PRACTICE EXAM LIFE
Which of the following is NOT fundable by annuities? a)Cash accumulation for any reason b)A person's retirement c)Estate liquidation d)Death benefits
d)Death benefits
Which nonforfeiture option provides coverage for the longest period of time? a)Extended term b)Paid-up option c)Accumulated at interest d)Reduced paid-up
d)Reduced paid-up
What is the term for how frequently a policyowner is required to pay the policy premium? a)Consideration b)Mode c)Schedule d)Grace period
b)Mode
If a producer has been convicted of a crime, he or she must notify the Commissioner within a)30 days. b)10 days. c)15 days. d)20 days.
a)30 days.
A rider attached to a life insurance policy that provides coverage on the insured's family members is called the a)Other-insured rider. b)Change of insured rider. c)Juvenile rider. d)Payor rider.
a)Other-insured rider.
All of the following are requirements for a nonresident license EXCEPT a)Passing the New Jersey licensing examination. b)Holding an active license in the same line of authority in another state. c)Submitting a licensing application from the home state. d)Paying the required fees.
a)Passing the New Jersey licensing examination.
What kind of policy allows withdrawals or partial surrenders? a) Variable whole life b) Universal life c) 20-pay life d) Term policy
b) Universal life
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? a)$8,000, no tax consequence b)$8,000, tax on growth only c)$10,000, tax on growth only d)$10,000, no tax consequence
d)$10,000, no tax consequence
Group life insurance is a single policy written to provide coverage to members of a group. Which of the following statements concerning group life is CORRECT? a)100% participation of members is required in noncontributory plans. b)Each member covered receives a policy. c)Coverage cannot be converted when an individual leaves the group. d)Premiums are determined by age, occupation, and individual underwriting.
a)100% participation of members is required in noncontributory plans.
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
All of the following candidates for a resident producer license may be exempted from the examination requirement EXCEPT a)A resident producer licensed for Property and Casualty insurance applying for a Life insurance license. b)A professional who holds a Certified Financial Planner (CFP) designation. c)A person in public employment in the insurance field whose license terminated 10 months ago. d)A nonresident producer in good standing who is moving to this state.
a)A resident producer licensed for Property and Casualty insurance applying for a Life insurance license.
Licensees must notify the Department within how many days of any change of address? a)10 b)15 c)20 d)30
d)30
What is the waiting period on a Waiver of Premium rider in life insurance policies? a)30 days b)3 months c)5 months d)6 months
d)6 months
Solicitation rules would apply to which of the following types of coverage? a)Deferred Annuity b)Variable Life c)Group Life d)Whole Life
d)Whole Life
All of the following statements are correct regarding credit life insurance EXCEPT a)Benefits are paid to the borrower's beneficiary. b)The amount of insurance permissible is limited per borrower. c)Premiums are usually paid by the borrower. d)Benefits are paid to the creditor.
a)Benefits are paid to the borrower's beneficiary.
What is a foreign insurer? a)An insurer with a home office in another country b)An insurer with licensed agents doing business in other countries c)An insurer with licensed agents who are citizens in more than one country d)An insurer with a home office in another state
d)An insurer with a home office in another state
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 a)Defend the report if the agency feels it is accurate. b)Change the report. c)Send an actual certified copy of the entire report to the consumer. d)Respond to the consumer's complaint.
d)Respond to the consumer's complaint.
A domestic insurer issuing variable contracts must establish one or more a)Liability accounts. b)Annuity accounts. c)General accounts. d)Separate accounts.
d)Separate accounts.
Proceeds from life insurance policies are protected from the beneficiary's debts under all of the following circumstances EXCEPT a)The amount of debt exceeds the policy's face value. b)The amount of debt exceeds 50% of the policy's face value. c)There are no circumstances under which proceeds are protected from the beneficiary's debts. d)Some of the premiums were paid in an attempt to defraud creditors.
d)Some of the premiums were paid in an attempt to defraud creditors.
Which of the following would be considered a nonqualified retirement plan? a)401(k) b)Keogh plan c)Roth IRA d)Split-dollar plan
d)Split-dollar plan
Which of the following would indicate a contractual relationship between a producer and an insurance company? a)A signed contract b)Implied authority c)A verbal agreement d)Producer's license
a)A signed contract
The Commissioner may revoke a producer's license for all of the following reasons EXCEPT a)Acting in a fiduciary capacity. b)Accepting business from an unlicensed person. c)Commingling of funds. d)Misrepresenting the terms of a policy.
a)Acting in a fiduciary capacity.
