New Jersey Life & Health Insurance License, Practice Exams

Filing a false statement of an insurer's financial condition with a public official with intent to deceive is prohibited under which section?

1. N.J.S.A. 17B:30-6 (twisting)
2. N.J.S.A. 17B:30-4 (false advertising)
3. N.J.S.A. 17B:30-5 (false financial statements) ✓
4. N.J.S.A. 17B:30-9 (stock operations)

Why: N.J.S.A. 17B:30-5 prohibits filing, making, or circulating any false statement of the financial condition of an insurer with intent to deceive, and making false entries in an insurer's books with intent to deceive examiners or officials.

An employee gets married, a HIPAA 'special enrollment' event. The employee may:

1. Never add a new spouse to an existing plan
2. Only enroll at the next annual open enrollment period
3. Enroll only after a 12-month waiting period
4. Enroll in the group plan outside the normal open enrollment ✓

Why: HIPAA special enrollment lets employees enroll after qualifying life events (marriage, birth, loss of other coverage) without waiting for open enrollment.

The HIPAA Privacy Rule primarily protects:

1. Producers against errors-and-omissions lawsuits by clients
2. Individuals' protected health information from improper disclosure ✓
3. Employers from the cost of group health premiums
4. Insurers from paying claims they consider disputed or fraudulent

Why: HIPAA's Privacy Rule safeguards protected health information (PHI), generally requiring authorization before disclosure.

A business has an insurable interest in a key employee because:

1. Every employer is legally required to insure all of its workers
2. Insurable interest exists between any two parties at any time
3. The firm would suffer a financial loss if that employee died ✓
4. The employee personally requested the coverage in writing

Why: A business has insurable interest in employees whose death would cause it economic loss, supporting key person and buy-sell coverage.

A nonresident producer license allows a producer to:

1. Waive the resident state's prelicensing and examination requirements
2. Sell only inside the producer's home state
3. Solicit business anywhere without holding a resident license
4. Transact insurance in a state other than their home state ✓

Why: A nonresident license lets an already-licensed producer do business in another state, typically via reciprocity with their resident license.

A 'jumping juvenile' policy is characterized by a face amount that:

1. Increases automatically at a stated age without a premium increase ✓
2. Is invested in mutual fund subaccounts the child's parents select each year
3. Declines steadily each year until the insured child reaches the age of majority
4. Is payable only after the insured child has passed a paramedical exam at age 18

Why: A jumping juvenile policy's face amount jumps (e.g., fivefold) at the age of majority with no increase in premium and no new evidence of insurability.

A probationary period in a disability or health policy is a span after issue during which:

1. No premium is due from the newly insured policyowner
2. Losses from sickness are not yet covered ✓
3. Benefits are automatically paid without any proof of loss
4. The insurer may cancel the policy for any reason at all

Why: The probationary period is an initial waiting span (often for sickness, not accidents) before certain new claims become payable.

A consumer who buys insurance through a producer representing the buyer (not the insurer) is working with a(n):

1. Adjuster
2. Underwriter
3. Captive agent
4. Broker ✓

Why: A broker legally represents the insurance buyer; an agent represents the insurer.

A New Jersey group life insured terminates employment and dies four days later, during the 31-day conversion window, before applying for the individual policy. What does N.J.S.A. 17B:27-72(k) require?

1. The estate must first apply for the individual policy and pay its first premium
2. No benefit is payable, since no individual policy was ever issued
3. The amount he could have converted is payable as a claim under the group policy ✓
4. Only a refund of the group premium paid for the final month

Why: N.J.S.A. 17B:27-72(k) provides that if the person dies during the conversion period before the individual policy becomes effective, the amount he would have been entitled to convert is payable as a claim under the group policy, whether or not application or first premium was made.

A New Jersey insured's age was understated on the application, so a lower premium was charged. Upon the insured's death, how must the insurer settle the claim under the misstatement-of-age provision?

1. Refund every premium paid, with interest at the policy's guaranteed rate, and pay no death benefit
2. Pay the full face amount and then bill the estate for the premium shortfall plus interest
3. Deny the claim entirely, because understating age on the application is a material misrepresentation
4. Pay the amount the premium actually paid would have purchased at the correct age ✓

Why: N.J.S.A. 17B:25-6 requires that if age is misstated, any amount payable shall be what the premium paid would have purchased at the correct age.

