NJ Insurance Licensing and Regulation Flashcards

Collection of vocabulary terms and definitions regarding insurance regulations, licensing, and life insurance products based on the New Jersey State lecture notes.

HIV-Related Testing Requirement

A company must obtain the insured's written authorization before conducting an HIV-related test.

Third-Party Ownership Exception

Primary Beneficiary is not an example of third-party ownership.

Life Insurance Assignment

The process by which a policy owner can temporarily transfer ownership as collateral for a loan.

Certification of License Status Exception

This document contains various licensee data but excludes the licensee's place of birth.

Annuity Misrepresentation

A producer who uses printed material showing inflated dividend histories in previous annuity contracts is guilty of this act.

Insurance Advertising Regulation

In local newspapers, this is regulated by the insurance company.

Annuity Suitability Exception

To determine suitability, the producer must obtain information on the insured except for their education level.

Paid-Up Additions

A dividend option that will increase the death benefit.

Representations

The proposed statements of the insured in a life insurance application.

Group Coverage Conversion Period

Conversion to a permanent life insurance policy must be applied for within $1\,month$ after the policy's expiration.

Adjustable Life Policy Limitation

The policyholder cannot increase the death benefit by using one of the non-forfeiture options.

Sales Commission Eligibility

An individual MUST be licensed by the state to legally receive a sales commission from an insurance company.

Investigative Consumer Report

An underwriting tool that includes information about the applicant's habits, friends, and neighbors.

Broker Service Fees

To receive fees other than commissions, a producer acting as a broker must present the prospect with a comparative information form.

Social Security Official Name

Old Age, Survivors, and Disability Insurance (OASDI).

Waiver of Premium Rider

Provision where there are no changes in rates, benefits, or policy options except that the insured stops paying premiums while disabled.

Accelerated Death Benefit Rider

Purpose is to provide early payment of the death benefit to an insured with a terminal (catastrophic) illness.

Automatic Premium Loan Rider

Protects the policyholder against unintentional lapse of coverage.

Guaranteed Insurability Rider

Allows for additional insurance on specific dates or events without evidence of insurability.

Family Income Rider

Rider that allows the insured's spouse to be added to the insurance policy.

Branch Office Registration

A registration form must be submitted to the Commissioner records $30$ days before opening.

Incomplete Application Approval

If an insurer approves an incomplete application, they waive the right to that information and must comply with the contract.

Decreasing Term Life Insurance

Frequently used for covering a home mortgage.

Sales Proposal Misrepresentation

Occurs if a producer makes a proposal that does not clearly and accurately disclose a contract included in the policy.

Replacement Notice Exception

The notice regarding life insurance replacement does NOT increase the possibility of misrepresentation by an agent.

Unearned Premiums

Premium refunds resulting from the cancellation of a borrower's life policy, which must be paid to the owner.

Certificate of Authority

A document issued by the Commissioner of Banking and Insurance permitting an insurer to do business.

Absolute Assignment Revocation

This is NOT among the rights of a life insurance policyholder.

Public Record Producer Info

The names of the insurance companies represented by the producer are available to the public.

Fixed Annuity Purchase Goal

To provide future financial security with payments that do not fluctuate.

Market-Indexed Annuity

Annuity products linked to a market-related index.

Domestic Insurance Company

An insurance company formed under the laws of New Jersey.

Advertising Copy Storage

According to New Jersey law, copies of insurance advertisements must be kept in the company's office.

Analyzing Insurance Coverage Fees

There must be a relationship between the fees and the total commission earned for a producer to charge for analysis.

Reduced Paid-Up Option

A provision where the new protection has the same value as the original policy without expiration.

Preferred Risk Policies

Issued with reduced premiums for individuals with a better than normal mortality or morbidity experience.

Non-Advertising Element

Guía de compradores is considered an element that is NOT a form of advertising.

Entire Contract Provision

Requires that the policy and a copy of the application be endorsed or attached to the policy when issued.

Replacement Form Retention

Replacement forms must be considered or kept by the agent for a minimum of $5\,years$.

Incontestable Clause Exception

A common error area in applications where this clause does not apply is age.

Life and Health Insurance Guaranty Association Funding

Subsidized by fees to member companies.

Commission Sharing Fraud

A producer who shares commissions with a client may be found guilty of fraud.

Seminar Invitation Requirements

If offering insurance, the mailing must include the producer's name as it appears on the license.

Policy Summary Exclusion

Does not need to include the dividend history of the insurance company issuing the policy.

License Reapplication Limit

After revocation, a licensee cannot reapply for $5\,years$.

Slander or Defamation

The act of printing derogatory statements about the financial condition of an insurance company.

Individual Annuity

A retirement plan not restricted to contribution limits set by the IRS.

Insurance Agent

A producer licensed by the insurance company to offer, negotiate, or sell insurance contracts.

Payer Additional Clause

Pays premiums on a policy for minors until the insured child reaches a specific age.