What is reinsurance? a)An agreement between a ceding insurer an assuming insurer b)An agreement between an originating insurer and a ceding insurer c)An agreement between a domestic insurer and a foreign insurer d)An agreement between an insurer and an insured
a)An agreement between a ceding insurer an assuming insurer
When an annuity is written, whose life expectancy is taken into account? a)Annuitant b)Beneficiary c)Life expectancy is not a factor when writing an annuity. d)Owner
a)Annuitant
Which of the following best describes fixed-period settlement option? a)Both the principal and interest will be liquidated over a selected period of time. b)Only the principal amount will be paid out within a specified period of time. c)The death benefit must be paid out in a lump sum within a certain time period. d)Income is guaranteed for the life of the beneficiary.
a)Both the principal and interest will be liquidated over a selected period of time.
An insured receives an annual life insurance dividend check. What term best describes this arrangement? a)Cash option b)Reduction of Premium c)Annual Dividend Provision d)Accumulation at Interest
a)Cash option
All of the following information about the applicant is identified in the General Information section of a life insurance application EXCEPT a)Education. b)Age. c)Gender. d)Occupation.
a)Education.
Which nonforfeiture option has the highest amount of insurance protection? a)Extended Term b)Conversion c)Decreasing Term d)Reduced Paid-up
a)Extended Term
If an insured surrenders his life insurance policy, which statement is true regarding the cash value of the policy? a)It is only taxable if the cash value exceeds the amount paid for premiums. b)It is not considered to be taxable. c)It is taxable only if it exceeds the amounts paid for premiums by 50%. d)It is automatically taxable.
a)It is only taxable if the cash value exceeds the amount paid for premiums.
Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option? a)Size of each installment b)Predetermined length of time stated in the contract c)Length of income period d)Amount of interest
a)Size of each installment
Under an extended term nonforfeiture option, the policy cash value is converted to a)The same face amount as in the whole life policy. b)The face amount equal to the cash value. c)A lower face amount than the whole life policy. d)A higher face amount than the whole life policy.
a)The same face amount as in the whole life policy
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? a)Dividend Accumulation option b)Paid-up option c)Accumulation at Interest d)Paid-up additions
b)Paid-up option
In New Jersey, the minimum age at which a person can purchase a life insurance policy on his or her own life is a)13. b)15. c)16. d)18.
b)15.
For how long is an insurance company allowed to defer policy loan requests? a)30 days b)60 days c)6 months d)1 year
b)60 days
If an insurance company wishes to order a consumer report on an applicant to assist in the underwriting process, and if a notice of insurance information practices has been provided, the report may contain all of the following information EXCEPT the applicant's a)Prior insurance. b)Ancestry. c)Credit history. d)Habits.
b)Ancestry.
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)Assignment b)Automatic premium loan c)Waiver of premium d)Incontestability period
b)Automatic premium loan
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? a)Second-to-Die b)Common Disaster c)Accidental Death d)Survivor Life
b)Common Disaster
Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member? a)Additional insured rider b)Family term rider c)Spouse rider d)Children's rider
b)Family term rider
Applicants for surplus lines authority must fulfill all of the following requirements EXCEPT a)Pass an insurance licensing exam. b)Hold a bond as a condition for licensure. c)Be a New Jersey resident. d)Hold a property and casualty license.
b)Hold a bond as a condition for licensure.
Why is an equity indexed annuity considered to be a fixed annuity? a)It is not tied to an index like the S&P 500. b)It has a guaranteed minimum interest rate. c)It has modest investment potential. d)It has a fixed rate of return.
b)It has a guaranteed minimum interest rate.
Which of the following is NOT true regarding the accumulation period of an annuity? a)It is also known as the pay-in period. b)It would not occur in a deferred annuity. c)It is the period during which the annuity payments earn interest. d)It is the period over which the owner makes payments into an annuity.
b)It would not occur in a deferred annuity.
