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Free life producer & instructor examination Practice Questions

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Sample Practice Questions

Try these 10 sample questions from the life producer & instructor examination practice bank. Each includes the answer and explanation. Continue with the interactive practice above to review the full question set.

  1. 1A client needs life coverage only while a 15-year loan is outstanding and does not need a policy cash value. Which type best fits that need?

    1. A. Ordinary whole life insurance
    2. B. Universal life insurance
    3. C. Term life insurance
    4. D. Variable whole life insurance

    Answer: C

    Explanation: NJDOBI says, "Term insurance generally has lower premiums in the early years, but does not build up cash values that you can use in the future." Term covers a defined period without building the requested cash value; the other named products are permanent cash-value designs.

    Reference: NJDOBI Consumer Information: Life Insurance — Consumer Information—Life Insurance, Term and Permanent Insurance

  2. 2A policyowner becomes disabled by a condition covered by an attached rider and wants premiums suspended while the rider's conditions are met. Which rider addresses this?

    1. A. Guaranteed insurability rider
    2. B. Accidental death benefit rider
    3. C. Waiver of premium rider
    4. D. Long-term care benefit rider

    Answer: C

    Explanation: NAIC says, "With a waiver of premium rider, you can stop paying your life insurance premium if you develop a covered illness or disability named in the rider." The other riders concern later coverage increases, accidental death, or care expenses.

    Reference: NAIC Consumer Life Insurance — Life Insurance Riders—Waiver of premium

  3. 3A New Jersey producer takes an application that requires the proposed insured's signature, and the insurer has issued no prior written waiver. What must the producer do before submission?

    1. A. Obtain the insurer's oral acceptance of an unwitnessed signature.
    2. B. Witness the proposed insured sign the application.
    3. C. Ask another producer to certify a scanned signature later.
    4. D. Treat the applicant's telephone confirmation as witnessing.

    Answer: B

    Explanation: NJDOBI quotes N.J.A.C. 11:17A-4.2: a producer taking the application "shall be required to witness the signature of the prospective insured on the application prior to the submission of the application to the insurer." A waiver requires prior written insurer authorization; the other actions do not satisfy witnessing.

    Reference: NJDOBI American General Market Conduct Examination — Market conduct report, p. 12, Witnessing of the Prospective Insured Signature on the Application

  4. 4An employee directs traditional, non-Roth elective wages into a qualified 401(k) plan and leaves the funds there. When are those deferrals generally subject to federal income tax?

    1. A. When the wages are deferred into the plan.
    2. B. When the employer records the plan contribution.
    3. C. When the funds are distributed from the plan.
    4. D. When the plan first credits investment gains.

    Answer: C

    Explanation: IRS states, "Elective deferrals and investment gains are not currently taxed and enjoy tax deferral until distribution." The stem excludes Roth deferrals, which are included in income currently; deposit, bookkeeping, and crediting gains do not end this traditional deferral.

    Reference: IRS 401(k) Plan Overview — Tax Advantages—Traditional 401(k) elective deferrals

  5. 5New Jersey's producer licensing statute assigns the title Commissioner to which official?

    1. A. Commissioner of Banking and Insurance
    2. B. Attorney General
    3. C. Commissioner of Labor and Workforce Development
    4. D. State Treasurer

    Answer: A

    Explanation: The statutory definition identifies the office as "the Commissioner of Banking and Insurance." Therefore that official is the Commissioner for this act.

    Reference: P.L.2001, c.210 (S2428 1R) — N.J.S.A. 17:22A-28

  6. 6A producer describes a life policy using a title that misstates its true nature. Which New Jersey rule is violated?

    1. A. The prohibition on policy misrepresentation
    2. B. The group conversion rule
    3. C. The nonresident reciprocity rule
    4. D. The guaranty-association assessment rule

    Answer: A

    Explanation: The law prohibits using "any name or title of any policy or annuity contract or class of policies or annuity contracts misrepresenting the true nature thereof." The misleading title is prohibited.

    Reference: Nj Search 17B 30 3 — N.J.S.A. 17B:30-3

  7. 7An applicant wants permanent life coverage but plans to finish paying scheduled premiums after 20 years. Which whole life design matches that plan?

    1. A. Ordinary level-premium whole life
    2. B. Limited-payment whole life
    3. C. Single-premium whole life
    4. D. Indeterminate-premium whole life

    Answer: B

    Explanation: NAIC describes limited-payment whole life: "Premiums are paid over a shorter time, but coverage lasts a lifetime." A 20-year premium schedule with lifetime coverage fits it. Ordinary payments extend through life, single-premium is one lump sum, and indeterminate premiums may change with insurer experience.

