NJ Laws and Rules

Question 1

The ______ (or principal) is the company or organization that issues a policy of insurance

Answer 1

insurer

Question 2

_______ are owned by stockholders who provide the capital necessary to establish and operate the insurance company and who share in any profits or losses.

Answer 2

Stock companies

Question 3

Stock companies issue ______ policies, in which policyowners do not share in profits or losses

Answer 3

nonparticipating

Question 4

A nonparticipating (stock) policy does not pay _____ to policyowners; however, taxable dividends are paid to stockholders.

Answer 4

dividends

Question 5

_______ are owned by the policyowner and issue participating policies.

Answer 5

Mutual companies

Question 6

With participating policies, policyowners are entitled to dividends, which in the case of mutual companies are a return of excess premiums and are therefore

Answer 6

nontaxable

Question 7

Insurance companies are classified according to the

Answer 7

location of incorporation (domicile)

Question 8

Regardless of where an insurance company is incorporated, it must obtain a

Answer 8

Certificate of Authority

Question 9

Insurers who meet the state’s financial requirements and are approved to transact business in the state are considered ______ _______ into the state as a legal insurer

Answer 9

authorized or admitted

Question 10

An _____ is an insurance producer acting as an agent authorized in writing by any insurance company to solicit, negotiate or sell insurance contracts, or collect premiums on its behalf. Deemed to represent the insurer

Answer 10

insurance agent

Question 11

When an insurance producer negotiates for an insurance contract on behalf of a client, the producer is acting as a

Answer 11

broker

Question 12

An insurance broker acts a representative of an insured or prospective insured, and helps with insurance transactions on the insured’s behalf for a

Answer 12

commissions, brokerage fee, or other consideration

Question 13

An _______ is a person who, for a fee, commission, other consideration, offers any advice, counsel, opinion, or service regarding the benefits, advantages, or disadvantages of any insurance policy issued in this state

Answer 13

insurance consultant

Question 14

The term insurance transaction includes any of the following:

Answer 14

1) Solicitation
2) Negotiations
3) Sale
4 Advising an individual concerning coverage

Question 15

_____ is a contract under which one insurance company (the reinsurer) indemnifies another insurance company for part or all of its liabilities

Answer 15

Reinsurance

Question 16

The purpose of reinsurance is to protect _____ against catastrophic losses

Answer 16

insurers

Question 17

The originating company that procures insurance on itself from another insurer is called the

Answer 17

ceding insurer

Question 18

When a reinsurer or assuming insurer has taken on too many risks and must spread some of its liabilities to other reinsurers is called

Answer 18

extended reinsurance or retrocession

Question 19

Insurance is an industry that is

Answer 19

vested in the public interest

Question 20

Paul vs Virginia, in rendering its decision, the Supreme Court states that insurance was

Answer 20

NOT interstate commerce

Question 21

U.S. vs South-Eastern Underwriters Assoc. Supreme court states

Answer 21

that insurance IS interstate commerce and therefore subject to regulation by the federal government. This decision stands today

Question 22

McCarran-Ferguson Act March 9,1945. Congress insisted that it was the right of the federal government to regulate the insurance industry but states in the Act that federal government would nor regulate insurance

Answer 22

as long as the states did an adequate job of regulating the industry

Question 23

If the commissioner believes that a licensed person has violated an insurance regulation or is engaged in any unfair trade practice, the Commissioner has the right to call a disciplinary hearing, and will provide the person charged with a _____ written notice of the date and time and place of hearing

Answer 23

10 days

Question 24

After the hearing, Commissioner will determine if a violation has occurred and if so will issue a ____ ____ order, which requires person to stop unlawful action

Answer 24

cease and desist

Question 25

Commissioner may also levy a fine up to ______ for each charge of violation of fair methods of competition laws or engaging in an unfair trade practice

Answer 25

$1,000

Question 26

Any person who violates an insurance law or regulation is liable to a penalty of up to _______ for a first offense, and up to _______ for each subsequent offense

Answer 26

$5000 | $10000

Question 27

To qualify for a producer license, candidates must

Answer 27

1) Be 18 2) Submit the NAIC and pay required fees 3) Complete education course within 2 years before submitting the license app 4) Pass license examination within 1 year before submitting a license application

Question 28

The application for a license are also required to submit _____ to the Commissioner and written consent for a criminal history record background check

Answer 28

fingerprints

Question 29

A producer license will not be issued to a business entity operated by a person who has had his or her license revoked within the past

Answer 29

10 years

Question 30

A _____ _____ is an individual who is domiciled and licensed as a resident producer in a state other than NJ

Answer 30

nonresident producer

Question 31

For the protection of consumers in NJ, nonresident producers must appoint the _______ as their agent to receive service of original legal process in NJ.

