State RegulationsNJ specificDifficulty 3/5
During the sale of a life policy, a producer exaggerates the projected dividends. Months later, the insurer mishandles the client's claim by delaying its investigation. Under New Jersey trade practice standards, which pairing of violations is correct?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
New Jersey separates the marketplace from the claims desk. Exaggerated statements in the sale are misrepresentation — a sales-side unfair trade practice — while claim-file delay and poor investigation are governed by the unfair claim settlement standards of N.J.S.A. 17B:30-13.1 and N.J.A.C. 11:2-17.1. Both are enforced by the New Jersey Department of Banking and Insurance, but they are distinct categories with distinct elements, which is why exam questions often test whether the candidate can tell them apart.
Why the other options are wrong
- A) The dividend exaggeration happened at the point of sale, before any claim existed; it cannot be a claim settlement practice.
- C) Signing the application does not fold the sale into the claims process; misrepresentation in the sale remains a sales-side violation.
- D) Both acts fall squarely within the department's trade practice jurisdiction; neither is left to internal review alone.
Memory hook
Sales lies are misrepresentation; claims lies and delays are settlement practices — two desks, two rulebooks.