NJ Accident and Health Producer
4 independent insurance company rating services
-A.M. Best Reviews -Moody's Investment -Standard and Poor's -Weiss Research
What 4 elements must exist for a contract to be enforceable?
-offer & acceptance -consideration -competent parties -legal purpose
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
A producer received a group master policy and certificates for delivery to the insured. Within how many days must the policy and certificate be delivered?
10 calendar days
What percentage of a company's employees must take part in a noncontributory group life plan?
100%
How long may an agent be imprisoned for making statements that jeopardize the solvency of an insurer?
15 years
If a producer dies or is rendered severely disabled, an unlicensed person can contract with another insurance producer to continue this person's insurance. This agreement can last no longer than...
180 days
Producer licenses are valid for...
2 years
An insurer is closing a branch office in the state. Within how many days of the office closing must the insurer notify the Department?
30 days
Licensees must notify the Department with how many days of any change of address?
30 days
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?
30 days
Equity Indexed Annuity
A fixed deferred annuity that offers the traditional guaranteed minimum interest rate and an excess interest feature that is based on the performance of an external equities market index.
Payor Benefit
A rider found in juvenile policies which waives the premiums if the person paying them (often the parent) is disabled or dies while the child is still a minor.
What is a material misrepresentation?
A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company
Which of the following is another term for an authorized insurer?
Admitted
Cost of Living Rider
Allows the policy face amount to be adjusted to account for inflation based on the consumer price index.
What is reinsurance?
An agreement between a ceding insurer and assuming insurer
All of the following are TRUE of the federal tax advantages of a qualified plan EXCEPT
At distribution all amounts received by the employees are tax free
An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a/an
Authorized Insurer
An insured receives an annual life insurance dividend check. What term best describes this arrangement?
Cash Option
A long stretch of national economic hardship causes a 7% rate of inflation. A policyowner notices that the face value of her life insurance policy has been raised 7% as a result. Which policy rider causes this change?
Cost of Living Rider
Which statement about dividends in incorrect?..
Dividends amounts are guaranteed in the policy
Misrepresenting an insurance policy as a share of stock is an example of which of the following?
False Advertising
Using names or titles that have tendency to misrepresent the true nature of a policy is an example of what illegal practice?
False Advertising
What is TRUE about the cash surrender nonforfeiture option?
Funds exceeding the premiums paid are taxable as ordinary income
The death benefit under the Universal Life Option B
Gradually increases each year by the amount that the cash value increases
Which of the following is an eligibility requirement for all Social Security Disability Income benefits?
Have attained fully insured status
the 2 MAJOR approaches used to determine the amount life insurance needed
Human life value; needs approach
Life income joint and survivor settlement option guarantees...
Income for 2 or more recipents
Standard Risk
Individuals who is considered to have an average probability of loss based on health, job, and lifestyle
Who is considered authorized or admitted?
Insurers who meet the state's financial requirements and hold a Certificate of Authority to transact business in the state
The policyowner wants to make sure that when he dead, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?
Interest Only Option
Which of the following best describes the MIB?
It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance.
The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called.....
Joint and Survivor
Within life insurance settlement option guarantees payments got the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designed beneficiary?
Life Income with period certain
What is the other term for the cash payment settlement option?
Lump sum
Which type of insurer is owned by its policyholders?
Mutual companies
Who issues participating life insurance policies?
Mutual companies
Rebating is defined as...
Offering any inducement in the sale of insurance products that is not specified in the policy, including money, reductions in commissions, promises, and personal services. Both offer and acceptance of a rebate are illegal
A participating insurance policy may do which of the following:...
Pay dividends to the policy owner
Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled?
Payor Benefit
Paid-Up Option
Pays off the policy more quickly than scheduled
After a back injury, an insured is disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will he receive?
Percentage of medical costs pad by the insurer
two types of risks
Pure and Speculative
To sell variable life insurance policies, an agent must receive all of the following EXCEPT
SEC registration
Which of the following is an example of a producer being involved in an unfair trade practice of rebating?...