    Reference: NAIC Life Insurance — Whole Life Insurance—Limited payment whole life insurance

  8. 8A healthy applicant wants the option to raise a life policy's death benefit at specified future dates even if health later worsens, without another medical exam. Which rider fits?

    1. A. Guaranteed insurability rider
    2. B. Accidental death benefit rider
    3. C. Waiver of premium rider
    4. D. Additional term coverage rider

    Answer: A

    Explanation: NAIC explains, "A guaranteed insurability rider lets you increase your death benefit at certain times in the future without a medical exam." Accidental death adds an accident-triggered benefit, waiver addresses premiums after disability, and a term rider adds separate term coverage rather than this scheduled right.

    Reference: NAIC Consumer Life Insurance — Life Insurance Riders—Guaranteed insurability

  9. 9After a life insurer issues a policy, it discovers false health statements on the signed application. Which contract consequence can follow from that discovery?

    1. A. The insurer may reduce or cancel the issued coverage.
    2. B. The insurer may place the issued coverage in a premium grace period.
    3. C. The insurer may exchange the issued coverage for reduced paid-up insurance.
    4. D. The insurer may renew the issued coverage without new health evidence.

    Answer: A

    Explanation: The NAIC guide warns, "If the insurance company discovers false statements on your application after it issues your policy, it could reduce or cancel your coverage." A grace period concerns an overdue premium, reduced paid-up insurance is a nonforfeiture choice, and renewal without new health evidence is a term-policy feature; none is the stated consequence of false application answers.

    Reference: NAIC Life Insurance Buyer's Guide — p. 6, Understand the Application Process

  10. 10An employer provides group-term life insurance to an employee. Under the ordinary federal rule, what is the maximum coverage amount whose cost is generally excluded from the employee's income?

    1. A. $25,000
    2. B. $50,000
    3. C. $75,000
    4. D. $100,000

    Answer: B

    Explanation: IRS Publication 525 says, "In most cases, the cost of up to $50,000 of group-term life insurance coverage provided to you by your employer (or former employer) isn’t included in your income." The question asks the ordinary maximum coverage amount, not whether an exception could change a particular employee's result.

    Reference: IRS Publication 525 — Employer-Provided Group-Term Life Insurance

Topics in this practice bank

These topics describe the available practice for life producer & instructor examination. Review the examination outline and its sources for scope and allocation details.

