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A comprehensive set of questions and answers related to new jersey life insurance regulations. It covers various aspects of insurance licensing, producer responsibilities, replacement rules, advertising regulations, and the role of the new jersey banking and insurance commissioner. Valuable for individuals preparing for the new jersey life insurance licensing exam or seeking to understand the legal framework governing the insurance industry in the state.
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The McCarran-Ferguson Act was passed by Congress to - ✔✔Redefine the authority of the state and federal government to regulate the insurance industry The principle that insurance is not a transaction of commerce and so should be regulated by the state was established in: - ✔✔Paul v. Virginia In New Jersey, a producer who violates a New Jersey insurance law for the first time may be fined up to - ✔✔$5, The New Jersey Banking and Insurance Commissioner has the authority to do all of the following actions EXCEPT - ✔✔Establish insurance rates and schedules Which of the following statements is correct about an employment agreement between two producers? - ✔✔It must be in writing The New Jersey Banking and Insurance Commissioner may issue which of the following documents to an insurance producer as evidence of authority? - ✔✔A license A producer who employs another producer must take which of the following actions? - ✔✔Enter into a written employment agreement with the employee producer For a New Jersey insurance producer to charge a prospective insured for analyzing coverages, there must be a reasonable relationship between the fee and - ✔✔the nature of the services performed
A person failing to comply with a subpoena from the Commissioner, may be charged with - ✔✔Contempt To be eligible for a resident producers license an individual must meet which of the following requirements? - ✔✔Complete a course of education approved by the Banking and Insurance Commissioner unless a waiver is obtained from the department What is issued to an insurer, by the Commissioner, demonstrating it's authority to transact insurance business in the state? - ✔✔Certificate of authority When an insurer procures insurance for itself from another insurer it is called - ✔✔reinsurance In order to receive fees other than commissions, a life insurance producer acting as a consultant must first - ✔✔obtain a written memorandum from the prospect stating the amount of compensation A producer acting as an agent may take all of the following action EXCEPT: - ✔✔Place insurance with a company the producer does not represent A producer wishing to appeal the final order of the Commissioner would appeal to - ✔✔The Superior Court Which of the following producers does not need to satisfy CE credits? - ✔✔Nonresident Continuing education credit may be earned for completing which of the following courses? - ✔✔CLU designation courses
A voluntarily terminated producer license may be reinstated during the same license period if the producer takes which of the following actions? - ✔✔Completes a new license application A producers certification of license status contains all of the following information except: - ✔✔Place of birth The Banking and Insurance Commissioner may revoke the license of a producer who - ✔✔Uses the license primarily to obtain insurance for his or her family If a producer's license is revoked, he must wait how long before applying for reinstatement? - ✔✔ 5 years The New Jersey Life and Health Guaranty Association is derived from - ✔✔Assessment on member companies If a producer's license is suspended, he must wait how long before applying for reinstatement?
fine not to exceed - ✔✔$5,000 for the first offense; $10,000 for each subsequent offenses A producer who unknowingly engages in a prohibited trade practice, can be issued a fine not to exceed - ✔✔$1, If an insurer or producer violates a cease and desist order, the Commissioner could assess a penalty not to exceed - ✔✔$5, Making statements which are false and derogatory about the financial condition of the insurer is: - ✔✔defamation When the beneficiary of a life insurance policy is a minor, the insurer can pay the proceeds - ✔✔If a legal guardian has been appointed A branch office registration form must be filed with the Banking and Insurance Commissioner a MINIMUM of how many days before conducting business at the branch office? - ✔✔thirty If the Guaranty Association assumes management of an insolvent insurer, the maximum amount of death benefits for which they are liable is - ✔✔$500,000 per person If a producer changes their address, how many days do they have to notify the Department? - ✔✔ 30 Which of the following activities does not require a license? - ✔✔Scheduling appointments for producers to sell insurance
The replacement of an existing policy requires all of the following EXCEPT - ✔✔Notice that the owner can return the policy within 90 days for a full refund Which of the following statements is CORRECT? - ✔✔Creditors may attach the death benefits payable to insured's estate A producer is in violation of the Replacement regulation by doing which of the following? - ✔✔Advising the applicant to directly contact their existing insurer to cancel their existing policy What information is NOT required to be included in advertising material for a life product? - ✔✔The agent's compensation The purpose of advertising regulation is to - ✔✔Assure full and truthful disclosure to the public In a credit insurance policy, who is the beneficiary? - ✔✔The creditor Insurance advertising in local newspapers is regulated by the: - ✔✔New Jersey Department of Banking and Insurance Credit life insurance may be issued to a borrower in which of the following forms? - ✔✔Group term life A creditor collects payment from a borrower for a credit life policy, but the policy is
