Test questions to study
When an insurance producer negotiates for an insurance contract on behalf of a client the producer is acting as a
Broker
A person who, for a fee, commissions, or the consideration, acts or hold himself or herself out to the public or to any licensee as offering any advice, counsel,opinion or service with respect to benefits, advantages or disadvantages under any insurance policy contract is?
Consultant- Insurance professional who offers advice regarding benefits or advantages of an insurance policy to a client for a fee..
A whole life policy is surrendered for reduced paid up policy. The cash value in the new policy will
Continue to increase
Which of the following statement is true regarding simple plans?
Contributions and earnings or tax deferred until funds are withdrawn.
Equity index annuity's
Seek higher returns
What is the waiting period on a waiver of premium rider in life insurance policy?
6 months - from the disability until the premium is waived
The national do not call registry was created to regulate
Telemarketers
A participating insurance policy may do which if the following?
Pay dividends to policy owner
What method do insurers use to protect themselves against catastrophic losses?
Reinsurance. Insurers use reinsurance to protect themselves from catastrophic losses. This is a method where the reinsurer indemnifies the ceding insurer for part or all of the losses it sustains related to a policy issued previously.
An agent selling variable and unities must be registered with
FINRA
Which of the following entities establish the do not call registry?
The federal trade commission
The life insurance policy clause that prevents an insurance company from denying a payment of a claim after a specific period of time is known as the
Incontestability clause
What is the maximum penalty for habitual willful non compliance with fair credit reporting Act?
$2500
The maximum the insurance guarantee association will pay to an individual for life insurance death benefit is
$500,000
If a producer dies or is rendered severely disabled, an unlicensed person can contract with another insurance producer to continue his personal insurance transaction for
180 days
An insurance producer is acting as a broker when he or she negotiates for an insurance contract on behalf of
A client
The term illustrations in life Fishermans policy refers to
A depiction of policy benefits and guarantees
Which of the following is true of a children's writer added to an insurance permanent life insurance policy?
It is term coverage that is convertible to permanent insurance at or prior to the children reaching maximum coverage age.
What significance did US versus South Eastern underwriters have on the insurance industry?
It reversed the decision of Paul versus Virginia, determining that insurance is interstate commerce and should be regulated federally.
What significance did Paul versus Virginia have on the insurance industry?
It was decided that insurance was not interstate commerce and could not be regulated by the federal government
And employer has sponsored a qualified retirement plan for its employees were the employer will contribute money whenever a profit is realize what is this called?
Profit sharing plan
In contrast think stock insurers and with mutual insurers, which statement is true?
Stock is yours are owned by shareholders and issued non-participating policies
What is the name of the clause that is included in a policy that limits or lemonade to the death benefit if the insured dies as a result of war or while serving in the military?
War or military service
The department can run a report on a specific producer that list his or her license information, current license status, and the type of insurances that here she can transact. What is the name of this report?
certification of license status report
A producer received a group master policy and certificates for delivery to the insured. Within how many days must a policy and certificates be delivered?
10 business days
Which of the following insurers are own by stockholders? A. stock B. Mutual C. reciprocal D. Fraternal
A. Stock
And insured decides to surrender his whole life insurance policy. The cash value at surrender is higher than the premium paid into the policy, due to interest. What part of the surrender value would be income taxable?
The difference between premiums paid and the cash value would be taxable
Which of the following insurance arrangements will be appropriate for the parent buying life insurance policy on a child with a parent is the policy owner?
Third-party ownership
Annual renewable term policies provide a level death benefit for a premium that
Increases annually
What type of insurance would be use for a return of premium rider?
Increasing term The return of premium rider is achieved by using increasing term insurance.
A participating insurance policy may do which of the following?
Pay dividends to the policyowner. A participating insurance policy will pay dividends to the owner based upon actual mortality cost, interest earned and costs.
