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NJ Life Producer EXAM QUESTIONS AND ANSWERS
UPDATED (202 5 /202 6 ) (VERIFIED ANSWERS)
Under a Traditional IRA, interest earned is taxed - ✔✔upon distribution Which of these statements regarding the annuitants is CORRECT? - ✔✔The annuitant's life expectancy determines the annuity payment What will the beneficiary receive is annuitant dies during the accumulation period? - ✔✔The greater the accumulated cash value or the total premium paid Which of the following actions is REQUIRED by an agent who is replacing an existing life insurance policy? - ✔✔Submit to to the replacing insurer a list of the policies to be replaced All pre-licensing course completion certificate are valid for a period of? - ✔✔ 2 years A partial surrender is allowed in which of the following life policies? - ✔✔Universal life What happens to interest earned if the annuitant dies before the payout start date? - ✔✔It is taxable How are annuities given favorable tax treatment? - ✔✔gains are taxed at distribution Fixed period settlement options are considered to be a form of a(n) - ✔✔annuity Matt is applying for life insurance and requests a double indemnity rider. A double indemnity benefit will be payable to Matt's beneficiary if Matt - ✔✔dies instantly from a car accident A modified insurance contract which accumulates cash values higher than the IRS will allow - ✔✔A life insurance contract which accumulates cash values higher than the IRS will allow
A(n) insurance company is one that was formed under the laws of a state other than New Jersey. - ✔✔Foreign An example of a tax-qualified retirement plan would be a(n) - ✔✔defined contribution plan How soon can the benefit payments begin with a deferred annuity? - ✔✔a minimum of 12 months after date of purchase A securities license is required for a life insurance producer to sell - ✔✔Variable Life Insurance A whole life insurance policy accumulates cash value that becomes - ✔✔the policy loan value which the insured may borrow against The coverage, conditions, and limitations in the master policy of a group contract can be found in which document? - ✔✔Certificate of coverage and benefits Which of the following policies does NOT build cash value? - ✔✔term When the word "insurance" appears in a producer's business name, which of the following words cannot be approved? - ✔✔company An example of an unfair method of competition is - ✔✔overstating the benefits of an insurance company Under a Modified Endowment Contract, what are the likely tax consequences? - ✔✔Pre-death distributions will become taxable When a decreasing term policy is purchased, it contains a decreasing death benefit and - ✔✔level premiums
All of these are considered sources of information that can assist an underwriter in determining whether or not to accept a risk EXCEPT - ✔✔National Association of Insurance Underwriters Replacement regulation is designed to protect the interests of - ✔✔policyowner Who were Keogh plans designed to provide pension benefits for? - ✔✔The self-employed Johan the producer charged a fee to a sales prospect for analyzing insurance coverages. According to New Jersey law, as reasonable relationship must exist between the fee and the - ✔✔substance of the services performed When does a life insurance policy typically become effective? - ✔✔when the completed application is signed and initial premium is collected Which of these is considered to be a document that describes the critical segments of a life insurance policy? - ✔✔Policy summary Jay the producer, is giving insurance advice regarding a prospects existing coverage. If Jay were to receive a fee for this advice (in addition his commission) he MUST - ✔✔obtain a signed memorandum from the prospect acknowledging the amount of compensation An agent is required to keep replacement forms on file for at least ____ years - ✔✔ 5 Which type of policy combines the flexibility of a universal life policy with investment choices? - ✔✔Variable universal life policy A waiver of premium rider allows an insured to waive premium wages if the the insured is - ✔✔Completely and permanently disabled A non-contributory health plan helps the insurer avoid - ✔✔Adverse Selection
The suicide clause of a life insurance policy states that if an insured commits suicide within a stated period from the policy's inception, the insurer will only be liable for a return of premiums paid - ✔✔minus indebtedness and without interest What is created after policy proceeds are obtained in a lump sum and then immediately invested? - ✔✔estate What guarantees that the statements supplied by an insurance applicant are true? - ✔✔warranty A guaranteed issue insurance policy has no - ✔✔medical underwriting Maria the agent would like to advertise an annuity product on a highway billboard. Which of the following must be included in the advertisements? - ✔✔Her name A rollover from a traditional IRA to another must be done within days to avoid tax consequences. - ✔✔ 60 days Kurt is an active duty serviceman who was recently killed in an accident while home on leave. Which military service exclusion clause would pay upon his death? - ✔✔Results An endorsement found in an insurance plan which modifies the provisions of the policy is called a(n) - ✔✔rider How are contributions made to a Roth IRA handled for tax purposes? - ✔✔Not tax deductible Which of the following enables a life policy to be replaced with another life policy and results in the postponement of the tax consequences. - ✔✔Section 1035 exchange A tax-free Section 1035 Exchange of a life insurance policy to a different policy is permitted if it occurs - ✔✔from insurer to insurer and no cash is received by the policyowner