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? a)Grace period b)Reinstatement provision c)Waiver of premium provision d)Incontestable clause
b)Reinstatement provision
Which of the following riders is often used in business life insurance policies when the policyowner needs to change the insured under the policy? a)Payor benefit rider b)Substitute insured rider c)Term rider d)Guaranteed insurability rider
b)Substitute insured rider
Which of the following would help prevent a universal life policy from lapsing? a)Corridor of insurance b)Target premium c)Face amount d)Adjustable premium
b)Target premium
The interest earned on policy dividends is a)40% taxable, similar to a capital gain. b)Taxable. c)Nontaxable. d)Tax deductible.
b)Taxable.
Nonforfeiture values guarantee which of the following for the policyowner? a)That the policy premiums will never increase b)That the cash value will not be lost c)That the dividends will be paid annually d)That the death benefit will be paid in a lump sum
b)That the cash value will not be lost
The initial amount of credit life insurance may NOT exceed a)The borrower's annual income. b)The amount to be repaid under the contract. c)An amount set by statute and adjusted regularly for inflation. d)The borrower's monthly income.
b)The amount to be repaid under the contract.
In a survivorship life policy, when does the insurer pay the death benefit? a)If the insured survives to age 100 b)Upon the last death c)Upon the first death d)Half at the first death, and half at the second death
b)Upon the last death
All of the following benefits are available under Social Security EXCEPT a)Death benefits. b)Welfare benefits. c)Old-age and retirement benefits. d)Disability benefits.
b)Welfare benefits.
During policy replacement, the replacing insurer must notify existing insurers within what time period? a)30 days b)90 days c)5 business days d)10 calendar days
c)5 business days
All of the following candidates for a resident producer license may be exempted from the examination requirement EXCEPT a)A person in public employment in the insurance field whose license terminated 10 months ago. b)A nonresident producer in good standing who is moving to this state. c)A resident producer licensed for Property and Casualty insurance applying for a Life insurance license. d)A professional who holds a Certified Financial Planner (CFP) designation.
c)A resident producer licensed for Property and Casualty insurance applying for a Life insurance license.
When an insurance producer negotiates for an insurance contract on behalf of a client, the producer is acting as a(n) a)Consultant. b)Agent. c)Broker. d)Solicitor.
c)Broker.
Which component increases in the increasing term insurance? a)Interest on the proceeds b)Premium c)Death benefit d)Cash value
c)Death benefit
Which nonforfeiture option has the highest amount of insurance protection? a)Decreasing Term b)Reduced Paid-up c)Extended Term d)Conversion
c)Extended Term
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.
An underwriter may obtain information on an applicant's hobbies, financial status, and habits by ordering a(n) a)Medical examination. b)Attending Physician Statement. c)Inspection report. d)Medical Information Bureau report.
c)Inspection report.
When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy? a)It decreases over the term of the policy. b)It remains the same as the original policy, regardless of any differences in value. c)It is reduced to the amount of what the cash value would buy as a single premium. d)It is increased when extra premiums are paid.
c)It is reduced to the amount of what the cash value would buy as a single premium.
Which of the following information about the applicant is NOT included in the General Information section of the application for insurance? a)Occupation b)Marital status c)Medical background d)Gender
c)Medical background
During replacement of life insurance, a replacing insurer must do which of the following? a)Designate a new producer for a replaced policy b)Send a copy of the Notice Regarding Replacement to the Department of Insurance c)Obtain a list of all life insurance policies that will be replaced d)Guarantee a replacement for each existing policy
c)Obtain a list of all life insurance policies that will be replaced
The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the a)Accelerated endowment. b)Paid-up additions. c)One-year term option. d)Paid-up option.
c)One-year term option.
Which of the following, when attached to a permanent life insurance policy, allows the policyowner to customize the policy to provide an additional amount of temporary insurance on the insured, or allows amounts of temporary insurance to cover other family members? a)Guaranteed insurability rider b)Change of insured rider c)Term rider d)Accidental death and dismemberment rider
c)Term rider
What is the advantage of reinstating a policy instead of applying for a new one? a)The face amount can be increased b)The cash values have gained interest while the policy was lapsed c)The original age is used for premium determination d)Proof of insurability is not required
c)The original age is used for premium determination
Which of the following statements regarding the taxation of Modified Endowment Contracts is FALSE? a)Policy loans are taxable distributions. b)Accumulations are tax deferred. c)Withdrawals are not taxable. d)Distributions before age 59 1/2 incur a 10% penalty on policy gains.
c)Withdrawals are not taxable.