The cash value in a permanent life insurance policy accumulates:

1. As taxable income each year
2. Tax-free with no conditions
3. Only when dividends are paid
4. Tax-deferred ✓

Why: Cash value grows tax-deferred while the policy is in force.

A worker dies, leaving a spouse caring for their 10-year-old child. Social Security survivor benefits are:

1. Payable only after the spouse turns 65
2. Payable to the surviving spouse and child ✓
3. Limited to a one-time lump sum only
4. Not available for dependent children

Why: Survivor benefits are payable to a surviving spouse caring for the deceased's young child and to the dependent child, if the worker was insured.

Under N.J.S.A. 17B:27-46, the outer time limit for bringing suit on a group health policy is that no action shall be brought at all unless brought within:

1. 2 years from the date on which the insurer denies the claim in writing
2. 1 year from the date the loss occurred
3. 3 years from the expiration of the time within which proof of loss is required ✓
4. 6 years from the date the policy was issued

Why: Section 27-46 bars any action unless brought within 3 years from the expiration of the time within which proof of loss is required by the policy.

Which investigatory powers does N.J.S.A. 17:22A-45 grant the Commissioner?

1. Only the power to refer suspected violations to the Attorney General, who alone may administer oaths and compel a licensee's testimony
2. The power to conduct investigations, administer oaths, interrogate licensees and others, and issue subpoenas without fee ✓
3. The power to arrest an unlicensed seller and to seize business records without a warrant during a market conduct examination
4. Only the power to suspend or revoke a license after a hearing

Why: N.J.S.A. 17:22A-45(a) gives the Commissioner power to conduct investigations, administer oaths, interrogate licensees and others, and issue subpoenas in connection with any investigation, hearing or proceeding under the Act, without fee.

Under N.J.S.A. 17B:26-16, optional policy provisions appearing in sections 17B:26-17 through 17B:26-27 generally must use:

1. Any wording the insurer prefers, so long as the completed form is filed with the commissioner within 30 days after the first policy is delivered
2. The words in which they appear in the applicable statutory section, or commissioner-approved wording not less favorable to the insured ✓
3. Only the model wording adopted by the National Association of Insurance Commissioners, which the commissioner must accept without further review
4. A plain-language summary selected by the soliciting producer and attached to the policy in place of the statutory optional-provision text

Why: N.J.S.A. 17B:26-16 requires optional provisions to be in the statutory words, or a commissioner-approved corresponding provision of different wording not less favorable to the insured.

An owner withdraws from a deferred annuity during its surrender-charge period. The result is:

1. Forfeiture of all interest credited to date
2. No charge at all, because annuity withdrawals are always penalty-free
3. A surrender charge on the amount above any free-withdrawal allowance ✓
4. Immediate annuitization of the entire contract into a life income option

Why: Withdrawals beyond the free-withdrawal amount during the surrender period incur a declining surrender charge.

A 52-year-old withdraws $8,000 of gain from a nonqualified annuity. The IRS penalty (besides income tax) is:

1. $800 ✓
2. $1,600
3. $400
4. $0

Why: Premature distributions before 59½ incur a 10% penalty: 10% × $8,000 = $800.

A policy has an accidental death benefit rider. The insured dies in a car accident. The beneficiary receives:

1. Nothing, since auto accidents are excluded
2. Only the policy's accumulated cash value at the date of death
3. The face amount plus the additional accidental death benefit ✓
4. The face amount reduced by half because the death was accidental, with no additional benefit

Why: For accidental death within the rider's terms, the beneficiary receives the face amount plus the extra accidental death benefit.

For group term life insurance, the cost of employer-provided coverage exceeding $50,000 is:

1. Taxed only when the employee eventually leaves the company
2. Exempt from tax because all group life is a tax-free benefit
3. Imputed as taxable income to the covered employee ✓
4. Fully deductible by the employee on their personal return

Why: Employees are taxed (imputed income, via IRS Table I) on the cost of employer-paid group term coverage above $50,000.

Under 17:33A-4(a)(6), preparing or presenting a certificate of insurance that contains false or misleading information about the policy it references is:

1. Permitted as a courtesy document
2. Outside the scope of the act
3. A violation of the Insurance Fraud Prevention Act ✓
4. Only a violation if money changes hands

Why: Section 17:33A-4(a)(6) makes it a violation to prepare, present or cause to be presented a certificate of insurance containing false or misleading information about the policy to which it refers, or to assist or conspire in doing so.

