Life Insurance Test

the method by which an insurer collects the data required to evaluate an insureds risk for life insurance is called the

insurance application

cash value guarantees in a whole life policy are called

nonforfeiture values

A "certification of license status" report can be run on any currently licensed New Jersey producer, but can only contain information on formal disciplinary actions taken within the past a) 6 months. b) 4 years. c) 7 years. d) 10 years.

4 years

During policy replacement, the replacing insurer must notify existing insurers within what time period? a) 10 calendar days b) 30 days c) 90 days d) 5 business days

5 business days

Within how many days must a producer report claims to the insurer? a) 5 business days b) 3 calendar days c) 3 business days d) 5 calendar days

5 business days

Which of the following is the legal name of a corporation or partnership under which a licensee conducts insurance business? a) Legal name b) Name of reference c) Business name d) Assumed name

Business Name

If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to a) Charge a higher premium. b) Require a yearly medical examination. c) Lower its insurability standards. d) Refuse to issue the policy.

Charge a higher premium

Which of the following are NOT fundable by annuities? a) Death benefits b) Cash accumulation for any reason c) A person's retirement d) Estate liquidation

Death Benefits

When a whole life policy is surrendered for its nonforfeiture value, what is the automatic option?

Extended term

all of the following are required for HIV testing except

if HIV is present, the person may be rated, but they cannot be dclined

under which of the following conditions would life insurance proceeds be taxable by the federal government

if there is any transfer of value

A producer received a group master policy and certificates for delivery to the insured. Within how many days must the policy and certificates be delivered? a) 10 calendar days b) 5 business days c) 5 calendar days d) 10 business days

10 calendar days

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 a) 7 days. b) 10 days. c) 15 days. d) 30 days.

30 days

a whole life policy is surrendered for a reduced paid up. the cash value in the new policy will continue to

increase

fixed annuities do not provide protection against

inflation

If a company has a Simplified Employee Pension plan, what type of plan is it? a) An undefined contribution plan for large businesses b) A defined contribution plan for a small business c) The same as a 401(k) plan d) The same as an IRA, with the same contribution limits

A defined contribution plan for a small business

An insurer cancelled a contract with a producer on April 1st. By what date must the insurer notify the Commissioner of this action? a) April 30th b) April 5th c) April 11th d) April 15th

April 15th

Equity indexed annuities a) Seek higher returns. b) Are more risky than variable annuities. c) Are security instruments. d) Invest conservatively.

Seek higher returns.

The Ownership provision entitles the policyowner to do all of the following EXCEPT a) Set premium rates. b) Receive a policy loan. c) Assign the policy. d) Designate a beneficiary.

Set premium rates.

in credit life the insured does not name the

beneficiary

interest only option

only interest is paid to the beneficiary

using the paid-up option, the policy is able to be

paid early

dividends are used to purchase single premium policy in addition to the face amount of the permanent policy

paid up option

life income option

provides recipient with income he/she cannot outlive

an inducement offered in the sale of insurance product that is not specified in the policy

rebating

cash value is used to purchase a completely paid up permanent policy that has a reduced face amount

reduced paid up

nonqualified deferred compensation plans have contributions that are

tax deductible

U.S. vs. South-Eastern Underwriters was decided in 1944. To what extent does the Supreme Court's decision still apply to insurance today? a) The decision has changed. Insurance and Securities are now regulated by the different federal agencies. b) It has changed. Insurance is not considered to be interstate commerce and is therefore not subject to regulation by the federal government. c) It still stands in full. Insurance is considered to be interstate commerce and is therefore subject to regulation by the federal government. d) It still stands in full. Insurance and Securities are still regulated by two distinct agencies.

It still stands in full. Insurance is considered to be interstate commerce and is therefore subject to regulation by the federal government.

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? a) Whole Life b) Ordinary Life c) Joint Life d) Decreasing Term

Joint Life

During replacement of life insurance, a replacing insurer must do which of the following? a) Send a copy of the Notice Regarding Replacement to the Department of Insurance b) Obtain a list of all life insurance policies that will be replaced c) Guarantee a replacement for each existing policy d) Designate a new producer for a replaced policy

Obtain a list of all life insurance policies that will be replaced

which dividend option will increase the death benefit?

Paid up additions

All of the following are requirements for a nonresident license EXCEPT a) Holding an active license in the same line of authority in another state. b) Submitting a licensing application from the home state. c) Paying the required fees. d) Passing the New Jersey licensing examination.

Passing the New Jersey licensing examination.

