NYL Final Exam Qss
A resident producer licensed for Property and Casualty insurance applying for a Life insurance license. The Commissioner may waive the prelicensing education and examination requirement if the applicant holds a professional designation or a license in the kind of insurance for which the applicant seeks authority. Property and Casualty producers applying for a life insurance license would not qualify for the exemption.
All of the following candidates for a resident producer license may be exempted from the examination requirement EXCEPT A resident producer licensed for Property and Casualty insurance applying for a Life insurance license. A professional who holds a Certified Financial Planner (CFP) designation. A person in public employment in the insurance field whose license terminated 10 months ago. A nonresident producer in good standing who is moving to this state.
$8,000, 60 days (Generally, IRA rollovers must be completed within 60 days from the time the money is taken out of the first plan. If the distribution from the first plan is paid directly to the participant, 20% of the distribution must be withheld by the payor.)
An employee quits her job where she has a balance of $10,000 in her qualified plan. The balance was paid out directly to the employee in order for her to move the funds to a new account. If she decides to rollover her plan to a Traditional IRA, how much will she receive from the plan administrator and how long does she have to complete the tax-free rollover? $10,000, 30 days $8,000, 60 days $8,000, 30 days $10,000, 60 days
It would not occur in a deferred annuity. The "accumulation period" is the period of time over which the annuity owner makes payments (premiums) into an annuity. This is the period of time during which the payments earn interest and grow tax deferred (which would be the case in a deferred annuity).
Which of the following is NOT true regarding the accumulation period of an annuity? It is the period during which the annuity payments earn interest. It is the period over which the owner makes payments into an annuity. It is also known as the pay-in period. It would not occur in a deferred annuity.
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 payment 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 varies.
Which two terms are associated directly with the way an annuity is funded? Immediate or deferred Renewable or convertible Single payment or periodic payments Increasing or decreasing
Cost of Living Rider The Cost of Living rider annually adjusts the policy's face value in accordance with the national rate of inflation or deflation. This rider adjusts the face amount of the policy to correspond with the rate of inflation, in order to keep the initial value of the policy constant over time.
A long stretch of national economic hardship causes a 7% rate of inflation. A policyowner notices that the face value of her life insurance policy has been raised 7% as a result. Which policy rider caused this change? Value Adjustment Rider Return of Premium Rider Inflation Rider Cost of Living Rider
Cash option The cash option allows an insurer to send the policyholder an annual, nontaxable dividend check.
An insured receives an annual life insurance dividend check. What term best describes this arrangement? Cash option Reduction of Premium Annual Dividend Provision Accumulation at Interest
False Financial Statements
Attempt to hide financial troubles from the public and government offices
False advertising
Circulating deceptive sales materials to the public is what type of Unfair Trade Practice?
Misrepresentation. Issuing or circulating any sales material that is false or misleading would be considered misrepresentation and is illegal.
On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of Unfair claim practice. Rebating. Misrepresentation. Concealment.
Mode
Term for how frequently a policyowner is required to pay a premium.
Universal Life (The Waiver of Cost of Insurance rider is found in Universal Life policies. If the insured becomes disabled, the rider allows the cost of insurance to be waived, with the exception of premium costs required to accumulate cash value.)
The Waiver of Cost of Insurance rider is found in what type of insurance? Joint and Survivor Juvenile Life Universal Life Whole Life
One-year term option.
The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the Paid-up additions. One-year term option. Paid-up option. Accelerated endowment.
Taxable
The interest earned on policy dividends is Tax deductible. 40% taxable, similar to a capital gain. Taxable. Nontaxable.
The death benefit can be increased by providing evidence of insurability. The policyowner (insured) would need to prove insurability for the amount of the increase.
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change? The death benefit can be increased only by exchanging the existing policy for a new one. The death benefit can be increased by providing evidence of insurability. The death benefit cannot be increased. The death benefit can be increased only when the policy has developed a cash value.
Tax deductible by the employer. The premiums that an employer pays for life insurance on an employee, whereby the policy is for the employee's benefit, are tax deductible to the employer as a business expense.
The premiums paid by the employer in a business life insurance policy are Never taxable to the employee. Tax deductible by the employer. Tax deductible by the employee. Always taxable to the employee.