A 10% IRS early-distribution penalty on a traditional IRA is generally waived if the owner:

1. Becomes totally disabled ✓
2. Simply decides they would prefer to access the funds early
3. Changes employers and rolls the balance into a new account
4. Has held the account for at least five consecutive years

Why: Exceptions to the 10% penalty include death, total disability, certain medical/first-home/education amounts, and substantially equal periodic payments.

Under N.J.S.A. 17B:26-47, to stop an insurer from issuing policies that do not conform to the minimum-standards regulations, the commissioner may:

1. Revoke the insurer's certificate of authority immediately and without notice or hearing
2. Petition the Superior Court for an order of liquidation and the appointment of a receiver over the insurer's assets
3. Through the Attorney General, institute an action in the Superior Court to enjoin and restrain the insurer ✓
4. Refer the matter for criminal prosecution of the insured who accepted the nonconforming policy

Why: N.J.S.A. 17B:26-47 allows the commissioner, through the Attorney General, to bring an action in Superior Court to enjoin and restrain a noncomplying insurer, proceeding in a summary manner.

Under N.J.S.A. 17B:24-2, a minor not less than 18 years of age may give a valid acquittance for insurance or annuity payments up to what aggregate amount in any one calendar year?

1. $10,000
2. $25,000
3. $2,000
4. $5,000 ✓

Why: N.J.S.A. 17B:24-2(b)(2) deems a minor not less than 18 years of age competent to receive and give acquittance for payments aggregating not more than $5,000 in any one calendar year (the limit is $2,000 for a minor at least 15).

Under N.J.S.A. 17B:25-35, which annuity is one in which the insurer invests the considerations in a separate account based on the owner's stated risk level and which may lose some or all of the owner's investment?

1. Immediate annuity
2. Variable annuity ✓
3. Fixed annuity
4. Deferred annuity

Why: N.J.S.A. 17B:25-35 defines a 'variable annuity' as one invested in a separate account based on the owner's stated investment risk, which may lose some or all of the owner's investment.

A New Jersey resident owns a variable annuity whose value is tied to a separate account and bears the investment risk. If the insurer becomes insolvent, how does the Guaranty Association treat the variable (non-guaranteed) portion?

1. It is excluded, because the portion not guaranteed by the insurer (where the owner bears the risk) is not covered ✓
2. It is fully covered, up to the $500,000 aggregate limit that the Act applies to all benefits payable for any one life
3. It is covered, though not guaranteed by the insurer and the owner bears the risk, only if the contract owner is a New Jersey resident aged 65 or older on the date of the liquidation order
4. It is covered up to $250,000 in present value

Why: N.J.S.A. 17B:32A-3(c) excludes any portion of a policy or contract not guaranteed by the member insurer, or under which the risk is borne by the policy or contract owner — i.e., the variable portion.

A group plan's 'probationary period' (waiting period) is the time a new employee must:

1. Wait after filing a claim before the insurer must pay it
2. Remain disabled before any disability benefit becomes payable
3. Hold the coverage before pre-existing conditions are covered
4. Wait after being hired before becoming eligible to enroll ✓

Why: The probationary/waiting period is the length of employment required before a new hire becomes eligible to enroll in the group plan.

The Medicare General Enrollment Period (GEP) runs:

1. On a single fixed date set individually by each state
2. From October 15 to December 7 every year
3. January 1 through March 31 each year ✓
4. Only during the week of the beneficiary's birthday

Why: Those who miss their IEP can sign up during the GEP (Jan 1–Mar 31), with coverage beginning later and a possible late penalty.

Under the New Jersey Guaranty Association Act, the present value of annuity benefits covered per life (including net cash surrender/withdrawal values) is limited to what maximum?

1. $250,000
2. $100,000
3. $300,000
4. $500,000 ✓

Why: N.J.S.A. 17B:32A-3(e)(2)(b) limits coverage to $500,000 in present value of annuity benefits, including net cash surrender and net cash withdrawal values.

A producer who represents only one insurer under an exclusive contract is a:

1. Public adjuster retained by the claimant
2. Fee-based insurance consultant
3. Captive (exclusive) agent ✓
4. Independent broker under the American agency system

Why: A captive (career/exclusive) agent represents a single insurer; an independent agent or broker may place business with several.