All of the following or dividend options except A) reduction of premium B) Paid-up additions C) Fixed period Installments D) accumulated at interest
C) fixed period Installments Fixed period Installments is a settlement option and not a dividend option.
All of the following statements concerning the use of life insurance as an executive bonus are?
- any type of insurance policy may be used - The employer pays a bonus to selected employees to fund the policy - it is considered a non-qualified employee benefit - The policy is owned by the employee
A producer received a group master policy and certificates for delivering to the insured how many days must the policy and certificates be delivered?
10 calendar days
A long stretch of national economic hardship clause is 7% rate of inflation. a policy owner notices the face value of her life insurance policy has been raised by 7% as a result. Which policy writer caused this change?
Cost of living writer The cost of living writer annually adjust the policies face value in accordance to the national rate of inflation or deflation. This writer adjust the face amount of the policy to correspond with the rate of inflation in order to keep the initial value of the policy constant overtime.
Which of the following losses would be likely covered under the accidental death rider?
Death caused by a head on collision. It would not include death that resulted from any health problem, disability, self-inflicted injury, war or dangerous hobbies or avocations
The provision that sets forth the basic agreement between insurer and the insured and states insurers promise to pay the death benefit upon insurance death is called
The insuring clause
According to the common disaster clause if they're insured and the primary beneficiary are killed in the same accident and it cannot be determined who died first which of the following is assumed?
The primary beneficiary died before the insured.
How much do replacing producer respond to an applicant wishing to replace existing life insurance?
The producer must provide the applicant with a notice regarding replacement
The buyers guide and policy summary can be delivered with the policy or earlier if the policy contains an unconditional refund provision of at least?
10 days
The commissioner investigates claims filed against the licensee and finds that the licensee has chronically violated several insurance regulations the commissioner decides to hold a hearing. What is the minimum amount of notice that the licensee must be given for the hearing?
10 days
In a non-contributory group policy
100% of eligible employees must participate.
If an insurer cancels an agency contract it must notify the commissioner in writing within how many days?
15 days
Which of the following statement is incorrect concerning modified endowment contract MEC's?
A) an MEC must always pass the 7- pay test Life Insurance contract must pass the seven pay test, otherwise they may become classified as an MEC.
A policy matures and pays the face amount if the insured lives a specific date. this best describes
An endowment policy
If an insured requires an application in order to reinstate a policy and if the insured request reinstatement in writing, an applicant must be delivered to the insured within
30 days
A father owns a life insurance policy on his 15 year old daughter. The policy contains Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premium?
The insured's premium would be waived until she's 21.
If an insured requires an application in order to renew life insurance policy, it is the insurers responsibility to send one to the insured
Within 30 days of insurance request
Fred is the owner of a whole life insurance policy some of the details involving benefit payments are not expressed in the policy, but the insurer proposed an arrangement of 10 years ago. Fred has still not agreed formally to the terms of the proposal. when the policy matures, what will insurer do?
Hold Fred's money in its general fund until it can come to a formal agreement with Fred
A policy will pay the death benefit if the insured dies during a 20 year premium paying period, And nothing if the death occurs 20 year Period. What type of policy is this?
Level term A 20 year term policy is written to provide a level death benefit for 20 years.
A Corporation is the owner and beneficiary of key person life policy. If the corporation collects the policy benefit, them
The benfit is recieved Tax Free.
When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with white face amount?
Equal to the original policy for as long as the cash values will purchase.
All of the following are not for forfeiture options except
Extended term, reduced paid up, cash surrender. Except interest only is not and is settlement option
A certification of a license status must include all of the following information except
Number of years license has been in the business, professional experience is not required
Which option are so life allows the beneficiary to collect both the death benefit and cash value upon death of the insured?
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 of the cash value increases. At any point in time, the death benefit will always be equal to the face amount of the policy plus the current amount of cash value.
When an insured terminates membership in an insured group, their shirt can convert to
Whole life without proof of insurability
According to the life insurance replacement regulations which of the following would be an example of a policy replacement?