An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do? a) Pay the full death benefit and refund excess premium b) Pay a reduced death benefit c) Pay the full death benefit d) Pay nothing; there was a misrepresentation on the application

Pay a reduced death benefit

All of the following professional designations are recognized by the Department as acceptable substitutes for education and examination requirements EXCEPT a) Chartered Property/Casualty Underwriter (CPCU) b) Chartered Financial Consultant (ChFC) c) Chartered Life Underwriter (CLU) d) Professional Insurance Agent (PIA)

Professional Insurance Agent (PIA)

What method do insurers use to protect themselves against catastrophic losses? a) Indemnity b) Pro rata liability c) Risk-management d) Reinsurance

Reinsurance

Under the Fair Credit Reporting Act, if the consumer challenges the correctness of the information contained in his/her report, the reporting agency must a) Respond to the consumer's complaint. b) Defend the report if the agency feels it is accurate. c) Change the report. d) Send an actual certified copy of the entire report to the consumer.

Respond to the consumer's complaint.

The responsibility of making certain that an application for insurance is filled out completely, correctly, and to the best of his or her knowledge is the responsibility of whom? a) The applicant b) The agent or producer c) The beneficiary of the applicant d) The insurance company

The agent or producer

Which of the following is NOT true regarding the annuitant? a) The annuitant's life expectancy is taken into consideration for the annuity. b) The annuitant receives the annuity benefits. c) The annuitant must be a natural person. d) The annuitant cannot be the same person as the annuity owner.

The annuitant cannot be the same person as the annuity owner.

The primary beneficiary of her husband's life policy found that no settlement option was stated in the policy on the date of her husband's death. Who will select the settlement option in this case? a) The beneficiary b) The benefit must be paid in a lump sum c) The insurance company d) The Court

The beneficiary

A life insurance policy does not have a war clause. If the insured is killed during a time of war, what will the beneficiary receive from the policy? a) Nothing, since the insured was killed as a result of a war b) The full death benefit c) The policy's cash value d) A refund of premiums

The full death benefit

What is the purpose of a disclosure statement in life insurance policies? a) To explain features and benefits of a proposed policy to the consumer b) To obtain important underwriting information from the applicant c) To help consumers compare policy prices d) To protect agents and insurers against lawsuit

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

What is the purpose of establishing the target premium for a universal life policy? a) To accumulate cash value faster b) To pay up the policy faster c) To cover all policy expenses d) To keep the policy in force

To keep the policy in force

When is the earliest a policy may go into effect? a) After the underwriter reviews the policy b) When the application is signed and a check is given to the agent c) When the first premium is paid and the policy has been delivered d) When the insurer approves the application

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

when comparing a joint life policy to two individual policies of the same amount on the same insureds, joint life has

a lower premium than the total of the other two individuals

according to the life insurance replacement regulations, which of the following would be an example of a policy replacement?

a policy reissued with a reduction in cash value

10 year period certain is

benefits are provided for the life of the insured. if the insured dies before the 10 years, the beneficiary will receive benefits for the remainder of the 10 year period

in a variable life insurance policy, all of the following assets are held in the insurance company's general account except

cash surrender values

an applicant for surplus lines authority does not need a

certificate of authority in this state

an employee dies having six quarters of coverage during the previous 13 quarter period. what status of coverage does the employee have under social security?

currently insured

unfair trade practice in which an insurer makes injurious statements about another with the intent of harming the persons reputation

defamation

an insured decides to surrender his whole life poicy. the cash value at the surrender is higher than the premiums paid in to the policy due to interest. what part of the surrender value would be income taxable?

difference between premiums paid and the cash value

policies cash value s are used to convert to term insurance with the same face value as the former policy

extended term

j is receiving fixed amount benefit payments from his late wife's insurance policy. he was told that if he dies before all of the benefits are paid, the remaining amount will go to the contingent beneficiary. which settlement option did J choose?

fixed amount

ordinary straight life policies do not have a

guaranteed death benefit

which of the following types of insurance products would be appropriate for an individual with a low income and high insurance needs?

term insurance

when term insurance is added to the main policy to enhance the policy of provide added benefit coverage, it is called a

term rider

in life insurance, which of the following is not reuqired to have an insurable interest in the insured

the beneficiary

if a licensee wants to transact insurance under a different name,

the name must be filed with the department

how does insurance distribute the financial consequences of individual losses?

transfers all the risk to all persons insured

an agent knowingly misrepresents material information for the purpose of inducing an insured to laps, forfeit, change or surrender a life insurance policy or annuity has committed an illegal practice known as

twisting

form of misrepresentation where the agent persuades an insured/owner to cancel a policy

twisting