Twisting
Using names or titles that have tendency to misrepresent the true nature of a policy is an example of what illegal practice? Rebating False advertising Defamation Twisting
Favorable tax treatment Those annuities meeting the IRS guidelines receive favorable tax treatment for funding qualified retirement plans.
What is the advantage of having a qualified annuity? No filing with the IRS Receiving a lump-sum settlement tax free Higher dividends Favorable tax treatment
Property and Casualty
What license is required for a Surplus Lines Producer?
Option A
Which Universal life option has a gradually increasing cash value and a level death benefit? Option B Term Insurance Option A Juvenile Life
The earnings in the plan accumulate tax deferred. (Contributions are tax deferred, and earnings on the money in the plan accrue on a tax-deferred basis.)
Which of the following describes the tax advantage of a qualified retirement plan? The earnings in the plan accumulate tax deferred. Distributions prior to age 59½ are tax deductible. Employer contributions are deductible as a business expense when the employee receives benefits. Employer contributions are not taxed when paid out to the employee.
Those who have been insured under the plan for at least 5 years
Which of the following employees under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated?
Surplus lines agent A surplus lines agent is allowed to write business in New Jersey for insurance companies that are not authorized New Jersey insurers. No authorized insurers in New Jersey can offer the specific type of insurance in question.
Which of the following is a person or organization that is allowed to write business in New Jersey for insurance companies that do not possess a certificate of authority in New Jersey, if no authorized insurers in New Jersey offer the specific type of insurance in question? Unauthorized broker Fiduciary agent Surplus lines agent Insurance intermediary
This is a term life insurance policy
Which of the following statements about life insurance would be allowed in an insurance advertisement? This life insurance policy is also an investment plan This is a retirement savings plan This is a group term policy This is a Term Life insurance policy
Buy-sell agreements are normally funded with a life insurance policy. (A buy-sell agreement is simply a contract that establishes what will be done with a business in the event that an owner dies. Buy-sell agreements are normally funded with a life insurance policy.)
Which of the following statements concerning buy-sell agreements is true? Benefits received are considered income taxable. Buy-sell agreements pay in the event of a medical emergency. Buy-sell agreements are normally funded with a life insurance policy. Premiums paid are deductible as a business expense.
Revocable Revocable beneficiaries can be changed at any point. Irrevocable beneficiaries must give permission to the policyowner in order for the beneficiary to be changed. The terms "primary" and "contingent" refer to succession of beneficiaries.
Which type of beneficiary is changeable at any point? Contingent Primary Irrevocable Revocable
At least 1 member must be a licensed insurance producer. Not every partner or officer needs to hold an individual producer license. However, every partner or officer who will actively solicit the sale of insurance must hold an individual producer license. If none of the partners plan to sell insurance, at least one partner or officer must hold an individual producer license anyway.
A group of 4 entrepreneurs decides to open an insurance company. Which of the following is true? None of the members have to be licensed as insurance producers, except for those who want to transact insurance business. At least 2 members must be licensed insurance producers. All 4 members must be licensed insurance producers, regardless of whether they are involved in insurance transactions. At least 1 member must be a licensed insurance producer.
It is the policyowner's responsibility to request the reinstatement application; the insurer must then deliver it within 30 days. (If, in order to renew or reinstate a life insurance or annuity policy, an insurer must first receive an application, the insurer must supply this application to the insured within 30 days, upon the insured's request.)
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. It is the policyowner's responsibility to request the reinstatement application; the insurer must then deliver it within 10 days. It is the insurer's responsibility to deliver this application to the policyowner within 30 days of policy lapse. It is the insurer's responsibility to deliver this application to the policyowner within 10 days of policy lapse.
Automatic premium loan (This provision is not required, but is commonly added to contracts with a cash value at no additional charge. This is a special type of loan that prevents the unintentional lapse of a policy due to nonpayment of the premium.)
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? Assignment Automatic premium loan Waiver of premium Incontestability period
Revocable beneficiary. The policyowner may change a revocable designation at any time and without the consent of the beneficiary. Irrevocable beneficiaries, on the other hand, have a vested interest in the policy, so the policyowner may not be able to exercise certain rights without their consent.
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 Primary beneficiary. Irrevocable beneficiary. Revocable beneficiary. Secondary beneficiary.
Applications can only be used in court cases if they are attached to or endorsed upon the issued policy.
