Selected Life-Producer Maryland Insurance Questions Answers

Comprehensive and Detailed Step by Step Explanation:In an annuity, theannuitant (D)is the individual entitled to receive benefits during the liquidation phase.

Theowner (A)controls the contract but may not be the recipient.

Thebeneficiary (B)receives funds only after the annuitant’s death.

Nominator (C)is not a term used in annuities.

References: Maryland Annuity and Retirement Income Provisions.

Comprehensive and Detailed Step by Step Explanation:Insurable interest arises when there is a legitimate interest in the continued life of another person.

Marriage partners (C)inherently have an insurable interest due to emotional and legal bonds.

Competitors (A)andtraveling companions (D)do not typically meet the threshold for insurable interest.

Business associates (B)may have insurable interest, but it usually requires contractual agreements (e.g., buy-sell agreements).

References: Maryland Insurance Code and Insurable Interest Guidelines.

Comprehensive and Detailed Step by Step Explanation:Cash values in whole life insurance are a key feature, and they:

Accumulate as a result of thelevel premium concept (A), where excess premiums in the early years of the policy build the cash value.

Are guaranteedin whole life policies, contrary to option B.

Do not equal the face value at age 65 (C) unless specifically structured for that purpose.

Continue to grow beyond age 65 as long as the policy remains active, invalidating option D.

References: Maryland Insurance Guidelines on Whole Life Policies, Cash Value, and Premium Structures.

Comprehensive and Detailed Step by Step Explanation:Thecost basisis the total of all premiums paid minus dividends received or used to offset premiums. This figure is used to calculate the taxable portion of the cash value upon surrender.

Cost basis (D):Represents the non-taxable portion of the surrender value; any amount exceeding this is considered taxable income.

Cash value (A):The policy’s accumulated value, which may include taxable gains.

Loan value (B):Refers to the amount available for borrowing against the policy.

Gross proceeds (C):The full amount received upon surrender, not accounting for cost basis deductions.

References:IRS Guidance on Life Insurance Taxation, Maryland Life Insurance Surrender Rules, and COMAR 31.09.14.