Chapter 5 Practice Test Questions: NJ Laws, Rules, and Regulations Common to All Lines
In a replacement situation, what is the maximum time period after the policy delivery during which a policyholder nay return the new policy for a full refund.
30 days
Replacing insurers are required to provide a free look period of
30 days
For how many years minimum must the insurer maintain copies of notice regarding replacement?
5 Years
In replacement situations the replacing insurance company must notify the existing insurer within
5 business days
How long should the insurer maintain copies of the sales proposals and Notice Regarding Replacement?
5 years
If a group policy terminates, how long must each certificate holder have been insured on the group plan in order to convert to an individual policy?
5 years
Insurance companies must maintain copies of all advertising files for a minimum of
5 years
If an insured requires an application in order to reinstate a policy, and if the insured requests reinstatement in writing, an application must be delivered to the insured within:
7 Days
Credit life insurance for loans with a term of 8-15 years must provide coverage for a minimum of
7 years
Credit life insurance is usually written as
Decreasing term
Any person making maliciously critical or derogatory statements about any person engaged in the insurance business is guilty of
Defamation
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?
Disclosure rule
A producer's license must be renewed
Every 2 years
How often must the Commissioner examine domestic insurers in New Jersey?
Every 5 years
Which action by a producer is NOT a reason for the nonrenewal of a license?
Failing to meet insurer sales quotas
Offering to return a portion of the premium to an applicant as an inducement to buy insurance is an illegal act known as
Rebating
What is the company that buys insurance from another company
Receding company
A person is required to be licensed to do which of the following?
Receive commissions
All of the following could be considered unfair methods of competition EXCEPT
Reinsurance
All of the following are requirements for maintaining a producer license EXCEPT
Retaking licensing examination
When a reinsurer has taken on too many risks and must spread some of its liabilities to other reinsurers it is called
Retrocession
A printer has hired an advertising agency to design and edited advertisement brochures for an insurance agency. Once the brochure is printed, who is responsible for the advertisement and their contract?
The insurance company
A group insurance policyowner allows the policy to lapse, and fails to reinstate the policy after the grace period expires. To what extent will the insurer cover claims made before the end of grace period?
The insurer is no longer liable for any claims
Which of the following statements about life an insurance policy would be allowed in an insurance advertisement?
This is a term life insurance policy.
What is the main purpose of requiring licenses for persons who transact insurance?
To protect the general public
Misrepresenting a policy for the purpose of inducing a policyholder to lapse their insurance policy and replace it with another company's policy, even if it was not in the client's best interest is
Twisting
Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?
Twisting
The fine for a producer violating a cease and desist order may be up to
$5,000
The penalty for violation of the NJ Fraud Prevention Act for the first violation is up to
$5,000
What is the maximum that the Guaranty Association will cover for life insurance death benefits?
$500,000
After receiving a policy from the insurer a producer must deliver the policy within
10 calendar days
A temporary license is valid for:
180 days
Which of the following would be required to be licensed as an insurance producer?
A salaried employee who solicits insurance
If a producer's license is revoked the producer may apply for a new license
After 5 years
Which of the following is a duty of the commissioner of insurance in this state?
Amend rules and regulations.
Who is not required to have a license?
Clerical employees
An insurance company formed under the laws of a state other than this state is known as a(n)
Foreign company
Before suspending or revoking a producer's license the Commissioner must:
Hold a hearing
If it is determined that a person has violated the NJ Insurance Fraud Prevention Act, the Commissioner may NOT
Impose a jail sentence
Any material designed to persuade the public to purchase life insurance is the responsibility of the
Insurance company
While soliciting insurance or transacting insurance business for insurance companies, producers represent the
Insurer
What does the state Insurance Guaranty Association guard against?
Insurer insolvency
An individual may obtain a temporary insurance producer's license without passing the licensing examination if the individual
Is a deceased licensed producer's next of kin
What is the law the says the state did an adequate job?
McCarran-Ferguson
Which legislative act declare that as long as the states do an adequate job of regulating insurance the federal government would leave it to the states?
