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

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. Individuals' protected health information from improper disclosure ✓
2. Insurers from having to pay disputed claims
3. Producers from errors-and-omissions lawsuits under the policy's terms
4. Employers from paying group premiums

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

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. Transact insurance in a state other than their home state ✓
2. Skip licensing requirements entirely
3. Sell only in their state of residence under the policy's terms
4. Operate without any appointment

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. Decreases steadily until the insured child reaches adulthood
3. Is invested in mutual funds chosen by the child's parents
4. Can be paid only after the child has passed a medical exam

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

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

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
2. No benefit is payable because no individual policy was issued
3. The amount he could have converted is payable as a claim under the group policy ✓
4. Only a return of premium is payable

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 all premiums and pay nothing more
2. Pay the full face amount and absorb the shortfall
3. Deny the claim entirely
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. Tax-free with no conditions
2. Tax-deferred ✓
3. As taxable income each year
4. Only when dividends are paid

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

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 the claim is denied
2. 1 year from the date of loss
3. 3 years from the expiration of the time within which proof of loss is required ✓
4. 6 years from the policy issue date

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 matters to the Attorney General
2. The power to conduct investigations, administer oaths, interrogate licensees and others, and issue subpoenas without fee ✓
3. The power to arrest unlicensed sellers
4. Only the power to revoke licenses

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
2. The words in which they appear in the applicable statutory section, or commissioner-approved wording not less favorable to the insured ✓
3. Wording drafted by the NAIC only
4. Plain-language summaries chosen by the agent

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. A surrender charge on the amount above any free-withdrawal allowance ✓
2. No charge of any kind under any circumstances
3. Automatic annuitization of the entire contract under the policy's terms
4. Forfeiture of the entire account value

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. The face amount plus the additional accidental death benefit ✓
2. Only the policy's cash value
3. The face amount reduced by half
4. Nothing, because accidents are excluded under the policy's terms

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

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 without a hearing
2. Order immediate liquidation of the insurer
3. Through the Attorney General, institute an action in the Superior Court to enjoin and restrain the insurer ✓
4. Impose criminal liability on the insured

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 $500,000
3. It is covered only if the owner is a senior
4. It is covered up to $250,000

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

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

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.