EF EXAM

A producer was found guilty of a 3rd violation of the Insurance Code. What would be the monetary penalty he will have to pay? (Choose from the following options) 1. $15,000 2. $25,000 3. $5,000 4. $10,000

$10,000

In New Jersey, the minimum age at which a person can purchase a life insurance policy on his or her own life is (Choose from the following options) 1. 13. 2. 15. 3. 16. 4. 18.

15

The two types of assignments are 1. Absolute and collateral. 2. Absolute and partial. 3. Complete and partial. 4. Complete and proportionate.

Absolute and collateral

Through which branch(es) of the government is insurance currently regulated? 1. Legislative 2. Judicial 3. Executive 4. All of the above

All of the above

Which of the following must an insurer obtain in order to transact insurance within a given state? 1. Business entity license 2. Insurer's license 3. Certificate of authority 4. Producer's certificate

Certificate of authority

Which of the following is an insurance professional who offers advice regarding benefits or advantages of an insurance policy to clients for a fee? 1. Producer 2. Broker 3. Counselor 4. Consultant

Consultant

What was created to keep telemarketers from calling consumers who do not wish contacted? 1. Call Control Registry 2. National Do Not Call Registry 3. Confidential No Call Act 4. Freedom of Information Act

National Do Not Call Registry

Which of the following individuals must have insurable interest in the insured? (Choose from the following options) 1. Beneficiary 2. Underwriter 3. Producer 4. Policyowner

Policyowner

At the time the insured purchased her life insurance policy, she added a rider that will allow her to purchase additional insurance in the future without having to prove insurability. This rider is called (Choose from the following options) 1. Waiver of cost of insurance. 2. Supplemental add on. 3. Cost of living. 4. Guaranteed insurability.

Guaranteed Insurability

Which of the following is a risk classification used by underwriters for life insurance? 1. Normal 2. Excellent 3. Standard 4. Poor

Standard

An applicant signs an application for a $25,000 life insurance policy, pays the initial premium, and receives a conditional receipt. If the applicant is killed in an automobile accident the next day, (Choose from the following options) 1. The beneficiary would receive $25,000 if it was determined that the insured qualified for the policy applied for. 2. The premium would be returned to the insured's estate because the policy was not issued. 3. The company could reject the death claim because the underwriting process was never completed. 4. The company could reject the application on the basis that the insured's death was not caused by an ongoing medical problem.

The beneficiary would receive $25,000 if it was determined that the insured qualified for the policy applied for.

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then (Choose from the following options) 1. The benefit is received tax free. 2. The benefit is subject to the exclusionary rule. 3. IRS has no jurisdiction. 4. The benefit is received as taxable income.

The benefit is received tax free

Which of the following best describes fixed-period settlement option? 1. Only the principal amount will be paid out within a specified period of time. 2. The death benefit must be paid out in a lump sum within a certain time period. 3. Income is guaranteed for the life of the beneficiary. 4. Both the principal and interest will be liquidated over a selected period of time.

Both the principal and interest will be liquidated over a selected period of time.

Which of the following would be considered false advertising? 1. Failing to include premiums in sales materials 2. Implying that the agent is the insurer 3. Stating the differences in benefits between Whole Life Insurance and Term Life Insurance 4. Stating that a policy has limitations and exclusions

Implying that the agent is the insurer

In a case where the primary beneficiary predeceases the insured, in the event of the insured's death, the death benefit proceeds will be paid to 1. The insured's spouse. 2. The policyowner. 3. The insurance company. 4. The contingent beneficiary.

The contingent beneficiary

What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act? 1. Revocation of license 2. $2,500 3. $1,000 4. $100 per violation

$2,500

An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy? 1. $20,000 2. $25,000 3. $50,000 4. The face amount will be determined by the insurer.

$50,000

In order to become a producer in New Jersey, after submitting a licensing application, candidates must pass a licensing examination within 1. 3 months. 2. 6 months. 3. 1 year. 4. 2 years.

1 year

The Commissioner believes that an insurance rule or regulation has been violated, and decides to call a disciplinary hearing. How many days before a hearing must the Commissioner issue a notice to the person charged with a violation? (Choose from the following options) 1. 10 days 2. 20 days 3. 30 days 4. 7 days

10 days

If a producer dies or is rendered severely disabled, an unlicensed person can contract with another insurance producer to continue this person's insurance transactions for (Choose from the following options) 1. 90 days. 2. 100 days. 3. 180 days. 4. 365 days.

180 days

Licensees must notify the Department within how many days of any change of address? 1. 10 2. 15 3. 20 4. 30

30

An insured replaces his current policy with one offered by another insurer. If he finds that he is unsatisfied with the new policy, within what period of time can he return it and receive a full refund? 1. This is not possible with replacement policies unless a mistake was made by either of the insurers. 2. 30 days 3. 60 days 4. 90 days

30 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 (Choose from the following options) 1. 7 days. 2. 10 days. 3. 15 days. 4. 30 days.

30 days

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 1. 7 years. 2. 10 years. 3. 6 months. 4. 4 years.

4 years

How many days does a producer have to remit the collected premiums to the insurer? 1. 3 business days 2. 5 business days 3. 10 calendar days 4. 30 calendar days

5 business days

In cases where a producer's license has been revoked, the producer must wait for how long before applying for reinstatement? (Choose from the following options) 1. 3 years 2. 5 years 3. 10 years 4. Once a license has been revoked, it cannot be reinstated in this state.

5 years

If a telemarketer wants to make an unsolicited sales call to a potential customer, what is the earliest time the telemarketer can call the prospect's residence? 1. 7 am 2. 8 am 3. 9 am 4. Noon

8 am

According to the telemarketing sales rules, what are the permissible calling hours for telemarketing calls? (Choose from the following options) 1. 10am until 10pm 2. 7am until 7pm 3. 7am until 9pm 4. 8am until 9pm

8 am until 9 pm

What is reinsurance? 1. An agreement between a ceding insurer an assuming insurer 2. An agreement between an originating insurer and a ceding insurer 3. An agreement between a domestic insurer and a foreign insurer 4. An agreement between an insurer and an insured

An agreement between a ceding insurer an assuming insurer

An insurance producer refused to comply with a subpoena. What would be the producer's penalty for this violation? 1. A fine and an imprisonment 2. A fine up to $10,000 3. Imprisonment up to 6 months 4. A fine up to $5,000

A fine up to $5,000

Which of the following named beneficiaries would NOT be able to receive the death benefit directly from the insurer in the event of the insureds' death? (Choose from the following options) 1. A business partner of the insured 2. The wife of the deceased insured 3. The former wife of the deceased insured 4. A minor son of the insured

A minor son of the insured

Insurance companies may be classified according to the legal form of their ownership. The type of company organized to return any surplus money to their policyholders is 1. A mutual insurer. 2. A reciprocal company. 3. A fraternal insurer. 4. A stock company.