A policy re-issued with a reduction in cash value. A replacement refers to any transaction in which life insurance or annuity is purchased resulting in reduced paid up insurance continuing of extended term insurance or otherwise reduced in value by the use of non-forfeiture benefits or other policy values.
When an insurance agency published an advertising brochure that emphasize the company's financial stability and sound business practices. In reality, it's financial health is terrible, and the company will soon have to file for bankruptcy. Which of the following terms best describes the advertisement?
False financial statements
What type of insurance would be used for a return of premium rider?
Increasing term The return of premium rider is achieved by using increasing term insurance when added to a whole life policy provides that death prior to at a given age not only is the original face amount payable, but also the premium previously paid or payable to the beneficiary.
Which of the following act stated that the federal government would not regulate insurance as long as the states did an adequate job of regulating the industry?
Mc Karen - Ferguson Act
A producer received a group master policy and certificate for delivery to the insured. Within how many days must the policy and certificate be delivered?
10 calendar days
Partners in a business entering into a buy sell agreement to purchase life insurance which states that should one of them die prematurely, the other would be financially able to buy the interest of the other deceased partner. What type of insurance policy may be used to fund this agreement?
Any form of life insurance
An individual has 200,000 convertible term life insurance policy if he chooses he can
Convert to a whole life policy for the same face amount without proof of insurability.
Producers licenses will not be issued to business entities in which of the following cases?
One partners license was revoked in the previous five years. No producer license will be issued a business entity operated by person who has had his license revoked within the past 10 years
A participating insurance policy may do which of the following?
Pay dividends to a policy owner. A participating insurance policy will pay dividends to the owner based on actual mortality cost, interest earned and costs.
A man decided to purchase 100,000 Annually renewable term life policy to provide additional protection until his children finish college he discovered that his policy...
Required or premium increase each renewal
Under the fair credit reporting act, if the consumer challenges the accuracy of the information contained in his or her report, the reporting agency must
Respond to the consumers complaint
If finisher and insured have a dispute about whether a particular loss is covered under insurance policy, which authority to settle the dispute?
The court system
Which policy component decreases in decreasing term insurance?
The face amount
And employee is insured under the employers group plan if she terminates her group coverage, which of the following statements is incorrect?
The insured may choose to convert the term or permanent individual coverage is incorrect, the insurer will determine the type of coverage usually permanent insurance.
Which of the following entities is considered the principal?
The insurer is showing a policy
What are the two components of a universal policy?
The universal policy has two components and insurance component in a cash account. Insurance component of universal life policy is always annual renewable term insurance.
All of the following are requirements for nonresident license except A) paying the required fees. B) passing the New Jersey license examination C) holding an active license in the same line of authority in another state D) submitting a license application from the home state
B) passing the New Jersey licensing examination Licensing examinations are not required for non-resident producers in the state as long as the producer hold active license in the same line of authority from another state
Which of the following is a legal name of a corporation or partnership under which a licensee conducts insurance business?
Business name
The company has issued a policy and delivered it to producer be on May 1, Monday. By what date must the policy be delivered to the insured?
May 10 within 10 calendar days
If a policy includes a free look. Of at least 10 days, the buyers guide may be delivered to the applicant
With the policy
All of the following professional designations are recognized by the department as acceptable substitutes for education and examination requirements except A) Professional insurance agents (PIA) B) chartered property/casualty underwriter (CPCU) C) Chartered financial consultant (CHFC) D) chartered life underwriter (CLU)
A) professional insurance agents (PIA)
Which of the following would NOT be considered an exception to the national do not call list? A) Cost base from outside the United States B) calls for which the consumer has given prior written permission C) Calls which are not commercial or do not include unsolicited advertisements D) Caused by or on behalf of tax exempt nonprofit organizations
Call based from outside of the United States would not be considered an exception to the national do not call list.