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? If less than 2 years have passed since the policy issue date, it is acceptable for the application to be considered as evidence. State law prohibits applications from being used in litigation. Applications can only be used in court cases if they are attached to or endorsed upon the issued policy. Once the policy is issued, it is permissible to use the application in litigation, provided that the insured is notified.
The claims will be paid by the state Life and Health Guaranty Association.
An insurer goes bankrupt and is unable to pay on any of its insureds' claims. Which of the following will happen? The claims will be paid by a nationally-based program. The claims will be paid by the state Life and Health Guaranty Association. The claims will be paid by the state Department of Insurance. The insureds will not be paid.
Illegal under any circumstances When a company criticizes the financial situation of another company with the intention of injuring that company, it has committed an illegal trade practice called defamation.
An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act? Illegal until endorsed by the Guaranty Association Legal, provided that the other insurers are paid royalties for the usage of their names Illegal under any circumstances Legal, provided that the information can be verified
Flexible premium. (Variable universal life, like universal life itself, has a flexible premium that can be increased or decreased as the policyowner chooses, so long as there is enough value in the policy to fund the death benefit.)
Both Universal Life and Variable Universal Life have a Increasing premium. Flexible premium. Level fixed premium. Decreasing premium.
Fixed Period
If a beneficiary wants a guarantee that benefits paid from the principal and interest would be paid for a period of 10 years before being exhausted, what settlement option should the beneficiary select? Fixed Period Fixed Amount Interest Only Life with period certain
With the policy. If a life insurance policy contains a free-look period of at least 10 days, the buyer's guide can be delivered with the policy. If it doesn't, the buyer's guide must be delivered prior to accepting the initial premium.
If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant Upon issuance of the policy. Within 30 days after the first premium payment was collected. Prior to filling out an application for insurance. With the policy.
12 months
If an applicants license has lapsed within a year, the applicant may apply for a late renewal within...
The original age is used for premium determination (The reinstatement provision allows the policyowner an opportunity to put a lapsed policy back in force, subject to proving continued insurability. If the policyowner elects to reinstate the policy, as opposed to purchasing a new policy, the reinstated policy is restored to its original status.)
What is the advantage of reinstating a policy instead of applying for a new one? The cash values have gained interest while the policy was lapsed The original age is used for premium determination Proof of insurability is not required The face amount can be increased
They earn lower interest rates than fixed annuities. (Equity Indexed Annuities invest on an aggressive basis in order to yield higher returns. Like a fixed annuity, Equity Indexed Annuities have guaranteed minimum interest rates. The insurance company often keeps a predetermined percentage of the return and pays the rest to the annuity owner. Equity Indexed Annuities are less risky than variable annuities and earn higher interest rates than fixed annuities.)
Which of the following is NOT true regarding Equity Indexed Annuities? They have guaranteed minimum interest rates. They are less risky than variable annuities. They earn lower interest rates than fixed annuities. The insurance company keeps a percentage of the returns.
The license needs to be returned to the Insurance Department. It can be reinstated by filling out an application and paying a fee. (A license can be cancelled at any time, simply by returning the license to the Insurance Department and requesting cancellation. A license can be reinstated by completing an application and paying a fee.)
Which of the following is true regarding license cancellation and reinstatement? 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. The license needs to be returned to the Insurance Department. Once this occurs, it cannot be reinstated. 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.
Amount paid with the accelerated benefits, plus the earnings lost by the insurance company in interest income from the accelerated benefit.
Which of the following would be deducted from the death benefit paid to the beneficiary, if a partial accepted death benefit has been paid while the insured was still alive?
$10,000, no tax consequence During an IRA direct transfer (or direct rollover), the full amount gets reinvested from one plan to the other.
An employee quits her job where she has a balance of $10,000 in her qualified plan. If she decides to do a direct transfer from her plan to a Traditional IRA, how much will be transferred from one plan administrator to another and what is the tax consequence of a direct transfer? $8,000, tax on growth only $10,000, tax on growth only $10,000, no tax consequence $8,000, no tax consequence
15 If an insurer cancels an agency contract, it must notify the Commissioner in writing within 15 days. Failure to do so will imply that an agency contract still exists.
If an insurer cancels an agency contract, it must notify the Commissioner in writing within how many days? 10 15 20 30