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 a)7 days. b)10 days. c)15 days. d)30 days.
d)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 a)7 years. b)10 years. c)6 months. d)4 years.
d)4 years.
What type of licensee represents the insurance company? a)Broker b)Consultant c)Advisor d)Agent
d)Agent
According to the entire contract provision, what document must be made part of the insurance policy? a)Buyer's Guide b)Agent's report c)Outline of coverage d)Copy of the original application
d)Copy of the original application
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? a)Value Adjustment Rider b)Return of Premium Rider c)Inflation Rider d)Cost of Living Rider
d)Cost of Living Rider
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 a)Accelerated benefit rider. b)Living need rider. c)Payor rider. d)Cost of living rider.
d)Cost of living rider.
For a retirement plan to be qualified, it must be designed for the benefit of a)Key employee. b)Employer. c)IRS. d)Employees.
d)Employees.
An agent selling variable annuities must be registered with a)Department of Insurance b)The Guaranty Association. c)SEC. d)FINRA.
d)FINRA.
An individual is purchasing a permanent life insurance policy with a face value 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 options should be included in the policy? a)Dividend options b)Guaranteed renewable option c)Nonforfeiture options d)Guaranteed insurability option
d)Guaranteed insurability option
Which two terms are associated directly with the premium? a)Fixed or variable b)Term or permanent c)Renewable or convertible d)Level or flexible
d)Level or flexible
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 policy delivery b)The date of issue c)The date of application d)The date of medical exam
d)The date of medical exam
Which of the following determines the cash value of a variable life policy? a)The company's general account b)The policy's guarantees. c)The premium mode d)The performance of the policy portfolio
d)The performance of the policy portfolio
How are contributions to a tax-sheltered annuity treated with regards to taxation? a)They are never taxed. b)They are taxed as income for the employee. c)They are taxed as income for the employee, but are tax free upon withdrawal. d)They are not included as income for the employee, but are taxable upon distribution.
d)They are not included as income for the employee, but are taxable upon distribution.
What is the purpose of a fixed-period settlement option? a)To settle the insurance company's liability b)To provide a guaranteed income for life c)To provide a guaranteed amount of money each month d)To provide a guaranteed income for a certain amount of time
d)To provide a guaranteed income for a certain amount of time
Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?a)Switching b)False advertising c)Rebating d)Twisting
d)Twisting
When is the earliest a policy may go into effect? a)When the first premium is paid and the policy has been delivered b)When the insurer approves the application c)After the underwriter reviews the policy d)When the application is signed and a check is given to the agent
d)When the application is signed and a check is given to the agent
Which of the following is called a "second-to-die" policy? a)Juvenile life b)Joint life c)Survivorship life d)Family income
c)Survivorship life
The LEAST expensive first-year premium is found in which of the following policies? a)Increasing Term b)Decreasing Term c)Level Term d)Annually Renewable Term
d)Annually Renewable Term
What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act? a)Revocation of license b)$2,500 c)$1,000 d)$100 per violation
b)$2,500
An individual purchased a $100,000 Joint Life policy on himself and his wife. Eight years later, he died in an automobile accident. How much will his wife receive from the policy? a)Nothing b)$50,000 c)$100,000 d)$200,000
c)$100,000
Who is a third-party owner? a)An employee in a group policy b)An irrevocable beneficiary c)A policyowner who is not the insured d)An insurer who issues a policy for two people
c)A policyowner who is not the insured
What percentage of a company's employees must take part in a noncontributory group life plan? a)0% b)25% c)75% d)100%
d)100%
What are the two components of a universal policy? a)Insurance and investments b)Mortality cost and interest c)Separate account and policy loans d)Insurance and cash account
d)Insurance and cash account
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 a)Guaranteed insurability. b)Waiver of cost of insurance. c)Accelerated benefits. d)Cost of living.
a)Guaranteed insurability.
Who might receive dividends from a mutual insurer? a)Policyholders b)Subscribers c)Stockholders d)Agents
a)Policyholders
The premium of a survivorship life policy compared with that of a joint life policy would be a)Half the amount. b)Lower. c)Higher. d)As high.
b)Lower.