A mutual insurer

Which of the following documents delivered to the policyowner includes information about premium amounts, cash values, surrender values and death benefits for specific policy years? 1. A privacy notice 2. A buyer's guide 3. A policy summary 4. A notice regarding replacement

A policy summary

In choosing an insurance business name, which of the following would be allowed? 1. A name with the same spelling as a competing company, but a different pronunciation 2. A name which implies eligibility for individuals to whom coverage is not actually offered 3. A proper name which does not belong to any officers, stockholders, or executives 4. A name with the same pronunciation as a competing company, but a different spelling

A proper name which does not belong to any officers, stockholders, or executives

Under which of the following circumstances would an insurer pay accelerated benefits? 1. A couple is nearing retirement and needs a steady stream of income. 2. An insured is looking for a way to put her daughter through college. 3. A couple wants to build a house and would like to make a larger down payment. 4. An insured is diagnosed with cancer and needs help paying for her medical treatment.

An insured is diagnosed with cancer and needs help paying for her medical treatment.

An insurer cancelled a contract with a producer on April 1st. By what date must the insurer notify the Commissioner of this action? (Choose from the following options) 1. April 11th 2. April 15th 3. April 30th 4. April 5th

April 15th

Which of the following is INCORRECT regarding a $100,000 20-year level term policy? 1. The policy will expire at the end of the 20-year period. 2. At the end of 20 years, the policy's cash value will equal $100,000. 3. The policy premiums will remain level for 20 years. 4. If the insured dies before the policy expired, the beneficiary will receive $100,000.

At the end of 20 years, the policy's cash value will equal $100,000.

A policyowner fails to pay the premium due on his whole life policy after the grace period passes, but the policy remains in force. This is due to what provision? 1. Assignment 2. Automatic premium loan 3. Waiver of premium 4. Incontestability period

Automatic premium loan

Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium? (Choose from the following options) 1. Extended term 2. Reinstatement 3. Reduced paid-up option 4. Automatic premium loan

Automatic premium loan

Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process? (Choose from the following options) 1. Insurance Index 2. Policy Summary 3. Illustrations 4. Buyer's Guide

Buyers Guide

When an insurance producer negotiates for an insurance contract on behalf of a client, the producer is acting as a(n) (Choose from the following options) 1. Broker. 2. Solicitor. 3. Consultant. 4. Agent.

Broker

The accelerated benefits provision will provide for an early payment of the death benefit when the insured (Choose from the following options) 1. Becomes terminally ill. 2. Needs to borrow money. 3. Has earned enough credits. 4. Becomes disabled.

Becomes terminally ill

Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as 1. Rebating. 2. Misleading advertising. 3. Defamation. 4. Coercion.

Coercion

A business owner was trying to obtain a bank loan to fund the purchase of a new business facility, but the bank required proof of additional assets to secure the loan. The business owner then decided to use her $250,000 life insurance policy to secure the loan. Which provision makes this possible? 1. Ownership provision 2. Collateral assignment 3. Insurable interest 4. Modification clause

Collateral assignment

In accordance with the Administrative Procedure Act, what entity has the authority to make and enforce rules and regulations to implement and carry out the purposes of the Insurance laws of New Jersey? (Choose from the following options) 1. Governor 2. NAIC 3. Insurance Regulation Board 4. Commissioner

Commissioner

An insured and his wife are both involved in a head-on collision. The husband dies instantly, and the wife dies 15 days later. The company pays the death benefit to the estate of the insured. This indicates that the life insurance policy had what provision? 1. Common Disaster 2. Accidental Death 3. Survivor Life 4. Second-to-Die

Common Disaster

Which of the following includes information regarding a person's credit, character, reputation, and habits? 1. Agent's report 2. Consumer report 3. Consumer history 4. Insurability report

Consumer report

Which of the following would NOT be considered an unfair and deceptive practice? (Choose from the following options) 1. Controlled business 2. Rebating 3. Defamation 4. Misrepresentation

Controlled business

Which of the following types of insurance would be written by a limited lines agent? 1. Surplus lines insurance 2. Term life insurance 3. Credit insurance 4. Variable life insurance

Credit Insurance

The type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is called (Choose from the following options) 1. Credit health. 2. Decreasing whole life. 3. Multiple Protection insurance. 4. Credit life.

Credit life

Which of the following is NOT an example of insurable interest? (Choose from the following options) 1. Employer in employee 2. Child in parent 3. Debtor in creditor 4. Business partners in each other

Debtor in creditor

Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called? 1. Misrepresentation 2. Adverse selection 3. Discrimination 4. Law of large numbers

Discrimination

Which of the following terms is used to name the nontaxed return of unused premiums? (Choose from the following options) 1. Interest 2. Surrender 3. Dividend 4. Premium return

Dividend

Circulating deceptive sales material to the public is what type of Unfair Trade Practice? 1. Coercion 2. Misrepresentation 3. False advertising 4. Defamation

False advertising

Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member? (Choose from the following options) 1. Spouse rider 2. Children's rider 3. Additional insured rider 4. Family term rider

Family term rider

All of the following are dividend options EXCEPT (Choose from the following options) 1. Reduction of premium. 2. Paid-up additions. 3. Fixed-period installments. 4. Accumulated at interest

Fixed-period installments

When an employee terminates coverage under a group insurance policy, coverage continues in force 1. For 60 days. 2. Until the employee can obtain coverage under a new group plan. 3. Until the employee notifies the group insurance provider that coverage conversion policy is issued. 4. For 31 days.

For 31 Days

Which of the following would NOT be considered rebating? (Choose from the following options) 1. Giving a client a $25 pen with the insurer's logo during the insurance application process 2. Sending a $50 gift certificate to the insured's employee after the insurance has been effected as a thank you for the referral 3. Sharing commission with the insured 4. Collecting a lower premium than what's specified in a policy as a token of client appreciation

Giving a client a $25 pen with the insurer's logo during the insurance application process

The automatic premium loan provision is activated at the end of the (Choose from the following options) 1. Grace period. 2. Free-look period 3. Elimination period. 4. Policy period.