A flexible-premium deferred annuity allows the owner to:

1. Make varying contributions over time before payouts begin ✓
2. Fund the contract with a single premium at issue and make no further deposits, as an SPDA requires
3. Direct every dollar into FDIC-insured bank certificates
4. Start income payments within 30 days of the first deposit

Why: An FPDA accepts ongoing, variable contributions during accumulation, with income deferred to a later date.

A 'life with 10-year period certain' annuity:

1. Pays for life but guarantees at least ten years of payments ✓
2. Pays income for only ten years and then stops entirely
3. Pays nothing at all if the annuitant dies during payout
4. Is functionally identical to a straight life-only annuity

Why: It pays for the annuitant's life and guarantees a minimum number of years of payments to a beneficiary.

An insurer holding a certificate of authority to transact business in a state is said to be:

1. Reciprocal
2. Admitted (authorized) ✓
3. Alien
4. Nonadmitted (unauthorized)

Why: An admitted/authorized insurer holds a certificate of authority; a nonadmitted insurer does not.

A long-term care policy has a 90-day elimination period. Benefits begin:

1. After 90 days of qualifying care the insured pays for ✓
2. After a one-year waiting period measured from the policy's effective date
3. Only after the insured turns 80
4. Immediately on the first day of any care, because the 90 days apply only to the policy's lifetime maximum

Why: The elimination period is a deductible in days; the insured covers care during it, and benefits start afterward.

Current assumption (interest-sensitive) whole life differs from traditional whole life because its premiums and cash values:

1. Adjust with current interest and mortality experience ✓
2. Are fixed by contract and can never be changed for the life of the policy
3. Decrease automatically each year until the policy becomes paid up
4. Are invested entirely in equity sub-accounts selected by the policyowner

Why: Current assumption whole life uses current interest and mortality assumptions, so premiums and cash values can be redetermined periodically.

Under the Insurance Fraud Prevention Act, a 'Pattern' of violations means:

1. Ten violations involving different victims
2. Five or more related violations of the act ✓
3. Any single intentional violation
4. Two or more violations within one year

Why: Section 17:33A-3 defines 'Pattern' as five or more related violations of the act, where violations are related if they involve the same victim or the same or similar actions.

Under 17:33A-4(g), a business that purposely or knowingly makes a false statement to evade the full payment of insurance premiums:

1. Is liable only if an employee complains
2. Is exempt because no claim was filed
3. Has committed only a tax violation
4. Violates the Insurance Fraud Prevention Act ✓

Why: Section 17:33A-4(g)(1) makes it a violation for a person, organization or business to purposely or knowingly make a false or misleading statement or submission for the purpose of evading the full payment of insurance benefits or premiums.

Medicare Supplement (Medigap) policies sold in most states are:

1. Custom-designed individually for each applicant's medical history
2. Available only to people who also qualify for full Medicaid
3. Identical to Medicare Advantage plans in every meaningful respect
4. Standardized into plans identified by letters such as A through N ✓

Why: Medigap plans are standardized (lettered A–N in most states), so the same lettered plan offers the same core benefits regardless of insurer.

A licensed producer is called to active military service and cannot complete renewal procedures. What does N.J.S.A. 17:22A-33 permit?

1. A grace period of six months after discharge in which to pay the renewal fee
2. Transfer of the license to a spouse or other family member for the duration of the deployment
3. The producer may request a waiver of the renewal procedures, and may also request waiver of examination requirements or sanctions for noncompliance ✓
4. Automatic and permanent cancellation of the license upon entry into active military service, with a new original application and a new examination required upon return to civilian life

Why: N.J.S.A. 17:22A-33(d) allows a producer unable to comply due to military service or other extenuating circumstance (such as long-term medical disability) to request a waiver of renewal procedures and of any examination requirement or fine/sanction.

An insured and the primary beneficiary die together in a car accident, and the order of death cannot be determined. Under the common disaster clause, the proceeds go to:

1. The insurer, which retains the proceeds as an unclaimed death benefit
2. The primary beneficiary's own named contingent payee
3. The contingent beneficiary (or the insured's estate) ✓
4. The primary beneficiary's estate, since that beneficiary was alive when the policy was issued

Why: The common disaster provision presumes the insured survived the beneficiary, so proceeds pass to the contingent beneficiary or the insured's estate.

