NJ Life Insurance Exam Questions with Answers (Latest
Update 2023)
Adverse Selection - ANSWER insuring of risks that are more prone to losses than
the average risk
lapse - ANSWER policy termination due to nonpayment of premium
Insurance - ANSWER transfers risk of loss from an individual or business entity to an
insurance company which in turn spreads the costs of unexpected losses to many
individuals
Life Insurance - ANSWER protects against loss associated with an insured's death,
and pays a death benefit to beneficiaries upon death of the insured
solicitation of Insurance - ANSWER an attempt to persuade a person to buy an
insurance policy
Buyers Guide - ANSWER provides basic, generic information about life insurance
policies that contains language approved by the Department of Insurance
- Explains how a buyer should go about choosing the amount and type of insurance
to buy
- Explains how a buyer can save money comparing the costs of familiar policies
Policy Summary - ANSWER a written statement describing the features and
elements of the policy being issued
Must provide:
- name and address of agent
- full name and home office or administrative office of the insurer
- generic name of the basic policy
- each rider
Illustrations - ANSWER a presentation or depiction that includes non guaranteed
elements of a policy of individual or group life insurance over a period of years
Life Insurance Illustration - ANSWER Distinguish between guaranteed and projected
amounts
- clearly state that an illustration is not a party of the contract
- identify those values that are not guaranteed as such
Field Underwriter - ANSWER An insurance agent who conducts an initial policy
solicitation and application. (The company's front line of underwriting)
Application - ANSWER starting point and basic source of information used by the
company in the risk selection process
,Application Part 1- General Info - ANSWER includes general questions about the
applicant such as name, address, age, birth date, gender, income, marital status,
and occupation
- inquires about the existing policies and if the proposed insurance will replace them
Application Part 2- Medical Info - ANSWER includes information on the prospective
insureds medical background, present health, any medical visits in recent years,
medical status of living relatives and causes of death of deceased relatives
Non-Medical Appplication - ANSWER if the amount of insurance is relatively small,
the agent and the proposed insured will complete all of the medical information
Agents Report - ANSWER provides the agents personal observations concerning the
proposed insured.
Required Signatures - ANSWER Both the agent and the proposed insured (usually
the applicant) must sign the application.
Consequences of Incomplete Applications - ANSWER If the insurer receives an
incomplete application, the insurer must return it to the applicant for complete
Consequences of Incomplete Applications - ANSWER If a policy is issued with
questions left unanswered, the contract will be interpreted as if the insurer waived its
rights to have an answer to the question
Consequences of Incomplete Applications - ANSWER the insurer will not have the
right to deny coverage based on any information that the unanswered question might
have contained
Premiums with the application - ANSWER Agents attempt to collect the initial
premium and submit to insurer. Collecting initial premium at the time of the
application increases the chance that the applicant will accept the policy once
issued.
Premium Receipt - ANSWER Receipt given to the applicant by the producer or
insurer, as proof of a premium payment.
Conditional Receipt - ANSWER used only when the applicant submits a prepaid
application
Warranty - ANSWER An absolutely true statement upon which the validity of the
insurance policy depends.
Representations - ANSWER statements believed to be true to the best of one's
knowledge, but they are not guaranteed to be true
Misrepresentations - ANSWER Untrue statements on the application
Material Misrepresentation - ANSWER A statement that, if discovered, would alter
the underwriting decision of the insurance company.
, Underwriting - ANSWER The risk selection process
Insurable Interest - ANSWER To purchase insurance, the policy owner must face the
possibility of losing money or something of value in the event of loss.
Valid Insurance Interest - ANSWER 1)Policy owner's own Life
2)the life of a family member
3) the life of a business partner, key employee, or someone who has a financial
obligation to the policy owner
Inevestigative Consumer Report - ANSWER general reports of the applicants
finances, character, work, hobbies and habits
Medical Examination Reasoning - ANSWER 1) the insurer may only request a
paramedical report which is completed by a paramedic or registered nurse
2) the underwriter may require an Attending Physicians Statement from a medical
practitioner who treated the applicant for a prior medical problem
Medical Information Bureau - ANSWER a nonprofit trade organization which
receives adverse medical information from insurance companies and maintains
confidential medical impairment information on individuals
Health Insurance Portability and Accountability Act (HIPAA) - ANSWER A federal
Law that protects health information
Privacy Rule - ANSWER patients have the right to view their own medical records,
as well as the right to know who has accessed those records over the previous 6
years
Disclosure Authorization Notice - ANSWER states the insurers practice regarding the
collection of personal information
Fair Credit Reporting Act - ANSWER established procedures that consumer-
reporting agencies must follow in order to ensure that records are confidential,
accurate, relevant, and properly used
Consumer Reports - ANSWER Written and /or oral statements regarding a
consumer's credit, character, reputation, or habits collected by a reporting agency
from employment records, credit reports, and other public sources.
Investigative Consumer Report - ANSWER Similar to consumer reports in that they
also provide information on the consumer's character, reputation, and habits.
Preferred Risk - ANSWER are those individuals who meet certain requirements and
qualify for lower premiums than the standard risk
standard risk - ANSWER An applicant or insured who is considered to have an
average probability of a loss based on health, vocation and lifestyle.