Grace Period

In life insurance policies, cash value increases 1. Are only taxed when the owner reaches age 65. 2. Grow tax deferred. 3. Are income taxable immediately. 4. Are taxed annually.

Grow tax deferred

All of the following are among the Commissioner's broad powers EXCEPT (Choose from the following options) 1. Appoint and remove officers employed within the Department. 2. Report to the Governor about the Department's operations. 3. Formulate and adopt rules and regulations of companies and licensees. 4. Have interest in insurance companies regulated by the Department.

Have interest in insurance companies regulated by the Department.

A licensed insurance producer may request a waiver of license renewal procedures under any of the following circumstances EXCEPT (Choose from the following options) 1. His renewal forms were lost in the mail. 2. He has recently been confined to a wheelchair due to MS. 3. He was injured in a car accident. 4. He has been called into active duty.

His renewal forms were lost in the mail.

A person takes out a loan in order to pay off his house. He dies several years later, having paid off only a small portion of the debt. Which of the following is true? 1. The state government will pay the balance to the lender. 2. The lender will not recover this money. 3. The federal government will pay the balance to the lender. 4. If the lender has credit insurance, this amount will be paid to the lender.

If the lender has credit insurance, this amount will be paid to the lender

An insured purchased a life insurance policy on his life naming his wife as primary beneficiary, and his daughter as contingent beneficiary. Under what circumstances could the daughter collect the death benefit? 1. If the primary beneficiary predeceases the insured 2. The primary and contingent beneficiaries share death benefits equally 3. With the primary beneficiary's written consent 4. If the insured died from accidental means

If the primary beneficiary predeceases the insured

Under which of the following circumstances would a nonresident producer NOT required to complete CE hours in New Jersey? (Choose from the following options) 1. Any time nonresident producers satisfy CE requirements in their home state 2. Under no circumstances: all producers must meet CE requirements in this state 3. If a waiver is received from the Commissioner 4. If the producer's home state has the same CE requirements and the producer satisfies them

If the producer's home state has the same CE requirements and the producer satisfies them

Life income joint and survivor settlement option guarantees 1. Payout of the entire death benefit. 2. Equal payments to all recipients. 3. Income for 2 or more recipients until they die. 4. Payment of interest on death proceeds.

Income for 2 or more recipients until they die.

Annually renewable term policies provide a level death benefit for a premium that (Choose from the following options) 1. Remains level. 2. Fluctuates. 3. Increases annually. 4. Decreases annually.

Increases annually

The type of term insurance that provides increasing death benefits as the insured ages is called (Choose from the following options) 1. Increasing term. 2. Flexible term. 3. Interest-sensitive term. 4. Age-sensitive term.

Increasing term

Producer's and insurer's actions related to insurance transactions, from selling insurance to processing claims are referred to as (Choose from the following options) 1. Producer actions. 2. Licensee's responsibilities. 3. Agent's authority. 4. Insurance-related conduct.

Insurance-related conduct

During partial withdrawal from a universal life policy, which portion will be taxed? (Choose from the following options) 1. Cash value 2. Principal 3. Loan 4. Interest

Interest

All of the following are Nonforfeiture options EXCEPT (Choose from the following options) 1. Cash surrender 2. Extended term 3. Reduced paid-up 4. Interest only

Interest Only

If a retirement plan or annuity is "qualified," this means 1. It is approved by the IRS. 2. It has a penalty for early withdrawal. 3. It accepts after-tax contributions. 4. It is noncancellable.

It is approved by the IRS

Which of the following is NOT true regarding a nonqualified retirement plan? 1. It needs IRS approval. 2. Contributions are not currently tax deductible. 3. It can discriminate in benefits and selecting participants. 4. Earnings grow tax deferred.

It needs IRS approval

What significance did Paul vs. Virginia have on the insurance industry? (Choose from the following options) 1. It was decided that insurance was interstate commerce and should therefore be regulated by the federal government. 2. It was decided that insurance required a separate federal regulatory agency from Securities products. 3. It was decided that insurance licenses should not be issued by the federal government and should instead be issued by individual states. 4. It was decided that insurance was not interstate commerce and could not be regulated by the federal government.

It was decided that insurance was not interstate commerce and could not be regulated by the federal government.

Which statement is NOT true regarding a Straight Life policy? (Choose from the following options) 1. It has the lowest annual premium of the three types of Whole Life policies. 2. Its premium steadily decreases over time, in response to its growing cash value. 3. The face value of the policy is paid to the insured at age 100. 4. It usually develops cash value by the end of the third policy year.

Its premium steadily decreases over time, in response to its growing cash value.

An insured has a life insurance policy that requires him to only pay premiums for a specified number of years until the policy is paid up. What kind of policy is it? 1. Limited-pay Life 2. Variable Life 3. Adjustable Life 4. Graded Premium Life

Limited-pay life

Which of the following information about the applicant is NOT included on Part 1 of the application for insurance? (Choose from the following options) 1. Gender 2. Occupation 3. Marital status 4. Medical background

Medical background

Which of the following provide(s) funding for the New Jersey Life and Health Guaranty Association? 1. Insolvent insurers 2. Member insurers 3. Tax payers 4. Fundraising

Member insurers

What is the term for how frequently a policyowner is required to pay the policy premium? (Choose from the following options) 1. Consideration 2. Mode 3. Schedule 4. Grace period

Mode

Insurance is regulated 1. Mostly on a state level. 2. Evenly between the state and federal levels. 3. Only on the level of social medicine, which is on both state and federal levels. 4. Mostly on a federal level.

Mostly on a state level

Which of the following most likely would NOT be required to complete continuing education hours in this state? (Choose from the following options) 1. Nonresident producers 2. Insurance brokers 3. Resident producers 4. Insurance consultants

Nonresident producers

Death benefits payable to a beneficiary under a life insurance policy are generally (Choose from the following options) 1. Subject to income taxation by the Federal Government. 2. Exempt from income taxation if under $7,000. 3. Exempt from income taxation if over $7,000. 4. Not subject to income taxation by the Federal Government.

Not subject to income taxation by the Federal Government.