What method do insurers use to protect themselves against catastrophic losses? a)Pro rata liability b)Risk management c)Reinsurance d)Indemnity
c)Reinsurance
Annuities can be used to fund which of the following? a)Group life insurance b)Estate creation c)Retirement plans d)Variable life insurance
c)Retirement plans
After its issuance, the temporary work authority expires after how many days? a)10 days b)30 days c)45 days d)60 days
d)60 days
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
Which of the following will be included in a policy summary? a)Copies of illustrations and application b)Comparisons with similar policies c)Primary and secondary beneficiary designations d)Premium amounts and surrender values
d)Premium amounts and surrender values
If a person violates a cease and desist order, the Commissioner can turn the matter over to the New Jersey Superior Court for further legal action and can assess a fine for each violation of up to a)$5,000. b)$10,000. c)$1,000. d)$3,000.
a)$5,000.
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? a)0 days b)5 days c)15 days d)30 days
a)0 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? a)5 b)10 c)14 d)30
a)5
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 a)Guaranteed insurability rider. b)Paid-up additions option. c)Cost of living provision. d)Nonforfeiture option.
a)Guaranteed insurability rider.
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? a)If the lender has credit insurance, this amount will be paid to the lender. b)The state government will pay the balance to the lender. c)The lender will not recover this money. d)The federal government will pay the balance to the lender.
a)If the lender has credit insurance, this amount will be paid to the lender.
Life income joint and survivor settlement option guarantees a)Income for 2 or more recipients until they die. b)Payment of interest on death proceeds. c)Payout of the entire death benefit. d)Equal payments to all recipients.
a)Income for 2 or more recipients until they die.
An insured has had a life insurance policy that he purchased 3 years ago when he was 40 years old. He is killed in an automobile accident and it is discovered that he is actually 45 years old, and not 43, as stated on the application. What will the company do? a)Pay a reduced death benefit b)Pay the full death benefit c)Pay nothing; there was a misrepresentation on the application d)Pay the full death benefit and refund excess premium
a)Pay a reduced death benefit
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? a)Payor Benefit b)Jumping Juvenile c)Juvenile Premium Provision d)Waiver of Premium
a)Payor Benefit
In which of the following instances would the premium be tax deductible? a)Premiums paid by an employer on a $30,000 group term life insurance plan for employees b)Premiums paid by an individual on his/her own life insurance c)Premiums paid by a mother on her son's policy d)Premiums paid by an employer on the life of a key person
a)Premiums paid by an employer on a $30,000 group term life insurance plan for employees
Upon policy delivery, the producer may be required to obtain any of the following EXCEPT a)Signed waiver of premium. b)Statement of good health. c)Payment of premium. d)Delivery receipt.
a)Signed waiver of premium.
All of the following would be different between qualified and nonqualified retirement plans EXCEPT a)Taxation on accumulation b)Taxation of withdrawals c)Taxation of contributions d)IRS approval requirements
a)Taxation on accumulation
An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT? a)The insured may choose to convert to term or permanent individual coverage. b)The insured would not need to prove insurability for a conversion policy. c)The insured may convert coverage to an individual policy within 31 days. d)The premium for individual coverage will be based upon the insured's attained age.
a)The insured may choose to convert to term or permanent individual coverage.
Which of the following is included in the term "insurance-related conduct"? a)Transmitting funds between producers and the insurance company b)Insurer's acting with the scope of the Insurance Code c)Producer's ethical behavior d)Producer licensing
a)Transmitting funds between producers and the insurance company
A producer received a group master policy and certificates for delivery to the insured. Within how many days must the policy and certificates be delivered? a)10 business days b)10 calendar days c)5 business days d)5 calendar days
b)10 calendar days
How many days does a producer have to remit the collected premiums to the insurer? a)3 business days b)5 business days c)10 calendar days d)30 calendar days
b)5 business days
Who is a third-party owner? a)An irrevocable beneficiary b)A policyowner who is not the insured c)An insurer who issues a policy for two people d)An employee in a group policy
b)A policyowner who is not the insured
Your customer doesn't mind paying a higher premium as long as he gets a life insurance product that would allow for a faster growth of the cash value. What kind of policy would you recommend? a)A whole life policy b)An endowment policy c)A term policy d)An annuity
b)An endowment policy
Which of the following is INCORRECT regarding a $100,000 20-year level term policy? a)The policy will expire at the end of the 20-year period. b)At the end of 20 years, the policy's cash value will equal $100,000. c)The policy premiums will remain level for 20 years. d)If the insured dies before the policy expired, the beneficiary will receive $100,000.
b)At the end of 20 years, the policy's cash value will equal $100,000.
