Life-Producer Exam Dumps - Maryland Insurance Administration Maryland Insurance Questions and Answers

Comprehensive and Detailed Step by Step Explanation:Theentire contract clauseensures transparency by limiting the policy's terms to the policy document and any attached application materials.

The application attached to the policy (B):Correct. It becomes part of the legal agreement between the insurer and the policyholder.

The Medical Information Bureau report (A):Used for underwriting but not part of the policy.

Any attending physician's statement (C):May inform underwriting but is not included in the policy.

The producer’s report to the insurer (D):Internal to the insurer and irrelevant to the contract itself.

References:Maryland Insurance Code §16-203, Entire Contract Provision Standards, and COMAR 31.09.09.

Comprehensive and Detailed Step by Step Explanation:The Maryland Insurance Administration (MIA) is authorized to inspect the records of insurers and agencies to ensure compliance with laws:

Yes, because of the powers defined by state laws (B):Correct. The MIA has broad authority under Maryland law to audit, inspect, and investigate insurance business practices.

No, because of privacy considerations (A):Incorrect. Regulatory inspections are exempt from privacy concerns when conducted lawfully.

Only an officer of the court (C):Not required; the MIA operates independently within its legal mandate.

Public domain records (D):Incorrect; insurance records are not publicly accessible unless required by law.

References:Maryland Insurance Article §2-209, COMAR 31.03.01, and Regulatory Oversight Guidelines.

Comprehensive and Detailed Step by Step Explanation:The Maryland Insurance Administration (MIA) has sole authority to regulate, suspend, or revoke an insurance producer’s license for violations of state insurance laws:

Maryland Insurance Administration (C):Correct. The MIA oversees producer licensing, compliance, and disciplinary actions.

Appointing insurer (A):Can terminate an appointment but cannot revoke a license.

Continuing education provider (B):Only offers training and has no regulatory authority.

Attorney General (D):Handles legal actions but does not directly manage licensing.

References:Maryland Insurance Article §10-126, Producer Regulation Guidelines, COMAR 31.03.13.

Comprehensive and Detailed Step by Step Explanation:Aninsurable interestexists when the policyholder benefits more from the insured’s life than their death.

Benefiting from the other person’s continued life (C):Correct. This applies to relationships where there is a legal, financial, or familial dependence.

Gaining economically by the death of the other person (A):Mischaracterizes insurable interest; financial gain from death without a legitimate relationship is unethical and illegal.

Continuing on good terms (B) and seeing the person survive (D):Do not constitute insurable interest under Maryland law.

References:Maryland Insurance Article §12-201, Insurable Interest Guidelines, and COMAR 31.09.03.

Comprehensive and Detailed Step by Step Explanation:A viatical settlement allows a policyowner (often with a terminal illness) to sell their life insurance policy for immediate cash, typically to a third party.

Less than the death benefit (D):The settlement amount is a fraction of the policy's face value, reflecting the buyer's expected profit after paying premiums and collecting the death benefit.

Equal to the sum of all premiums paid (A):This is incorrect as premiums paid do not determine the settlement amount.

Equal to the death benefit (B):The buyer profits from receiving the full death benefit upon the insured’s death, so they pay less upfront.

Greater than the death benefit (C):This would result in a financial loss for the buyer, which is not the case in viatical settlements.

References: Maryland Viatical Settlement Act, COMAR 31.09.10, and Terminal Illness Policyholder Assistance Guidelines.

Comprehensive and Detailed Step by Step Explanation:Thebeneficiaryis the individual or entity named in the life insurance policy to receive the death benefit upon the insured’s death.

Designated recipient of proceeds (B):The policyholder nominates this party in the policy documents.

Ownership interest in the policy (A):Refers to the policyowner, who controls and funds the policy but may not be the beneficiary.

Insurer (C):Issues and administers the policy but is not a recipient.

Owner of the cash value fund (D):This pertains to cash value accumulation, separate from death benefit designation.

References: Maryland Life Insurance Policy Provisions and Beneficiary Designation Rules.

Comprehensive and Detailed Step by Step Explanation:In Maryland, the replacement of life insurance policies requires safeguards to protect policyholders.

TheImportant Notice Replacement of Life Insurance or Annuitiesform must be signed byboth the applicant and the insurance producer (B)to ensure informed consent and regulatory compliance.

The applicant only (A)does not suffice, as producer acknowledgment is essential.

The producer only (C)lacks the policyholder’s agreement.

An officer of the insurer (D)does not participate in this process.

References: Maryland Replacement of Life Insurance Regulations, COMAR 31.09.05.

Comprehensive and Detailed Step by Step Explanation:Maryland law requires that the results of medical examinations used to determine insurability:

Be disclosed to thephysician of the applicant’s choice (B), but only if the applicant requests it.

This ensures privacy and confidentiality while giving the applicant access to critical information.

Beneficiaries (A)andunderwriters (C)do not receive this information.

Physicians furnishing information (D)already have access to their own submissions.

References: Maryland Insurance Code on Privacy and Disclosure of Medical Information.

Comprehensive and Detailed Step by Step Explanation:Under a1035 exchange, policyholders can replace an insurance policy or annuity without immediate tax consequences. However, gains realized later upon surrender of the new policy are taxed as:

Ordinary income (A):The difference between the cash surrender value and the cost basis (premiums paid) is taxed as income.

Capital gains (B):Not applicable because gains on life insurance are classified as ordinary income.

Ordinary income plus a 10% surcharge (C):The 10% penalty applies only to premature withdrawals from retirement accounts, not life insurance.

Deferred capital gain (D):Does not apply, as life insurance gains are not taxed under capital gain rules.

References:IRS Code Section 1035, Maryland Tax Treatment of Life Insurance Policies, and COMAR 31.09.12.

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.