  • I.0 TYPES OF POLICIES (9 Items)
    • 1.1 Traditional Whole Life Products
    • 1.1 Traditional Whole Life Products / Ordinary (straight) life
    • 1.1 Traditional Whole Life Products / Limited-pay and single-premium life
    • 1.1 Traditional Whole Life Products / Adjustable life
    • 1.2 Interest-Sensitive Life Products
    • 1.2 Interest-Sensitive Life Products / Universal life
    • 1.2 Interest-Sensitive Life Products / Variable whole life
    • 1.2 Interest-Sensitive Life Products / Variable universal life
    • 1.2 Interest-Sensitive Life Products / Interest-sensitive whole life
    • 1.3 Term life
    • 1.3 Term life / Level, decreasing, and increasing term
    • 1.3 Term life / Special features
    • 1.3 Term life / Special features / Renewable
    • 1.3 Term life / Special features / Convertible
    • 1.4 Annuities
    • 1.4 Annuities / Single, level, and flexible premium
    • 1.4 Annuities / Immediate and deferred
    • 1.4 Annuities / Fixed and variable
    • 1.4 Annuities / Equity index
    • 1.5 Combination Plans and Variations
    • 1.5 Combination Plans and Variations / Joint life
    • 1.5 Combination Plans and Variations / Survivorship life
  • 2.0 POLICY RIDERS, PROVISIONS, OPTIONS, AND EXCLUSIONS (21 Items)
    • 2.1 Policy Riders
    • 2.1 Policy Riders / Waiver of premium and waiver of premium with disability income
    • 2.1 Policy Riders / Guaranteed insurability
    • 2.1 Policy Riders / Payor benefit
    • 2.1 Policy Riders / Accidental death and/or accidental death and dismemberment
    • 2.1 Policy Riders / Term riders
    • 2.1 Policy Riders / Other insureds (e.g., spouse, children, nonfamily)
    • 2.1 Policy Riders / Cost of living
    • 2.2 Policy Provisions and Options
    • 2.2 Policy Provisions and Options / Entire contract
    • 2.2 Policy Provisions and Options / Insuring clause
    • 2.2 Policy Provisions and Options / Free look
    • 2.2 Policy Provisions and Options / Consideration
    • 2.2 Policy Provisions and Options / Owner’s rights
    • 2.2 Policy Provisions and Options / Beneficiary designations
    • 2.2 Policy Provisions and Options / Beneficiary designations / Primary and contingent
    • 2.2 Policy Provisions and Options / Beneficiary designations / Revocable and irrevocable
    • 2.2 Policy Provisions and Options / Beneficiary designations / Changes
    • 2.2 Policy Provisions and Options / Beneficiary designations / Common disaster
    • 2.2 Policy Provisions and Options / Beneficiary designations / Minor beneficiaries
    • 2.2 Policy Provisions and Options / Premium Payment
    • 2.2 Policy Provisions and Options / Premium Payment / Modes
    • 2.2 Policy Provisions and Options / Premium Payment / Grace period
    • 2.2 Policy Provisions and Options / Automatic premium loan
    • 2.2 Policy Provisions and Options / Level or flexible
    • 2.2 Policy Provisions and Options / Reinstatement
    • 2.2 Policy Provisions and Options / Policy loans, withdrawals, partial surrenders
    • 2.2 Policy Provisions and Options / Nonforfeiture options
    • 2.2 Policy Provisions and Options / Dividends and dividend options
    • 2.2 Policy Provisions and Options / Incontestability
    • 2.2 Policy Provisions and Options / Assignments
    • 2.2 Policy Provisions and Options / Suicide
    • 2.2 Policy Provisions and Options / Misstatement of age and gender
    • 2.2 Policy Provisions and Options / Settlement options
    • 2.3 Policy Exclusions
  • 3.0 COMPLETING THE APPLICATION, UNDERWRITING, AND DELIVERING THE POLICY (12 Items)
    • 3.1 Completing The Application
    • 3.1 Completing The Application / Required signatures
    • 3.1 Completing The Application / Changes in the application
    • 3.1 Completing The Application / Consequences of incomplete applications
    • 3.1 Completing The Application / Warranties and representations
    • 3.1 Completing The Application / Collecting the initial premium and issuing the receipt
    • 3.1 Completing The Application / Replacement
    • 3.1 Completing The Application / Disclosures at point of sale (i.e. HIPAA, HIV consent)
    • 3.2 Underwriting
    • 3.2 Underwriting / Insurable interest
    • 3.2 Underwriting / Medical information and consumer reports
    • 3.2 Underwriting / Fair Credit Reporting Act
    • 3.2 Underwriting / Risk classification
    • 3.3 Delivering The Policy
    • 3.3 Delivering The Policy / When coverage begins
    • 3.3 Delivering The Policy / Explaining the policy and its provisions, riders, exclusions, and ratings to the client
    • 3.4 Do Not Call List
  • 4.0 TAXES, RETIREMENT, AND OTHER INSURANCE CONCEPTS (8 Items)
    • 4.1 Third-Party Ownership
    • 4.2 Group Life Insurance
    • 4.2 Group Life Insurance / Conversion privilege
    • 4.2 Group Life Insurance / Contributory vs. noncontributory
    • 4.3 Retirement Plans
    • 4.3 Retirement Plans / Tax-qualified plans
    • 4.3 Retirement Plans / Nonqualified plans
    • 4.4 Business Insurance
    • 4.5 Social Security Benefits and Taxes
    • 4.6. Tax Treatment of Insurance Premiums, Proceeds, Dividends
    • 4.6. Tax Treatment of Insurance Premiums, Proceeds, Dividends / Individual life
    • 4.6. Tax Treatment of Insurance Premiums, Proceeds, Dividends / Group life
    • 4.6. Tax Treatment of Insurance Premiums, Proceeds, Dividends / Modified Endowment Contracts (MECs)
    • 4.7 Accelerated Death Benefits—Living Benefits
    • 4.8 Endowments
  • 5.0 New Jersey Laws, Rules, and Regulations Common to Life, Accident and Health, Property, and Casualty Insurance (25 Items)
