primerica exam review
If a producer has been convicted of a crime, he or she must notify the Commissioner within
30 days
During policy replacement, the replacing insurer must notify existing insurers within what time period?
5 business days
If a consumer requests additional information concerning an investigation consumer report, how long does the insurer or reporting agency have to comply?
5 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
Which of the following authorities is in charge of investigating claims held against licensees?
Commissioner
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?
Cost of Living Rider
a key person insurance policy can pay for which of the following?
Costs of training a replacement
If an insurer and insured have a dispute about whether a particular loss is covered under a policy, which authority will settle the dispute?
Court system
What happens when a policy is surrendered for its cash value?
Coverage ends and the policy cannot be reinstated.
Which of the following is TRUE about credit life insurance?
Creditor is the policyowner.
Which of the following is NOT typically excluded from life policies?
Death due to plane crash for a fare-paying passenger
Which of the following is NOT an example of insurable interest?
Debtor in creditor
An individual has just borrowed $10,000 from his bank on a 5-year installment loan requiring monthly payments. What type of life insurance policy would be best suited to this situation?
Decreasing term
When a producer was reviewing a potential customer's coverage written by another company, the producer made several remarks that were maliciously critical of that other insurer. The producer could be found guilty of
Defamation
Two individuals are in the same risk and age class; yet, they are charged different rates of their insurance policies die to an insignificant factor. What is this called?
Discrimination
Which of the following is true regarding taxation of dividends in participating policies?
Dividends are not taxable.
an annuity owner is funding an annuity that will supplement her retirement. because she does not know what effect inflation may have on her retirement dollars, she would like a return that will equal the performance of the Standard and Poor's 500 Index. She would likely purchase a(n)
Equity indexed annuity
Which of the following statements is NOT true concerning insurable interest as it applies to life insurance?
A debtor has an insurable interest in the life of a lender.
Who is a third-party owner?
A policyowner who is not the insured
Which of the following would be required to be licensed as an insurance producer?
A salaried employee who advertises and solicits insurance
Which of the following would indicate a contractual relationship between a producer and an insurance company?
A signed contract
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 violation of the New Jersey Insurance Fraud Prevention Act.
The commissioner may revoke a producer's license for all of the following reasons EXCEPT
Acting in a fiduciary capacity
At age 30, an applicant wants to start an insurance program, but realizing that his insurance needs will likely change, he wants a policy that can be modified to accommodate those changes as they occur. Which of the following policies would most likely fit his needs?
Adjustable Life
Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be
Adjusted to the insured's age at the time of renewal.
Which of the following is the closest term to an authorized insurer?
Admitted
What is a branch office?
An office in this state where the licensee conducts insurance business, other than a principal office
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
A Universal Life Insurance policy is best described as a/an
Annually Renewable Term policy with a cash value account.
In classifying a risk, the Home Office underwriting department will look at all of the following EXCEPT
Applicant's past income.
Which of the following is the basic source of information used by the company in the risk selection process?
Application
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 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?
As of the application date
To be issued a business entity producer license by the Commissioner, the business entity must have how many partners or officers licensed as producers?
At least 1
A group of 4 entrepreneurs decides to open an insurance company. Which of the following is true?
At least 1 member must be a licensed insurance producer.
Which of the following is INCORRECT regarding a $100,000 20-year level term policy?
At the end of 20 years, the policy's cash value will equal $100,000.
The accelerated benefits provision will provide for an early payment of the death benefit when the insured
Becomes terminally ill.
Which of the following best describes fixed-period settlement option?
Both the principal and interest will be liquidated over a selected period of time.
Which of the following would describe a legal document which would dictate who can buy a deceased partner's share of a business and for what amount?
Buy-sell agreement
an insured receives an annual life insurance dividend check. What term best describes this arrangement?
Cash option
Which of the following must an insurer obtain in order to transact insurance within a given state?
Certificate of authority
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 scenarios would NOT be covered by insurance?