Accidental Death Payout (Medical Cause)

If an insured with an accidental death rider dies of a heart attack, the insurer pays only the base face value, such as $100,000$.

Insolvent Insurer

An insurer placed under a liquidation order by a court of competent jurisdiction.

Group Life Grace Period

A contract that lapses for non-payment continues to cover losses incurred for the duration of the grace period.

Taxable Dividend Option

Accumulation of interest.

Fair Credit Reporting Act Right

Grants the consumer the right to request a copy and explanation of their credit report from the agent.

Annuity Grace Period

At least $10\,days$ and not more than $30\,days$ from the policy delivery date.

Coverage Effective Date

Life insurance becomes effective most frequently when the premium is collected and the policy is issued.

Reinstatement Conditions

Included in the reinstatement clause; often includes evidence of insurability.

Personal Policy Loan Taxation

Income derived from loans against a personal life insurance policy is not treated as taxable income.

Fixed Annuity Disadvantage

Annuitants might experience a decrease in the purchasing power of their payments over a period.

Commissioner Authority Exception

The New Jersey Commissioner of Banking and Insurance cannot establish insurance rate programs.

Universal Life Premium Feature

Distinguished from whole life insurance policies by its flexible premium schedule.

Joint First-to-Die

A life insurance policy written for both spouses that is payable after the first death.

Dividend Misrepresentation

Guilt assigned to a producer who intentionally misleads a client by claiming the policy will pay dividends.

Renewable Term

A policy where the holder can extend coverage without evidence of insurability.

Replacement Regulations Purpose

To protect renewal policyholders from existing producers.

Employed Producer Requirement

A producer who employs another must enter into a written agreement with them.

Immediate Annuity Payout

Designed to make the first benefit payment usually $1\,month$ after purchase.

Sarah Harding Case (Death after Term)

Sam dies $8\,years$ after the inception of a non-renewable $5\,year$ term policy; the transcript states the wife is paid $100,000$.

Coverage Exclusion Exception

Provisions cannot restrict or exclude coverage for a fare-paying passenger.

Non-Contributory Plan

A group insurance plan where the employer pays all premiums for employees.

Exemption from Claims

Life insurance proceeds paid to a beneficiary are exempt from claims by the insured.

U.S.A. vs. South-Eastern Underwriters Association (1944)

Ruled that insurance is commerce and must be subject to federal regulations.

Paul vs. Virginia

The principle that insurance is not a transaction of commerce and should be regulated by states.

McCarran-Ferguson Act

Passed by Congress to redefine state and federal authority over insurance regulation.

Lapsed Policy Reinstatement Period

Policies can be reinstated within a period of $3\,years$.

Agency Contract Cancellation Notice

Insurers must submit written notice at a maximum of $15\,days$ after the cancellation date.

EDDA

Employee benefit sometimes described as an amount equal to the face value of group life.

Non-Contestable Clause

Protects the policyholder from misrepresentation caused by an incorrect error.

Advertising Regulations Purpose

To ensure full and truthful disclosure to the public.

Reinsurance

The process where an insurance company acquires insurance for itself from another insurance company.

Continuing Education Credits

A producer must obtain $24$ credits to renew their license.

Catastrophic Illness Benefit

The living benefit option in a life insurance policy is also known by this name.

Effective Date (No Advance Payment)

Begins when the producer delivers the policy and collects a premium.

Unfair Act of Competition

Example: Exaggerating the benefits of an insurance policy.

Cash Surrender Calculation

Stated cash value minus outstanding loans (e.g., $1,500 - 500 = 1,000$).

Pre-licensing Education Validity

A potential producer must apply for a license within a maximum of $2\,years$ after completing the course.

Universal Life Partial Surrender

A specific policy feature that allows for a partial surrender of cash value.

Dividend Lack of Guarantee

A producer must state during sales presentations that dividends are NOT guaranteed.

Misstatement of Age Procedure

The insurer collects all overdue premiums plus interest based on the actual age.

Policy Summary Delivery Deadline

Must be provided no later than the date the policy is delivered.

Single Premium Life Recommendation

Appropriate for an older individual (e.g., $70$ years old) wanting to distribute savings while needing income.

Agent Evaluation Obligations

Includes completing all applications and collecting initial premiums.

Irrevocable Beneficiary

A beneficiary designation that the policyholder cannot change easily or at all.

Reciprocal Agreement

Allows a resident of one state to acquire a license in another without taking an exam.

Premium Mode

Defined as the frequency of premium payment.

Payer Benefit

Another name for the living benefit option in a life insurance policy.

Stock Company Ownership

A local insurance company owned by shareholders.

Replacement Rules (Group Life)

Replacement rules specifically apply to group life insurance.

Buyer's Guide Duty

Must explain the specific policy amounts and general information.

Replacing Agent Obligation

Must send the replacing insurer a list of all life insurance policies or annuity contracts to be replaced.