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New York Insurance Sales Practices: Practice Questions

20 free practice questions with explanations. Pick an answer for each, then check your score.

Exam weight: New York sales rules cited across the life and health sections on the New York Life, Accident and Health agent exam (17-55). Updated 2026-11-04.

Quick study guide

New York tests its sales rules by regulation number, so learn the number, the Part of 11 NYCRR it lives in, and the one or two deadlines each carries.

Regulation 187: best interest (Part 224)

Since the 2018 amendment, a producer recommending the purchase, replacement or modification of a life insurance policy or annuity must act in the consumer's best interest: only the consumer's interests count, and compensation is allowed only if it does not influence the recommendation. Before recommending, the producer makes reasonable efforts to collect suitability information (nine items for term with no cash value; fourteen for everything else, adding financial experience, liquidity needs, liquid net worth, risk tolerance and tax status). At the time of the recommendation the producer discloses the basis in a reasonable summary and documents it, plus any refusal to give information. A replacement is judged partly on whether the consumer had another replacement in the preceding 36 months. Insurers must supervise, audit and train producers. Agents may not call themselves financial planners or advisors unless properly licensed or certified and actually providing non-insurance financial services.

Regulation 60: replacement (Part 51)

Replacement covers lapsing, surrendering, using nonforfeiture values, reducing benefits, stopping or reducing premiums, or borrowing any portion of the loan value. Every application carries a signed Definition of Replacement. When replacement is likely, the agent gives the IMPORTANT Notice Regarding Replacement no later than when the applicant signs, and submits a signed Disclosure Statement before delivery explaining why the old coverage cannot meet the applicant's objectives.

Rule	New York requirement	Source
Return of a replacement policy or annuity	60 days from delivery, unconditional full refund paid within 10 days	51.6(d)
Existing insurer answers a request for disclosure information	Within 20 days	51.6(c)(2)
Replacing insurer sends Disclosure Statement to existing insurer	Within 10 days of delivery	51.6(b)(6)
Life buyer's guide / policy summary	At or before application / on delivery	Ins. Law 3209(b)
Medigap first-year commission	No more than 200% of second year; level renewals for at least 5 years	58.1(f)

Illustrations, advertising and seniors

Regulation 74 bans words like vanishing premium and requires a signed illustration, or a signed certification that none was used, with the application. Life advertising that names an insurer must give its full name and principal-office city (Ins. Law 2122); accident and health advertising falls under Regulation 34, and insurers must give the superintendent Medicare supplement ads before use. Regulation 199 bans misleading senior designations, including those from sales-training outfits. Medigap and long-term care replacements both need an agent-signed appropriateness statement and a replacement notice delivered before the policy is issued or delivered.