Which of the following documents must be provided to the policyowner or applicant during policy replacement? (Choose from the following options) 1. Buyer's Guide and Policy Summary 2. Policy illustrations 3. Notice Regarding Replacement 4. Disclosure Authorization Form

Notice Regarding Replacement

During replacement of life insurance, a replacing insurer must do which of the following? 1. Send a copy of the Notice Regarding Replacement to the Department of Insurance 2. Obtain a list of all life insurance policies that will be replaced 3. Guarantee a replacement for each existing policy 4. Designate a new producer for a replaced policy

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

Which of the following explains the policyowner's right to change beneficiaries, choose options, and receive proceeds of a policy? 1. Assignment Rights 2. Owner's Rights 3. The Entire Contract Provision 4. The Consideration Clause

Owner's Rights

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? (Choose from the following options) 1. Waiver of Premium 2. Payor Benefit 3. Jumping Juvenile 4. Juvenile Premium Provision

Payor Benefit

What describes the specific information about a policy? 1. Illustrations 2. Buyer's guide 3. Producer's report 4. Policy summary

Policy Summary

Which of the following will be included in a policy summary? (Choose from the following options) 1. Copies of illustrations and application 2. Comparisons with similar policies 3. Primary and secondary beneficiary designations 4. Premium amounts and surrender values

Premium amounts and surrender values

Most agents try to collect the initial premium for submission with the application. When an agent collects the initial premium from the applicant, the agent should issue the applicant a 1. Warranty. 2. Premium receipt. 3. Statement of good health. 4. Backdated receipt.

Premium receipt

A couple owns a life insurance policy with a Children's Term rider. Their daughter is reaching the maximum age of dependent coverage, so she will have to convert to permanent insurance in the near future. Which of the following will she need to provide for proof of insurability? (Choose from the following options) 1. Her parents' federal income tax receipts 2. Medical exam and parents' medical history 3. Proof of insurability is not required. 4. Medical exam

Proof of insurability is not required

Which of the following licenses is required for a surplus lines producer? (Choose from the following options) 1. Credit insurance 2. Life and Health 3. Adjusters 4. Property and Casualty

Property and Casualty

The policyowner pays for her life insurance annually. Until now, she has collected a nontaxable dividend check each year. She has decided that she would rather use the dividends to help pay for her next premium. What option would allow her to do this? (Choose from the following options) 1. Cash option 2. Reduction of premium 3. Paid-up addition 4. Accumulation at interest

Reduction of premium

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 1. Respond to the consumer's complaint. 2. Defend the report if the agency feels it is accurate. 3. Change the report. 4. Send an actual certified copy of the entire report to the consumer.

Respond to the consumers complaint

Annuities can be used to fund which of the following? (Choose from the following options) 1. Variable life insurance 2. Group life insurance 3. Estate creation 4. Retirement plans

Retirement plans

If an agent wishes to sell variable life policies, what license must the agent obtain? (Choose from the following options) 1. Securities 2. Adjuster 3. Surplus Lines 4. Personal Lines

Securities

Which of the following best details the underwriting process for life insurance? 1. Selection, classification, and rating of risks 2. Solicitation, negotiation and sale of policies 3. Issuance of policies 4. Reporting and rejection of risks

Selection, classification, and rating of risks

The Ownership provision entitles the policyowner to do all of the following EXCEPT 1. Set premium rates. 2. Receive a policy loan. 3. Assign the policy. 4. Designate a beneficiary.

Set premium rates

An employee has group life insurance through her employer. After 5 years, she decides to leave the company and work independently. How can she obtain an individual policy? (Choose from the following options) 1. She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan. 2. She will still be covered under the group plan, but will have to pay an individual policy premium. 3. She can only convert her coverage without proof of insurability if she has the master policy. 4. She must apply for a new policy, which requires her to provide proof of insurability.

She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan.

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT 1. Signed waiver of premium. 2. Statement of good health. 3. Payment of premium. 4. Delivery receipt.

Signed waiver of premium

Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option? (Choose from the following options) 1. Length of income period 2. Amount of interest 3. Size of each installment 4. Predetermined length of time stated in the contract

Size of each installment

All of the following are unfair claims settlement practices EXCEPT 1. Failing to acknowledge pertinent communication pertaining to a claim. 2. Suggesting negotiations in settling the claim. 3. Refusing to pay claims without conducting a reasonable investigation. 4. Failing to adopt and implement reasonable standards for settling claims.

Suggesting negotiations in settling the claim.

Which of the following is called a "second-to-die" policy? 1. Juvenile life 2. Joint life 3. Survivorship life 4. Family income

Survivorship Life

Traditional IRA contributions are (Choose from the following options) 1. Deducted based on the income level. 2. Never tax deductible. 3. Partially tax deductible depending on the income level. 4. Tax deductible.

Tax deductible

The Supreme Court stated that insurance is interstate commerce and is therefore subject to regulation by the federal government in the decision of what case? 1. The U.S. vs. the South-Eastern Underwriters Association 2. McCarran-Ferguson vs. New York 3. Rosche-Wall vs. Alabama 4. Paul vs. Virginia

The U.S. vs. the South-Eastern Underwriters Association

The initial amount of credit life insurance may NOT exceed 1. The amount to be repaid under the contract. 2. An amount set by statute and adjusted regularly for inflation. 3. The borrower's monthly income. 4. The borrower's annual income.

The amount to be repaid under the contract.

An insurer goes bankrupt and is unable to pay on any of its insureds' claims. Which of the following will happen? (Choose from the following options) 1. The claims will be paid by the state Department of Insurance. 2. The insureds will not be paid. 3. The claims will be paid by a nationally-based program. 4. The claims will be paid by the state Life and Health Guaranty Association.

The claims will be paid by the state Life and Health Guaranty Association.

The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change? (Choose from the following options) 1. The death benefit can be increased only when the policy has developed a cash value. 2. The death benefit can be increased only by exchanging the existing policy for a new one. 3. The death benefit can be increased by providing evidence of insurability. 4. The death benefit cannot be increased.

The death benefit can be increased by providing evidence of insurability.

The Paul vs. Virginia case was decided in 1869. To what extent does the Supreme Court's decision still apply to insurance today? 1. It still stands in full. Insurance and securities are still regulated by two distinct agencies. 2. The decision has changed. Insurance is considered to be interstate commerce, and is subject to regulation by the federal government. 3. The decision has changed. Insurance and securities are now regulated by the same federal agency. 4. It still stands in full. Insurance is not considered to be interstate commerce, and is not subject to regulation by the federal government.

The decision has changed. Insurance is considered to be interstate commerce, and is subject to regulation by the federal government.

