Free New Hampshire life insurance practice test.

Answer A. Complete required continuing education and renew the license on schedule

Resident producers must complete continuing education and renew their license on the required schedule to stay active. A brand-new full application is not needed at each renewal; a renewal process applies. There is no standard personal surety bond required simply to renew. Producers do not retake the exam to renew as long as they meet CE and renewal requirements.

Answer A. Suspension of the license

Suspension is a recognized disciplinary action, along with denial and revocation. Reinstatement is not guaranteed and often carries conditions. A total employment ban is not a licensing penalty. There is no automatic conversion to a nonresident license as a disciplinary result.

Answer D. To protect the public and ensure compliance with insurance laws

Investigations and examinations exist to protect the public and confirm that insurers and producers follow the law and remain financially sound. Premium taxes are collected but that is not the purpose of investigations. The Commissioner reviews rates but does not simply set all rates directly, and this is separate from investigative powers. The Commissioner never sells insurance; the department regulates the industry.

Answer B. A current, valid producer license

An insurer can only appoint a person who already holds a valid producer license, because the appointment builds on that license. A completed sale is not required first; appointment can occur before any sales. New Hampshire does not require producers to post a surety bond as a condition of appointment. There is no minimum experience requirement to be appointed.

Answer C. Conversion of funds

Using client or insurer money that a producer holds in trust for his own purposes is conversion of funds, a serious violation. Controlled business refers to writing insurance mostly on yourself and close associates. A referral is directing a person to a producer, not misusing money. Twisting is convincing someone to replace a policy through misrepresentation, which does not describe misusing premium funds.

Answer D. Boycott, coercion, and intimidation

Refusing to deal with an insurer to restrain trade or force it out of business falls under boycott, coercion, and intimidation. Illegal inducement involves offering something not in the policy to make a sale. Defamation is false statements harming reputation. Unfair claim settlement concerns mishandling of claims, not market pressure.

Answer A. It is a form of insurance fraud that may be reported and prosecuted

Knowingly submitting a false statement to obtain a benefit is insurance fraud and can be both reported and prosecuted. Insurer approval does not make a false claim legal. Fraud can carry criminal penalties, not just civil ones. A small dollar amount does not excuse fraud.

Answer A. The insurer must give James the name and address of the reporting agency

When adverse action is taken based on a consumer report, the FCRA requires the insurer to tell the consumer and provide the name and address of the agency that supplied it, so the consumer can review and dispute it. The insurer is not forced to approve coverage, pay a penalty, or delete the report.

Answer B. The 1033 consent is a specific federal requirement to lift a criminal prohibition, separate from a state's general background review

A state background check screens applicants generally, but 1033 consent is a distinct federal step needed to remove the specific federal bar on a disqualified person working in insurance. They are not identical, 1033 does not replace the state application, and 1033 covers disqualifying felonies rather than minor tickets.

18 USC Sections 1033 and 1034

Answer D. The Federal Trade Commission

The Federal Trade Commission maintains and enforces the National Do Not Call Registry, working together with the Federal Communications Commission. The Department of Insurance regulates insurance at the state level but does not run the registry. The NAIC is an organization of state regulators, not a federal enforcement agency. The Social Security Administration has nothing to do with telemarketing rules.

Answer B. The chance that a person's house may burn down

Pure risk involves only the chance of loss or no loss, such as a house burning down, and it is insurable. Investing, betting, and starting a business all involve a chance of gain or loss, which makes them speculative risk. Speculative risk is not insurable because it includes the possibility of profit.

Answer A. When the insurer issues the policy as applied for

When no premium is submitted with the application, the application is treated as the offer and the insurer accepts by issuing the policy as requested. Nora signing the application is only her offer. The producer forwarding it is just delivery of the offer. Nora reading the policy does not create acceptance.

Answer A. The insurer

The insurer is the principal because the producer acts on the insurer's behalf. The producer is the agent, not the principal. The policyowner is a third party the agent deals with, not the principal. The insurance department is the regulator and is never a party to the agency relationship.

Answer A. A representation

A representation is a statement believed true to the best of the applicant's knowledge; it only needs to be substantially true. A warranty is guaranteed to be absolutely true. A concealment is deliberately hiding a known fact. A material misstatement of law is not a standard classification for applicant statements.

Answer B. Only at the time the policy is issued

In life insurance, insurable interest must exist at the time the policy is applied for and issued, but it does not have to continue afterward. This differs from property insurance, where interest must exist at the time of loss. Requiring it at death or continuously is incorrect for life insurance. Requiring it only at claim time is also wrong.

Answer B. Funds to pay off the family mortgage

The needs approach lists specific family needs such as paying off the mortgage, covering final expenses, and funding education. Paying off the mortgage is a classic need item, so that is correct. Future earnings is the basis of the human life value approach, not an itemized need. The agent's commission and the insurer's profit are costs to the company, not needs of the insured's family.

Answer B. Each partner owns a policy on the other partner

In a cross-purchase plan, each owner buys and owns a policy on the other owner's life. When one dies, the survivor uses the death benefit to buy the deceased's share. If the business itself owned the policies, that would be an entity (stock redemption) plan, not cross-purchase. A trustee is optional and not required, and the deceased's estate is what gets bought out, not the policy owner.

Answer D. Interest lowers the premium through investment earnings, while expense raises it to cover company costs

These two factors work in opposite directions. Assumed interest earnings reduce the premium because the insurer expects to make money on invested premiums, while expenses (loading) increase the premium to pay for running the business. They do not both lower the premium, and their roles are not reversed. Claims are covered by the mortality factor, not interest, and expense does not cover investment losses.

Answer C. A business entity license covers a firm and requires a designated licensed individual responsible for compliance, while an individual license covers one person

A business entity license authorizes a firm to act as a producer and requires a designated responsible licensed person to oversee compliance, while an individual license covers a single person. The two are not the same. A business entity license does not eliminate the need for licensed individuals; producers acting for the firm must still be licensed. And an individual license is valid on its own and is not limited to use only within a firm.

Answer B. To penalize the violation and deter future misconduct

Administrative fines punish the wrongdoing and discourage repeat behavior. They are not used to cover the violator's legal fees or education costs, and they are not paid to insurers as lost sales reimbursement.