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NEW QUESTION # 44
Which one of the following statements about participating life insurance is true?
- A. Policyowners are assessed monthly for losses.
- B. The insured must be the policyowner.
- C. Policyowners may be entitled to receive dividends.
- D. The insurer must be a stock company.
Answer: C
Explanation:
Participating life insurance policies are typically issued by mutual insurers and allow policyholders to:
Receive dividends (A), which are excess profits returned to policyholders.
Policyholders are not assessed for losses (B); insurers absorb losses.
The insured and policyowner can be separate entities, invalidating (C).
Mutual insurers, not stock companies, issue most participating policies, making (D) incorrect.
References: Maryland Mutual Insurance Practices and Participating Policy Guidelines.
NEW QUESTION # 45
If an individual's occupation is considered to be illegal:
- A. It must be stated as such on an accident and health insurance application
- B. It may require a waiver on a disability income insurance policy
- C. It may result in a denial of a disability income claim
- D. It results in a substandard rating on an accident and health insurance policy
Answer: C
Explanation:
Illegal occupations (Insurance Article, § 12-101) can lead to claim denials if disability arises from illegal acts, per public policy. Disclosure isn't mandated, waivers don't apply, and ratings adjust risk, not legality.
References:Maryland Insurance Article, § 12-101; MIA claims policies.
NEW QUESTION # 46
All of the following are common underwriting factors used by life insurance companies EXCEPT:
- A. Amount of insurance applied for
- B. Driving record
- C. Family health history
- D. Ethnic heritage
Answer: D
Explanation:
Underwriting involves evaluating risk factors that could influence the likelihood of claims and ensuring compliance with anti-discrimination laws.
Ethnic heritage (A): Incorrect. Using ethnic heritage as an underwriting factor violates anti-discrimination laws, including Maryland Insurance Article §27-501.
Amount of insurance applied for (B): Correct. Insurers consider coverage amounts to assess risk and pricing.
Driving record (C): Correct. Poor driving history, particularly DUI incidents, increases risk.
Family health history (D): Correct. Inherited conditions and family medical history help predict potential health risks.
References: Maryland Insurance Anti-Discrimination Laws, Life Insurance Underwriting Standards, and COMAR 31.08.07.
NEW QUESTION # 47
Responsibilities of the life insurance producer in the process of underwriting include all of the following EXCEPT:
- A. Determining the final rate classification
- B. Gathering complete information for the application
- C. Notifying the insurer of any material information not in the application
- D. Seeking any additional information requested by the insurer
Answer: A
Explanation:
Role of the producer vs. the insurer in underwriting.
In Maryland, underwriting authority belongs to the insurer, not the producer.
Producers act as field underwriters, collecting information but not making final decisions.
Evaluate each option.
A). Gathering complete application information
This is a core producer responsibility.
B). Determining the final rate classification
Incorrect. Only the insurer's underwriting department assigns rate classes.
C). Seeking additional information requested by the insurer
Producers commonly assist in obtaining medical records or clarifications.
D). Notifying the insurer of material information
Maryland law requires disclosure of material facts affecting insurability.
Conclusion.
The producer does not determine final underwriting classifications, making option B correct.
NEW QUESTION # 48
Pat owns a small business and is interested in enrolling her son in the Maryland Children's Health Insurance Program. Which of the following is the MOST appropriate person for Pat to contact for enrollment?
- A. A certified Navigator or authorized Producer for the Individual Exchange
- B. The Maryland Insurance Commissioner
- C. A SHOP Exchange Navigator
- D. An Insurance Producer authorized to work in the SHOP Exchange
Answer: A
NEW QUESTION # 49
Which of the following is NOT a mandated benefit in Maryland?
- A. Hearing aids for children
- B. Weight reduction programs
- C. Treatment of mental illness
- D. Treatment of substance abuse
Answer: B
Explanation:
Maryland mandates mental health (§ 15-802), substance abuse (§ 15-803), and hearing aids for children (§ 15-
838), but weight reduction programs are elective and not required (Insurance Article, § 15-801).
References:Maryland Insurance Article, § 15-801, § 15-802, § 15-803, § 15-838; MIA mandated benefits.
NEW QUESTION # 50
To be eligible for major medical extended care benefits, a patient must:
- A. Require physical therapy
- B. Require continuous skilled nursing care
- C. Have had surgery
- D. Be terminally ill
Answer: B
Explanation:
Extended care under major medical (Insurance Article, § 15-201) requires continuous skilled nursing care (e.
g., nursing home), not just terminal illness, surgery, or therapy, which have broadercriteria.
References:Maryland Insurance Article, § 15-201; MIA major medical standards.
NEW QUESTION # 51
The life insurance buyer ' s guide includes information about all of the following EXCEPT how to:
- A. Compare life insurance policy requirements
- B. Decide how much life insurance to buy
- C. Take civil action against an insurer
- D. Calculate
Answer: C
Explanation:
The life insurance buyer's guide is designed to help potential policyholders make informed decisions about life insurance by:
Explaining how to decide how much life insurance to buy (C), ensuring individuals purchase adequate coverage for their needs.
Providing details to compare life insurance policy requirements (D) to evaluate and choose the best policy.
Showing how to compare rates (A) for different policies to find cost-effective options.
However, it does not include instructions for taking civil action against an insurer (B). Such legal matters fall outside the scope of the guide and are addressed in regulatory and legal channels.
References: Maryland Insurance Buyer's Guide Guidelines and State Insurance Regulations.
NEW QUESTION # 52
Which medical care benefits are emphasized in HMO plans?