If an insurer requires an applicant in order to renew a life insurance policy, it is the insurer's responsibility to send one to the insured
Within 30 days of insurance request.
If an insurance company makes a statement that its policies are guaranteed by the existing of insurance guaranty Association, that would be considered
An unfair trade practice
If a person violates a cease and desist order, the commissioner can turn the matter over to NJ Superior Court for further legal action and can asses a fine of each violation of up to
$5000
A licensee violates insurance regulation a hearing is held, and the person is found guilty. If this is a person first offense, the penalty is no more than?
$5000 - first offense Each subsequent is 10,000
All of the following are true regarding the federal fair credit reporting act except
Report may be sent to anyone who request one ( not just anyone can request a report)
What is the waiting period on a waiver of premium rider in life insurance policies?
6 months - most insurers impose a 6 month waiting period from the time of disability until the first premium is waived.
What method do insurers use to protect themselves against catastrophic losses?
Insurers use reinsurance to protect themselves from catastrophic losses this is a method where the reinsurer indemnifies the ceding insurance for part or all of the losses it sustains related to a policy is issued previously.
Which of the following could most likely be issued a resident producer license? A) Julie recently moved from New Jersey to a neighboring state and will no longer work in her New Jersey office. B) Joe is actively licensed in his home state and applies for a nonresident license in New Jersey. C) Sallie lives in a neighboring state but has an office in New Jersey D) Sam lives and works in a neighboring state.
C) Sallie lives in a neighboring state but has an office in New Jersey
Which of the following statements are true concerning irrevocable beneficiary?
They can only be changed with written consent of that beneficiary.
Variable whole life insurance is based on what type of premium ?
Variable whole life insurance is level fixed premium.
Which of the following is not typically excluded from life policies? A. Self-inflicted death B. Death that occurs when a person is committing a fennel a felony C. death due to a war or military service D. Death due to a plane crash for a fare-paying passenger
D. Death due to a plane crash for a fair paying passenger
If a consumer request additional information concerning an investigative consumer report how long does the insurer or reporting agency have to comply?
5 days
All of the following are true regarding the waiver of cost insurance rider except A) The rider waves insurance cost in the event insured becomes disabled. B) The rider is only applicable to universal life policies C) The rider cannot waive the cost of premiums that accumulate cash value D) The rider expires when insured reaches age 60.
D) The rider expires when insured which is age 60 is not true.
What would the insurance company do if they're insured under the whole life policy with an accidental death rider intentionally kill himself a couple months after purchasing the policy?
Deny the death benefit but refund the premium.
The department can run a report on a specific producer that list his or her license information, current license status, and the types of insurance that he or she can transact what is the name of this report?
Certification of license status report
The triple indemnity accident death rider obligates the company to pay three times the face amount of the policy if the insured dies as a result of an accident. The death must be accidental and not contributed by any other factors and must occur within 90 days of the incident. In this case since insured contributed to his own death the triple indemnity rider is void but the beneficiary will still receive the policy death benefit.
Example 100,000 policy, does by accident, it's his fault with triple indemnity what will death benefit be? 100,000
In a direct rollover how is the money transferred from one plan to a new one?
From trustee to trustee. In a direct rollover, the distribution is made directly from trustee of the first plan to the trustee administrator/custodian of the new IRA plan.
An individual is purchasing a permanent life insurance policy with 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
Life income joint and survivor settlement option guarantees
Income for two or more recipients until they die
Upon policy delivery, the producer may required to obtain any of the following except
Payment of premium, delivery receipt, statement of good health except signed waiver of premium this is a rider
All of the following are true of annual renewable term insurance except: A) Proof of insurability must be provided at each renewal. B) The premium increases each year C) The death benefit remains level D) The policy must be renewed no matter what happens to one's health
Proof of insurability must be provided at each renewal. Annual renewable term insurance may be guaranteed to be renewable each year without proof of insurability.