Answer 31

Commissioner

Question 32

If moving the residence or primary of business to NJ, a nonresident producer must notify the Department of the change of address and contact information within ___

Answer 32

30 days

Question 33

Applicants for surplus lines authority must:

Answer 33

Be NJ resident | Hold a property and casualty license

Question 34

Prior to being admitted to the state licensing examination, an applicant must complete _____ of prelicensing education for each line of authority that he intends to transact

Answer 34

20 hours

Question 35

Commissioner may ___ the prelicensing education if the applicant holds a professional approved by the Commissioner in the kind of insurance for which the applicant seeks authority

Answer 35

waive

Question 36

Applicants who previously held a NJ insurance license which was terminated as a condition of public employment are exempt from re-examination, provided that the public employment was in an insurance- related field and the license application is made within ___ of termination of that employment

Answer 36

1 years

Question 37

Any individual previously licensed and in good standing with another state who applies for an insurance producer license in NJ will not be required to complete any prelicensing education or examination. The application must be received by the department within _____ of the cancellation of the previous license

Answer 37

90 days

Question 38

After completing the procedural steps required for obtaining a producer license, an applicant may have to wait some time before the license is actually issued. An applicant may have to wait some time before the license is actually issued. An applicant may begin working as a producer immediately after completing all the required procedures by obtaining a

Answer 38

temporary work authority

Question 39

The temporary work authority expires no more than ____ after it is issued and becomes ineffective

Answer 39

60 days

Question 40

Producer licenses are valid for

Answer 40

2 years

Question 41

Licenses will expire on the last day of the producer's

Answer 41

month of birth

Question 42

Individual producers renewing their license must also submit proof of completing 24 hours of ______ _____ _____ ____during the previous 2 years, with 3 of those hours in courses related to professional ethics

Answer 42

approved continuing education credits

Question 43

To renew a producer license, the producer must at least ____ days before the expiration date submit a completed renewal application with the renewal fee and a certification signed by the producer, stating that he continues to qualify for a license in accordance with NJ

Answer 43

10

Question 44

Any licensee not wishing to renew his or her license should notify the Department by writing ________ on the face of the renewal application

Answer 44

"do not renew"

Question 45

Nonresident producers who satisfy CE requirements in their home state are not required to complete

Answer 45

CE requirements in NJ

Question 46

If an applicant's license has lapsed within the past year, the applicant may apply for late renewal of the license within ____ of expiration

Answer 46

1 year

Question 47

A licensed producer may request a _____ of license renewal requirements if he or she is unable to comply with renewal procedures due to military service or other extenuating circumstances, such as long-term medical disability

Answer 47

waiver

Question 48

When requested by any person, the department will issue a certification of license status of any currently licensed producer or producer licensed within the past

Answer 48

4 years

Question 49

Commissioner may revoke, suspend, refuse to issue, or renew a license if he fails to notify commissioner within ____ of a conviction of a crime, indictment, or filing of a formal charge

Answer 49

30 days

Question 50

All licensed are the property of the _____ and upon suspension, revocation, or expiration must be returned to the Department

Answer 50

State of NJ

Question 51

If a producer's license has been revoked, the producer must wait _____ before applying for reinstatement

Answer 51

5 years

Question 52

Contractual relations between a producer and an insurance company are conducted through a

Answer 52

contract signed by both parties

Question 53

The appointment insurance company must submit notice of an agent appointment to the Department within _____ after execution of the contract or within _____ after the first insurance application is submitted by the producer

Answer 53

15 days

Question 54

If an insurer cancels an agency contract, it must notify the Commissioner

Answer 54

in writing within 15 days

Question 55

______ is defined as any inducement offered to the insured in the sale of insurance products that is not specified in the policy.

Answer 55

Rebating

Question 56

It is illegal to be involved in any activity of _____, _____, or ______ that is intended to restrict fair trade or to create a monopoly

Answer 56

boyctt, coercion, or intimidation

Question 57

______ occurs when an oral or written statement is made that is intended to injure a person engaged in the insurance business

Answer 57

Defamation

Question 58

All policies, certificates or other evidence of insurance that are received by an insurance producer must be delivered or mauled to the insured within

Answer 58

10 calendar days

Question 59

A producer has ______ to reply in writing to any inquiry of the Department related to the business insurance

Answer 59

15 calendar days

Question 60

Claims must be reported to the insurer no later than ______ after the receipt of notice of claim by the producer

Answer 60

5 business days

Question 61

All completed receipt books must be retained for a minimum of _____ from the date of completion

Answer 61

5 years

Question 62

The ___________ was created to protect policyowners, insureds, and beneficiaries under life insurance policies, health insurance policies, annuity contracts, and supplemental contracts when insurers fail to perform contractual obligations due to financial impairment

Answer 62

New Jersey Life and Health Guaranty Assoc.

Question 63

New Jersey Life and Health Guaranty Assoc. is funded by its ______, or all authorized insurers that are required to be members of the Assoc. and contribute to a fund to provide for the payment of claims for insolvent insurers

Answer 63

members

Question 64

For the purpose of administration and assessments, the Guaranty Assoc. maintains 2 accounts:

Answer 64

life insurance and annuity account | Health insurance account