Who bears all of the investment risk in a fixed annuity? 1. The annuitant 2. The insurance company 3. The owner 4. The beneficiary

The insurance company

The insured had his wife named as the beneficiary of his life insurance policy. To ensure that his wife had income for life after the insured's death, he chose the life income settlement option. The amount of payments will be determined by taking into account all of the following EXCEPT 1. The beneficiary's life expectancy. 2. Projected interest rates. 3. Face amount of the policy. 4. The insured's age at death.

The insured's age at death

A 40-year old man buys a whole life policy and names his wife as his only beneficiary. His wife dies 10 years later. He never remarries and dies at age 61, leaving 2 grown-up children. Assuming he never changed the beneficiary, the policy proceeds will go to (Choose from the following options) 1. Both children who share equally on a per-capita basis. 2. The insurance company. 3. The insured's estate. 4. The insured's firstborn child.

The insured's estate

An employee quits his job on May 15 and doesn't convert his Group Life policy to an individual policy for 2 weeks. He dies in a freak accident on June 1. Which of the following statements best describes what will happen? 1. The insurer will pay nothing because the employee has terminated his group insurance and hasn't started the individual one. 2. The insurer will pay the full death benefit from the group policy to the beneficiary. 3. The insurer will pay a reduced death benefit to the beneficiary. 4. The insurer will pay the death benefit minus one month's premium.

The insurer will pay the full death benefit from the group policy to the beneficiary

What is the advantage of reinstating a policy instead of applying for a new one? 1. The cash values have gained interest while the policy was lapsed 2. The original age is used for premium determination 3. Proof of insurability is not required 4. The face amount can be increased

The original age is used for premium determination

Which of the following best describes what the annuity period is? 1. The period of time from the effective date of the contract to the date of its termination 2. The period of time during which accumulated money is converted into income payments 3. The period of time from the accumulation period to the annuitization period 4. The period of time during which money is accumulated in an annuity

The period of time during which accumulated money is converted into income payments

All of the following are true of key person insurance EXCEPT 1. The key employee is the insured. 2. The plan is funded by permanent insurance only. 3. There is no limitation on the number of key employee plans in force at any one time. 4. The employer is the owner, payor and beneficiary of the policy.

The plan is funded by permanent insurance only.

An insured has chosen joint and 2/3 survivor as the settlement option. What does this mean to the beneficiaries? (Choose from the following options) 1. One of the beneficiaries will receive 1/3 and the other 2/3 of the proceeds when the insured dies. 2. The surviving beneficiary will continue receiving 2/3 of the benefit paid when both beneficiaries were alive. 3. The beneficiary will receive 2/3 of the lump sum up front, and the remaining 1/3 will be paid over time. 4. The beneficiary will receive 2/3 of the total benefit, with the final 1/3 payable when the first beneficiary dies.

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

All of the following are true regarding the guaranteed insurability rider EXCEPT 1. The insured may purchase additional coverage at the attained age. 2. The insured may purchase additional insurance up to the amount specified in the base policy. 3. It allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events. 4. This rider is available to all insureds with no additional premium.

This rider is available to all insureds with no additional premium.

Why should the producer personally deliver the policy when the first premium has already been paid? (Choose from the following options) 1. To ensure the producer gets paid commission 2. To find out how the family has been doing since the initial presentation 3. To make sure the policy is not stolen or lost 4. To help the insured understand all aspects of the contract

To help the insured understand all aspects of the contract

Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another? 1. Switching 2. False advertising 3. Rebating 4. Twisting

Twisting

An insured owns a life insurance policy. To be able to pay some of her medical bills, she withdraws a portion of the policy's cash value. There is a limit for a withdrawal and the insurer charges a fee. What type of policy does the insured most likely have? a) Universal life b) Adjustable life c) Term life d) Limited pay

Universal life

In a survivorship life policy, when does the insurer pay the death benefit? (Choose from the following options) 1. Half at the first death, and half at the second death 2. If the insured survives to age 100 3. Upon the last death 4. Upon the first death

Upon the last death

The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called (Choose from the following options) 1. Waiver of premium. 2. Guaranteed insurability. 3. Waiver of cost of insurance. 4. Payor benefit.

Waiver of premium

When is the earliest a policy may go into effect? 1. When the insurer approves the application 2. After the underwriter reviews the policy 3. When the application is signed and a check is given to the agent 4. When the first premium is paid and the policy has been delivered

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

Solicitation rules would apply to which of the following types of coverage? (Choose from the following options) 1. Group Life 2. Whole Life 3. Deferred Annuity 4. Variable Life

Whole life

All of the following could own group life insurance EXCEPT 1. A debtor group. 2. A group needing low-cost life insurance. 3. A group sponsored by an employer. 4. An alumni group.

A group needing low-cost life insurance.

Insurance companies may be classified according to the legal form of their ownership. The type of company organized to return any surplus money to their policyholders is 1. A fraternal insurer. 2. A stock company. 3. A mutual insurer. 4. A reciprocal company.

A mutual insurer.

Who is a third-party owner? 1. An employee in a group policy 2. An irrevocable beneficiary 3. A policyowner who is not the insured 4. An insurer who issues a policy for two people

A policyowner who is not the insured

The Commissioner may revoke a producer's license for all of the following reasons EXCEPT 1. Commingling of funds. 2. Misrepresenting the terms of a policy. 3. Acting in a fiduciary capacity. 4. Accepting business from an unlicensed person.

Acting in a fiduciary capacity.

When transacting business in this state an insurer formed under the laws of another country is known as a/an 1. Domestic insurer. 2. Foreign insurer. 3. Admitted insurer. 4. Alien insurer.

Alien insurer

Which of the following would NOT be considered an exception to the National Do Not Call List? 1. Calls by or on behalf of tax-exempt nonprofit organizations 2. Calls based from outside of the United States 3. Calls for which the consumer has given prior written permission 4. Calls which are not commercial or do not include unsolicited advertisements

Calls based from outside of the United States

The type of policy that can be changed from one that does not accumulate cash value to the one that does is a 1. Whole Life Policy. 2. Convertible Term Policy. 3. Renewable Term Policy. 4. Decreasing Term Policy.

Convertible Term Policy

A rider that may be attached to a life insurance policy that will adjust the face amount based upon a specific index, such as the Consumer Price Index, is called 1. Living need rider. 2. Payor rider. 3. Cost of living rider. 4. Accelerated benefit rider.

