NJ Life Insurance Exam

What is the maximum allowed value of a gift that an agent can give to the insured without violating the regulation on rebating?

$100

The insured under $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?

$100,000

If a person violates a cease and desist order, the commissioner can turn the matter over to the NJ Superior Court for further legal action, and can assess a fine for each violation up to:

$5,000

An insured has a $10,000 term life policy. The annual premium of $200 was due February 1st. However, the insured failed to pay the premium. He died on February 28th. How much would the beneficiary receive from the policy?

$9,800

All advertisements pertaining to life insurance policies are the responsibility of the :

Insurer

Which option for universal life allows the beneficiary to collect BOTH the death benefit AND cash value, upon the death of the insured?

Option B

The interest earned on policy dividends is:

Taxable

All of the following are true of key person insurance, except:

The plan is funded by permanent insurance only.

When is the earliest age an individual can purchase a life insurance policy for him or herself in the state of NJ?

15 years old

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

According to the telemarketing sales rules, what are the permissible calling hours for telemarketing calls?

8am-9pm

Which of the following is another term for authorized insurer?

Admitted

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

Items stipulated in the contract that the insurer will not provide coverage for are found in the

Exclusions clause

Which of the following best describes annually renewable term insurance?

It is level term insurance.

Which of the following is not true regarding a non-qualified retirement plan?

It needs IRS approval

Which of the following settlement options in life insurance is known as straight life?

Life income

If a change needs to be made to the application for insurance, the agent may do all the following except:

erase the incorrect answer, and record the correct answer

If a life policy allows the policy owner to make periodic additions to the face amount at standard rates, without proving insurability, the policy includes a

guaranteed insurability rider

Which of the following best describes a misrepresentation?

issuing sales material with exaggerated policy benefits

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 this policy

requires a premium increase at each renewal

All the following are considered limited lines of authority EXCEPT

surplus lines

An absolute assignment is a :

transfer of all ownership rights in a policy

Agents who persuade insureds to cancel a policy in favor of another when it might not be in the insureds best interest, are guilty of:

twisting

If a policy includes a free look period of at least 10 days, the buyers guide may be delivered to the applicant no later than

with the policy

Bill's license was revoked two years ago. How much longer will he have to wait to request his license to be reinstated?

3 years

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

30 days

A licensed insurance producer must notify the department of change of mailing address within how many days and what method?

30 days and mail or electronically

All of the following statements are correct regarding credit life insurance EXCEPT

Benefits are paid to the borrower's beneficiary

All of the following are dividend options except:

Fixed period installments

Under the Fair Credit Reporting Act, if the consumer challenges the accuracy of the information contained in a consumer or investigative report, the reporting agency must

respond to the consumers complaints

An insurer must keep all sales materials for how long?

5 years

According to the entire contract provision, what document must be made part of the insurance policy?

Copy of the original application

The waiver of cost of insurance rider is found on what type of insurance:

Universal Life

Which of the following policies would have an IRS required corridor or gap between the cash value and death benefit?

Universal life option A

Which of the following life insurance policies allows a policy owner to take out a loan from the policies cash value?

Variable universal life

Which of the following types of policies allows for a flexible premium and a variable investment component?

Variable universal life

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

Violation of the NJ Insurance Fraud Prevention Act

When would a misrepresentation on an insurance application be considered fraud?

When it was intentional

An insured owes $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 policy?

$50,000

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

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

All of the following of information about the applicant is identified in the general information section of a life insurance application EXCEPT

Education

Using names or titles that have tendency to misrepresent the true nature of a policy is an example of what illegal practice?

False advertising

When doing business in this state, an insurance company that is formed under the laws of another state is known as which type of insurer?

Foreign

Life insurance death proceed 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

Traditional IRA contributions are tax-deductible based on which of the following?

Owner's income

How must a replacing producer respond to an applicant wishing to replace existing life insurance?

The producer must provide the application with a Notice Regarding Replacement

Under an extended term nonforfeiture option, the policy cash value is converted to

The same face amount as in the whole life policy

When's transacting business in the state, an insurer formed under the law's of another country is known as:

Alien insurer

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

Amount of premium payment

All of the following statements are correct regarding credit life insurance, except:

Benefits are paid to the borrower's beneficiary.

An individual just borrowed $10,000 from his bank on a 5 year installment loan requiring monthly payments. What type of insurance policy would be best suited to this situation?

