Life insurance

Forcing a client to buy insurance from a particular lender as a condition of granting a loan is defined as a) Coercion. b) Rebating. c) Misleading advertising. d) Defamation.

A) coercion

An employer has sponsored a qualified retirement plan for its employees where the employer will contribute money whenever a profit is realized. What is this called? a) Tax-sheltered account plan b) HR 10 plan c) Profit sharing plan d) 401(k) plan

C) Profit sharing plan

When would a 20-pay whole life policy endow? a) When the insured reaches age 100 b) At the insured's age 65 c) After 20 payments d) In 20 years

Reaches age 100

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? a) This is not possible with replacement policies unless a mistake was made by either of the insurers. b) 30 days c) 60 days d) 90 days

30 days

All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT a) Upon conversion, the death benefit of the permanent policy will be reduced by 50%. b) Evidence of insurability is not required. c) Most term policies contain a convertibility option. d) Upon conversion, the premium for the permanent policy will be based upon attained age.

A) Upon conversion, the death benefit of the permanent policy will be reduced by 50%.

An underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering a(n) a) Inspection report. b) Medical Information Bureau report. c) Medical examination. d) Attending Physician Statement.

A) inspection report

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

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

The Federal Fair Credit Reporting Act a) Regulates consumer reports. b) Protects customer privacy. c) Regulates telemarketing. d) Prevents money laundering.

a) Regulates consumer reports.

An individual applied for an insurance policy and paid the initial premium. The insurer issued a conditional receipt. Five days later the applicant had to submit to a medical exam. If the policy is issued, what would be the policy's effective date? a) The date of medical exam b) The date of policy delivery c) The date of issue d) The date of application

a) The date of medical exam

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

b) Acting in a fiduciary capacity.

Using names or titles that have tendency to misrepresent the true nature of a policy is an example of what illegal practice? a) Rebating b) False advertising c) Defamation d) Twisting

b) False advertising

All of the following are Nonforfeiture options EXCEPT a) Reduced paid-up b) Interest only c) Cash surrender d) Extended term

b) Interest Only

Which of the following best describes a misrepresentation? a) Discriminating among individuals of the same insuring class b) Issuing sales material with exaggerated statements about policy benefits c) Making a deceptive or untrue statement about a person engaged in the insurance business d) Making a maliciously critical statement that is intended to injure another person

b) Issuing sales material with exaggerated statements about policy benefits

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

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

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? a) Incontestability period b) Assignment c) Automatic premium loan d) Waiver of premium

c) Automatic premium loan

What is a material misrepresentation? a) Any misstatement made by an applicant for insurance b) Any misstatement by the producer c) Concealment d) A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company

d) A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company

When must insurable interest exist in a life insurance policy? a) At the time of policy delivery b) When there is a change of the beneficiary c) At the time of loss d) At the time of application

d) At the time of application

If an insurer cancels an agency contract, it must notify the Commissioner in writing within how many days? a) 10 b) 15 c) 20 d) 30

B) 15 days

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 a) A stock company. b) A mutual insurer. c) A reciprocal company. d) A fraternal insurer.

B) A Mutual insurer

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT a) Delivery receipt. b) Signed waiver of premium. c) Statement of good health. d) Payment of premium.

B) signed waiver premium

Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained? a) 3 days b) 5 days c) 10 days d) 14 days

a) 3 days

The Department can run a report on a specific producer that lists 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? a) Certification of license status report b) MIB report c) Producer's report d) Investigative consumer report

a) Certification of license status report

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

a) The plan is funded by permanent insurance only.

What significance did Paul vs. Virginia have on the insurance industry? a) It was decided that insurance licenses should not be issued by the federal government and should instead be issued by individual states. b) It was decided that insurance was not interstate commerce and could not be regulated by the federal government. c) It was decided that insurance was interstate commerce and should therefore be regulated by the federal government. d) It was decided that insurance required a separate federal regulatory agency from Securities products.

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

Which of the following licenses is required for a surplus lines producer? a) Adjusters b) Property and Casualty c) Credit insurance d) Life and Health

b) Property and Casualty

If the issuance of a license is denied and a hearing is requested, which entity will be making determination whether or not the license should be issued? a) The Office of Administrative Law b) The Department of Insurance c) The NAIC d) The state courts

b) The Department of Insurance

All of the following are dividend options EXCEPT a) Reduction of premium. b) Paid-up additions. c) Fixed-period installments. d) Accumulated at interest

c) Fixed-period installments.

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? a) Joint and survivor b) Fixed amount option c) Interest only option d) Life income with period certain

c) Interest only option

An insurance company and insured are settling a lawsuit involving a life insurance policy. The insurer believes that the application would help to establish material facts in the case. Which of the following is true? a) Once the policy is issued, it is permissible to use the application in litigation, provided that the insured is notified. b) If less than 2 years have passed since the policy issue date, it is acceptable for the application to be considered as evidence. c) State law prohibits applications from being used in litigation. d) Applications can only be used in court cases if they are attached to or endorsed upon the issued policy.

d) Applications can only be used in court cases if they are attached to or endorsed upon the issued policy

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

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