Client M purchases life insurance on herself prior to committing suicide.
a banker is ready to close on a customer's loam. The bank is prepared to offer the loam but only if the customer purchases a life insurance policy from the bank in the amount of the loan. This is an example of
Coercion
If a change needs to be made to the application for insurance, the agent may do all of the following EXCEPT
Erase the incorrect answer and record the correct answer.
Which of the following information about the applicant is NOT included on Part 1 of the application for insurance?
Medical background
in an Adjustable Life policy all of the following can be changed by the policy owner EXCEPT
the type of investment
What is the purpose of a disclosure statement in life insurance policies?
to explain features and benefits of a proposed policy to the consumer
The paid-up addition option uses the dividend
to purchase a smaller amount of the same type of insurance as the original policy
Which of the following types of insurance policies is most commonly used in credit life insurance?
Decreasing term
What describes the specific information about a policy?
Policy summary
Most agents try to collect the initial premium for submission with the application. When an agent collects the initial premium from the applicant, the agent should issue the applicant a
Premium receipt
Which of the following describes the tax advantage of a qualified retirement plan?
The earnings in the plan accumulate tax deferred.
Who is the owner and who is the beneficiary on a Key Person Life Insurance policy?
The employer is the owner and beneficiary.
If 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.
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?
$100,000
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 this case, what will the policy beneficiary receive?
$100,000
Provided that it is a first offense, what is the maximum penalty for failing to respond to a subpoena?
$5000
In order to become a producer in New Jersey, after submitting a licensing applicatoin, candidates must pass a licensing examination with
1 year
After its issuance, the temporary work authority expires after how many days
180 days not 60
Licensees must notify the Department within how many days of any change of address?
30
The insurer must maintain copies of Notice Regarding Replacement and the comparative information form, policy summary, and all sales materials until the next regular examination by the Department of Banking and Insurance or for at least
5 years
What is the fine for violating the Commissioner's cease and desist order?
5000
If a telemarketer wants to make an unsolicited sales call to a potential customer whaat is the earliest time the telemarketer can call the prospects residence?
8 am
According to the Entire Contract provision, a policy must contain
A copy of the original application for insurance.
What is reinsurance?
An agreement between a ceding insurer an assuming insurer
All of the following are examples of third-party ownership of a life insurance policy EXCEPT
An insured borrows money from the back and makes a collateral assignment of a part of the death benefit to secure the loan.
If an insurance company wished 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 applicants
Ancestry
An insurer cancelled a contract with a producer on April 1st. By what date must the insurer notify the Commissioner of this action?
April 15th
If an insurer meets the state's financial requirements and is approved to transact business in the state, it is considered to be
Authorized
Which of the following is the legal name of a corporation or partnership under which a licensee conducts insurance business?
Business name
Which of the following is a generic consumer publication that explains life insurance in general terms in order to assist the applicant in the decision-making process?
Buyer's Guide
How is the Insurance Guaranty Association funded?
By its members-authorized insurers
Which of the following would NOT be considered an exception to the National Do Not Call List?
Calls based from outside of the United States
Under which nonforfeiture option does the company pay the surrender value and have no further obligations to the policy owner?
Cash surrender
If a violation of the New Jersey insurance code were to occur, a cease and desist order and/or penalty may be issued. Who may issue a cease and desist order?
Commissioner
The type of policy that can be changed from one that does not accumulate cash value to the one that does is a
Convertible Term Policy.
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
Cost of living rider.
Which of the following types of insurance would be written by a limited lines agent?
Credit Insurance
Which of the following are NOT fundable by annuities?
Death benefits
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT
Dividends from a mutual insurer.
Which of the following best describes an insurance company that as been formed under the laws of this state?
Domestic
All of the following information about the applicant is identifies in the General Information section of a life Insurance application Except
Education
For a retirement plan to be qualified, it must be designed for the benefit of
Employees.
When a life insurance policy is cancelled and the insured has selected the extended term nonforfeiture option, the cash value will be used to purchase term insurance that has a face amount
Equal to the original policy for as long a period of time that the cash values will purchase.
