life exam

Which of the following would indicate a contractual relationship between a producer and an insurance company?

A signed contract

Which of the following would be considered an unfair claims settlement practice?

Advising the insured that if the claim goes to arbitration, the insured would probably receive less than what is currently being offered

Which is NOT true about beneficiary designations?

The beneficiary must have insurable interest in the insured.

What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?

$2,500

What is the fine for violating the Commissioner's cease and desist order?

$5,000

If a consumer requests additional information concerning an investigative consumer report, how long does the insurer or reporting agency have to comply?

5 days

The company owes premium money to the insured. The insurer gave the funds to the producer to return to the insured. Within how many days must the producer pay the insured?

5 days

An insurer must keep all sales materials for at least how long?

5 years

If a credit life policy lapses for nonpayment before the debt is satisfied, within how many days must the creditor either refund the premium paid or apply it against the debt?

60

After its issuance, the temporary work authority expires after how many days?

60 days

What is a material misrepresentation?

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

What is reinsurance?

An agreement between a ceding insurer an assuming insurer

What is a branch office?

An office in this state where the licensee conducts insurance business, other than a principal office

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?

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

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?

Certification of license status report

Which of the following types of insurance would be written by a limited lines agent?

Credit insurance

under a 20-pay whole life policy, in order for the policy to pay the death benefit to a beneficiary, the premiums must be paid

For 20 years or until death, whichever occurs first.

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.

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?

If the primary beneficiary predeceased the insured

Under which of the following circumstances would a nonresident producer NOT required to complete CE hours in New Jersey?

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

It is the responsibility of which of the following to make sure that an applicant/policyholder has a policy summary and buyer's guide?

Insurer

What is the purpose of a conditional receipt?

It is intended to provide coverage on a date prior to the policy issue.

Which of the following is NOT true regarding a Certificate of Authority?

It is issued to group insurance participants.

Which two terms are associated directly with the premium?

Level or flexible

Under the Fair Credit Reporting Act, individuals rejected for insurance due to information contained in a consumer report

Must be informed of the source of the report.

During replacement of life insurance, a replacing insurer must do which of the following?

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

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?

Profit sharing plan

Methods used to pay the death benefits to a beneficiary upon the insured's death are called

Settlement options.

All of the following are considered unfair trade practices in the business of insurance EXCEPT

Sharing commissions.

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

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

he Supreme Court stated that insurance is interstate commerce and is therefore subject to regulation by the federal government in the decision of what case?

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

Which of the following information will be stated in the consideration clause of a life insurance policy?

The amount of premium payment

If a policy has an automatic premium loan provision, what happens if the insured dies before the loan is paid back?

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

The primary beneficiary of her husband's life policy found that no settlement option was stated in the policy on the date of her husband's death. Who will select the settlement option in this case?

The beneficiary

If an insured under a variable life insurance policy dies, how will the insurer respond to outstanding policy loans?

The loan amounts are deducted from the death benefit.

All of the following are true of an annuity owner EXCEPT

The owner must be the party to receive benefits.

Which is true about a spouse term rider?

The rider is usually level term insurance

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

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

Which of the following is TRUE about nonforfeiture values?

They are required by state law to be included in the policy.

Which of the following statements about a life insurance policy would be allowed in an insurance advertisement?

This is a term life insurance policy.

Social Security was created to provide all of the following benefits EXCEPT

Unemployment income.

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?

Universal life

All of the following are TRUE regarding the convertibility option under a term life insurance policy EXCEPT

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

f 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

Whether an insurable interest exists between the individuals.

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

lump sum

What is the term for how frequently a policyowner is required to pay the policy premium?

mode

Any inducement offered to the insured in the sale of an insurance policy that is not specified in the policy is an unlawful practice known as

rebating

Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?

warranty

Producer licenses are valid for

2 years

If a producer has been convicted of a crime, he or she must notify the Commissioner within

30 days

All of the following are requirements of eligibility for Social Security disability income benefits EXCEPT

Being age 65.

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?

Discrimination

Which of the following is an example of a limited-pay life policy?

Life Paid-up at Age 65

All of the following are unfair claims settlement practices EXCEPT

Suggesting negotiations in settling the claim.

