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

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.

Comprehensive and Detailed Step by Step Explanation:Defamationin the context of insurance involves publishing false or malicious statements intended to harm an insurer’s reputation.

Defamation (A):Includes false claims about an insurer’s financial stability, products, or business practices, prohibited under Maryland law.

Intimidation (B):Refers to coercing individuals into specific actions, unrelated to false publications.

Extortion (C):Involves obtaining something of value through threats, unrelated to false statements.

Coercion (D):Focuses on forcing compliance, not publishing falsehoods.

References:Maryland Insurance Administration’s Unfair Trade Practices Act, COMAR 31.15.03.

Comprehensive and Detailed Step by Step Explanation:Aflexible premium fixed annuityis designed to allow policyholders flexibility in premium payments while providing guaranteed growth.

Flexible deposits:Policyholders can make variable contributions based on their financial situation.

Deferred taxation:Earnings grow tax-deferred until withdrawal.

Guaranteed minimum interest rate:Fixed annuities offer this feature to protect against market downturns.

Death proceeds equal to cash value:Upon death, beneficiaries typically receive the accumulated cash value.

Other Options:

Adjustable whole life policy (A):Features adjustable premiums but lacks deferred taxation and guaranteed rates.

Deferred annuity (B):Generic and does not specify the features of fixed annuities.

Universal life (D):Provides more flexibility but differs in guaranteed returns.

References:Maryland Annuity Guidelines, COMAR 31.09.08, and Tax-Deferred Financial Product Regulations.

Comprehensive and Detailed Step by Step Explanation:The licensing of insurance agents ensures professional competency and ethical conduct:

Licensuredemonstrates qualifications (B)required to represent insurers and serve clients.

Maryland does not impose limits on the number of licensed agents, invalidating (A).

Monitoring sales activity (C) and rate regulation (D) are distinct regulatory functions.

References: Maryland Insurance Administration Licensing Requirements.

Comprehensive and Detailed Step by Step Explanation:Individual life insurance policies often allow riders or supplementary coverage options, but they do not cover workers' compensation, which is a separate insurance category.

Disability (A):Can be included as a rider, such as a waiver of premium or disability income benefit.

Long-term care (B):Often available as an optional rider to address extended medical care expenses.

Burial (D):Final expense policies or riders can be added to cover funeral and burial costs.

Workers’ compensation (C):Not covered under life insurance policies; this is a specific insurance product regulated differently.

References:Maryland Life Insurance Rider Guidelines, Workers' Compensation Insurance Regulations, and COMAR 31.09.03.