Update 2023)
Adverse Selection - ANSWER insuring of risks that are more prone to losses than
the average risk
lapse - ANSWER policy termination due to nonpayment of premium
Insurance - ANSWER transfers risk of loss from an individual or business entity to an
insurance company which in turn spreads the costs of unexpected losses to many
individuals
Life Insurance - ANSWER protects against loss associated with an insured's death,
and pays a death benefit to beneficiaries upon death of the insured
solicitation of Insurance - ANSWER an attempt to persuade a person to buy an
insurance policy
Buyers Guide - ANSWER provides basic, generic information about life insurance
policies that contains language approved by the Department of Insurance
- Explains how a buyer should go about choosing the amount and type of insurance
to buy
- Explains how a buyer can save money comparing the costs of familiar policies
Policy Summary - ANSWER a written statement describing the features and
elements of the policy being issued
Must provide:
- name and address of agent
- full name and home office or administrative office of the insurer
- generic name of the basic policy
- each rider
Illustrations - ANSWER a presentation or depiction that includes non guaranteed
elements of a policy of individual or group life insurance over a period of years
Life Insurance Illustration - ANSWER Distinguish between guaranteed and projected
amounts
- clearly state that an illustration is not a party of the contract
- identify those values that are not guaranteed as such
Field Underwriter - ANSWER An insurance agent who conducts an initial policy
solicitation and application. (The company's front line of underwriting)
Application - ANSWER starting point and basic source of information used by the
company in the risk selection process
,Application Part 1- General Info - ANSWER includes general questions about the
applicant such as name, address, age, birth date, gender, income, marital status,
and occupation
- inquires about the existing policies and if the proposed insurance will replace them
Application Part 2- Medical Info - ANSWER includes information on the prospective
insureds medical background, present health, any medical visits in recent years,
medical status of living relatives and causes of death of deceased relatives
Non-Medical Appplication - ANSWER if the amount of insurance is relatively small,
the agent and the proposed insured will complete all of the medical information
Agents Report - ANSWER provides the agents personal observations concerning the
proposed insured.
Required Signatures - ANSWER Both the agent and the proposed insured (usually
the applicant) must sign the application.
Consequences of Incomplete Applications - ANSWER If the insurer receives an
incomplete application, the insurer must return it to the applicant for complete
Consequences of Incomplete Applications - ANSWER If a policy is issued with
questions left unanswered, the contract will be interpreted as if the insurer waived its
rights to have an answer to the question
Consequences of Incomplete Applications - ANSWER the insurer will not have the
right to deny coverage based on any information that the unanswered question might
have contained
Premiums with the application - ANSWER Agents attempt to collect the initial
premium and submit to insurer. Collecting initial premium at the time of the
application increases the chance that the applicant will accept the policy once
issued.
Premium Receipt - ANSWER Receipt given to the applicant by the producer or
insurer, as proof of a premium payment.
Conditional Receipt - ANSWER used only when the applicant submits a prepaid
application
Warranty - ANSWER An absolutely true statement upon which the validity of the
insurance policy depends.
Representations - ANSWER statements believed to be true to the best of one's
knowledge, but they are not guaranteed to be true
Misrepresentations - ANSWER Untrue statements on the application
Material Misrepresentation - ANSWER A statement that, if discovered, would alter
the underwriting decision of the insurance company.
, Underwriting - ANSWER The risk selection process
Insurable Interest - ANSWER To purchase insurance, the policy owner must face the
possibility of losing money or something of value in the event of loss.
Valid Insurance Interest - ANSWER 1)Policy owner's own Life
2)the life of a family member
3) the life of a business partner, key employee, or someone who has a financial
obligation to the policy owner
Inevestigative Consumer Report - ANSWER general reports of the applicants
finances, character, work, hobbies and habits
Medical Examination Reasoning - ANSWER 1) the insurer may only request a
paramedical report which is completed by a paramedic or registered nurse
2) the underwriter may require an Attending Physicians Statement from a medical
practitioner who treated the applicant for a prior medical problem
Medical Information Bureau - ANSWER a nonprofit trade organization which
receives adverse medical information from insurance companies and maintains
confidential medical impairment information on individuals
Health Insurance Portability and Accountability Act (HIPAA) - ANSWER A federal
Law that protects health information
Privacy Rule - ANSWER patients have the right to view their own medical records,
as well as the right to know who has accessed those records over the previous 6
years
Disclosure Authorization Notice - ANSWER states the insurers practice regarding the
collection of personal information
Fair Credit Reporting Act - ANSWER established procedures that consumer-
reporting agencies must follow in order to ensure that records are confidential,
accurate, relevant, and properly used
Consumer Reports - ANSWER Written and /or oral statements regarding a
consumer's credit, character, reputation, or habits collected by a reporting agency
from employment records, credit reports, and other public sources.
Investigative Consumer Report - ANSWER Similar to consumer reports in that they
also provide information on the consumer's character, reputation, and habits.
Preferred Risk - ANSWER are those individuals who meet certain requirements and
qualify for lower premiums than the standard risk
standard risk - ANSWER An applicant or insured who is considered to have an
average probability of a loss based on health, vocation and lifestyle.