The maximum the Insurance Guaranty Association will pay to an individual for life insurance death benefits is

$500,000.

By how many days does the discontinuance of a group insurance policy reduce the time limit for providing notice of claim or proof of loss?

0 days

What percentage of a company's employees must take part in a noncontributory group life plan?

100%

If an applicant's license has lapsed within the past year, the applicant may apply for late renewal of the license within the maximum of how many months of expiration?

12 months

Licensees must notify the Department within how many days of any change of address?

30 days

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?

Collateral assignment

All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT

Dividends from a mutual insurer.

What is the main purpose of the Seven-pay Test?

It determines if the insurance policy is a MEC.

Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean?

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

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?

The date of medical exam

An applicant for a producer's license has successfully completed all of the steps necessary to obtain the license. The soon-to-be producer does not want to wait until he receives his license in order to begin working. Which of the following is possible?

The person can obtain a temporary work authority.

Two attorneys operate their practice as a partnership. They want to start a program through their practice that will provide retirement benefits for themselves and three employees. They would likely choose

HR-10 (Keogh Plan).

What is the major difference between a stock company and a mutual company?

Ownership

What is the purpose of a disclosure statement in life insurance policies?

To explain features and benefits of a proposed policy to the consumer

Which of the following is NOT allowed in credit life insurance?

Creditor requiring that a debtor buys insurance from a certain insurer

An insured has a Modified Endowment Contract. He wants to withdraw some money in order to pay medical bills. Which of the following is true?

He will have to pay a penalty if he is younger than 59½.

A licensed insurance producer may request a waiver of license renewal procedures under any of the following circumstances EXCEPT

His renewal forms were lost in the mail.

Applicants for surplus lines authority must fulfill all of the following requirements EXCEPT

Hold a bond as a condition for licensure.

The Medical Information Bureau (MIB) was created to protect

Insurance companies from adverse selection by high risk persons.

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?

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

Which of the following applies to the 10-day free-look privilege?

It permits the insured to return the policy for a full refund of premiums paid.

An insured buys a 5-year level premium term policy with a face amount of $10,000. The policy also contains renewability and convertibility options. When the insured renews the policy in 5 years, what will happen to the premium?

It will increase because the insured will be 5 years older than when the policy was originally purchased.

Which life insurance settlement option guarantees payments for the lifetime of the recipient, but also specifies a guaranteed period, during which, if the original recipient dies, the payments will continue to a designated beneficiary?

Life income with period certain

Your client wants both protection and savings from the insurance, and is willing to pay premiums until retirement at age 65. What would be the right policy for this client?

Limited pay whole life

Which of the following riders added to a life insurance policy can pay part of the death benefit to the insured to cover expenses incurred in a nursing or convalescent home?

Long-term care

If a life insurance policy develops cash value faster than a seven-pay whole life contract, it becomes a/an

Modified endowment contract.

A life insurance policy insures against several different perils. If the policyowner wants to cancel the coverage for one of those perils, can that be done?

Only if the policy specifies that a separate premium for that peril coverage is separately cancelable.

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?

Reduction of premium

An insured committed suicide 6 months after his life insurance policy was issued. The insurer will

Refund the premiums paid.

An insured will be allowed to reactivate her lapsed life insurance policy if action is taken within a certain period of time, and proof of insurability is provided. Which policy provision allows this?

Reinstatement provision

What method do insurers use to protect themselves against catastrophic losses?

Reinsurance

Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?

Replacement rule

Which of the following may NOT be included in an insurance company's advertisement?

That its policies are covered by a state Guaranty Association

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

The insured's age at death.

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

4 years.

During policy replacement, the replacing insurer must notify existing insurers within what time period?

5 business days

Which option is being utilized when the insurer accumulates dividends at interest and then uses the accumulated dividends, plus interest, and the policy cash value to pay the policy up early?

Paid-up option

Who might receive dividends from a mutual insurer?

Policyholders

All of the following are characteristics of group life insurance EXCEPT

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

Which of the following protects consumers against the circulation of inaccurate or obsolete personal or financial information?

The Fair Credit Reporting Act

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

The customer's associates, friends, and neighbors provide the report's data.

If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant no later than

With the policy.