New York State Exam New York State Insurance License Exam 1 — Questions and Answers
Question 1: Which New York state agency is responsible for regulating insurance companies, agents, and brokers operating in the state?
- New York State Division of Licensing Services
- New York Department of Financial Services (DFS) (Correct answer)
- New York State Insurance Bureau
- New York Office of Consumer Protection
Correct answer: New York Department of Financial Services (DFS)
The New York Department of Financial Services (DFS) is the state agency that regulates all insurance companies, agents, and brokers in New York.
Question 2: What is the minimum free-look period required for life insurance policies sold in New York?
- 5 days
- 7 days
- 10 days (Correct answer)
- 30 days
Correct answer: 10 days
New York law mandates a minimum 10-day free-look period for life insurance policies, during which the policyholder may return the policy for a full premium refund.
Question 3: Which of the following best defines 'insurable interest' in insurance law?
- The policyholder's ability to afford insurance premiums
- A financial stake in the insured subject such that a loss would cause financial harm (Correct answer)
- The right to name any person as a beneficiary on a policy
- The insurance company's interest in minimizing claim payouts
Correct answer: A financial stake in the insured subject such that a loss would cause financial harm
Insurable interest means the policyholder must have a financial relationship to the insured subject, so that a loss would cause them actual financial harm.
Question 4: Under New York law, which of the following activities requires a valid insurance license?
- Referring a friend to an agent without receiving compensation
- Teaching a general insurance concepts course at a college
- Soliciting or negotiating insurance contracts for compensation (Correct answer)
- Completing claim paperwork as a licensed public adjuster's paralegal
Correct answer: Soliciting or negotiating insurance contracts for compensation
New York law requires a license for any person who solicits, negotiates, or sells insurance in exchange for compensation.
Question 5: Which legal principle ensures that insurance restores the insured to the same financial position before a loss, but does not allow the insured to profit?
- Subrogation
- Utmost good faith
- Indemnity (Correct answer)
- Adhesion
Correct answer: Indemnity
The principle of indemnity ensures insurance compensates the insured only for actual financial loss, preventing any profit from an insurance claim.
Question 6: How long is a standard New York insurance agent's license valid before it must be renewed?
- 1 year
- 2 years (Correct answer)
- 3 years
- 5 years
Correct answer: 2 years
New York insurance agent and broker licenses are issued on a biennial (2-year) cycle and must be renewed every two years.
Question 7: What is a 'binder' in New York insurance practice?
- A booklet containing all policy exclusions
- A temporary written agreement providing insurance coverage until a formal policy is issued (Correct answer)
- A premium payment schedule attached to the policy
- A document transferring ownership of a policy to a third party
Correct answer: A temporary written agreement providing insurance coverage until a formal policy is issued
A binder is a temporary written contract that provides immediate insurance coverage while a formal policy is being prepared and issued.
New York State Exam New York State Insurance License Exam 1
Which New York state agency is responsible for regulating insurance companies, agents, and brokers operating in the state?