McCarran-Ferguson Act
Which of the following provides funding for the New Jersey Life and health Guaranty Association?
Member insurers
Issuing or circulating illustrations or sales materials that are false or misleading concerning policy benefits or terms in order to secure a sale is an example of
Misrepresentation
An insurance company that is owned by the policyholders is what type of insurer?
Mutual
Which of the following types of insurance companies issue participating polices?
Mutual
You want to purchase a policy in Florida from a company incorporated in Maine and not licensed to do business in Florida. This company is considered
Nonadmitted
To sell insurance in New Jersey an out-of-state producer needs what type of license?
Nonresident
Which of the following is the duty of an agent when replacing a policy?
Obtain a signed replacement of notice form
It is illegal to discriminate against a person for all of the following reasons EXCEPT
Poor risk
An agent who offers a cash reward to a prospect for buying a policy is guilty of:
Rebating
When a group life insurance policy is automatically discontinued, what must an insurer do?
Send a cease and desist letter to the commissioner.
The Commissioner has the authority to do all of the following EXCEPT
Set premium rates
Which type of insurance company is referred to as a non-participating company?
Stock insurer
If the commissioner issues a cease and desist order, that means the insurer must:
Stop committing a particular violation
All of the following are unfair claims settlement practices EXCEPT
Suggesting negotiation in settlement the claims,
What type of license is required to transact business with unauthorized companies if the insurance not available from authorized insurers in New Jersey?
Surplus lines
Who must file a notice of agent appointment with the Department?
The insurer
Credit life insurance is usually written ad what type of policy?
Whole life
All of the following could own group life insurance EXCEPT
A debtor group
Which would NOT be a consideration when determining the suitability of an annuity purchase?
A form of misrepresentation in which a producer persuades a policyowner to cancel, lapse or switch policies, even when it is to the insured's disadvantage is
When should the Notice Regarding Replacement be presented to the applicant?
At the time of completing the application
All of the following are requirements that you must meet in order to obtain a resident insurance producer's license EXCEPT
Be at least 21 years of age
If a producer's license expires the producer may reinstate the existing license within:
1 year
Within what maximum time period can a producer reinstate a lapsed license without having to retake a written examination.
12 months
If an insurer cancels an appointment it must notify the Commissioner in writing within
15 days
In New Jersey, the minimum age at which a person can purchase a life insurance policy on his or her own lie is:
18
New Jersey resident producer licenses are valid for
2 years
Producer continuing education requirements must be completed every
2 years
If a producer has violated a New Jersey law regarding Standards of Conduct they are entitled to hearing within
20 calendar days
How many hours of continuing education must a life producer complete?
24
Which of the following is a continuing education requirement?
24 hours every 2 years
The producer license renewal period in New Jersey is every
24 months
How many hours of ethics must a producer complete to satisfy continuing education requirements?
3 hours
Insurance producers must report their change of business or residence within:
30 Days
A temporary work authority is valid for
60 days
Any change in address must be reported to the Department within
30 days
The Commissioner of Insurance is
Appointed by the Governor with the advice and consent of the Senate
Which of the following authorizes a licensed person to act as an agent for an insurer?
Appointment
What is the company that sells the insurance to another company
Assuming company
Which of the following is NOT a factor that the producer must consider in determining the suitability of an annuity product for a customer
Beneficiary's age
In credit life insurance, who is responsible for paying the policy premium?
Borrower
An office in New Jersey other than a principal office where a resident licensee conducts insurance business is known as a(n)
Branch
The originating insurer in reinsurance agreements is known as the
Ceding insurer
An insurance company doing business in New Jersey must operate under
Certificate of authority
Which of the following is NOT a characteristic of a producer's fiduciary responsibility?
Commingling of funds
An individual that charges a fee to advise a prospective insured is an insurance
Consultant
Which of the following would NOT be considered as a replacement?
Converting term insurance within the same company
The New Jersey life insurance disclosure regulations do NOT apply to
Credit life insurance
Which of the following is the beneficiary in credit insurance?
Creditor