Practice questions

A New York agent recommends that a client buy a whole life policy. Under Regulation 187 as amended, what standard applies to that recommendation?
1. A.Suitability only, because the best interest standard applies just to annuities
2. B.Best interest: only the client's interests count, and pay must not sway the recommendation
3. C.A fiduciary standard under which the agent guarantees the client a favorable outcome
4. D.No standard for the agent, because the insurer alone is responsible for recommendations
Show answer
Answer: B. Section 224.4(a) requires a producer recommending a sales transaction to act in the consumer's best interest, and Part 224 defines a policy to include life insurance as well as annuities (224.3(d)). Under 224.4(b)(1) only the consumer's interests may be considered, and lawful compensation is permitted as long as it does not influence the recommendation. Section 224.0(c) states the standard does not guarantee or warrant an outcome, and the duty falls on the insurer only where no producer is involved.
Source: NY 17-55 outline: Life Insurance Basics, suitability (Reg 187, 224.2-224.4); 11 NYCRR 224.4 (Regulation 187); 11 NYCRR 224.0
When judging whether a recommended replacement of a client's annuity is suitable, Regulation 187 requires the producer to consider whether the client has had another policy replacement, in particular one within the preceding:
1. A.12 months
2. B.60 months
3. C.24 months
4. D.36 months
Show answer
Answer: D. Section 224.4(b)(3)(iv) lists the factors for a replacement: surrender charges, a new surrender period, lost benefits, higher fees, an adverse change in health rating, tax consequences, any real improvements, and whether the consumer has had another replacement, in particular one within the preceding 36 months. That 36-month look-back is the only period the regulation names, so the shorter and longer figures are wrong for New York.
Source: NY 17-55 outline: Life Insurance Basics, suitability (Reg 187, 224.2-224.4); 11 NYCRR 224.4 (Regulation 187)
Which item does Regulation 187 list as suitability information for a cash value policy or annuity, but not for a term life policy with no cash value?
1. A.Age
2. B.Risk tolerance
3. C.Annual income
4. D.Financial objectives
Show answer
Answer: B. Section 224.3(g)(1) gives a shorter list for term-only policies with no cash value: age, annual income, financial situation and needs, financial objectives, intended use, time horizon, existing assets, willingness to accept non-guaranteed elements, and other relevant information. Section 224.3(g)(2), for every other policy, adds financial experience, liquidity needs, liquid net worth, risk tolerance and tax status. Age, income and objectives appear on both lists.
Source: NY 17-55 outline: Life Insurance Basics, suitability (Reg 187, 224.2-224.4); 11 NYCRR 224.3 (Regulation 187 definitions)
A client refuses to tell a producer about her income and assets, and the producer does not recommend an annuity. She insists on buying one anyway. Under Regulation 187, which statement is correct?
1. A.The sale is prohibited until the client provides every item of suitability information
2. B.The producer's best interest duties do not apply, but the producer must document the refusal
3. C.The producer and insurer have no duties at all, so no records need to be kept
4. D.The producer must still certify in writing that the annuity is in her best interest
Show answer
Answer: B. Section 224.4(e)(1)(iii) removes the producer's obligations under subdivisions (a) and (b) when the consumer refuses to give relevant suitability information and the transaction is not recommended. Section 224.4(f)(3) and (4) still require the producer to document the refusal and that the sale was not recommended, and 224.4(e)(2) requires the insurer's effectuation to be suitable based on all information it actually knows. The sale itself is not banned.
Source: NY 17-55 outline: Life Insurance Basics, suitability (Reg 187, 224.2-224.4); 11 NYCRR 224.4 (Regulation 187)
A New York agent holds only an insurance license and provides no securities or other non-insurance financial services. She wants to print "Financial Advisor" on her business cards. Under Regulation 187:
1. A.She may use it as long as she also discloses how she is paid on each sale
2. B.She may use it if her appointing insurer approves the business card in writing
3. C.She may not, because she is not licensed for and does not provide non-insurance financial services
4. D.She may use it once she completes her continuing education for the licensing period
Show answer