Cost of living rider

When a life insurance policy is cancelled and the insured has selected the extended term nonforfeiture option, the cash value will be used to purchase term insurance that has a face amount? 1. The same as the original policy minus the cash value. 2. Equal to the original policy for as long a period of time that the cash values will purchase. 3. In lesser amounts for the remaining policy term of age 100. 4. Equal to the cash value surrendered from the policy.

Equal to the original policy for as long a period of time that the cash values will purchase.

If a beneficiary wants a guarantee that benefits paid from principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select? 1. Fixed period 2. Life with period certain 3. Fixed amount 4. Interest only

Fixed Period

Which is TRUE about the cash surrender nonforfeiture option? 1. After the cash surrender, the insured is covered for a grace period of 1 month. 2. The policy remains active for some time after the policyholder opts for cash surrender. 3. The policyholder receives the original cash value of the policy. 4. Funds exceeding the premium paid are taxable as ordinary income.

Funds exceeding the premium paid are taxable as ordinary income.

Life insurance death proceeds are 1. Generally not taxed as income. 2. Taxable to the extent that they exceed 7.5% of the beneficiary's adjusted gross income. 3. Taxed as a capital gain. 4. Taxed as ordinary income.

Generally not taxed as income.

If a life policy allows the policyowner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a 1. Cost of living provision. 2. Nonforfeiture option. 3. Guaranteed insurability rider. 4. Paid-up additions option.

Guaranteed insurability rider

Your client's employer does not offer a company-wide annuity contract. What type of annuity contract could your client obtain? 1. Individual 2. Independent Group Contract 3. Single 4. Non-qualified

Individual

What do individuals use to transfer their risk of loss to a larger group? 1. Insurance 2. Insurable interest 3. Exposure 4. Indemnity

Insurance

It is the responsibility of which of the following to make sure that an applicant/policyholder has a policy summary and buyer's guide? 1. Commissioner 2. Department of Banking and Insurance 3. Insurer 4. Applicant

Insurer

Credit Life insurance 1. Insures the life of a creditor. 2. Has a maximum term for insurance of 20 years. 3. Insures the life of a debtor. 4. Is purchased on an installment basis.

Insures the life of a debtor.

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? 1. Fixed amount option 2. Interest only option 3. Life income with period certain 4. Joint and survivor

Interest only option

A life insurance policy has lapsed, and the policyowner would like to reinstate it. In order to initiate the reinstatement process, he must submit an application to his insurer. Which of the following is true? 1. It is the policyowner's responsibility to request the reinstatement application; the insurer must then deliver it within 30 days. 2. It is the policyowner's responsibility to request the reinstatement application; the insurer must then deliver it within 10 days. 3. It is the insurer's responsibility to deliver this application to the policyowner within 30 days of policy lapse. 4. It is the insurer's responsibility to deliver this application to the policyowner within 10 days of policy lapse.

It is the policyowner's responsibility to request the reinstatement application; the insurer must then deliver it within 30 days.

Which of the following was created to protect policyowners, insureds, and beneficiaries under insurance contracts when insurers fail to perform contractual obligations due to financial impairment? 1. New Jersey Insurance Solvency Association 2. New Jersey Consumer Protection Organization 3. New Jersey Life and Health Guaranty Association 4. New Jersey Insurance Consumer Protectorate

New Jersey Life and Health Guaranty Association

A nonresident licensed producer decides to conduct business under an assumed name. Which of the following is true? 1. The assumed name must be filed with the NAIC, the Commissioner of the domicile state, and the Commissioner of the state for which the nonresident producer is licensed. 2. Nonresident producers may not conduct business under any name besides legal names. 3. The assumed name must be submitted on the Uniform Assumed Title form, with the appropriate fee. 4. Nonresident producers need to take no action before conducting business under an assumed name.

Nonresident producers may not conduct business under any name besides legal names.

All of the following are characteristics of group life insurance EXCEPT 1. Individuals covered under the policy receive a certificate of insurance. 2. Certificate holders may convert coverage to an individual policy without evidence of insurability. 3. Premiums are determined by the age, sex and occupation of each individual certificate holder. 4. Amount of coverage is determined according to nondiscriminatory rules.

Premiums are determined by the age, sex and occupation of each individual certificate holder.

When an insured under a life insurance policy died, the designated beneficiary received the face amount of the policy as well as a refund of all of the premiums paid. Which rider is attached to the policy? 1. Premature death 2. Return of premium 3. Cost of living 4. Decreasing term

Return of premium

A policyowner who is also the insured wants to name her husband as the beneficiary of her life policy. She also wishes to retain all of the rights of ownership. The policyowner should have her husband named as the 1. Secondary beneficiary. 2. Primary beneficiary. 3. Irrevocable beneficiary. 4. Revocable beneficiary.

Revocable beneficiary

To sell variable life insurance policies, an agent must receive all of the following EXCEPT 1. A securities license. 2. A life insurance license. 3. SEC registration. 4. FINRA registration.

SEC registration

Methods used to pay the death benefits to a beneficiary upon the insured's death are called 1. Designation options. 2. Beneficiary provisions. 3. Death benefit options. 4. Settlement options.

Settlement options

Which type of life insurance policy generates immediate cash value? 1. Continuous Premium 2. Single Premium 3. Level Term 4. Decreasing Term

Single Premium

Proceeds from life insurance policies are protected from the beneficiary's debts under all of the following circumstances EXCEPT 1. The amount of debt exceeds 50% of the policy's face value. 2. There are no circumstances under which proceeds are protected from the beneficiary's debts. 3. Some of the premiums were paid in an attempt to defraud creditors. 4. The amount of debt exceeds the policy's face value.

Some of the premiums were paid in an attempt to defraud creditors.

Which of the following insurers are owned by stockholders who have the usual rights of ownership, including the right of voting? 1. Fraternal 2. Stock 3. Mutual 4. Reciprocal

Stock

Which of the following types of risk will result in the highest premium? 1. Substandard risk 2. Standard risk 3. Preferred risk 4. All risks pay equal premiums

Substandard risk

The National Do Not Call Registry was created to regulate 1. Insurance solicitors. 2. Telemarketers. 3. Field underwriters. 4. Insurers.

Telemarketers

Children's riders attached to whole life policies are usually issued as what type of insurance? 1. Variable life 2. Adjustable life 3. Whole life 4. Term

Term

If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back? 1. The balance of the loan will be taken out of the death benefit. 2. The policy beneficiary receives the full death benefit. 3. The policy beneficiary takes over the loan payments. 4. The policy is rendered null and void.