Under N.J.S.A. 17B:26A-6, the Commissioner may extend the initial 30-day review period for a Medicare supplement form by giving written notice before it expires. The maximum additional extension is:

1. Not more than 15 additional days
2. Not more than 60 additional days
3. Not more than 30 additional days ✓
4. An unlimited period at the Commissioner's discretion

Why: Section 26A-6(a)(3) allows the Commissioner to extend the 30-day period by not more than 30 additional days by written notice given before the initial period expires.

For what maximum period may the Commissioner issue a temporary producer license under N.J.S.A. 17:22A-37?

1. A period not to exceed two years
2. A period not to exceed 90 days
3. A period not to exceed one year
4. A period not to exceed 180 days ✓

Why: N.J.S.A. 17:22A-37(a) authorizes a temporary producer license for a period not to exceed 180 days, without an examination, where necessary to service an insurance business.

Under N.J.S.A. 17B:27A-19, every small employer carrier must, as a condition of transacting business in New Jersey, offer to every small employer:

1. A custom plan individually designed for each small employer's workforce
2. At least three of the health benefit plans established by the board ✓
3. Every health benefit plan the carrier offers anywhere in the country
4. Exactly one standard plan, selected each year by the carrier and filed with the board

Why: Section 27A-19(a) requires every small employer carrier to offer at least three of the health benefit plans established by the board.

A withdrawal of gain from a nonqualified deferred annuity before age 59½ generally triggers:

1. Tax-free treatment because annuities are always exempt
2. A flat 20% capital-gains tax on the entire account value
3. Loss of the contract and forfeiture of all principal paid in
4. A 10% IRS penalty plus ordinary income tax on the gain ✓

Why: Premature distributions of annuity gain before 59½ incur a 10% penalty plus ordinary income tax; nonqualified annuity earnings come out LIFO (gain first).

An applicant wants coverage that pays an increasing death benefit to keep pace with inflation. The best choice is a policy or rider providing:

1. A return-of-premium rider refunding paid premiums
2. A cost-of-living (increasing) benefit ✓
3. A level face amount for life
4. Decreasing term matched to a mortgage balance

Why: A cost-of-living/increasing benefit raises the death benefit over time to offset inflation.

An endowment policy is distinguished by the fact that it:

1. Pays the face amount at a set maturity date if the insured is still living ✓
2. Decreases its face amount steadily over the policy's term
3. Provides only temporary coverage that expires with no value
4. Invests the entire premium in the insurer's separate investment accounts chosen by the owner

Why: An endowment pays the face amount either at the insured's death or upon reaching the maturity date while living; modern tax rules limit their use.

A policyowner names their estate as beneficiary. A drawback is that the proceeds:

1. Become taxable income to the heirs at their own ordinary income tax rates
2. Are automatically forfeited to the state
3. May be subject to probate and the insured's creditors ✓
4. Cannot be paid at all by the insurer

Why: Naming the estate exposes proceeds to probate and creditor claims; naming a person avoids that.

Under the Insurance Fraud Prevention Act, 'Statement' is defined broadly to include which of the following?

1. Only writings filed in a court proceeding, such as pleadings, affidavits and deposition transcripts offered to support a claim
2. Only oral statements made under oath to an investigator or to the insurer, together with testimony given at an examination under oath
3. Only sworn proofs of loss submitted to the insurer
4. Applications, proofs of loss, bills, estimates, diagnoses, X-rays, test results and other evidence of loss, injury or expense ✓

Why: Section 17:33A-3 defines 'Statement' to include applications, writings, notices, proofs of loss, bills, invoices, estimates of property damage, diagnoses, prescriptions, hospital/physician records, X-rays, test results and other evidence of loss, injury or expense.

According to N.J.S.A. 17:22A-28, a "license" issued by the Commissioner:

1. Guarantees the holder an appointment with at least one authorized insurer writing the lines listed on it
2. Automatically appoints the producer to every insurer admitted in this State for the lines of authority shown
3. Itself does not create any authority — actual, apparent or inherent — in the holder to represent or commit an insurer ✓
4. Creates apparent authority in the holder to bind coverage for any insurer writing the licensed lines, up to the limits filed with the Department

Why: The Act states the license is a document authorizing a person to act as a producer for specified lines, but the license itself does not create any authority, actual, apparent or inherent, to represent or commit an insurer.

A preferred provider organization (PPO) plan generally allows members to:

1. Receive a fixed cash amount per day instead of expense reimbursement
2. See only network providers, with no out-of-network coverage at all
3. Visit any provider but only after a primary-care physician referral
4. Use out-of-network providers at a higher cost, with no referral needed ✓

Why: A PPO covers care from out-of-network providers at higher cost sharing and does not require a gatekeeper referral; an EPO covers in-network only.