Answer: C. Section 224.4(j) bars a producer from using the title financial planner, financial advisor or a similar title unless the producer is properly licensed or certified and actually provides securities or other non-insurance financial services. It also bars implying that a recommendation is comprehensive financial planning or investment management without a specific certification or designation in that area. Insurer approval, continuing education or a compensation disclosure does not cure the problem.
Source: NY 17-55 outline: Life Insurance Basics, suitability (Reg 187, 224.2-224.4); 11 NYCRR 224.4 (Regulation 187)
A captive agent mostly recommends one insurer's policies and turns to other insurers only when the primary insurer has nothing that fits. What does Regulation 187 require of him?
1. A.A prominent written disclosure, before recommending, of when he will and will not limit recommendations
2. B.Nothing, because captive agents are exempt from Regulation 187's best interest standard
3. C.The superintendent's prior approval for each policy he places with another insurer
4. D.Only an oral statement at policy delivery that he may limit his recommendations
Show answer
Answer: A. Section 224.4(m) lets a producer limit the range of policies recommended under a captive or affiliation agreement only if he prominently discloses to each consumer in writing, before a recommendation and in a form acceptable to the superintendent, the nature of the agreement and the circumstances in which recommendations will and will not be limited. A disclosure that merely says he may limit recommendations is insufficient, and he must follow the disclosed conditions with each consumer. Captive agents are not exempt from the best interest duty.
Source: NY 17-55 outline: Life Insurance Basics, suitability (Reg 187, 224.2-224.4); 11 NYCRR 224.4 (Regulation 187)
A client buys a new life policy and pays its first premium with a loan of 10% of the loan value of his existing whole life policy. Under Regulation 60, is this a replacement?
1. A.Yes, because borrowing any portion of the existing policy's loan value is a replacement
2. B.No, because the existing policy stays in force with its full face amount
3. C.Only if the existing policy lapses within one year of the new purchase
4. D.No, because the loan is less than 25% of the existing policy's loan value
Show answer
Answer: A. Section 51.2(a)(5) treats existing coverage as replaced when it is assigned as collateral or made subject to borrowing or withdrawal of any portion of the loan value, including dividend accumulations or paid-up additions, as part of the purchase of new coverage. New York sets no percentage threshold; the 25% figure appears in some other states' rules. Continuing the old policy with stopped or reduced premiums is also a replacement under 51.2(a)(6).
Source: NY 17-55 outline: Life Insurance Basics, replacement (Reg 60, 51.1-51.8); 11 NYCRR 51.2 (Regulation 60 definitions)
Regulation 60 does not apply when the existing life insurance being replaced is:
1. A.An individual deferred annuity whose surrender charge period has already ended
2. B.A whole life policy that was issued more than 20 years before the sale
3. C.Any term life policy, whatever its remaining term or conversion rights
4. D.A nonrenewable, nonconvertible term policy with five years or less until it expires
Show answer
Answer: D. Section 51.3(d) exempts replacement of a nonrenewable, nonconvertible term policy with five years or less to its expiration date. Other exemptions in 51.3 include conversions under a contractual privilege with the same insurer group and certain group or employer-paid coverage. Older whole life policies, annuities past their surrender period, and term policies that are renewable, convertible or have longer to run remain subject to the full procedure.
Source: NY 17-55 outline: Life Insurance Basics, replacement (Reg 60, 51.1-51.8); 11 NYCRR 51.3 (Regulation 60 exemptions)
An agent's application will replace a client's existing annuity. When must the agent present the "IMPORTANT Notice Regarding Replacement or Change of Life Insurance Policies or Annuity Contracts"?
1. A.Within 20 days after the existing insurer is notified
2. B.Only if the client asks for it before the policy is delivered
3. C.Not later than at the time the applicant signs the application
4. D.Within 10 days after the new contract is delivered
Show answer
Answer: C. Section 51.5(c)(4) and (5) require the agent to present the notice no later than when the applicant signs the application, leave a copy, and have the applicant acknowledge receiving and reading it. Before delivery the agent must also submit a signed Disclosure Statement giving the primary reasons for the new contract and why the existing one cannot meet the applicant's objectives (51.5(c)(7)). The 10-day and 20-day periods are insurer deadlines under 51.6, not the agent's.