Items stipulated in the contract that the insurer will not provide coverage for are found in the
Exclusions clause.
Circulating deceptive sales material to the public is what type of Unfair Trade Practice?
False advertising
Which rider, when attached to a permanent life insurance policy, provides an amount of insurance on every family member?
Family Term Rider
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
Fiduciary responsibility.
Life insurance death proceeds are
Generally not taxed as income
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
Guaranteed Insurability
Which of the following would be considered false advertisement?
Implying that the agent is the insurer
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?
Insuring clause
Which of the following is TRUE about the 10-day free look period in the Life Insurance Policy>
It begins when the policy is delivered
Why is an equity indexed annuity considered to be a fixed annuity?
It has a guaranteed minimum interest rate
What significance did U.S. vs. South-Eastern Underwriters have on the insurance industry?
It reversed the decision of Paul vs. Virginia, determining that insurance is interstate commerce and should be regulated federally.
Which of the following statements is TRUE about the policy assignment?
It transfers rights of ownership from the owner to another person
Which statement is NOT true regarding a Straight Life policy?
Its premium steadily decreases over time, in response to its growing cash value.
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
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
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?
Monthly premium waiver and monthly income
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 factors determines the amount of each installment paid in a Life Income Option arrangement?
Recipient's life expectancy and amount of principal
An insured pays $1,200 annually for her life insurance premium. The insured applies 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
What method do insurers use to protect themselves against catastrophic losses?
Reinsurance
A man decided to purchase a $100,000 Annually Renewable Term Life policy to provide additional protection until his children finished college. He discovered that his policy
Required a premium increase each renewal.
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.
The McCarran Act stated that the federal government would not regulate insurance as long as an adequate job of regulating the industry was done by the
States
Which of the following riders is often used in business life insurance policies when the policyowner needs to change the insured under the policy?
Substitute insured rider
All of the following are unfair claims settlement practices EXCEPT
Suggesting negotiations in settling a claim
Which is NOT true about beneficiary designations?
The beneficiary must have insurable interest in the insured.
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
A life insurance policy does not have a war clause. Of the insured is killed during a time of war, what will the beneficiary receive from the policy?
The full death benefit
Which of the following entities is held responsible for the contents of an insurer's advertisement on local TV station?
The insurance company
Which of the following determines the cash value of a variable life policy?
The performance of the policy portfolio
if an insurer issued a policy based on the application that held unanswered questions, which of the following will be TRUE?
The policy will be interpreted as if the insurer waived its right to have an answer on the application
A producer's license was revoked as a result of the Insurance Code violation. Which the following is TRUE?
The producer will have to wait 5 years before applying for license reinstatement
Which is true about a spouse term rider?
The rider is usually level term insurance.
Under an extended term nonforfeiture option, the policy cash value is converted to
The same face amount as in the whole life 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.
All of the following are true regarding the guaranteed insurability rider EXCEPT
This rider is available to all insureds with no additional premium.
Which of the following employees insured under a group life plan would be allowed to convert to individual insurance of the same coverage once the plan is terminated?
Those who have been insured under the plan for at least 5 years
What is the purpose of a fixed-period settlement option?
To provide a guaranteed income for a certain amount of time
Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured's best interest are guilty of
Twisting
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%.
The rider in a whole life policy that allows the company to forgo collecting the premium if the insured is disabled is called
Waiver of premium.
An insurer wants to begin underwriting procedures for an applicant. What source will it consult for the majority of its underwriting information?
application
Traditional IRA contributions are
tax deducted
The interest earned on policy dividends is
taxable
The National Do Not Call Registry was created to regulate
telemarketers
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?
$8,000, 60 days
An insured had a $10,000 term life policy. The annual premium of $200 was due on February 1; however, the insured failed to pay the premium. He died on February 28. How much would the beneficiary receive from the policy?
$9,800
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?