What background screening does N.J.S.A. 17:22A-32 require of a New Jersey producer license applicant?

1. Submission of name, address, fingerprints, and written consent for a criminal history record background check ✓
2. A letter of reference from a licensed producer who has known the applicant for at least three years
3. A drug screening administered by a laboratory approved by the Department of Health
4. A consumer credit report showing no unsatisfied judgments, submitted at the applicant's expense, together with a written explanation of any bankruptcy filed within the past seven years

Why: N.J.S.A. 17:22A-32(e) requires the applicant (and controlling owners/officers of a corporation or partnership) to submit name, address, fingerprints, and written consent for a criminal history record background check, with the applicant bearing the cost.

A blanket health policy is designed to cover:

1. One named individual and that person's immediate dependents only
2. Retirees already enrolled in both Medicare Parts A and B who want their Part A deductible paid
3. Only those employees who have passed a full individual medical examination paid for by the employer
4. A group of people who are not individually named, such as passengers or students ✓

Why: A blanket policy covers a constantly changing group of unnamed people defined by a relationship (airline passengers, students, sports teams).

By applying for and receiving a nonresident license, a nonresident producer is deemed under N.J.S.A. 17:22A-34 to have:

1. Consented to an annual audit of his personal financial records by an examiner the Commissioner designates, conducted at the producer's own expense
2. Agreed to maintain a premium trust account in a New Jersey bank
3. Waived all right to a hearing on disciplinary action taken in this State
4. Appointed the Commissioner as agent to receive service of legal process arising out of New Jersey insurance transactions ✓

Why: N.J.S.A. 17:22A-34(f) deems each licensed nonresident producer to have appointed the Commissioner as agent to receive service of original legal process in New Jersey for causes of action arising out of transactions under the license.

Under 17:23A-15(c), at a hearing under the Insurance Information Practices Act, the Commissioner has the power to:

1. Impose a criminal sentence of up to 18 months' imprisonment on a person who violates the act
2. Order the liquidation of any insurance institution that refuses to correct its recorded personal information
3. Suspend the operation of the Administrative Procedure Act for the duration of the proceeding
4. Subpoena witnesses, compel their attendance, and require production of relevant records ✓

Why: Section 17:23A-15(c) gives the Commissioner power to administer oaths, examine witnesses, receive evidence, and subpoena witnesses and require production of books, papers, records and other relevant documents.

The 'conformity with state statutes' provision states that any policy provision in conflict with the law of the state where the insured lives is:

1. Enforceable exactly as written, since the parties' own agreement overrides state insurance law
2. Grounds for the insurer to cancel the policy
3. Void, voiding the entire policy back to its issue date
4. Automatically amended to meet the minimum requirements of that statute ✓

Why: This provision deems any conflicting provision amended to conform to the minimum statutory requirements of the insured's state.

In determining the amount of coverage by the 'human life value' approach, a producer calculates the:

1. Total of the family's debts, final expenses, and education goals
2. Largest annual premium the client's budget allows
3. Cash value the policy will build by age 65
4. Present value of the insured's expected future earnings ✓

Why: Human life value bases coverage on the present value of future income; the needs approach totals specific obligations instead.

If the Commissioner finds that the public interest requires immediate action before a hearing is completed, N.J.S.A. 17:22A-45 permits him to:

1. Refer the matter to the NAIC, which may issue an emergency cease and desist order binding in every state where the producer holds a resident or nonresident license
2. Enter an appropriate (including ex parte) order effective pending completion of the hearing, subject to an application to vacate on 10 days' notice ✓
3. Permanently revoke the license by summary order, after which the licensee's only remedy is a direct appeal to the Appellate Division of the Superior Court
4. Take no action of any kind, because the Act permits an order of any sort to issue only after the hearing has been completed and the evidentiary record closed

Why: N.J.S.A. 17:22A-45(d) authorizes an interim order (which may be entered on ex parte proofs) effective pending the hearing, subject to an application to vacate upon 10 days' notice, with a preliminary hearing within 20 days; the Commissioner may also seek a Superior Court injunction.

A producer was properly licensed at the time he sold a policy but has since let his license lapse. Under N.J.S.A. 17:22A-41, may renewal (deferred) commissions on that policy still be paid to him?