The balance of the loan will be taken out of the death benefit.

All of the following statements concerning an employer sponsored nonqualified retirement plan are true EXCEPT 1. The plan is a legal method of accumulating money for retirement needs. 2. The plan can discriminate as to who may participate. 3. The plan is not approved for favorable tax treatment by the IRS. 4. The employer can receive a current tax deduction for any contributions made to the plan.

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

A group of 15 skydivers met at a seminar and began talking about life insurance during a break. Because it was expensive to get individual life insurance, they decided to band together to form a small group so that they could qualify for group life insurance. After they applied for group life insurance, they were rejected. Why? 1. There are not enough people in the group to qualify for group life insurance. 2. The group has not been established for long enough. 3. The purpose of the group was to purchase life insurance. 4. Their profession poses too high of a risk for the insurer.

The purpose of the group was to purchase life insurance

Under an extended term nonforfeiture option, the policy cash value is converted to 1. A lower face amount than the whole life policy. 2. A higher face amount than the whole life policy. 3. The same face amount as in the whole life policy. 4. The face amount equal to the cash value.

The same face amount as in the whole life policy.

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 1. Rebating. 2. Twisting. 3. Defamation. 4. Misrepresentation.

Twisting

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract? 1. Indemnity 2. Representation 3. Warranty 4. Concealment

Warranty

When may an insurance company use suicide as a defense against paying a death claim? 1. Only when there was a witness to the event 2. At any time suicide can be proven 3. At no time 4. When death occurs within a specified period of time after the policy was issued

When death occurs within a specified period of time after the policy was issued

If an applicant for a life insurance policy and person to be insured by the policy are two different people, the underwriter would be concerned about 1. Whether an insurable interest exists between the individuals. 2. The gender of the applicant. 3. The type of policy requested. 4. Which individual will pay the premium.

Whether an insurable interest exists between the individuals.

The Commissioner believes that an insurance rule or regulation has been violated, and decides to call a disciplinary hearing. How many days before a hearing must the Commissioner issue a notice to the person charged with a violation? 1. 10 days 2. 20 days 3. 30 days 4. 7 days

10 days

It is the job of what authority to appoint and remove officers and other personnel employed within the Department? 1. Insurance Officer Regulation Board 2. Department of Insurance 3. Commissioner 4. Governor

Commissioner

An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company? 1. Consumer Privacy Act 2. Conditional receipt 3. Disclosure rule 4. Fair Credit Reporting Act

Fair Credit Reporting Act

Which of the following is an example of a limited-pay life policy? 1. Renewable Term to Age 70 2. Level Term Life 3. Straight Life 4. Life Paid-up at Age 65

Life Paid-up at Age 65

If a producer dies or is rendered severely disabled, an unlicensed person can contract with another insurance producer to continue this person's insurance transactions for 1. 90 days. 2. 100 days. 3. 180 days. 4. 365 days.

180 days.

Applicants for an individual producer license must submit proof of completing 24 hours of continuing education credits during the previous 1. 4 years. 2. 5 years. 3. 2 years. 4. 3 years.

2 years

An insurer is closing a branch office in this state. Within how many days of the office closing must the insurer notify the Department? 1. 10 days 2. 15 days 3. 30 days 4. 90 days

30 days

Which of the following is NOT considered a misrepresentation as it pertains to unfair trade practices? (Choose from the following options) 1. Making comparisons between different policies 2. Stating that the insurance policy is a share of stock 3. Exaggerating the benefits provided in the policy 4. Stating that the competitors will arbitrarily increase their premiums each year

Making comparisons between different policies

A rider attached to a life insurance policy that provides coverage on the insured's family members is called the 1. Payor rider. 2. Other-insured rider. 3. Change of insured rider. 4. Juvenile rider.

Other-insured rider

A corporation is the owner and beneficiary of the key person life policy. If the corporation collects the policy benefit, then 1. The benefit is received tax free. 2. The benefit is subject to the exclusionary rule. 3. IRS has no jurisdiction. 4. The benefit is received as taxable income.

The benefit is received tax free.

Within how many days must a producer report claims to the insurer? 1. 3 business days 2. 5 calendar days 3. 5 business days 4. 3 calendar days

5 business days

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 10 years ago. Fred has still not agreed formally to the terms of the proposal. When the policy matures, what will the insurer do? 1. Hold Fred's money in its general fund until it can come to a formal agreement with Fred 2. Execute the terms of the proposed agreement, while charging Fred a penalty of no more than 2.5% of the monthly payout until an agreement is established 3. Execute the terms of the proposed agreement, since Fred did not formally disagree 4. Hold Fred's money in a segregated fund until it can come to a formal agreement with Fred

Hold Fred's money in its general fund until it can come to a formal agreement with Fred

In the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. Which of the following is true concerning the policy premium? 1. The applicant's habits and health do not affect the premiums. 2. It will likely be lower because the applicant is a preferred risk. 3. It will likely be higher because the applicant is a substandard risk. 4. It will likely be the average premium issued to standard risks.

It will likely be higher because the applicant is a substandard risk.

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? 1. Ordinary Life 2. Joint Life 3. Decreasing Term 4. Whole Life

Joint Life

An insured has a life insurance policy from a participating company and receives quarterly dividends. He has instructed the company to apply the policy dividends to increase the death benefit. The dividend option that the insured has chosen is called 1. Paid-up additions. 2. One-year term purchase. 3. Accumulation at interest. 4. Reduction of premiums.

Paid-up additions

Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean? 1. The beneficiary will receive the lump sum, plus interest. 2. The primary beneficiary will receive the death benefit and the secondary beneficiaries will share the interest payments. 3. The beneficiary will only receive payments of the interest earned on the death benefit. 4. The beneficiary must pay interest to the insurer.

The beneficiary will only receive payments of the interest earned on the death benefit.

A Universal Life Insurance policy is best described as a/an 1. Flexible Premium Variable Life policy. 2. Annually Renewable Term policy with a cash value account. 3. Variable Life with a cash value account. 4. Whole Life policy with two premiums: target and minimum.

Annually Renewable Term policy with a cash value account

If an insurer cancels an agency contract, it must notify the Commissioner in writing within how many days? 1. 10 2. 15 3. 20 4. 30

15 days

A licensed insurance producer must notify the Department of a change in mailing address within how many days and by what method? 1. 6 months, only electronically 2. 1 year, either orally or in writing 3. 5 days, by certified mail 4. 30 days, by mail or electronically

30 days, by mail or electronically

If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered 1. A required disclosure. 2. A legal representation of the Association. 3. An unfair trade practice. 4. A misrepresentation.

