NJ Life Producer

How does insurance distribute the financial consequences of individual losses?

It transfers the risk to all persons insured.

The Waiver of Cost of Insurance rider is found in what type of insurance?

Universal Life

An insured misstates her age at the time the life insurance application is taken. This misstatement may result in

adjustment in the amount of death benefit

Which nonforfeiture option has the highest amount of insurance protection?

extended term

Which of the following included in the term "insurance-related conduct"?

Transmitting funds between producers and the insurance company *The term "insurance-related conduct" includes acts related to insurance transactions, such as selling, soliciting, negotiating and binding insurance policies; processing claims; or transmitting funds between the insured, producers, premium finance companies and insurance companies.

When an insured terminates membership in the insured group, the insured can convert to

Whole life without proof of insurability.

What guarantees that the information explained in the insurance contract is true?

A warranty

Which of the following would be considered a nonmedical insurance application?

An application on which the medical information is completed by the applicant and the agent only *An application on which all of the questions, including medical history questions, do not need to be completed by medical professionals, and may be completed by the applicant and the agent.

An insured bought an insurance policy that requires him to pay $150 in premiums on the 15th of each month. He then takes an extended vacation and forgets to pay the premium. Ten days later, his policy is still in effect and has not lapsed. Which policy provision allowed for this?

Grace period

The company has issued a policy and delived it to Producer B on May 1st, Monday. By what date must the policy be delivered to the insured?

May 10th (within 10 calendar days?

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. Which of the following is true?

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 losses 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

When is the earliest a policy may go into effect?

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

In which of the following scenarios will the life insurance proceeds be protected from the creditors

When the benefits are not paid out to the insured or any person affecting the insurance

If an insurer requires an application in order to renew a life insurance policy, it is the insurer's responsibility to send one to the insured

within 30 days of the insured's request

**A producer was found guilty of a 3rd violation of the Insurance Code. What would be the monetary penalty he will have to pay?

$10,000 *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.

A whole life policy is surrendered for a reduced-paid up policy. The cash value in the new policy will

Continue to increase

Producer licenses will NOT be issued to business entities in which of the following cases

One partner's license was revoke in the previous 5 years *No producer license will be issued to a business entity operated by a person who has had his/her license revoked within the past 10 years

If a life insurance company uses HIV testing as part of its underwriting, when must an applicant be notified of the procedure?

Prior to performance of the test

What is the purpose of requiring licenses for persons who transact insurance?

Protect the general public

An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries?

The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive.

Life income joint and survivor settlement option guarantees

income for 2 or more recipients until they die

An individual is purchasing a permanent life insurance policyw ith a face value of $25,000. While this is all the insurance that he can afford at this time, he wants to be sure that additional coverage will be available in the future. Which of the following options should be included in the policy?

Guaranteed insurability option

All of the following information needs to be included on an application for life insurance EXEPT

Health insurance policies in force

When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to

Purchase a single premium policy for a reduced face amount.

The term of credit accident and health insurance begins on the date when the debt becomes obligated to the creditor, and the term of coverage cannot be extended more than how many days beyond the scheduled maturity date of the loan?

15

An insured reads his policy and is under the impression that a particular loss will be covered. The insurer, however, insists that the loss will not be covered. What authority will settle this dispute?

Court system

If a settlement option is not chosen by the beneficiary or policyowner, which option will be used?

Lump sum

An insured falls down a flight of stairs and sustains a neck injury that renders him severely disabled. The insured owns a Whole Life policy. Is it possible for the policy to include a Waiver of Const of Insurance rider, and if so, what insurance costs would be waived?

No; it is not possible for this waiver to be included in a whole life policy *The Waiver of Cost of Insurance rider is found in Universal Life policies

An applicant for surplus lines authority must do all of the following EXCEPT

Possess a certificate of authority in this state

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then...

The benefit is received tax free

If a licensee wants to transact insurance under a different name than that listed on his or her producer's license, which of the following must occur

The change must be filed with the Department

All of the following statements concerning an employer sponsored nonqualified retirement plan are true except?

The employer can receive a current tax deduction for any contributions made to the plan

Which of the following would NOT trigger the payment of Accelerated Death Benefits?

Being permanently disabled.

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?