1. No — every payment of renewal or deferred commissions must stop on the lapse date, because subsection (a) looks to whether the producer is licensed on the date the commission is actually paid rather than the date of sale
2. Yes — renewal or deferred commissions may be paid if the person was required to be licensed and was so licensed at the time of the sale, solicitation or negotiation ✓
3. Only if the Commissioner grants prior written approval on an application filed within 30 days of the lapse
4. Only if the producer reinstates the lapsed license within 90 days of its expiration date

Why: N.J.S.A. 17:22A-41(c) permits renewal or other deferred commissions to be paid where the person was required to be licensed and was so licensed at the time of the sale, solicitation or negotiation.

Reinsurance is best described as:

1. One insurer transferring part of its risk to another insurer ✓
2. A state fund that pays claims when an insurer becomes insolvent
3. The process of reinstating a policy that previously lapsed for nonpayment
4. An insured purchasing a second policy from a competing company

Why: Reinsurance lets the original (ceding) insurer transfer some risk to a reinsurer, stabilizing results and increasing capacity.

Pension maximization is a strategy in which a retiree:

1. Takes the larger single-life pension and buys life insurance to protect the spouse ✓
2. Delays starting the pension indefinitely in order to keep earning additional years of service credit
3. Withdraws the entire pension as a lump sum, drops all coverage, and self-insures the survivor need
4. Always elects the reduced joint-and-survivor pension on the view that it is the safest possible choice

Why: Pension max takes the higher single-life payout and uses life insurance to provide for the surviving spouse, instead of accepting a smaller joint-and-survivor benefit.

The change of beneficiary provision in a health policy allows the policyowner to:

1. Name a beneficiary only once, with no changes ever permitted
2. Change an irrevocable beneficiary at any time without restriction
3. Transfer ownership of the policy to the insurer at will
4. Change a revocable beneficiary without that beneficiary's consent ✓

Why: Unless the beneficiary is irrevocable, the owner may change a revocable beneficiary at any time without the beneficiary's consent.

Medicare Savings Programs (such as QMB) help low-income beneficiaries by:

1. Adding dental and vision to Medicare
2. Eliminating the need to enroll in Part A
3. Providing tax-free life insurance
4. Paying Medicare premiums and cost-sharing ✓

Why: Medicaid-administered Medicare Savings Programs (QMB, SLMB, QI) help pay Medicare premiums, deductibles, and coinsurance for those with limited means.

A joint and survivor annuity continues payments:

1. To the couple's children after both annuitants die
2. As long as either annuitant is still living ✓
3. Only until the first of the two annuitants dies
4. For a fixed ten-year period regardless of survival

Why: A joint and survivor annuity pays as long as either annuitant lives (often reducing to a percentage for the survivor).

A premium is still unpaid at the end of the grace period, but the policy has sufficient cash value. The automatic premium loan provision:

1. Converts the coverage to extended term insurance
2. Doubles the next premium billed as a reinstatement penalty
3. Surrenders the policy and pays the net cash value to the owner as a refund
4. Pays the overdue premium from the cash value to prevent a lapse ✓

Why: APL borrows from the cash value to pay the overdue premium, keeping the policy in force.

When a convertible term policy is converted using the 'attained age' method, the new permanent premium is based on:

1. The insured's original age when the term policy was first issued
2. A blended average of the insured's original and current ages
3. The insured's current age at conversion ✓
4. The youngest age the insurer offers any coverage at all

Why: Attained-age conversion sets the premium at the insured's current age (no back premium); original-age conversion uses the issue age but requires paying the difference in premiums.

Penalties imposed under 17:29B-7 are collected by the Commissioner in the name of the State through:

1. An offset charged against the insurer's statutory reserves at the next annual statement
2. A criminal prosecution brought by the county prosecutor in the Law Division
3. A summary proceeding under the penalty enforcement law ✓
4. Binding arbitration before a panel the Commissioner appoints

Why: Section 17:29B-7(a) provides that the penalty is collected by the Commissioner in the name of the State in a summary proceeding under the penalty enforcement law (N.J.S. 2A:58-1 et seq.).

A prescription drug plan formulary is:

1. A government registry of every drug approved nationwide for sale
2. A tiered list of the medications the plan covers ✓
3. The maximum the insured may spend on drugs in a lifetime
4. A required second opinion before any prescription is filled

Why: A formulary is the plan's list of covered drugs, usually arranged in cost-sharing tiers (generic, preferred brand, non-preferred, specialty).