What is the clause that describes the method of paying the death benefit in the event that the insured and beneficiary are both killed in the same accident? a)Nonforfeiture Clause b)Common Disaster Clause c)Spendthrift Clause d)Settlement Clause
b)Common Disaster Clause
What happens when a policy is surrendered for its cash value? a)The policy can be converted to term coverage. b)Coverage ends and the policy cannot be reinstated. c)Coverage ends but the policy can be reinstated at any time. d)The policy can be reinstated by paying back all policy loans and premiums.
b)Coverage ends and the policy cannot be reinstated.
Which of the following types of insurance policies is most commonly used in credit life insurance? a)Equity indexed life b)Decreasing term c)Increasing term d)Whole life
b)Decreasing term
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 settlement options in life insurance is known as straight life? a)Fixed amount b)Life income c)Single life d)Life with period certain
b)Life income
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? a)Medical exam and parents' medical history b)Proof of insurability is not required. c)Medical exam d)Her parents' federal income tax receipts
b)Proof of insurability is not required.
Which of the following best details the underwriting process for life insurance? a)Reporting and rejection of risks b)Selection, classification, and rating of risks c)Solicitation, negotiation and sale of policies d)Issuance of policies
b)Selection, classification, and rating of risks
Which of the following describes the tax advantage of a qualified retirement plan? a)Employer contributions are not taxed when paid out to the employee. b)The earnings in the plan accumulate tax deferred. c)Distributions prior to age 59½ are tax deductible. d)Employer contributions are deductible as a business expense when the employee receives benefits.
b)The earnings in the plan accumulate tax deferred.
A small employer owns a group health insurance policy. The employer does not pay the premium by the premium due date and fails again to pay by the end of the grace period. The insurer cancels the policy. Which of the following is true? a)The insurer will pay all losses only up to the premium due date. b)The insurer will pay all losses through the end of the grace period. c)The insurer will pay all losses continuing after the grace period ends. d)This varies with every insurer, so there is not enough information to answer this question.
b)The insurer will pay all losses through the end of the grace period.
If an insured continually uses the automatic premium loan option to pay the policy premium, a)The insurer will increase the premium amount. b)The policy will terminate when the cash value is reduced to nothing. c)The face amount of the policy will be reduced by the automatic premium loan amount. d)The cash value will continue to increase.
b)The policy will terminate when the cash value is reduced to nothing.
A small employer owns a group health insurance policy. The employer neglects to pay the premium by the payment due date. The employer fails to pay the premium yet again by the end of the grace period. Which of the following will happen? a)The certificate holders will have to pay for all claims that were incurred after the premium due date. b)The policy will terminate. c)The policy will continue for the certificate holders only. d)The certificate holders will be transferred to another policy.
b)The policy will terminate.
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.
What is the purpose of a disclosure statement in life insurance policies? a)To protect agents and insurers against lawsuits b)To explain features and benefits of a proposed policy to the consumer c)To obtain important underwriting information from the applicant d)To help consumers compare policy prices
b)To explain features and benefits of a proposed policy to the consumer
The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive? a)$0 b)$50,000 (50% of the policy value) c)$100,000 d)$300,000 (triple the amount of policy value)
c)$100,000
An insured purchased a 15-year level term life insurance policy with a face amount of $100,000. The policy contained an accidental death rider, offering a double indemnity benefit. The insured was severely injured in an auto accident, and after 10 weeks of hospitalization, died from the injuries. What amount would his beneficiary receive as a settlement? a)$0 b)$100,000 c)$200,000 d)$100,000 plus the total of paid premiums
c)$200,000
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? a)$20,000 b)$25,000 c)$50,000 d)The face amount will be determined by the insurer.
c)$50,000
In order to become a producer in New Jersey, after submitting a licensing application, candidates must pass a licensing examination within a)3 months. b)6 months. c)1 year. d)2 years.
c)1 year.
An insurance producer is acting as a broker when he or she negotiates for an insurance contract on behalf of a)The insurer. b)Another insurance producer. c)A client. d)A financial institution.
c)A client.
How is an insurance consultant different from an insurance producer? a)A consultant does not get paid commissions. b)A consultant represents the insurer. c)A consultant does not sell policies, but only offers advice. d)A consultant does not need an insurance license.
c)A consultant does not sell policies, but only offers advice.