10 calendar days
The Commissioner believes that an insurance rule or regulation has been violated, and decides to call a disciplinary hearing. How many days before a hearing must the Commissioner issue a notice to the person charged with a violation?
10 days
The commissioner believes that a license has violated an insurance regulation and decides to conduct a hearing. How long of a notice must the Commissioner provide the licensee?
10 days
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?
10000, no tax consequences
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
If an insurer cancels an agency contract, it must notify the Commissioner in writing within how many days?
15
When an insurance producer sustains a spinal cord injury in a car wreck, he is rendered permanently disabled. In order to continue his business, his wife establishes an agreement with another producer to continue his business. This authorization will lat for a maximum of
180 days
Producer licenses are valid for
2 years.
The validity of coverage under a life insurance policy may not be contested, except for nonpayment of premium, after the policy has been in force for at least how many years?
2 years.
an insured purchased a 15-year level term life policy with a face amount of 100000. the policy contained an accidental death rider, offering 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 this beneficiary receive as a settlement?
200000
What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act?
2500
Under SIMPLE plans, participating employees may defer up to a specified amount each year, and the employer then makes a matching contribution up to an amount equal to what percent of the employee's annual wages?
3
Within how many days of requesting an investigative consumer report must an insurer notify the consumer in writing that the report will be obtained?
3 days
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 ensures within
30 days
If $100,000 of life insurance proceeds were used in a settlement option, which paid $13,000 per year for ten years, which of the following would be taxable annually?
3000
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
What is the number of credits required for fully insured status for Social Security disability benefits?
40
Within how many days must a producer report claims to the insurer?
5 business 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
In cases where a producer's license has been revoked, the producer must wait for how long before applying for reinstatement?
5 years
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?
Fixed period
All of the following are dividend options EXCEPT
Fixed-period installments.
When an employee terminates coverage under a group insurance policy, coverage continues in force
For 31 days.
Which is TRUE about the cash surrender nonforfeiture option?
Funds exceeding the premium paid are taxable as ordinary income.
Which of the following would NOT be considered rebating?
Giving a client a $25 pen with the insurer's logo during the insurance application process
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
Grounds for license revocation
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.
Fred is the owner of a whole life insurance policy. Some of the details involving benefit payments are not expressed in the policy, but the insurer proposed an arrangement 10 years ago. Fred has still not agreed formally to the terms of the proposal. When the policy matures, what will the insurer do?
Hold Fred's money in its general fund until it can come to a formal agreement with Fred
Applicants for surplus lines authority must fulfill all of the following requirements EXCEPT
Hold a bond as a condition for licensure.
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?
If the lender has credit insurance, this amount will be paid to the lender.
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 predeceases 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
The life insurance policy clause that prevents an insurance company from denying patent of a death claim after a specified period of time is known as the
Incontestability clause
What type of insurance would be used for a Return of Premium rider?
Increasing term
The type of term insurance that provides increasing death benefits as the insured ages is called
Increasing term.
Your client's employer does not offer a company-wide annuity contract. What type of annuity contract could your client obtain?
Individual
What do individuals use to transfer their risk of loss to a larger group?
Insurance
What are the two components of a universal policy?
Insurance and cash amount
Producer's and insurer's actions related to insurance transactions, from selling insurance to processing claims are referred to as
Insurance-related conduct.
Which of the following statements regarding HIV testing for insurance purposes is NOT true?
Insurers are barred from requesting HIV testing.
The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose?
Interest only option
Which of the following best describes a misrepresentation?
Issuing sales material with exaggerated statements about policy benefits
What is the main purpose of the Seven-pay Test?
It determines if the insurance policy is an MEC.
What would be an advantage to naming a contingent (or secondary) beneficiary in a life insurance policy?
It determines who receives policy benefits if the primary beneficiary is deceased
When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy?
It is reduced to the amount of what the cash value would buy as a single premium.
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.
In the underwriting process, it was determined that the applicant for life insurance is in poor health and has some dangerous habits. Which of the following is true concerning the policy premium?
