Life

What is the purpose of Stranger-originated life insurance (STOLI)?

The policy is originated primarily or solely for the purpose of resale

The designee of a producer who is entering active duty with the Armed Forces must do which of the following in order to continue the producer's insurance business?

Apply to the Department of Banking and Insurance for a temporary license

The technical name of the person who makes a policy assignment is the:

Assignor

Which of the following life insurance policies is ideally suited for estate planning purposes?

Joint Survivorship

What is the primary purpose of an annuity?

To protect against outliving one's income

When an insurer appoints a new producer, the Department must be notified within ______ days.

15 days

When a bank or credit union refuses to give a loan unless the borrower buys insurance from a specific company, it is known as __________.

Coercion

The New Jersey Life and Health Insurance Guaranty Association is able to cover the cost of claims by:

Collecting money from each member company

The ____________ has the power to issue rules and regulations to help enforce insurance statutes.

Commissioner

Alice is the insured, Bill is the primary beneficiary, and Claire is the contingent beneficiary. Bill dies and Alice names Dale as the new primary beneficiary. Alice dies, so who receives the policy proceeds?

Dale

If life insurance proceeds are paid to the deceased's estate they may be subject to ________ taxes.

Federal Estate

The Commissioner may fine a licensed agent for unknowingly violating an unfair method of competition no more than __________.

$1,000

Jason has a Whole Life insurance policy with a face amount of $100,000, an annual premium of $1,000, and a cash value of $10,000. If he wants to borrow money from the insurer, what is the maximum he can obtain?

$10,000

Which of the following statements is correct concerning the different lines of insurance for which a producer may be licensed?

Casualty is coverage against legal liability, including death, injury or disability or damage to real or personal property

The bank may require its borrowers to have a life insurance policy to secure a loan in the event of the borrower's death. Which provision gives the bank proportional protection but not control of the policy?

Collateral Assignment

Which annuity settlement option provides a stated monthly amount to the annuitant and upon the annuitant?s death the same or a lesser amount paid for the lifetime of the survivor?

Joint and surviovrship option

The proceeds from a _________ plan provide the necessary funds to recruit, hire, and train a replacement employee.

Key Employee

An insurance producer must receive which of the following from the Commissioner as evidence of their authority?

License

M purchased a traditional permanent life insurance plan many years ago. What happens when he attains age 100?

M gets a check for the face amount of the policy

A former licensee whose license was revoked in May 2015 may apply for reinstatement in:

May 2020

If it is known or should be known by the agent that an existing policy is going to be lapsed, forfeited, surrendered or terminated in favor of a new policy, the agent must submit a:

Notice Regarding Replacement

An insurance producer replacing a life insurance policy must do all of the following, EXCEPT:

Obtain a signed statement from the applicant that includes the reason for replacing their life insurance policy

What is a material misstatement?

One which would have caused the insurer to not issue the policy had it been known

A(n) ________ has all of the contractual rights in an annuity contract.

Owner

If an annuity uses units instead of dollars to determine the value of the policy, then it is a(n) _________ annuity.

Variable

Roth IRAs and Traditional IRAs have only one of the following in common. Which one is it?

catch up contributions for those age 50 or older

All of the following are common exclusions from loss found in disability income policies EXCEPT for that incurred while

commiting a misdemeanor

Life coverage includes

coverage on human lives, including endowment and annuity benefits

Which type of policy rider is ideal for covering the balance of an outstanding mortgage

decreasing term

All of the following are classifications of risk EXCEPT

non-nicotine

Surplus lines is coverage

written by unautharized insurers

KEOGH plans have been largely replaced by ________ plans, which have the same contribution limits, but much less paperwork.

SEP IRA

Maria's policy was issued with an incorrect age. She was actually older than what was listed in the policy. Which of the following will the insurer most likely do if she had died 5 years after policy issue, but prior to this discovery?

The insurer would pay out a reduced benefit in proportion to the underpayment of premium

If the producer discovers that the applicant is not in good health at time of policy delivery, what should the next step be?

