Life Insurance NJ
All of the following are requirements for a non-resident license except
Passing the New Jersey licensing examination
Methods used to pay the death benefits to a beneficiary upon the insureds death are called
Settlement options - Settlement options are methods used to pay death benefits to a beneficiary upon the insureds death
What is the maximum allowed value of a gift that an agent can give to an insured without violation the regulation on rebating
$100
In which following would be premium be tax deductible
As a general rule premiums paid for life insurance are not tax deductible. The exception is when an employee buys group term life insurance for his employees since it is considered a business expense
According to the entire contract provision, what document must be made part of the insurance policy?
Copy of the original application
All of the following benefits are available under the Social Security except
Welfare Benefits - Social Security is an entitlement program, not a welfare program
The life insurance policy clause that prevents an insurance company from denying payment of a death claim after a specified period of time is known as
Incontestability Clause - If an insurer wishes to contest any statements on an application, they must do so within the first 2yrs.
All of the following are true reguarding rebates except
Rebates are allowed if its in the best interest of the client - A rebate is an illegal act which involves returning of something of value to the client as an inducement to buy, such as the commission. Rebates are only allowed if specifically stated in the policy. Insurance dividends are not considered rebates as the IRS considers it as a return of overpaid premium
Which of the following describes the tax advantage of a qualified retirement plan?
The earning in the plan accumulate tax-deferred - Contributions are tax-deferred, and earnings on the money in the plan accrue on a tax-deferred basis.
What is the purpose of establishing the target premium of a universal life policy
To keep the policy enforce - The target premium is a recommended amount that should be paid on a policy in order to cover the cost of the insurance protection and to keep the policy in force throughout its lifetime.
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?
$50,000 - the face amount of the policy would be the same as the face amount provided under the whole life policy
Which is not an example of insurable interest
Debtor in Creditor - The 3 recognized are in which insurable interest exists are as follows: a policy owner insuring his or her own life; the life of a family member: or the life of a business partner, key employee, or someone who has a financial obligation to them.
Which nonforfeiture option has the highest amount of insurance protection
Extended Term - The Extended Term Nonforfeiture option has the same face amount as the original policy, but for a shorter period of time
The Policy owner wants to make sure that upon his death, the policy will pay out a portion of the proceeds annually to his spouse, but that the portion will be paid to their children when they reach a certain age.
Interest-only option - with the interest-only option, the insurance company retain the policy proceeds and pays interest on the proceeds to the recipient(beneficiary) at regular intervals
What significance did the U.S. vs South-Eastern Underwriters have in the insurance industry
It reversed the decision of Paul vs Virginia, determining that insurance is interstate commerce and should be regulated federally - IN 1942, the Attorney General of the UNited states filed a brief on the Sherman Act against the South-Eastern Underwriters Association, a cooperative rating bureau alleging that the bureau constituted a combination in restraint of trade in 1944, the Supreme Court reversed its decision of Paul vs Virginia, stating that insurance is interstate commerce and is therefore subject to regulation by the federal government. The decision stands currently.
Which two terms are associated directly with the premium
Level and Flexible - Level premium is the one in which the premium payment never changes. Flexible premium is found in Universal life policies where the insured changes their premium payment
An insured pays $1,200 annually for her life insurance premium. The insureds apply for this year's $300 worth of accumulated dividends to the next year's premium, thus reducing it to $900. What option does this describe?
Reduction of Premium - The Reduction of Premium option allows the policyholder to apply dividends towards the next years premium. The dividend is subtracted from the premium amount, yielding the new premium due for the next year
Life Income joint and survivor settlement option guarantees
The income for 2 or more recipients until they die - The Life Income Joint and Survivor option guarantees an income for two or more recipients for the duration of their lives. Most contracts stipulate that the surviving partner will receive a reduced payment after the other dies, although some will continue to pay the same amount. There is no guarantee that all the life insurance proceeds will be paid out
When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to
purchase a single premium policy for a reduced face amount - When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used by the insurer as a single premium, to purchase a completely paid-up permanent policy that has a reduced face amount from that of the former policy
If an insurance company makes a statement that its policies are guaranteed by the existence of the Insurance Guaranty Association, that would be considered
An unfair trade practice - It is an unfair trade practice to make any statement that an insurer's policies are guaranteed by the existence of the Insurance Guaranty Association. Though it is illegal to advertise the statement is still true and would not be considered a misrepresentation
The Department can run a report of 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 the report?