It will likely be higher because the applicant is a substandard risk
Which of the following statements is TRUE concerning the Accidental Death Rider?
It will pay double or triple the face amount.
Which two terms are associated directly with the premium?
Level or flexible
All other factors being equal, what would the premium be like in a survivorship life policy as compared to the premium in a joint life policy?
Lower
Which of the following would provide an underwriter with information concerning an applicant's health history?
MIB
An insured stated on her application for life insurance that she had never had a heart attack, when in fact she had a series of minor heart attacks last year for which she sought medical attention. Which of the following will explain the reason a death benefit claim is denied?
Material misrepresentation
If a life insurance policy develops cash value faster than a seven-pay whole life contract, it becomes a/an
Modified endowment contract.
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.
Which of the following was created to protect policyowners, insureds, and beneficiaries under insurance contracts when insurers fail to perform contractual obligations due to financial impairment?
New Jersey Life and Health Guaranty Association
A nonresident licensed producer decides to conduct business under an assumed name. Which of the following is true?
Nonresident producers may not conduct business under any name besides legal names
Death benefits payable to a beneficiary under a life insurance policy are generally
Not subject to income taxation by Federal Government
On a participating insurance policy issued by a mutual insurance company, dividends paid to policyholders are
Not taxable since the IRS treats them as a return of a portion of the premium paid.
A Certification of License Status must include all of the following information EXCEPT
Number of years a licensee has been in the business
All of the following would be considered an insurance transaction EXCEPT
Obtaining an insurance license.
Which Universal Life option has a gradually increasing cash value and a level death benefit?
Option A
What is the major difference between a stock company and a mutual company?
Ownership
A participating insurance policy may do which of the following?
Pay dividends to the policy owner
A prospective insured receives a conditional receipt but dies before the policy is issued. The insurer will
Pay the policy proceeds only if it would have issued the policy.
Which of the following riders would NOT cause the Death Benefit to increase
Payor Benefit Rider
All of the following are true regarding insurance policy loans EXCEPT
Policy loans can be made on policies that do not accumulate cash value.
all of the following professional designations are recognized by the department as acceptable substitutes for education and examination requirements EXCEPT
Professional Insurance Agent (PIA)
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.
Which nonforfeiture option provides coverage for the longest period of time?
Reduced paid-up
In New Jersey, the public is protected by a notice of discontinuance when a policy is discontinued for nonpayment of premiums. When a policy is discontinued , all of the following are required EXCEPT
Refund of premiums
an insured will be allowed to reactivate her lapse 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
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
Revocable beneficiary.
To sell variable life insurance policies, an agent must receive all of the following EXCEPT
SEC registration.
Which of the following best details the underwriting process for life insurance?
Selection, classification, and rating of risks
The Ownership provision entitles the policyowner to do all of the following EXCEPT
Set premium rates.
An employee has group life insurance through her employer. After 5 years, she decided to leave the company and work independently. How can she obtain an individual policy?
She can convert her group policy to an individual policy without proof of insurability within 31 days of leaving the group plan
Upon policy delivery, the producer may be required to obtain any of the following EXCEPT
Signed waiver of premium.
Which two terms are associated directly with the way an annuity is funded?
Single payment or periodic payments
An insurance policy that only requires a payment of premium at its inception, provides insurance protection for the life of the insured, and matures at the insured's age 100 is called
Single premium whole life.
Which of the following would be considered a nonqualified retirement plan?
Split-dollar plan
which of the following when attached to a permanent life insurance policy, allows the policy owner 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?
Term rider
Which of the following may NOT be included in an insurance company's advertisement?
That its policies are covered by a state Guaranty Association
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
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 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 the state Life and Health Guaranty Assosiation
an adjustable life policy owner can change which of the following policy features?
The coverage period
What is the advantage of reinstating a policy instead of applying for a new one?
The original age is used for premium determination
All of the following are requirements for life insurance illustrations EXCEPT
They must be part of the contract
Which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policyowner?