Source: NY 17-55 outline: Life Insurance Basics, replacement (Reg 60, 51.1-51.8); 11 NYCRR 51.5 (duties of agents and brokers)
A New York client returns a replacement whole life policy 45 days after it was delivered. What must the replacing insurer give her?
1. A.Nothing, because the 10-day free look period has already passed
2. B.A premium refund only if the old insurer refuses to reinstate her original policy
3. C.The policy's cash value less any surrender charge that applies
4. D.An unconditional full refund of all premiums, paid within 10 days of receiving the policy
Show answer
Answer: D. Section 51.6(d) gives the owner of a replacement policy or contract 60 days from delivery to return it for an unconditional full refund of all premiums (cash surrender benefits plus all fees and charges for a variable or market value adjustment contract), paid within ten days of receipt. During that period the replaced insurer must reinstate the old coverage without new underwriting or a new contestable or suicide period once it receives proof of cancellation, any released funds and premium due. Insurance Law section 2123(a)(3)(D) requires this sixty-day period; the 10-day minimum return period mentioned in Insurance Law 3209(d)(7) does not shorten it.
Source: NY 17-55 outline: Life Insurance Basics, replacement (2123(a)(2, 3); Reg 60); 11 NYCRR 51.6 (duties of insurers); N.Y. Ins. Law 2123
An agent tells applicants to answer "no" to the replacement questions so the existing insurer will not be notified, and several of his clients later surrender their old policies after stating that no replacement was intended. Under Regulation 60:
1. A.Prohibited, and the pattern is prima facie evidence he knew replacement was intended
2. B.Only the insurer can be penalized, because it accepted the applications
3. C.It is a violation only if the new policies cost more than the old ones
4. D.There is no violation, because the applicants signed the answers themselves
Show answer
Answer: A. Section 51.7(a)(4) bars counseling an applicant to answer the replacement questions negatively to prevent notice to the insurer being replaced, and 51.7(a)(2) and (3) bar failing to ask those questions or recording an answer incorrectly. Under 51.7(c), a pattern of such replacements among one agent's clients is prima facie evidence of the agent's knowledge and intent to violate the Part. Penalties under 51.7(b) reach agents as well as insurers and can include restitution, restoration of policies, license suspension or revocation and fines.
Source: NY 17-55 outline: Life Insurance Basics, replacement (Reg 60, 51.1-51.8); 11 NYCRR 51.7 (prohibited acts)
An agent sells an individual life policy face to face in New York. When must the prospective purchaser receive the buyer's guide and the policy summary?
1. A.The buyer's guide at or before application, and the policy summary upon delivery
2. B.Both documents together at the time the policy is delivered
3. C.Both documents, but only if the applicant asks for them in writing
4. D.The policy summary at application, and the buyer's guide with the first annual report
Show answer
Answer: A. Insurance Law section 3209(b)(1) bars delivery of a life policy unless the buyer received the buyer's guide and preliminary information at or before the time the application was taken, and a policy summary upon delivery; 11 NYCRR 53-2.6 repeats the buyer's guide rule. Only a mail solicitation with no agent and at least a 30-day unconditional refund period may deliver the guide with the policy. For policy forms marketed with a complying illustration, the illustration takes the place of the preliminary information and policy summary (3209(l)).
Source: NY 17-55 outline: Life Insurance Basics, policy summary and buyer's guide (3209; Reg 74); N.Y. Ins. Law 3209; 11 NYCRR 53-2.6 (buyer's guide)
An agent shows a client an illustration in which projected dividends would pay the premiums after year 12. Which statement is prohibited under New York's illustration rules?
1. A."Dividends are not guaranteed and actual results may be more or less favorable."
2. B."See page one for the guaranteed elements."
3. C."Your premiums vanish after year 12."
4. D."This is a life insurance policy."
Show answer
Answer: C. Section 53-3.2(b)(8) bars using the term vanish or vanishing premium, or any similar term implying the policy becomes paid up, to describe a plan for using non-guaranteed elements to pay future premiums; 53-3.2(b)(3) also bars implying non-guaranteed elements are guaranteed. The other three statements are required, not forbidden: 53-3.3 requires a statement that non-guaranteed values may be more or less favorable, a description of the product as life insurance, and a reference to the guaranteed elements on pages showing only non-guaranteed ones.
