New Jersey Life Insurance Practice Exam Free - 2026

• A. 5 days after delivery
• B. 10 days after she receives the policy
• C. 20 days after the application date
• D. 30 days after the policy date

Correct answer: B. 10 days after she receives the policy

Explanation: Individual life policies delivered in New Jersey must allow cancellation during a period of no less than 10 days after the policyholder receives the policy, with a prompt refund of any premium paid, including policy fees or other charges. See N.J.S.A. 17B:25-2.1.

• A. 10 days; coverage is suspended until payment
• B. 31 days; coverage continues only if the insurer consents
• C. 30 days; the policy continues in full force
• D. 60 days; the policy continues in full force

Correct answer: C. 30 days; the policy continues in full force

Explanation: New Jersey life policies must provide a grace period of 30 days (or, at the insurer's option, one month of not less than 30 days), during which the policy continues in full force. See N.J.S.A. 17B:25-3.

• A. 6% per annum
• B. 8% per annum
• C. 10% per annum
• D. No interest may be charged during the grace period

Correct answer: A. 6% per annum

Explanation: During the grace period, the insurer may impose an interest charge not in excess of 6% per annum for the number of days of grace elapsing before payment of the premium. See N.J.S.A. 17B:25-3.

• A. Yes, misstatements may be contested at any time
• B. Yes, if it refunds all premiums
• C. No, unless the insured consents
• D. No; after 2 years in force during the insured's lifetime, the policy is incontestable except for nonpayment of premium

Correct answer: D. No; after 2 years in force during the insured's lifetime, the policy is incontestable except for nonpayment of premium

Explanation: A New Jersey life policy must be incontestable, except for nonpayment of premiums, after it has been in force during the lifetime of the insured for 2 years from its date of issue. Disability and accidental death benefits are excluded from this rule. See N.J.S.A. 17B:25-4.

• A. It has no cash value until the insured reaches age 65
• B. It still requires annual premiums to stay in force
• C. It has immediate cash value and, under federal tax rules, is generally a modified endowment contract
• D. Its death benefit automatically decreases each year

Correct answer: C. It has immediate cash value and, under federal tax rules, is generally a modified endowment contract

Explanation: Single-premium whole life is bought with one payment and needs no further premiums, and substantial cash value exists immediately. Because one premium far exceeds the seven-pay test limit, such policies issued since 1988 are generally modified endowment contracts (MECs): lifetime withdrawals and loans are taxed earnings-first and may face a 10% penalty before age 59 1/2, though the income-tax-free death benefit is preserved.

• A. Straight whole life
• B. Accidental death and dismemberment
• C. Annual renewable term
• D. Decreasing term

Correct answer: A. Straight whole life

Explanation: Straight whole life is designed for lifetime coverage with level premiums and guaranteed cash value accumulation under the policy contract.

• A. Survivorship life policy
• B. Joint life policy
• C. Family income policy
• D. Group credit policy

Correct answer: B. Joint life policy

Explanation: A joint life policy covers two or more insureds and commonly pays when the first insured dies. Survivorship life usually pays after the second death.

• A. the policy reaches one year
• B. the first insured dies
• C. the second insured dies
• D. either insured becomes disabled

Correct answer: C. the second insured dies

Explanation: Survivorship life, also called second-to-die life, generally pays after the last surviving insured dies.

• A. a homeowner's liability exposure
• B. a hospital expense bill
• C. a business inventory loss
• D. a borrower's outstanding debt

Correct answer: D. a borrower's outstanding debt

Explanation: Credit life is designed to pay off or reduce a borrower's covered debt if the insured borrower dies.

• A. The policyowner may change coverage elements within policy limits
• B. The policyowner directs cash value into separate account subaccounts
• C. The policy provides a level face amount for a fixed period of years and then expires
• D. The policy's cash value growth is tied to a stock market index

Correct answer: A. The policyowner may change coverage elements within policy limits

Explanation: Adjustable life allows certain changes, such as premium amount, face amount, or protection period, within insurer and policy guidelines.

• A. To cancel the policy immediately after a missed payment
• B. To provide extra time to pay a premium after the due date
• C. To let the insurer delay all claim payments
• D. To increase the policy face amount automatically

Correct answer: B. To provide extra time to pay a premium after the due date

Explanation: The grace period gives the policyowner limited extra time to pay a premium while coverage usually remains in force.

• A. Incontestability provision
• B. Entire contract provision
• C. Reinstatement provision
• D. Ownership provision

Correct answer: C. Reinstatement provision

Explanation: The reinstatement provision may allow a lapsed policy to be restored if the policyowner meets the insurer's conditions, such as proof of insurability and payment of overdue amounts.