Third-party ownership
The paid-up addition option uses the dividend
To purchase a smaller amount of the same type of insurance as the original policy.
In a survivorship life policy, when does the insurer pay the death benefit?
Upon the last death
An agent and an applicant for a life insurance policy fill out and sign the application. However, the applicant does not wish to give the agent the initial premium, and no conditional receipt is issued. When will coverage begin?
When the agent delivers the policy, collects the initial premium, and the applicant completes an acceptable Statement of Good Health
The main difference between immediate and deferred annuities is
When the income payments begin.
All of the following are true of key person insurance EXCEPT
a
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
ll of the following are TRUE statements regarding the accumulation at interest option EXCEPT
a
An insurance producer is acting as a broker when he or she negotiates for an insurance contract on behalf of
a client
according to the entire Contact provision, a policy must contain
a copy of the original application for insurance
the two types of assignments are
absolute and collateral
Which of the following would be considered a non-medical insurance application?
an application on which the medical information is completed by the applicant and the agent only
all other factors being equal, the least expensive first-year premium payment is found in
annually renewable term e
An employee quits his job and converts his group policy to an individual policy; the premium for the individual policy will be based on his
attained age
Social Security was created to protect against all of the following EXCEPT
bad investment choices
all of the following statements are correct regarding Credit Life Insurance EXCEPT
benefits are paid to the borrowers beneficiary
an insured pays an annual premium to the insurer. in return, the insurer promises to pay benefits in accordance with the terms of the contract. this is called
consideration
which of the following reports will provide the underwriter with the information about an insurance applicants credit
consumer report
which of the following is not a duty of the commissioner
developing insurance rates
When twin brothers applied for life insurance from Company A, the company found that while neither of them smoked and both had a very similar lifestyle, one of the twins was in a much stronger financial position than the other. Because of this, the company charged him a higher rate for his insurance. This practice is considered
discrimination
which of the following will NOT be considered unfair discrimination by insurers?
discrimination in benefits and coverages based on the insured habits and lifestyle
all of the following statements concerning dividends are true EXCEPT
dividend amounts are guaranteed in the policy
Which nonforfeiture option has the highest amount of insurance protection?
extended term
An applicant is denied insurance because of information found on a consumer report. Which of the following requires that the insurance company supply the applicant with the name and address of the consumer reporting company?
fair credit reporting act
which is TRUE about the cash surrender nonforfeiture option?
funds exceeding the premium paid are taxable as ordinary income
What provision in an insurance policy extends coverage beyond the premium due date?
grace period
What required provision protects against unintentional lapse of the policy?
grace period
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
An insurer devises an intimidation strategy in order to corner a large portion of the insurance market. Which of the following best describes this practice?i
illegal
The Medical Information Bureau (MIB) was created to protect
insurance companies from adverse selection by high risk persons
all advertisements pertaining to life insurance policies are the responsibility of the
insurer
Which of the following policy components contains the company's promise to pay?
insuring clause
During partial withdrawal from a universal life policy, which portion will be taxed?
interest
When a beneficiary receives payments consisting of both principal and interest portions, which parts are taxable as income?
interest only
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 policy owners responsibility to request the investment application; the insurer must then deliver it within 30 days
What significance did Paul vs. Virginia have on the insurance industry?
it was decided that insurance was not interstate commerce and could not be regulated by the federal government.
Variable Life insurance is based on what kind of premium?
level fixed
A policy will pay the death benefit if the insured dies during the 20-year premium-paying period, and nothing if death occurs after the 20-year period. What type of policy is this?
limited pay whole life
an applicant who receives a preferred risk classification qualifies for
lower premiums than a person who receives a standard risk
If a settlement option is not chosen by the beneficiary or policyowner, which option will be used?l
lump sum
The responsibility of making certain that an application for insurance is filled out completely, correctly, and to the best of his or her knowledge is the responsibility of whom?
the producer
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
misrepresentation
What is the term for how frequently a policy owner is required to pay the policy premium?
mode
An insured purchased an insurance policy 5 years ago. Last year, she received a dividend check from the insurance company that was not taxable. This year, she did not receive a check from the insurer. From what type of insurer did the insured purchase the policy?
mutual
Must be informed of the source of the report.
ncome for 2 or more recipients until they die.
