New Jersey Life Producer Law Practice Test

Question: 1 / 400

What must an agent acquire when replacing a life insurance policy?

The applicant's credit score

The applicant's justification for the replacement

When replacing a life insurance policy, the agent is required to acquire the applicant's justification for the replacement. This is crucial because it ensures that the applicant fully understands the reasons for changing their existing policy and the implications of doing so. By obtaining this justification, the agent confirms that the applicant is making an informed decision that aligns with their financial needs and goals.

The requirement for justification helps prevent the practice of churning, where agents might encourage clients to replace policies without a valid reason, potentially leading to losses in benefits or increases in costs for the client. Ultimately, it serves as a protective measure for consumers, ensuring that any changes to their insurance coverage are necessary and beneficial. This practice is part of the regulatory framework designed to promote transparency and ethical behavior among insurance agents.

Get further explanation with Examzify DeepDiveBeta

The applicant's previous insurer's consent

The applicant's medical history

Next Question

Report this question

Download New Jersey Life Producer Law Practice Test PDF Study Guide
Subscribe

Get the latest from Examzify

You can unsubscribe at any time. Read our privacy policy