The policy should be returned to the insurer, or the deliver the policy only after the insurer grants permission

How does the per capita rule apply to proceeds from a life insurance policy?

The proceeds are divided equally among living primary beneficiaries

Which type of annuity attempts to offset inflation by providing a benefit linked to an underlying investment account?

Variable

Harry, the annuitant of a non-qualified tax deferred annuity with $40,000 cash value chooses the Life Income with Refund Payment Option when he annuitizes the policy. After receiving $1,000 each month for 80 months, Harry suddenly dies. How much will his beneficiary, his wife Lucille, receive?

Zero

How is a life settlement transaction similar to a vatical settlement transaction?

a Third party buys a life insurance policy for less then its face amount

Which of the following is truly a Key Person (Key Employee)? a) the company's truck driver b) a rank-and-file employee c) an executive sales manager d) the company bookkeeper

C) and executive sales manager the key employee must be part of the management team

If the insured of a Whole Life policy is on claim with a Waiver of Premium rider, what happens to the cash values?

Cash value and dividends are not affected

If the policyowner specifies the time over which all settlement option installments are to be paid, he/she has chosen which Settlement Option?

Fixed Period

Which of the following is TRUE of an equity-indexed annuity?

It has a guaranteed minimum interest rate

Why is the accidental death benefit referred to as double indemnity?

It provides twice the face value in the policy for death due to accident

Within how many days must a licensed insurance producer notify the Commissioner about being convicted of a crime?

30 days

When establishing a SIMPLE, what two different types of qualified plans must employers choose between?

401(k) or IRA

When the exchange of value is unequal, the contract is considered:

Aleatory

When a life insurance policy's ownership is changed from the original owner to a new owner without payment, this is known as a(n) ___________.

Absolute Assignment

Which of the following statements is true with regard to suspension or revocation of a producer's license?

Advertising in the producer's legal or business name may not be used

Insurance-related conduct includes selling, soliciting, negotiating insurance, but not binding policies of insurance

False Binding is included

__________ is an attempt by the existing insurer to keep a policy active rather than replace it with another policy.

Conservation

A client wants to make sure that they can have a permanent life insurance policy several years from now when they can afford it without having to prove insurability. What feature should they make sure they have on their new term life insurance policy?

Convertibility

Which of the following statements is true with regard to state legislation?

Court actions are interpretations and rulings by courts of law to settle disputes

Obtaining consumer information reports under false pretenses is prosecutable by which of the following?

Fair Credit Reporting Act

With a Variable Life Policy, which of the following is guaranteed?

Death Benefit

Which is a common approach to addressing the problems inherent in naming a minor as a beneficiary to a life insurance policy?

establishing a trust to administer proceeds

Current assumption whole life policies are sensitive to which of the following?

interest rates

The department must give prior approval of an actual, fictitious, or assumed name of an insurance business which will expire if a license application is not received within ______ days after the prior approval.

90 days

A personalized computer-generated illustration detailing premiums, cash values, interest rates, and surrender values is called __________.

A policy Summary

A producer replacing a life policy must give the applicant all of the following, except: a) buyers guide b) comparison statement c) signed replacement notice d) copy of each sales proposal

A) Buyers guide

How long will prior approval of names expire if no license application is received by the department?

90 days

Premium refunds to the insured must be paid or credited to the insured's account within __________ after received by the producer.

5 business days

To have Currently Insured status under Social Security, a worker must have at least _____ quarter credits during the 13-quarter period ending with the quarter in which the worker dies, becomes disabled, or reaches retirement age.

6

An applicant may be issued a temporary work authority that will expire no more than ________ days after issuance.

60 days

What is the age that is used to determine when the owner of a traditional IRA must begin to take required minimum distributions

72, by april 1st

The policies with fixed interest loan rates usually have a maximum interest rate of

8%

After the department approves a business name, the business has ______ days to submit a license application?

90 days

Group life insures a group of people under a _____________.