Source: NY 17-55 outline: Life Insurance Basics, illustrations (Reg 74, 53-3.1 to 53-3.6); 11 NYCRR 53-3.2 (general rules for illustrations); 11 NYCRR 53-3.3 (basic illustrations)
An insurer markets a policy form with illustrations, but the agent uses no illustration when she sells it. What does 11 NYCRR 53-3.5 require?
1. A.The insurer must send an illustration only if the client asks within 30 days of delivery
2. B.She certifies in writing that none was used, and a conforming illustration comes with the policy
3. C.Nothing, because the agent alone decides whether an illustration is needed for the sale
4. D.The application is void and must be retaken with a signed illustration attached
Show answer
Answer: B. Under 53-3.5(b), if no illustration is used, or the policy is applied for other than as illustrated, the producer certifies that in writing on an insurer form, the applicant acknowledges that a conforming illustration will be provided no later than delivery, the form goes to the insurer with the application, and a basic illustration matching the issued policy is sent with the policy and signed by delivery. The application is not void. The insurer keeps these records until the later of six years after the policy ends or the next Department examination (53-3.5(e)).
Source: NY 17-55 outline: Life Insurance Basics, illustrations (Reg 74, 53-3.1 to 53-3.6); 11 NYCRR 53-3.5 (delivery of illustration and records)
A New York agent places a newspaper ad that names the life insurer she represents. Under Insurance Law section 2122, what must the ad state about that insurer?
1. A.A statement that the Department of Financial Services approved the ad
2. B.Its NAIC company code and its New York certificate of authority number
3. C.Its full name and the city, town or village of its principal office in the United States
4. D.Its financial strength ratings from at least two independent rating agencies
Show answer
Answer: C. Section 2122(b) requires every agent and broker to set out, in any advertisement, announcement, sign, pamphlet, circular or card that refers to an insurer, the insurer's full name and the city, town or village of its principal office in the United States. Section 2122(a) adds that statements about an insurer's financial condition must conform to section 1313 and that no ad may call attention to an unauthorized insurer. Ratings, a company code and a Department approval line are not what 2122 requires.
Source: NY 17-55 outline: Life Insurance Basics, advertising (2122); N.Y. Ins. Law 2122
A life agent pays for a "Certified Retirement Elder Specialist" designation from a company whose business is sales and marketing training; it has no continuing education requirement and no disciplinary process. Under Regulation 199, using this designation to sell annuities to seniors is:
1. A.Allowed, as long as he also holds a valid New York life and health agent license
2. B.Allowed, because he actually completed the course and paid the fee for the designation
3. C.Prohibited, because the issuing firm is a sales trainer without competency or education standards
4. D.Prohibited only if he charges the senior a separate fee for his financial advice
Show answer
Answer: C. Section 225.2(a)(2) prohibits senior-specific designations that are unearned, self-conferred, imply qualifications the producer lacks, or come from an organization primarily engaged in sales or marketing instruction or lacking reasonable standards for competency, discipline or continuing education. Section 225.2(c) treats words such as senior, retirement or elder combined with certified, specialist or advisor as signs of a senior designation. Under 225.3 a violation is an unfair or deceptive act and a determined violation under Insurance Law 2402(c), whether or not a fee is charged.
Source: NY 17-55 outline: Life Insurance Basics, senior-specific certifications (Reg 199, Part 225); 11 NYCRR 225.2 (Regulation 199); 11 NYCRR 225.3
An agent sells a Medicare supplement policy that will replace a client's Medicare Advantage plan. Under New York's Medicare supplement regulation, when and how is the replacement notice given?
1. A.Before issue or delivery, signed by applicant and agent, with copies for both applicant and insurer
2. B.Only if the new Medicare supplement policy contains a preexisting condition limitation
3. C.Within 30 days after the first premium is paid, mailed by the insurer to the applicant
4. D.No notice is needed, because a Medicare Advantage plan is not coverage that can be replaced
Show answer