Which of the following statements is NOT true concerning insurable interest as it applies to life insurance? a)A husband or wife has an insurable interest in their spouse. b)An individual has an insurable interest in his or her own life. c)A debtor has an insurable interest in the life of a lender. d)Business partners have an insurable interest in each other.
c)A debtor has an insurable interest in the life of a lender.
Who can make a fully deductible contribution to a traditional IRA? a)Someone making contributions to an educational IRA b)A person whose contributions are funded by a return on investment c)An individual not covered by an employer-sponsored plan who has earned income d)Anybody; all IRA contributions are fully deductible regardless of income level
c)An individual not covered by an employer-sponsored plan who has earned income
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? a)As of the first of the month after the policy issue b)As of the policy issue date c)As of the application date d)As of the policy delivery date
c)As of the application date
Which of the following statements concerning buy-sell agreements is true? a)Benefits received are considered income taxable. b)Buy-sell agreements pay in the event of a medical emergency. c)Buy-sell agreements are normally funded with a life insurance policy. d)Premiums paid are deductible as a business expense.
c)Buy-sell agreements are normally funded with a life insurance policy.
Which policy component decreases in decreasing term insurance? a)Dividend b)Premium c)Face amount d)Cash value
c)Face amount
The requirement that agents must account for all insurance funds collected, and are not permitted to comingle those funds with their own is known as a)Insurance-related conduct. b)Fiscal responsibility. c)Fiduciary responsibility. d)Premium accountability.
c)Fiduciary responsibility.
Which provision of a life insurance policy states the insurer's duty to pay benefits upon the death of the insured, and to whom the benefits will be paid? a)Beneficiary clause b)Consideration clause c)Insuring clause d)Entire contract clause
c)Insuring clause
After a back injury, an insured is disabled for a year. His insurance policy carries a Disability Income Benefit rider. Which of the following benefits will he receive? a)Payments for life b)Yearly premium waiver and income c)Monthly premium waiver and monthly income d)Percentage of medical costs paid by the insurer
c)Monthly premium waiver and monthly income
Proceeds from life insurance policies are protected from the beneficiary's debts under all of the following circumstances EXCEPT a)The amount of debt exceeds 50% of the policy's face value. b)There are no circumstances under which proceeds are protected from the beneficiary's debts. c)Some of the premiums were paid in an attempt to defraud creditors. d)The amount of debt exceeds the policy's face value.
c)Some of the premiums were paid in an attempt to defraud creditors.
Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean? a)The beneficiary will receive the lump sum, plus interest. b)The primary beneficiary will receive the death benefit and the secondary beneficiaries will share the interest payments. c)The beneficiary will only receive payments of the interest earned on the death benefit. d)The beneficiary must pay interest to the insurer.
c)The beneficiary will only receive payments of the interest earned on the death benefit
The policyowner of an adjustable life policy wants to increase the death benefit. Which of the following statements is correct regarding this change? a)The death benefit can be increased only when the policy has developed a cash value. b)The death benefit can be increased only by exchanging the existing policy for a new one. c)The death benefit can be increased by providing evidence of insurability. d)The death benefit cannot be increased.
c)The death benefit can be increased by providing evidence of insurability.
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? a)The insurer will pay the death benefit minus one month's premium. b)The insurer will pay nothing because the employee has terminated his group insurance and hasn't started the individual one. c)The insurer will pay the full death benefit from the group policy to the beneficiary. d)The insurer will pay a reduced death benefit to the beneficiary.
c)The insurer will pay the full death benefit from the group policy to the beneficiary.
All of the following are requirements for life insurance illustrations EXCEPT a)They must identify nonguaranteed values. b)They must differentiate between guaranteed and projected amounts. c)They must be part of the contract. d)They may only be used as approved.
c)They must be part of the contract.
What is the purpose of a fixed-period settlement option? a)To provide a guaranteed income for life b)To provide a guaranteed amount of money each month c)To provide a guaranteed income for a certain amount of time d)To settle the insurance company's liability
c)To provide a guaranteed income for a certain amount of time
Licensees must file with the Department a branch office registration form within how many days before business is first conducted there? a)10 b)15 c)20 d)30
d)30
Presenting any written or oral statement in support of or in opposition to a claim payment, while knowing that the statement contains false or misleading information material to the claim, would be best considered a)A permissible act. b)Grounds for license revocation. c)A violation of the "Unsatisfied Claim and Judgment Fund Law." d)A violation of the New Jersey Insurance Fraud Prevention Act.
d)A violation of the New Jersey Insurance Fraud Prevention Act.