Carmen's individual life insurance policy has recently lapsed. She may reinstate her policy within years - ✔✔ 3 years When new Life Insurance is to be purchased, the solicitation will be considered a replacement transaction if, in conjunction with the sale, existing Life Insurance will be subject to borrowing for amounts exceeding which of the following? 10% of the policy's loan value 75% of the policy's loan value 25% of the policy's loan value 50% of the policy's loan value - ✔✔25% of the policy's loan value An insurance company may only pay a sales commission to - ✔✔individuals licensed by the state The period in which there are no Social Security benefits for the surviving spouse is called the - ✔✔blackout period A life insurance rider that allows an individual to purchase insurance as they grow older, regardless of insurability is - ✔✔guaranteed insurability rider What is involved when a life insurance company policy has been backdated? - ✔✔Making the policy effective on an earlier date than the present Which of these is affected by the frequency of an insurance policy's premium payments? - ✔✔cost Which of these would be the best example of a limited pay life insurance policy? - ✔✔whole life policy with premiums paid up after 20 years The statement that best describes the relationship between the premiums of a whole policy and the premium payments is - ✔✔The shorter the payment period, the higher the premium
An insurance broker is someone who represents which of the following? - ✔✔an insured or prospective insured Insurance licenses are intended to be issued for the purpose of authorizing the transaction of business with members of the general public and not primarily allowing someone to benefit from commissions on business which insures their personal interests. This is a description of which of the following? - ✔✔controlled business A type of group that has a constitution and by laws and has been organized for purposes other than obtaining insurance is called a(n) - ✔✔Association or labor groups Field underwriting performed by the producer involves - ✔✔completing the application and collecting initial premium In life insurance, replacing companies must keep records of all replacement materials on file for how long? - ✔✔5 years, or until the next regular examination by the commissoner Proceeds from a life insurance policy are protected from the beneficiary's creditors by which clause? - ✔✔Spendthrift clause All of these are settlement options for life insurance policies EXCEPT - ✔✔Extended term What is the automatic continuance of insurance coverage referred to as? - ✔✔renewal Statements made by an insurance applicant on an application are considered to be - ✔✔representations Karen is a producer who has obtained personal information about a client without having a legitimate reason to do so. Under the McCarran-Ferguson Act, what is the minimum penalty for this? - ✔✔$10, Which of the following is considered to be the period when the accumulated value in an annuity is paid out? - ✔✔Annuitization phase
The New Jersey Life and Health Insurance Guaranty Association is - ✔✔funded by assessments on member companies Shirley has a $500,000 10 - year non-renewable level term life policy. If she dies 15 years after the policy's inception date, how much will her beneficiary receive? - ✔✔Nothing How often must an insurance producer's license in New Jersey be renewed? - ✔✔Every two years Shawn, Mike, and Dave are brothers who have a $100,000 "first to die" joint life policy covering all three of their lives. If Mike dies first, the policy proceeds - ✔✔will no longer provide insurance protection Where would policy proceeds be paid if both the insured and primary beneficiary were killed in the same accident? - ✔✔contingent beneficiary The automatic premium loan provision authorizes an insurer to withdraw from a policy's cash value the amount of - ✔✔past due premiums that have not been paid by the end of the grace period Which of the these is NOT considered to be a nonforfeiture option on a whole life insurance policy? - ✔✔interest only Joanne has a $100,000 whole life policy with an accumulated $25,000 of cash value. She would like to borrow $15,000 against the cash value. Which of the following statements is TRUE? - ✔✔Net death benefit will be reduced if the loan is not repaid Ron has a life insurance policy with a face value of $100,000 and a cost of living rider. If the consumer price index has gone up 4%, how much may Ron increase the face value of the policy? - ✔✔$4, What is the name of the provision which states that a copy of the application must be attached to the policy when issued? - ✔✔Entire contract
Upon policy delivery, which of the following must a producer have an applicant sign if no initial premium was collected with the life insurance application? - ✔✔a good health statement How many months can a life insurance policy normally be backdated from the date of application? - ✔✔ 6 A document providing basic information about life insurance policies in general is a called a - ✔✔Buyer's Guide A beneficiary change can occur - ✔✔normally at any time during the policy term What is an insurance policy's grace period? - ✔✔Period of time after the premium is due but the policy remains in force