Answer: A. Section 58.1(e)(1) applies when a Medicare supplement sale will replace accident and health coverage, expressly including Medicare supplement, Medicare select and Medicare Advantage coverage, HMO coverage or an employer plan. The issuer or agent furnishes the notice before issuance or delivery; a copy signed by applicant and agent goes to the applicant and the issuer keeps a signed copy. The preexisting-condition paragraphs may be deleted when they do not apply, but the notice itself is still required. The 30-day timing belongs to the separate duplicate-coverage notice sent with or after the first premium notice under 58.1(e)(3).
Source: NY 17-55 outline: Private Insurance for Senior Citizens, Medicare supplement replacement (Reg 193, Part 58); 11 NYCRR 58.1 (Regulation 193)
Which commission schedule is permitted under New York's Medicare supplement compensation rules for a sale that does not replace other coverage?
1. A.20% of premium in the first year and 10% in each of only two renewal years
2. B.30% of premium in the first year and 10% in each of five renewal years
3. C.20% in the first year, 10% in the second year and 5% in later renewal years
4. D.20% of premium in the first year and 10% in each renewal year for at least five renewal years
Show answer
Answer: D. Section 58.1(f) allows first-year compensation of no more than 200 percent of second-year compensation (20% is twice 10%, so 30% is too much), and requires renewal compensation to equal the second-year amount for no fewer than five renewal years, which rules out stopping after two years or dropping to 5%. When a Medicare supplement, Medicare select or Medicare Advantage plan is replaced, compensation may not exceed the renewal compensation. Compensation includes bonuses, gifts, prizes, awards and finder's fees.
Source: NY 17-55 outline: Private Insurance for Senior Citizens, permitted compensation arrangements (Reg 193, Part 58); 11 NYCRR 58.1 (Regulation 193)
An insurer selling Medicare supplement insurance in New York has an outside agency produce a television ad. Under Regulation 34, which statement is correct?
1. A.The advertising agency, not the insurer, is responsible for the ad's content
2. B.The insurer must give the superintendent a copy before use and is responsible for its content
3. C.Television ads are exempt, because Regulation 34 covers only printed material
4. D.The insurer may run the ad first and file it later with its annual statement
Show answer
Answer: B. Section 215.5(d) requires every insurer providing Medicare supplement insurance to provide the superintendent a copy of any written, radio or television advertisement before its use in New York. Under 215.2(b) all advertisements are the insurer's responsibility regardless of who wrote them, and 215.3(a) defines advertising to include TV and radio scripts. The annual certificate of compliance under 215.17(b) is an additional, after-the-fact requirement, not a substitute for prior filing.
Source: NY 17-55 outline: Accident and Health Insurance Basics, advertising (Reg 34, 215.1-215.18); 11 NYCRR 215.5 (Regulation 34); 11 NYCRR 215.2
An agent takes an application for an individual long-term care policy that will replace the client's existing nursing home insurance. Under Regulation 62, what must the application include or have attached?
1. A.An agent-signed statement that, after reviewing her current coverage, the replacement is appropriate
2. B.A written guarantee that the new policy covers all preexisting conditions immediately
3. C.A physician's certification that the applicant currently needs long-term care services
4. D.Written consent from the existing insurer agreeing to the proposed replacement
Show answer
Answer: A. Section 52.29(b) requires an agent-taken long-term care application to include a signed agent statement that the replacement or additional coverage is appropriate for the applicant's needs, and 52.29(a) requires the application to list existing accident and health policies and identify those being replaced. Under 52.29(c), the insurer or agent must also give a replacement notice before the policy is issued or delivered, which warns that preexisting conditions may not be covered immediately and the new premium may be higher. No physician certificate or consent from the existing insurer is required.
Source: NY 17-55 outline: Long-Term Care Insurance, replacement (Reg 62, 52.29); 11 NYCRR 52.29 (Regulation 62, long-term care replacement)

Where these questions come from: New York Life, Accident and Health agent exam outline (series 17-55, PSI candidate information bulletin updated 28 Apr 2023), sections: Life Insurance Basics, licensee responsibilities (8%); Accident and Health Insurance Basics, marketing requirements (5%); Long-Term Care (LTC) Insurance (6%); Private Insurance for Senior Citizens and Special Needs Individuals (6%). See how we write questions.