Which of the following most likely would NOT be required to complete continuing education hours in this state?
nonresident producers
The dividend option in which the policy owner uses dividends to purchase a term policy for one year is referred to as the
one-year term option
a rider to a life insurance policy that provides coverage on the insured's family members is called the
other-insured rider
All of the following are requirements for a nonresident license EXCEPT
passing the new jersey licensing exam
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?
payor benefit
Life income joint and survivor settlement option guarantees
payout of the entire death benefit
Who can request changes in premium payments, face value, loans, and policy plans?
policy owner
if the policy owner, the insured, and the beneficiary under life insurance policy are three different people, who has the ownership rights?
policy owner
which of the following must have insurable interest in the insured.
policy owner
In which of the following instances would the premium be tax deductible?
premiums paid by an employer on a 30000 fgroup term life insurance plan for employees
Which of the following is NOT required information a producer must provide before soliciting insurance?
producers contact information
Another name for a substandard risk classification is
rated
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 customers complaint
Insurance is the transfer of
risk
methods used to oath death benefits to the beneficiary upon the insured's death are called
settlement options
An insurance application cannot ask about which of the following information about an applicant?
sexual orientation
all of the following would be different qualified and non qualified retirement plans EXCEPT
taxation on accumulation
which of the following is an example of a producer being involved in an unfair trade practice of rebating
telling a client that the first premium will be waived if he purchased the insurance policy today
nonforfeiture values guarantee which of the following for the policy owner?
that the cash value will be lost
an applicant sign an application for a 25000 life insurance policy, pays the initial premium, and receives a conditional receipt. if the applicant is killed in an automobile accident the next dat
the beneficiary would receive 25000 if it was determined that the insured qualifies for the policy applied for
The Paul vs. Virginia case was decided in 1869. To what extent does the Supreme Court's decision still apply to insurance today?
the decision has changed. insurance is considered to be interstate commerce, and is subject to regulation by the federal government
All of the following are TRUE of the federal tax advantages of qualified plan EXCEPT
the distribution, all amounts received by the employee are tax free
A 40-year old man buys a whole life policy and names his wife as his only beneficiary. His wife dies 10 years later. He never remarries and dies at age 61, leaving 2 grown-up children. Assuming he never changed the beneficiary, the policy proceeds will go to
the insured state
a father owns a life insurance policy on his 15-year old daughter. the policy contains optional payor benefit rider. if the father becomes disabled, what will happen to the life insurance premiums?
the insured's premiums will be waived until she is 21
a small employer owns a group health insurance policy. the employer does not pay the premium by the premium due date and fails to pay by the end of the grace period. the insurer cancels the policy. which of the following is true?
the insurer will pay all losses through the end of the grace period
Who makes up the Medical Information Bureau?
the insurers
An organization licensed as a producer business entity based in New York would like to transact insurance in New Jersey. Which of the following is true?
the organization will need to obtain a nonresident business entity license, and its producers will need to obtain nonresident licenses
Which type of misrepresentation persuades an insured, to his or her detriment, to cancel, lapse, or switch policies from one to another?
twisting
Which of the following Life Insurance policies would be considered interest sensitive?
universal life
Giving a client an inducement to a sale not stated in the policy is an unlawful practice known as
unlawful distribution of dividends
Which of the following is a statement that is guaranteed to be true, and if untrue, may breach an insurance contract?
warranty
If a policy includes a free-look period of at least 10 days, the Buyer's Guide may be delivered to the applicant
with the policy
If an insurer requires an application in order to renew a life insurance policy, it is the insurer's responsibility to send one to the insured
within 30 days of insured's request
