended term nonforfeiture option, the policy cash value is converted to
the same face amount as in the whole life policy
which provision states that the insurance company must pay medical expense claims immediately?
time of payment of claims
When an insurer issues an individual health insurance policy that is guaranteed renewable, the insurer agrees
to renew the policy under the insured has reached age 65 the guaranteed renewable provision is similar to the noncancellable provision, with the exception that the insurer can increase the policy premium on the policy anniversary date. as with the noncancellable policy, coverage is generally not renewable beyond the insured age 65
in a XXXX contract, the insured is not legally bound to do anything. the insurer however must pay losses covered by the policy
unilateral
waiver of cost of insurance rider is found in what type of insurance?
universal life if the insured becomes disabled, the rider allows the cost of insurance to be waived, with the exception of premium costs required to accumulate cash value
What policy would have an IRS required corridor or gap between the cash value and the death benefit?
universal life - option A aka level death beneift policy must maintain a specified 'corridor' or gap between the cash value and the death benefit, as required by the IRS. if this corridor is not maintained, the policy is no longer defined as life insurance for tax purposes, and consequently loses most of the tax advantages that have been associated with life insurance
a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?
warranty a warranty in insurance is a statement guaranteed to be true.
in forming an insurance contract, when does acceptance usually occur?
when an insurer's underwriter approves coverage