- A. Emergency care
- B. Alternative medicine
- C. Home health care
- D. Preventive care
Answer: D
Explanation:
Comprehensive and Detailed in Depth Explanation:
The correct answer isB. Preventive care. Health Maintenance Organizations, or HMOs, are designed around managed care, network-based care, and controlling costs by encouraging early treatment, wellness, and prevention. Maryland's Health-General Article requires an HMO's plan to show that it has an active program forpreventing illness, disability, and hospitalizationamong its members, and that services designed to prevent major health problems and improve general health are provided by the HMO.
Emergency care, home health care, and other services may be covered under appropriate circumstances, but they are not the primary medical care benefit emphasized by the HMO model. Alternative medicine is not the core HMO emphasis. Official Maryland Reference: Maryland Health-General Article §19-705.1, HMO quality of care and preventive programs.
NEW QUESTION # 53
Which of the following statements about the contestability of a life insurance policy is true?
- A. The policy cannot be contested by the insurer once it is paid for and issued
- B. The policy can be contested only if the insured is convicted of a felony
- C. The policy can be contested by the insurer at all times
- D. The policy can be contested by the insurer only during the first two years of the contract
Answer: D
Explanation:
Purpose of the incontestability clause.
Protects policyowners from having claims denied long after issuance.
Encourages insurers to investigate applications promptly.
How contestability works.
For the first two years, insurers may contest the policy for material misrepresentation.
After two years, the policy becomes incontestable, except for fraud in some jurisdictions.
Evaluate each option.
A). Cannot be contested once issued
Incorrect. The contestable period still applies.
B). Contestable only during first two years
Correct.
C). Contestable at all times
Incorrect. This would defeat the purpose of the clause.
D). Only if felony conviction
Incorrect and unrelated.
Maryland statutory relevance.
Maryland requires incontestability provisions in life insurance policies.
Conclusion.
A life insurance policy is contestable only during the first two years.
NEW QUESTION # 54
Subject to certain limitations, the purpose of the Maryland Life and Health Insurance Guaranty Corporation is to protect various entities such as residents who are policyowners, beneficiaries, and annuitants. The intent is to protect the listed individuals against failure in the performance of contractual obligations due to:
- A. Impending insurance legislation
- B. An insurance producer's fraudulent actions
- C. Riots, insurrections, war, or acts of God
- D. The impairment of the insurer that issued the policy or contract
Answer: D
Explanation:
Purpose of the Maryland Life and Health Insurance Guaranty Corporation.
Maryland established the Life and Health Insurance Guaranty Corporation to provide limited protection to policyholders when a licensed insurer becomes insolvent or impaired.
The protection applies only to policies and contracts issued by authorized insurers.
Evaluate each option.
A). Impairment of the insurer
Correct. The guaranty association exists specifically to protect consumers when an insurer fails to meet contractual obligations due to insolvency or impairment.
B). Riots, war, or acts of God
These are risks addressed by insurance policies, not guaranty associations.
C). Producer's fraudulent actions
Producer misconduct is addressed through licensing enforcement and legal remedies, not guaranty funds.
D). Impending insurance legislation
Legislative changes do not trigger guaranty association protection.
Conclusion.
The guaranty corporation protects against insurer insolvency, making option A correct.
NEW QUESTION # 55
Which advantage does an employer gain by providing a qualified retirement plan, as contrasted to a non- qualified plan?
- A. It can be designed for the exclusive benefit of several key employees
- B. It is useful in rewarding selected employees for good work performance
- C. The plan funds are available for general business needs
- D. The employer's contributions to the plan are tax deductible
Answer: D
Explanation:
Qualified retirement plans, such as 401(k) and pension plans, offer significant tax advantages for employers:
Tax-deductible contributions (B): Employer contributions to qualified plans are deductible as business expenses, reducing taxable income.
Exclusive benefit for key employees (A): Not allowed under IRS rules, as qualified plans must follow non- discrimination requirements.
Funds available for business needs (C): Incorrect, as plan funds are held in trust and cannot be used for business operations.
Rewarding selected employees (D): Qualified plans must comply with anti-discrimination rules, so rewards must benefit all eligible employees.
References: IRS Publication 560, Maryland Retirement Plan Standards, and COMAR 31.09.11.
NEW QUESTION # 56
The amount received for a life insurance policy in a viatical settlement is:
- A. Greater than the death benefit
- B. Equal to the death benefit
- C. Equal to the sum of all premiums paid
- D. Less than the death benefit
Answer: D
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.
NEW QUESTION # 57
A disability income insurance policy typically provides coverage for disabilities resulting from:
- A. Both accidents and sickness
- B. Occupational accidents only
- C. Accidents only
- D. Sickness only
Answer: A
Explanation:
Disability income policies (Insurance Article, § 15-201) cover both accidents and sickness, providing broad income protection, not limited to one cause or occupational incidents.
References:Maryland Insurance Article, § 15-201; MIA disability standards.
NEW QUESTION # 58
All of the following are basic underwriting actions in accident and health insurance EXCEPT:
- A. Issuing standard policies as applied for
- B. Issuing policies with exclusion riders
- C. Rejecting applicants
- D. Deleting uniform policy provisions
Answer: D
Explanation:
Underwriting involves assessing risk by rejecting high-risk applicants, issuing standard policies, or adding exclusion riders for specific conditions. Deleting uniform policy provisions-mandatory clauses like grace periods (Insurance Article, § 15-201)-isn't an underwriting action, as these are legally required and cannot be altered by underwriters.
References:Maryland Insurance Article, § 15-201 et seq.; MIA underwriting guidelines.
NEW QUESTION # 59
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