Telling a client that his first premium will be waived if he purchased the insurance policy.
Which of the following statements about a life insurance policy would be allowed in an Insurance advertisement?..
Term Life insurance policy
Which of the following entities established the Do-Not-Call Registry?
The Federal Trade Commission
Which of the following is TRUE regarding variable annuities?
The annuitant assumes the risks on investment
Who do agents represent?
The insurer that sponsors them
An organizations 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
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
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
Who do brokers represent?
Themselves and the policyowner/insured
Which of the following is NOT true regarding Equity Indexed Annuities?
They earn lower interest rates than fixed annuities
What is the purpose of key person insurance?
To lessen the risk of financial loss because of the death of a key employee
T or F: Dividends cannot be guaranteed
True
Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of
Twisting
Which type of life insurance policy allows the policyowner to pay more or less than the planned premium?
Universal Life
Which of the following is a key distinction between variable whole life and variable universal life products?
Variable whole life has a guaranteed death benefits
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
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
peril is...
a cause of loss
hazard is..
a condition that increases the chance of loss occurring
collateral assigns...
a part or all of the benefits
Universal Life
a variation of whole life insurance characterized by considerable flexibility, allows it policyowners to determine the amount and frequency of premium payments and to adjust the policy face amount up or down to reflect changes in needs.
The two types of assignments are...
absolute and collateral
When an insurer approves coverage for more bad risks than good risks he is exposed to _____?______ selection
adverse
Who manages a reciprocal?
an attorney-in-fact
explain error and omission
an unintentional error or honest mistake by a producer
An alien insurer is authorized in ____?_____ and its principal office is located _____?____ this country.
any state; outside
the insurer seeking reinsurance is the _____?_____ insurer, while the insurer assuming the risk is the _____?____
ceding; reinsurer
When a life insurance death benefit is paid, its creates an ____?___
estate
a person in a position of trust, particularly with collected premiums, is referred to as..
fiduciary
The FTC established the Do Not Call list .....
in order to protect consumers against unwanted solicitations
Where does a domestic insurer have its principal or home office?
in the state where its headquarted
life income joint and survivor settlement option guarantees
income for 2 or more recipients until they die
One-Year Term Option
increases the overall policy death benefit
What must exist for an individual to purchase life insurance on another individual?
insurable interest
Who are the owners of a stock company?
its stockholders
Which of the following riders added to a life insurance policy can part of the death benefit to the insured to cover expenses incurred in a nursing or convalescent home?
long term care
Which of the following best describes the unfair practice of defamation?
making derogatory oral statements about another insurer's financial condition
3 Key factors in determining premiums...
mortality, interest & expense
Under the Fair Credit Reporting Act (FCRA), individuals rejected for insurance due to information contained in a consumer report...
must be informed of the source of the report
Participating Insurance policy will...
pay dividends to the owner based upon mortality cost, interest earned and cost
Fixed Amount Option
pays a specified amount in regular intervals until proceeds are gone
2 parties in a life insurance contract
policyowner & insurer
Life Income Option
provides the recipient with an income that he or she cannot outlive
_____?____ risk is the only type that may be insured
pure
Whats the name of the price paid per unit of coverage?
rate
an unincorporated organization in which members insure one another is known as...
reciprocal
A domestic insurer issuing variable contracts must establish one or more
separate accounts
Variable Annuity
shifts the investment risks from the insurer to the insured(does not have a guarantee).
Fixed Period Option
specified period of years is selected & equal installments are paid to recipent
absolute assigns.....
the entire policy
Interest Only Option
the insurance company retains the policy proceeds and pays interest on the proceeds to the recipient at regular intervals
Which of the following best describes what the annuity period is?
the period of time during which accumulated money is converted into income payments
Fixed Annuity
type of annuity that guarantees a certain rate of return
Explain the concept of actual or express authority?
when an agent's authority is defined in the agent's contract