An uncontested portion of a New Jersey life insurance claim must be paid no later than which day following receipt of due proof of death?

1. The 60th calendar day ✓
2. The 45th calendar day
3. The 30th calendar day
4. The 90th calendar day

Why: N.J.S.A. 17B:25-11(b) provides that any uncontested portion of a claim must be paid no later than the 60th calendar day following receipt of due proof of death.

The Medicare Initial Enrollment Period (IEP) is:

1. A single day, falling exactly on the person's 65th birthday
2. An annual period every December for all current beneficiaries
3. A 7-month window around the month a person turns 65 ✓
4. A 60-day window that opens only after retirement from work

Why: The IEP spans 7 months: the 3 months before, the month of, and the 3 months after the 65th-birthday month.

Credit life insurance is typically structured so that:

1. The face amount increases over the life of the underlying loan
2. Coverage continues at the same level long after the loan is repaid
3. The borrower's family receives the full original loan amount in cash
4. It is decreasing term with the creditor named as the beneficiary ✓

Why: Credit life is usually decreasing term equal to the outstanding debt, with the lender as beneficiary; it cannot exceed the loan balance.

A producer tells a client false negative information about a competing insurer to win the sale. This is:

1. Twisting
2. Rebating
3. Defamation ✓
4. Coercion

Why: Making false, maligning statements about another insurer is defamation, an unfair trade practice.

In group underwriting, a 'guaranteed issue' limit is the amount of coverage that:

1. Members can obtain without providing individual evidence of insurability ✓
2. Is automatically doubled for any employee who enrolls one or more dependents in the plan
3. The employer is required to buy for every eligible employee, whatever the resulting rate
4. Each member must pay for entirely out of pocket

Why: Up to the guaranteed issue limit, members are covered without individual medical evidence; amounts above it require proof of insurability.

A Medicare SELECT policy is a type of Medigap that:

1. Charges a lower premium in exchange for using a provider network ✓
2. Pays cash directly to enrollees regardless of where they get care
3. Covers only long-term custodial nursing-home expenses
4. Replaces both Medicare Part A and Part B entirely

Why: Medicare SELECT is a Medigap policy that requires using network providers (except emergencies) in return for a lower premium.

A state insurance guaranty association exists to:

1. Guarantee that every applicant will be approved for coverage
2. Pay covered claims of insurers that become insolvent, up to set limits ✓
3. Provide free legal representation to policyholders in disputes
4. Set the premium rates that all insurers in the state must charge

Why: Guaranty associations protect policyholders by covering claims (within statutory limits) when a member insurer becomes insolvent; their existence may not be used in advertising or sales.

Under 17:29B-5, the Commissioner's investigative power over a person engaged in the business of insurance is for the purpose of determining whether that person:

1. Has engaged in any unfair method of competition or unfair or deceptive act prohibited by the act ✓
2. Has paid all premium taxes due the State Treasurer for the preceding calendar year
3. Maintains reserves and surplus at least equal to the minimums required for its certificate of authority in this State
4. Holds a valid certificate of authority and has appointed each producer soliciting business on its behalf

Why: Section 17:29B-5 gives the Commissioner power to examine and investigate the affairs of every person engaged in the business of insurance to determine whether the person has engaged in any unfair method of competition or unfair/deceptive act prohibited by the act.

The required policy loan provision in N.J.S.A. 17B:25-8 does NOT apply to which type of coverage?

1. Term insurance ✓
2. Whole life insurance
3. Universal life insurance
4. Endowment policies

Why: N.J.S.A. 17B:25-8 expressly states the policy loan section does not apply to term insurance or to industrial life insurance policies, which build no loan value.

Joint life (first-to-die) insurance pays the death benefit:

1. In equal installments to each surviving insured person
2. Upon the first death among the insureds covered ✓
3. When both insureds covered by the policy have died
4. Only if the insureds die within thirty days of each other

Why: Joint (first-to-die) life pays at the first death of the covered insureds; survivorship (second-to-die) pays at the second death.

Under 17:23A-6, a disclosure authorization signed for collecting information in connection with an application for life, health or disability insurance may remain valid for no longer than:

1. 6 months
2. One year
3. 30 months from the date signed ✓
4. The life of the policy

Why: Section 17:23A-6(g)(1)(a) limits the authorization to 30 months from the date the authorization is signed if the application or request involves life, health or disability insurance.