New Jersey Life Producer Practice Exam

The correct statement is that the liability caps for death benefits under the New Jersey Life and Health Guaranty Association are based on policy type. This means that different types of life insurance policies may have different coverage limits provided by the Guaranty Association in the event of an insurer's insolvency.

In New Jersey, the Guaranty Association provides certain protections to policyholders, which vary depending on the specific nature of the insurance product. For life insurance, the maximum amount of death benefit protection may indeed differ depending on the policy type, reflecting an approach that recognizes the diversity in insurance products and their inherent risk profiles.

This structured limitation helps ensure that the association can provide its guarantees more effectively across a broader range of policies, rather than imposing a one-size-fits-all cap, which may not adequately address the needs of different policyholders. Understanding the basis for these liability caps is crucial for life producers, as it influences how they advise clients regarding the stability and security of their insurance coverage.