Single Contract

Which part of an insurance contract contains the promise to pay losses covered by the policy in exchange for the insured's premium and compliance with policy terms?

insuring clause

Casualty

is coverage against legal liability, including death, injury or divisibility or damage to real or personal property

An entity purchase plan

is one in which life insurance provides the funds necessary to buy out the business interest of the deceased

Personal lines include

property and casualty for primarily noncommercial purposes

How might someone cover the extra expenses of child care and home-related costs?

purchasing family term insurance

In which of the following must a beneficiary change request be filed in writing to the insurer and is made effective by the insurance company recording the change in its records?

recording method

In a level term life policy, which ALWAYS remains constant?

variable

Why is relying solely on employer group life insurance generally considered inadequate for most individual's needs?

It is financially insufficient to cover end of life expenses

All of the following are tax qualified retirement plans EXCEPT

Section 529 plans

If a licensed producer hires another producer to write insurance business on behalf of the employer/producer, the employer will not do which of the following?

Transfer the insurance-related conduct of the employee to the employer's manager

When a policy insures more than one peril, the coverage may not be separately cancelable unless the policy specifies a separate premium for the specific peril

True

For an individual long-term care policy there is an annual dollar limit for tax deductions that is based on which of the following?

age

Which one of the following is particularly important for an insurance producer to explain to a client upon delivery of a life insurance policy?

any exclusions

When is the group conversion option not allowed?

during the annual benefits enrollment period

Which of the following is characteristic of a nonqualified plan?

plan does not meet federal guidlines for tax benefits

What is the order in which beneficiaries receive proceeds from a life insurance policy?

succession of beneficiaries

Group AD&D policies may be deducted by whom and under which deduction category?

the employer under business expenses

If enrolled in an accredited elementary or secondary school, a covered child can continue receiving Survivor Benefits up to what age?

19

In order to renew an insurance license, producers must complete 24-credit hours of instruction every:

2 years

What is the time limit on certain defenses after which the policy becomes incontestable?

2 years

Licenses will not be renewed unless the licensee has completed _______credit hours of continuing education.

24

Prior to renewal, a licensee must complete ________ credit hours of approved continuing education courses, _______ of which must be related to ethics.

24/3

How many days before conducting business must a branch office registration form be filed?

30 days

How many days does a branch office have to notify the Commissioner of closing or moving?

30 days

Widows/widowers of a fully insured deceased worker may begin receiving benefits at age

60

The MIB is used in the underwriting of all of the following types of insurance, except:

Auto and Homeowners

Concealing information requested on an insurance application is a violation of which act

New Jersey Insurance Fraud Prevention Act

The Court ruled the insurance industry was not subject to the commerce clause in the Constitution in which of the following court cases?

Paul vs. Virginia

With respect to a producer's fiduciary capacity, which of the following is true?

Premiums being returned to the insured must be paid to the insured within 5 business days after being received by the producer

An insurer must provide a Buyer's Guide to all prospective purchasers:

Prior to accepting the applicants initial premium

In a STOLI/IOLI transaction, what are the insureds basically doing?

Selling their mortality to another for up-front cash

K needs funds and needs to maintain the life insurance she has at the same time. Which of the following should K do with her traditional whole life policy?

Take out a policy loan

Which of the following is true regarding the duties of replacing insurers?

The replacing insurer must retain records relating to replacement for 5 years

Which of the following statements is true about surplus lines?

The surplus lines producer must also be, or will be licensed for property and casualty authorities

Participating policy dividends become taxable as income when:

The total amount of dividends received by a policyowner exceeds the total amount of premium he/she has paid

When is the Notice of Information Practices required to be provided?

Upon policy delivery or any time personal information is collected, and policy renewal or reinstatement

An agency appointment will terminate:

When an agency contract is cancelled, within 15 days the insurer must notify the Commissioner of the cancellation date and the reason for cancellation.

Twisting is

the act of misleading and convincing an insured to surrender, lapse or exchange an existing policy for a different one, to the insured's detriment.

All of the following are features of the spendthrift clause EXCEPT

the beneficiary may encumber the proceeds

Which of the following occurs immediately after the application is submitted and the initial premium paid?

the underwriting process begins

Which policy type is backed by equity investments and allows the policyholder to adjust the death benefit?

variable universal life