    • 5.1 State Regulatory Jurisdiction (4 Items)
    • 5.1 State Regulatory Jurisdiction (4 Items) / Legislation
    • 5.1 State Regulatory Jurisdiction (4 Items) / Legislation / State Laws
    • 5.1 State Regulatory Jurisdiction (4 Items) / Legislation / Court Action
    • 5.1 State Regulatory Jurisdiction (4 Items) / Legislation / Court Action / Interpretations
    • 5.1 State Regulatory Jurisdiction (4 Items) / Legislation / Court Action / Effect on Law and Policy Forms
    • 5.1 State Regulatory Jurisdiction (4 Items) / Legislation / Related Federal Laws and court Cases
    • 5.1 State Regulatory Jurisdiction (4 Items) / Legislation / Related Federal Laws and court Cases / Paul v. Virginia
    • 5.1 State Regulatory Jurisdiction (4 Items) / Legislation / Related Federal Laws and court Cases / US v. South-Eastern Underwriters Assoc.
    • 5.1 State Regulatory Jurisdiction (4 Items) / Legislation / Related Federal Laws and court Cases / McCarran-Ferguson Act/Public Law 15
    • 5.1 State Regulatory Jurisdiction (4 Items) / Commissioner/Dept. of Banking and Insurnace
    • 5.1 State Regulatory Jurisdiction (4 Items) / Commissioner/Dept. of Banking and Insurnace / Broad Powers of Commissioner
    • 5.1 State Regulatory Jurisdiction (4 Items) / Commissioner/Dept. of Banking and Insurnace / Notice and Hearing
    • 5.1 State Regulatory Jurisdiction (4 Items) / Commissioner/Dept. of Banking and Insurnace / Penalties
    • 5.2 Definitions (4 Items)
    • 5.2 Definitions (4 Items) / Insurance-related conduct
    • 5.2 Definitions (4 Items) / Domestic, foreign, and alien companies
    • 5.2 Definitions (4 Items) / Stock and mutual
    • 5.2 Definitions (4 Items) / Reinsurance/Retrocession
    • 5.2 Definitions (4 Items) / Certificate of authority
    • 5.2 Definitions (4 Items) / A producer acting as:
    • 5.2 Definitions (4 Items) / A producer acting as: / Insurance Agent
    • 5.2 Definitions (4 Items) / A producer acting as: / Insurance Broker
    • 5.2 Definitions (4 Items) / A producer acting as: / Insurance Consultant
    • 5.2 Definitions (4 Items) / “Sell, Solicit, and Negotiate”
    • 5.3 Licensing (8 Items)
    • 5.3 Licensing (8 Items) / Types of licenses/authorities/requirements
    • 5.3 Licensing (8 Items) / Types of licenses/authorities/requirements / Producer
    • 5.3 Licensing (8 Items) / Types of licenses/authorities/requirements / Business entity
    • 5.3 Licensing (8 Items) / Types of licenses/authorities/requirements / Nonresident
    • 5.3 Licensing (8 Items) / Types of licenses/authorities/requirements / Nonresident / Producer
    • 5.3 Licensing (8 Items) / Types of licenses/authorities/requirements / Nonresident / Business Entity
    • 5.3 Licensing (8 Items) / Prelicensing requirements
    • 5.3 Licensing (8 Items) / Surplus lines
    • 5.3 Licensing (8 Items) / Temporary work authority
    • 5.3 Licensing (8 Items) / Contractual relationships
    • 5.3 Licensing (8 Items) / Contractual relationships / Company/producer
    • 5.3 Licensing (8 Items) / Contractual relationships / Producer employing another producer
    • 5.3 Licensing (8 Items) / Contractual relationships / Producer substituting for or taking over the business of a disabled/deceased producer
    • 5.3 Licensing (8 Items) / Maintenance and duration of license
    • 5.3 Licensing (8 Items) / Maintenance and duration of license / Renewal
    • 5.3 Licensing (8 Items) / License refusal/termination
    • 5.3 Licensing (8 Items) / License refusal/termination / Denial
    • 5.3 Licensing (8 Items) / License refusal/termination / Cancellation/reinstatement
    • 5.3 Licensing (8 Items) / License refusal/termination / Revocation/suspension
    • 5.4 Trade Practices (6 Items)
    • 5.4 Trade Practices (6 Items) / Prohibited practices
    • 5.4 Trade Practices (6 Items) / Licensee responsibilities (Reporting information to the Department of Banking and Insurance)
    • 5.4 Trade Practices (6 Items) / Licensee responsibilities (Reporting information to the Department of Banking and Insurance) / Business names (including fictitious)
    • 5.4 Trade Practices (6 Items) / Licensee responsibilities (Reporting information to the Department of Banking and Insurance) / Branch offices
    • 5.4 Trade Practices (6 Items) / Licensee responsibilities (Reporting information to the Department of Banking and Insurance) / Change of address including email
    • 5.4 Trade Practices (6 Items) / Licensee responsibilities (Reporting information to the Department of Banking and Insurance) / Standards of conduct
    • 5.4 Trade Practices (6 Items) / Licensee responsibilities (Reporting information to the Department of Banking and Insurance) / Fraud
    • 5.4 Trade Practices (6 Items) / Licensee responsibilities (Reporting information to the Department of Banking and Insurance) / Information Privacy
    • 5.5 Guaranty Associations
    • 5.6 Ethics
  • 6.0. New Jersey Laws, Rules, and Regulations Pertinent to Life and Regulations (8 Items)
    • Credit Life
    • Group Life
    • Marketing Methods and Practices
    • Marketing Methods and Practices / Replacement
    • Marketing Methods and Practices / Disclosures
    • Marketing Methods and Practices / Advertising
    • Marketing Methods and Practices / Twisting
    • The Insurance Contract
    • Suitability of Annuities and Life Products
    • Appropriate Use of Business Title or Designation when marketing life and annuity products

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