An unfair trade practice

The full premium was submitted with the application for life insurance, and the policy was issued two weeks later as requested. When does the policy coverage become effective? 1. As of the policy delivery date 2. As of the first of the month after the policy issue 3. As of the policy issue date 4. As of the application date

As of the application date

If the annuitant dies during the accumulation period, who will receive the annuity benefits? 1. Estate 2. Beneficiary 3. Owner 4. Insurance company

Beneficiary

Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process? 1. Policy Summary 2. Illustrations 3. Buyer's Guide 4. Insurance Index

Buyer's Guide

If a violation of the New Jersey insurance code were to occur, a cease and desist order and/or penalty may be issued. Who may issue a cease and desist order? 1. Department of Banking and Insurance 2. Insurance Company 3. Governor 4. Commissioner

Commissioner

An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation? 1. Variable life 2. Universal life 3. Whole life 4. Decreasing term

Decreasing term

Which of the following terms describes making false statements about the financial condition of any insurer that are intended to injure any person engaged in the business of insurance? 1. Slandering 2. Defamation 3. Undercutting 4. Twisting

Defamation

Which of the following best describes an insurance company that has been formed under the laws of this state? 1. Domestic 2. Sovereign 3. Alien 4. Foreign

Domestic

To become licensed as a nonresident producer in this state, a producer must do which of the following? 1. Have been licensed as a producer for at least 3 years before applying in New Jersey. 2. Be a member of the New Jersey Insurance Guaranty Association. 3. Spend at least 25% of his or her working hours in New Jersey. 4. Hold a resident license in good standing in the producer's home state.

Hold a resident license in good standing in the producer's home state.

An insurer receives a report regarding a potential insured that includes the insured's financial status, hobbies and habits. What type of a report is that? 1. Underwriter's Report 2. Inspection Report 3. Medical Information Bureau's report 4. Agent's Report

Inspection Report

Which of the following is true about the premium on the children's rider in a life insurance policy? 1. It decreases when an adopted child is added to the policy. 2. It remains the same no matter how many children are added to the policy. 3. It decreases when the oldest child reaches the age of 21. 4. It increases when a newborn baby is added to the policy.

It remains the same no matter how many children are added to the policy.

Death benefits payable to a beneficiary under a life insurance policy are generally 1. Exempt from income taxation if under $7,000. 2. Exempt from income taxation if over $7,000. 3. Not subject to income taxation by the Federal Government. 4. Subject to income taxation by the Federal Government.

Not subject to income taxation by the Federal Government.

On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are 1. Paid at a fixed rate every year. 2. Taxable as ordinary income. 3. Guaranteed. 4. Not taxable since the IRS treats them as a return of a portion of the premium paid.

Not taxable since the IRS treats them as a return of a portion of the premium paid.

All of the following are requirements for a nonresident license EXCEPT 1. Paying the required fees. 2. Passing the New Jersey licensing examination. 3. Holding an active license in the same line of authority in another state. 4. Submitting a licensing application from the home state.

Passing the New Jersey licensing examination.

All of the following are true regarding insurance policy loans EXCEPT 1. The amount of the outstanding loan and interest will be deducted from the policy proceeds when the insured dies. 2. The policy will terminate if the loan plus interest equals or exceeds the cash value of the policy. 3. Policyowners can borrow up to the full amount of their whole life policy's cash value. 4. Policy loans can be made on policies that do not accumulate cash value.

Policy loans can be made on policies that do not accumulate cash value.

Which of the following individuals must have insurable interest in the insured? 1. Producer 2. Policyowner 3. Beneficiary 4. Underwriter

Policyowner

Which nonforfeiture option provides coverage for the longest period of time? 1. Extended term 2. Paid-up option 3. Accumulated at interest 4. Reduced paid-up

Reduced paid-up

All of the following are considered limited lines of authority EXCEPT 1. Bail bonds. 2. Surplus lines. 3. Credit insurance. 4. Travel insurance.

Surplus lines

Traditional IRA contributions are 1. Never tax deductible. 2. Partially tax deductible depending on the income level. 3. Tax deductible. 4. Deducted based on the income level.

Tax Deductible

A candidate for a producer license passed his licensing exam 6 months ago but has not applied for a license yet. Which of the following is true? 1. The candidate does not need to apply for a license. After passing the exam, all required information is transmitted to the Insurance Department by the testing provider. 2. The candidate has 6 more months to apply for a license. 3. The candidate will need to apply for a license immediately. 4. The candidate has waited too long to apply for a license and must retake the examination.

The candidate has 6 more months to apply for a license.

Which of the following is true regarding license cancellation and reinstatement? 1. The license needs to be returned to the Insurance Department. It can be reinstated by filling out an application and paying a fee. 2. The producer must allow it to lapse. After that point, it can be reinstated any time within the next 2 years, provided that the continuing education requirements have been met. 3. The license needs to be returned to the Insurance Department. Once this occurs, it cannot be reinstated. 4. The producer must complete a brief interview with the Commissioner's Office. The license may then be reinstated within 1 year.

The license needs to be returned to the Insurance Department. It can be reinstated by filling out an application and paying a fee

Which of the following best defines target premium in a universal life policy? 1. The minimum amount to make sure the policy is annually renewable 2. The corridor of insurance 3. The recommended amount to keep the policy in force throughout its lifetime 4. The maximum amount the policyowner may pay on a policy

The recommended amount to keep the policy in force throughout its lifetime

Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated? 1. Those who have no history of claims 2. Those who have been insured under the plan for at least 5 years 3. Those who have worked in the company for at least 3 years 4. Those who have dependents

Those who have been insured under the plan for at least 5 years

Which of the following is included in the term "insurance-related conduct"? 1. Producer licensing 2. Transmitting funds between producers and the insurance company 3. Insurer's acting with the scope of the Insurance Code 4. Producer's ethical behavior

Transmitting funds between producers and the insurance company

The Waiver of Cost of Insurance rider is found in what type of insurance? 1. Whole Life 2. Joint and Survivor 3. Juvenile Life 4. Universal Life

Universal Life

The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called 1. Guaranteed insurability. 2. Waiver of cost of insurance. 3. Payor benefit. 4. Waiver of premium.

Waiver of premium