Under which of the following circumstances would an insurer pay accelerated benefits? a)A couple is nearing retirement and needs a steady stream of income. b)An insured is looking for a way to put her daughter through college. c)A couple wants to build a house and would like to make a larger down payment. d)An insured is diagnosed with cancer and needs help paying for her medical treatment.
d)An insured is diagnosed with cancer and needs help paying for her medical treatment.
Partners in a business enter into a buy-sell agreement to purchase life insurance, which states that should one of them die prematurely, the other would be financially able to buy the interest of the deceased partner. What type of insurance policy may be used to fund this agreement? a)Term insurance only b)Permanent insurance only c)Universal life insurance only d)Any form of life insurance
d)Any form of life insurance
Which of the following best describes fixed-period settlement option? a)Only the principal amount will be paid out within a specified period of time. b)The death benefit must be paid out in a lump sum within a certain time period. c)Income is guaranteed for the life of the beneficiary. d)Both the principal and interest will be liquidated over a selected period of time.
d)Both the principal and interest will be liquidated over a selected period of time.
Which of the following components must a life insurance policy have to allow policy loans? a)Dividends b)Flexible premiums c)Face amount d)Cash value
d)Cash value
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? a)Insurable interest b)Modification clause c)Ownership provision d)Collateral assignment
d)Collateral assignment
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? a)Life with period certain b)Fixed amount c)Interest only d)Fixed period
d)Fixed period
The automatic premium loan provision is activated at the end of the a)Free-look period b)Elimination period. c)Policy period. d)Grace period.
d)Grace period.
When a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income? a)Both principal and interest b)Neither principal nor interest c)Principal only d)Interest only
d)Interest only
What is the benefit of choosing extended term as a nonforfeiture option? a)It matures at age 100. b)It allows for coverage to continue beyond maturity date. c)It can be converted to a fixed annuity. d)It has the highest amount of insurance protection.
d)It has the highest amount of insurance protection
Which of the following is correct regarding credit life insurance? a)It is purchased on an installment basis. b)It insures the life of a creditor. c)It has a maximum term of 20 years. d)It insures the life of a debtor.
d)It insures the life of a debtor.
Which of the following best describes annually renewable term insurance? a)It requires proof of insurability at each renewal. b)Neither the premium nor the death benefit is affected by the insured's age. c)It provides an annually increasing death benefit. d)It is level term insurance.
d)It is level term insurance.
The type of settlement option which pays throughout the lifetimes of two or more beneficiaries is called a)Fixed period. b)Fixed amount. c)Joint life. d)Joint and survivor.
d)Joint and survivor.
Which of the following provide(s) funding for the New Jersey Life and Health Guaranty Association? a)Tax payers b)Fundraising c)Insolvent insurers d)Member insurers
d)Member insurers
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 a)One-year term purchase. b)Accumulation at interest. c)Reduction of premiums. d)Paid-up additions.
d)Paid-up additions
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? a)Paid-up addition b)Accumulation at interest c)Cash option d)Reduction of premium
d)Reduction of premium
The initial amount of credit life insurance may NOT exceed a)An amount set by statute and adjusted regularly for inflation. b)The borrower's monthly income. c)The borrower's annual income. d)The amount to be repaid under the contract.
d)The amount to be repaid under the contract.
A father owns a life insurance policy on his 15-year-old daughter. The policy contains the optional Payor Benefit rider. If the father becomes disabled, what will happen to the life insurance premiums? a)The premiums will become tax deductible until the insured's 18th birthday. b)Since it is the policyowner, and not the insured, who has become disabled, the life insurance policy will not be affected. c)The insured will have to pay premiums for 6 months. If at the end of this period the father is still disabled, the insured will be refunded the premiums. d)The insured's premiums will be waived until she is 21.
d)The insured's premiums will be waived until she is 21.
If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant a)Upon issuance of the policy. b)Within 30 days after the first premium payment was collected. c)Prior to filling out an application for insurance. d)With the policy.
d)With the policy.
