Free New Jersey Life & Health Insurance License Exam Practice Test

Sample NJ L&H practice questions

Try a few representative questions below. Each includes the correct answer and a short explanation — the same style you'll see in the full practice test.

1. Question 1Life Insurance Policy Types

   A New Jersey resident purchases a $250,000 term life insurance policy. The policy has a guaranteed level premium for the first 10 years. After 10 years, the policy converts to an annually renewable term (ART) policy. If the insured is 45 years old at issue and the annual premium for the first 10 years is $500, what is the most likely reason the premium will increase significantly after year 10?

   • A.The policy includes a 10-year term rider that is now expiring, necessitating a premium adjustment.
   • B.A new medical examination is required, and the increased premium reflects the higher risk of the insured's current age.
   • C.The policy converts to an annually renewable term (ART) policy, with premiums based on the insured's attained age.(Correct)
   • D.The policy enters a cash value accumulation phase, requiring higher premiums.

   Explanation

   After the guaranteed level premium period of 10 years, the policy converts to an Annually Renewable Term (ART) policy. In an ART policy, the premium increases each year as the insured's age increases, reflecting the rising risk of mortality.

2. Question 2Producer Responsibilities & Ethics

   Under New Jersey law, an insurance producer is acting as a fiduciary when they:

   • A.Recommend a policy that offers the highest commission.
   • B.Collect premiums and remit them to the insurer within 30 days.
   • C.Represent themselves as a financial advisor without proper licensing.
   • D.Disclose all material facts about a policy, including potential risks and benefits.(Correct)

   Explanation

   A fiduciary relationship requires the utmost good faith, loyalty, and honesty. Disclosing all material facts, including risks and benefits, is a core fiduciary duty. While collecting and remitting premiums is a responsibility, it doesn't encompass the full scope of fiduciary duties.

3. Question 3Health Insurance Policy Provisions

   A client has a health insurance policy with a $1,500 deductible and an 80/20 coinsurance provision. If the client incurs $7,500 in covered medical expenses, what is the maximum out-of-pocket cost for the client, assuming no out-of-pocket maximum is stated?

   • A.$7,500
   • B.$3,900
   • C.$2,700(Correct)
   • D.$1,500

   Explanation

   The client first pays the $1,500 deductible. The remaining expenses are $7,500 - $1,500 = $6,000. The client is responsible for 20% of this amount, which is $6,000 * 0.20 = $1,200. Total out-of-pocket cost is $1,500 (deductible) + $1,200 (coinsurance) = $2,700.

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