Chapter 6: New Jersey Laws, Rules, and Regulations Pertinent to Life Only

Replacement

any transaction in which new life insurance or a new annuity is purchased and, as a result, the existing life insurance or annuity has been or will be; Lapsed, forfeited, surrendered.

Replacing insurer

the company that issues the new policy

Existing insurer

the company whose policy is being replaced

Policy replacement

what is the purpose of disclosure regulations ?

is to require the insurers to provide information to buyers that will help them to better understand life insurance products under consideration and make educated decisions

What does disclosure rules do not apply to?

~individual or group annuities

~credit life insurance

~group life insurance

~variable life insurance under which the death benefit and cash values vary in accordance with unit values of investments held in a separated account

~life insurance policies issued in connection with pension and welfare plans (ERISA)

Advertising

any material design to persuade the public to purchase life insurance

Twisting

a misrepresentation or incomplete or fraudulent comparison of insurance policies that persuade an insured/owner, to their detriment, cancel, lapse, switch policies, or take out a policy with another insurer

What is the minimum age an individual can purchase a life insurance policy?

15 yrs old

Exemption of proceeds

are protected from creditors and will be received by the policy beneficiary, as long as the beneficiary is not any of the following;

~the insured

~the person effecting the insurance or the executor/ administrator of the insured.

credit insurance

is special type of coverage written to insurance the life of the debtor and pay off the balance of a loan in the event of death of the debtor.

what is credit written as usually?

decreasing term insurance

what is the creditor?

the owner and the beneficiary of the policy although the premiums are generally paid by the borrower (or the debtor)

what can the credit life insurance not do?

Credit life insurance cannot pay out more than the balance of the debt

All the advertisements pertaining to Life insurance policies are the responsibility of the ?

insurer

The initial amount of credit life insurance may not exceed

The amount to be repaid under the contract

What can the creditor insure the debtor in a credit life policy?

They can only insure the debtor for the amount owed

what type of misrepresentation persuades an insured, to their detriment, to cancel, lapse or switch policies from one to another?

Twisting

Using names or titles that have the tendency to misrepresent the true nature of a policy is an example of what illegal practice?

false advertising

it is the responsibility of which of the following to make sure that an applicant/policyholder has a policy summary and buyer’s guide?

Department of Banking insurance

applicant

insurer

commissioner

insurer

Proceeds from life insurance policies are protected from the beneficiary’s debts except for ?

some of the premiums were paid in attempt to defraud creditors

during policy replacement, the replacing insurer must notify existing insurers within what time period?

5 Business days

The type of insurance sold to a debtor and designed to pay the amount due on a loan if the debtor dies before the loan is repaid is called?

credit life

if a credit life policy lapses for nonpayment before the debt is satisfied, within how many days must the creditor either refund the premium paid apply it against the debt?

60 days

if an insurer requires an application in order to renew a life insurance policy, it is the insurer’s responsibility to send one to the insured within ?

30 days of the insured's request

Agents who persuade insureds to cancel a policy in favor of another one when it might not be in the insured’s best interest are guilty of

twisting

How must a replacing producer respond to an applicant wishing to replace existing life insurance?

The producer must provide the applicant with a notice regarding replacement

which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance?

Replacement rule