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 owns the policy.

Which of the following types of insurance would 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 nonresident limited lines.

What happens to the face amount of a whole life policy if the insured reaches the age of 100?

The face amount is paid to the insured

All of the following statements are correct regarding Credit Life Insurance EXCEPT

Benefits are paid to the borrower's beneficiary

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

30 days.

Which of the following statements is INCORRECT concerning business operations in a branch office in New Jersey?

A branch office certificate expires 2 years from the date of filing, regardless of the producer's own license expiration. *A branch office certificate expires at the same time as the producer's own license.

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

A policy is reissued with a reduction in value. *existing life insurance or annuities have been or will be converted to reduced paid-up insurance, continued as extended term insurance or otherwise reduced in value by the use of nonforfeiture benefits or otehr policy values.

The term "illustration" in a life insurance policy refers to

A presentation of nonguaranteed elements of a policy.

Which option for Universal life allows the beneficiary to collect both the death benefit and cash value upon the death of the insured?

Option B *Under Option B the death benefit includes the annual increase in cash value so that the death benefit gradually increases each year by the amount that the cash value increases. At any point in time, the total death benefit will always be equal to the face amount of the policy plus the current amount of cash value.

A lender who conditions approval of a loan on the condition that the borrower purchase insurance from that lended may be guilty of

Coercion

The Guaranteed Insurability Rider allows the owner to purchase additional amounts of life insurance without proof of insurability at all of the following EXPEPT

Purchase of a new home

An IRA owner who is 57 years old want to make a withdrawal form her traditional IRA. What penalty will be imposed

10%

Which statement is INCORRECT regarding the type of term insurance that fits best with the applicant's needs?

Applicants who may require a larger death benefit in the future should buy convertible term insurance

Which of the following is the legal name of a corporation or partnership under which a lincensee conducts insurance business?

Business name

Which of the following policy components contains the company's promise to pay?

Insuring clause * The insuring clause contains the company's promise to pay.

Who can make a fully deductible contribution to a traditional IRA?

An individual not covered by an employer-sponsored plan who has earned income *Individuals who are not covered by an employer-sponsored plan may deduct the full amount of their IRA contributions regardless of their income level.

All of the following are requirements for life insurance illustrations EXCEPT

They must be part of the contract

What is the difference between a straignt life policy and a 20-whole life policy?

Premium payment period *Premium is completely paid off in 20 years for the 20-whole life policy

Which of the following would be TRUE of both the fixed-period and fixed-amount settlement options?

Both guarantee the principal and interest will be fully paid out *Neither the fixed-period nor fixed-amount settlement options guarantee income for the life of the beneficiary; however, they both guarantee that the entire principle and interest will be fully paid out

Which of the following will NOT be considered unfair discrimination by insurers?

Discriminating in benefits and coverages based on the insured's habits and lifestyle * Discriminating between individuals of the same class, with equal life expectancies, or by reason of race, nationality, or ethnic group would be considered unfair discrimination. Insurers are also not allowed to cancel individual coverage due to a change in marital status. Discriminating in benefits based on the insured's habits and lifestyle (such as smoking or dangerous hobbies) is acceptable.

A producers license can be suspended or revoked for all of the following actions EXCEPT

Failure to generate commissions

The requirement that agents must account for all insurance funds collected, and are not permitted to comingle those funds with their own is known as

Fiduciary responsibility

J is receiving fixed amount benefit payments form 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

All of the following are required for HIV testing EXCEPT

If HIV is present, the person may be rated, but they cannot be declined *A person with the HIV can be declined

In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports?

The customer's associates, friends, and neighbors provide the report's data. *Both consumer reports and investigative consumer reports provide additional information from an outside source about a customer's character and reputation, and both types of reports are used under the Fair Credit Reporting Act. The main difference is that the information for investigative consumer reports is obtained through an investigation and interviews with associates, friends and neighbors of the consumer.

When an insurance producer negotiates for an insurance contract on behalf of a client, the producer is acting as a

broker

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 or annuity contracts 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 replacement.

Proceeds from life insurance policies are protected from the beneficiary's debts under all of the following circumstances EXCEPT

Some of the premiums wer paid in an attempt to defraud creditors

The policyowner wants to make sure that upon his death, 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