not issued. What action MUST the creditor take with the advance payment? - ✔✔Return it directly to the borrower According to New Jersey law, copies of insurance advertisements must be maintained - ✔✔At the company's office All of the following items may be considered forms of advertising for life insurance except: - ✔✔Buyer' Guides All of the following statements are correct about the Notice Regarding Replacement of Life Insurance EXCEPT that it - ✔✔Increases the opportunity for misrepresentation by an agent A policy illustration given at the time of sale does not typically include the - ✔✔Names of the beneficiary The primary purpose of the replacement regulation is to - ✔✔Protect policyowners from misrepresentation and loss of benefits What must decrease in a decreasing term policy? - ✔✔the death benefit When must insurable interest exist? - ✔✔at the time the producer writes an application on a proposed insured When does an applicant make an offer to an insurer? - ✔✔When they send an application with an initial premium
Is interest paid on a policy loan tax deductible? - ✔✔no What is an employer paid life insurance policy called? - ✔✔non contributory group life What is a tax free exchange of one life insurance policy or annuity for another called? - ✔✔ 1035 exchange What group life plan requires 75% of the eligible members to participate? - ✔✔contributory What does a buy and sell agreement do? - ✔✔Allows a business partner to purchase their partner's share of the business from their family/estate if the partner dies. At what age must owners of Traditional IRAs begin to receive payments from their retirement funds? - ✔✔ 70 1/ What factor does not impact Social Security retirement benefits? - ✔✔sex/gender What is a modification to a life policy called? - ✔✔a rider Who has the right to change the beneficiary? - ✔✔the policyowner Can a policyowner change the revocable beneficiary without their knowledge or consent? - ✔✔yes
What is the benefit of a modified whole life plan? - ✔✔a lower premium in the beginning years of the contract; permanent policy What is a 20 pay life policy? - ✔✔a policy that provides lifetime protection for an insured with premiums payable for 20 years What is an invalid mode of payment in a life policy? - ✔✔biweekly payments. (valid: annual, semiannual (every 3mo), monthly) What does a payor benefit rider do? - ✔✔temporarily waives the premium if the payor dies and the insured is a minor, up to a certain age A policy beneficiary that cannot be changed is called what? - ✔✔irrevocable beneficiary What does the conditional receipt do? - ✔✔states the terms of coverage during the underwriting process What is the provision that addresses misstatements made by an applicant on an application? - ✔✔incontestability clause When does the grace period begin? - ✔✔when the premium is due What is best used for estate planning purposes? - ✔✔survivorship life
What did the McCarran-Ferguson Act do? - ✔✔Redefined the authority of the state and federal government to regulate the insurance industry The Commissioner of the NJ Department of Insurance is appointed by whom? - ✔✔the govenor How many days does a producer have to notify the Department of an address change? - ✔✔ 30 days A producer who shares commission with a client may be found guilty of what? - ✔✔rebating Credit life insurance may be issued to a borrower in what form? - ✔✔group term life How many days is a temporary license in NJ valid for? - ✔✔up to 180 days How frequently must telemarketers update their registration with the National Do Not Call Registry? - ✔✔ 31 days An insurance producer who, for a fee or commission, represents a prospective insured for the purpose of obtaining them an insurance policy, best describes a? - ✔✔insurance broker A branch office registration form must be filed with the Banking and Insurance Commissioner a MINIMUM of how many days before conducting business at the branch office? - ✔✔ 30 days A business name authorization expires in how many days? - ✔✔ 90
A first time applicant is someone who has not been licensed as a producer for the previous months? - ✔✔ 12 When applying for a producer's license, an applicant must have passed the state licensing exam within how long from the date of their application for license? - ✔✔ 12 months What is true regarding the waiver of premium rider? - ✔✔there will be no change in the policy's rates, benefits or options other than that the insured no longer has to pay the premium What is true regarding a renewable term life insurance policy? - ✔✔An insurer must renew a renewable term policy at the policy owner's request regardless of the insurability status of the insured Do those who participate in group life insurance plans have to submit to a medical exam? - ✔✔no In what type of life insurance policy will the death benefit vary based on the performance of an underlying portfolio of securities? - ✔✔variable life Premiums paid on an individual life insurance policy are what? - ✔✔not tax deductible What is the CPI Index? (CPI-I) - ✔✔a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services
When would a change in premium due to a rate-up would normally be discussed with a client? - ✔✔at the time of policy delivery An insurance company that transfers risk to another company is called? - ✔✔the ceding company (the action is reinsurance) An application submitted without an initial premium is considered what? - ✔✔an invitation to make an offer If one party in the contract gives a legally enforceable promise, but not the other party, what kind of contract is it? - ✔✔unilateral contract The type of contract where one party creates the terms and the other party must accept them unconditionally is called? - ✔✔contract of adhesion What policy will pay the owner the face amount of the policy if the insured is alive at the end of a specified period? - ✔✔endowment What two death benefit options are offered in a universal life policy? - ✔✔level or increasing When is a policy considered mature? - ✔✔when the cash value becomes equal to the face value
What is true of a limited pay whole life policy? - ✔✔coverage continues after the policy is paid up In a universal life policy, what is deducted from the policy's cash value account to pay for the cost of insurance protection? - ✔✔mortality charge What policy is best used for estate planning purposes? - ✔✔survivorship life A policy where the first person dies and the second person is the beneficiary is called what? - ✔✔joint life What policy doesn't have a cash value accumulation? - ✔✔increasing term What benefit comes with buying a convertible term life insurance policy? - ✔✔it allows for exchange to a whole life policy without evidence of insurability