Decreasing Term

Which of the following will NOT be considered unfair discrimination by insurers?

Discriminating in benefits and coverage based on the insured habits and lifestyle

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

Dividends from a mutual insurer

An individual is purchasing a permanent life insurance policy with a face value of $25,000. While this is all the insurance they 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 available in the future?

Guaranteed insurability option

Who does an insurance agent represent?

Insurer

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

All of the following are general requirements of qualified plans except:

The plan must provide an offset for social security benefits

Provided that it is a first offense, what is the maximum penalty for failing to respond to a subpoena?

$5,000

What are the penalties for the first, second, and subsequent violation of the NJ Fraud Prevention Act, respectively?

$5,000, $10,000, $15,000

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

All of the following are examples of third party ownership of a life insurance policy except

An insured borrows money from the bank and make a collateral assignment of a part of the death benefit to secure the loan

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 practice has been provided, the report may contain all of the following information except the applicant's:

Ancestry

Which of the following premium payment modes will incur the lowest overall payment?

Annual

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?

Any form of life insurance

An insurer that holds a Certificate of Authority in the state in which it transacts business is considered a :

Authorized Insurer

Which of the following best describes fixed period settlement options?

Both the principal and the interest will be liquidated over a select period of time

How is the insurance guarantee association funded?

By its members-authorized insurers

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. The indicates that the life insurance policy had what provision?

Common disaster

If an insurer and an insured have a dispute about whether a particular loss is covered under a policy, which authority will settle the dispute?

Court System

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

Credit Insurance

An insurer publishes intimidating brochures that portray the insurer's competition as financially and professionally unstable. Which of the following best describes this act?

Illegal under any circumatances

An insurer receives a report regarding a potential insured that includes the insureds financial status, hobbies and habits. What type of report is that?

Inspection Report

If an insurer requirers a medical examination of an applicant in connection with the application for life insurance, who is responsible for paying the cost of the examination?

Insurer

A policy will pay the death benefit if the insured dies within the 20 year premium paying period, and nothing if death occurs after the 20 year period. What type of policy is this?

Level term

Which of the following individuals would most likely be issued a non-residential producer license?

Massachusetts Resident who sells Insurance full time in Boston, but wants to expand his customer base by becoming licensed in New Jersey

Which of the following is not true regarding policy loans?

Money borrowed from the cash value is taxable

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 would be considered an insurance transaction, except:

Obtaining an insurance license

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

Which of the following will be included in a policy summary?

Premium amounts, and surrender values

An insured pays $1,200 annually for her life insurance premiums. The insured applies this years $300 worth of accumulation dividends to next year's premium thus reducing it to $900. What option does this describe?

Reduction of premium

The 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 provision allows this?

Reinstatement Provision

If an agent fails to obtain the applicant's signature on the insurance application, what must the agent do?

Return the application to the applicant for the signature

The insurer discovers that one of the applicants for life insurance missed a couple of questions on the application. What must the insurer do with the application?

Return to applicant for completion

What significance did the US v. Southeaster Underwriters Association have on the insurance industry?

Revised the decision of Paul v. Virginia determining that the insurance is interstate commerce and should be regulated federally

Which type of beneficiary is changeable at any point?

Revokable

Upon policy delivery, the producer may be required to obtain any of the following EXCEPT

Signed waiver of premium

What type of life insurance policy generates immediate cash value?

Single premium

Children's riders attached to a whole life policy are usually issued what type of insurance?

Term

An individual applied for an insurance policy and paid for the initial premium. The insurer issued a conditional receipt. 5 days later, the applicant had to submit a medical exam. If the policy is issued, what would be the policies effective date?

The date of the medical exam

An employee is insured under her employer's group life plan. If she terminates her group life coverage, which of the following statements is INCORRECT:

The insured may choose to convert to term or permanent individual coverage

An employee quits his job on May 15th and doesn't convert his group life policy to an an individual policy for 2 weeks. He dies in a freak accident on June 1st. What best describes what will happen?

The insurer will pay the full death benefit from the group policy to the beneficiary.

An organization licensed as a producer business entity based in NY would like to transact insurance in NJ. Which of the following is true?

The organization will need to obtain a non-resident business entity license and it's producers will need to obtain non-resident licenses

If an insurer issued a policy based on the application that had 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

The paid-up addition option uses the dividend to:

To purchase a smaller amount of the same type of insurance on the same policy

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

U.S. v. Southeastern Underwriters Association