Certification of License status report -The Insurance Department can issue a certification on the license status of any current producer or producer licensed within the last 4 yrs. The certification includes basic information, including license number, types of insurance that the producer can transact, and whether the license is still effect
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
Guaranteed Insurability rider - The Guaranteed Insurability Rider allows the policy owner to purchase specific amounts of additional insurance at specific dates or events, without proving continued insurability. Rates for the additions are based upon attained age
What settlement option in life insurance is known as straight life?
Life Income - The life-income option, also known as straight life, provides the recipient with an income that he or she cannot outlive, It pays the benefit while the beneficiary is alive; however, the payments stop at the beneficiary's death
Which of the following would not be consider rebating
Giving a client a $25 pen with the insurer's logo during the insurance application process - In this state, promotional materials, articles of merchandise, or gifts that have a redeemable value of $100 OR LESS ARE NOT CONSIDERED "valuable consideration" therefore are allowed.
The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called
Joint and Survivor - a joint and survivor option pays while either beneficiary is still living
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?
Joint life - A joint life policy covering two lives would be the least expensive because the premiums are based on an average age, and it would pay a death benefit only at the first death
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
The department of insurance
If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?
5 days - Consumers must be advised that they have a right to request additional information concerning investigative consumer reports, and the insurer or reporting agency has 5 days to provide the consumer with additional information
Which of the following would be considered an unfair claim settlement practice?
Advising the insured that if the claim goes to arbitration, the insured would probably receive less than what is currently being offered. - Violation of Unfair Settlement Practices
Which of the following is not required information a producer must provide before soliciting insurance?
Producers Contact Information - Insurance producers who solicit insurance must first identify themselves (to each person solicited) by name, as well as the name of the insurer or insurance producer they represent, and the nature of their relationship with the insurer or producer being represented
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 - The consumer has the right to request the information on the report, the reasons for the turn down and any adverse underwriting decisions. The reporting agency is requited to respond to the consumers complaint, and if necessary, to reinvestigate the report.
A policy owner 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 ow ownership. The policy owner should have her husband named as the
Revocable Beneficiary - The policy owner may change a revocable designation at anytime and without the consent of the beneficiary. Irrevocable beneficiarys on the other hand have a vested interest in the policy, so the policy owner may not be able to exercise rights without their consent.
Which two terms are associated directly with the way an annuity is funded?
Single Payment or Periodic payments - Annuities are characterized by how they can be paid for: either a single payment (lump sum) or through periodic payments in which the premiums are paid in installments over a period of time. Periodic payments annuities can be either level, in which the annuitant/owner pays a fixed installment, or the payments can be flexible, in which the amount and frequency of each installment vary.
An insured and his wife are both invovled in a head on collision. The husband instantly dies 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 held what provision
Common Disaster -Under the Uniform Simultaneous Death Law, Common Disaster provision, they will assume that the primary beneficiary dies first in a common disaster as long as the beneficiary dies within this specified period of time following the death of if the insured (usually 30 days period). This provides that the proceeds will be paid to either the contingent beneficiary or the insured's estate if no contingent beneficiary is stated.
What type of premium do both Universal Life and Variable Universal Life policies have?
Flexible
An individual is purchasing a permanent life insurance policy with a face amount 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 option should be included in the policy
Guaranteed Insurability option -The guaranteed insurability option allows the insured to purchase specific amounts of additional insurance at specific times without providing insurability.