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NEW QUESTION # 47
If, after submitting an application, a producer becomes aware of a material fact that may affect the underwriting decision, the producer ' s ethical responsibility requires that the producer:
- A. Deny knowledge of the fact
- B. Acknowledge the fact only if asked by the insurance company
- C. Report the fact to the insurance company
- D. Advise the applicant to amend the application
Answer: C
Explanation:
Ethical responsibilities and state laws mandate that insurance producers act in good faith when handling applications.
Reporting material facts to the insurer (D): Producers must disclose any information that could impact underwriting decisions. Transparency ensures that policies are accurately priced and legally enforceable.
Denying knowledge (A): Violates ethical and legal obligations.
Acknowledging facts only if asked (B): Demonstrates bad faith and can lead to legal penalties.
Advising applicants to amend (C): While this helps, it does not fulfill the producer's duty to inform the insurer.
References: Maryland Insurance Administration Producer Code of Ethics, COMAR 31.03.13.
NEW QUESTION # 48
The purpose of regulation of insurance advertising is to do all of the following EXCEPT:
- A. Present an accurate description of insurance to the public
- B. Prevent unfair competition among insurers
- C. Maintain a low profile for insurance products
- D. Establish minimum standards of conduct
Answer: C
Explanation:
Purpose of insurance advertising regulation in Maryland.
Maryland regulates insurance advertising to protect consumers from misrepresentation, deception, and unfair trade practices.
Advertising rules are designed to ensure honesty, accuracy, and fair competition.
Evaluate each option.
A). Establish minimum standards of conduct
Correct. Maryland sets minimum advertising standards to ensure ethical practices.
B). Prevent unfair competition among insurers
Correct. Advertising rules prevent insurers from gaining an unfair advantage through misleading claims.
C). Maintain a low profile for insurance products
Incorrect. Regulators do not restrict visibility or promotion of insurance products; they regulate how products are advertised, not whether they are promoted.
D). Present an accurate description of insurance to the public
Correct. Accuracy and clarity are primary goals of Maryland insurance advertising regulation.
Conclusion.
Maintaining a low profile is not a regulatory goal, making option C the correct answer.
NEW QUESTION # 49
Medical expense insurance typically EXCLUDES coverage for:
- A. Hospital laboratory tests
- B. Hospital care extending past 30 days
- C. Maternity care benefits
- D. Expenses incurred for primarily cosmetic surgery
Answer: D
Explanation:
Medical expense insurance covers necessary treatments like hospital stays, maternity care, and diagnostic tests, but excludes elective procedures such as primarily cosmetic surgery unless medically necessary (e.g., reconstructive surgery post-injury). Maryland law (Insurance Article, § 15-103) allows exclusions for non- essential services, aligning with standard practice where aesthetic surgeries like facelifts are not covered.
References:Maryland Insurance Article, § 15-103; MIA guidelines.
NEW QUESTION # 50
The Maryland State Benchmark Plan applies to which of the following?
- A. Medicare supplement plans sold outside the Exchange prior to January 1, 2014
- B. Medicaid plans sold through the Exchange
- C. Individual Health Benefit Plans sold through the Exchange
- D. Individual Health Benefit Plans sold outside the Exchange prior to January 1, 2014
Answer: C
Explanation:
The Maryland Benchmark Plan (Insurance Article, § 31-115) defines EHBs for individual and small group plans sold via the Maryland Health Connection Exchange, not Medicaid, Medigap, or pre-2014 off-Exchange plans.
References:Maryland Insurance Article, § 31-115; MIA ACA guidelines.
NEW QUESTION # 51
The annual addition to an employee ' s account in a qualified retirement plan:
- A. Usually reflects the employee ' s individual work performance each year
- B. Cannot exceed maximum limits set by the Internal Revenue Service
- C. Must be the same dollar amount for every full-time employee
- D. Can be any amount as determined by the employer from year to year
Answer: B
Explanation:
Qualified retirement plans are regulated by IRS rules:
Contributions cannot exceed IRS limits (C), which are updated annually.
Contributions are not arbitrarily determined by employers (A) or based on employee performance (D).
Employers may make varying contributions, invalidating (B).
References: IRS Regulations for Qualified Retirement Plans, Maryland Employee Benefits Guidelines.
NEW QUESTION # 52
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 by the insurer at all times
- C. The policy can be contested by the insurer only during the first two years of the contract
- D. The policy can be contested only if the insured is convicted of a felony
Answer: C
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 # 53
In a deferred annuity, which event initiates benefit payments to the annuitant?
- A. The beneficiary dies
- B. The contract is annuitized
- C. A cash refund is paid
- D. The contract is surrendered
Answer: B
Explanation:
Comprehensive and Detailed in Depth Explanation:
The correct answer isC. The contract is annuitized. A deferred annuity has an accumulation period first, during which contributions are made and the annuity value builds. Benefit payments begin when the annuity enters the payout phase. The Maryland Insurance Administration explains thatannuitizationis the process of converting an annuity into a series of periodic payments, and that deferred annuities begin the payout phase sometime after purchase according to the contract.
Surrendering the contract is not the normal event that begins annuity benefit payments; it usually means terminating the contract for its surrender value and may involve charges. A cash refund is a settlement feature, not the event that starts regular benefits. The beneficiary's death does not initiate normal annuity payments to the annuitant. Official Maryland Reference: Maryland Insurance Administration, Annuities 101, annuitization and deferred annuity payout phase.
NEW QUESTION # 54
All of the following are true about accident and health insurance policies that provide limited benefits EXCEPT:
- A. The perils covered may be limited to specified dread diseases
- B. Coverage is limited to persons under age 65
- C. The dollar amount of coverage may be limited to a specified daily amount
- D. Coverage for accidental injury may be limited to accidents occurring during travel
Answer: B
Explanation:
Comprehensive and Detailed in Depth Explanation:
The correct answer isA. Coverage is limited to persons under age 65. Limited benefit accident and health policies are not defined by being available only to people under age 65. Instead, they are limited because they cover only certain types of losses, certain services, fixed-dollar benefits, or specified diseases. Maryland materials recognize several types of limited or excepted health coverage, including accident-only coverage, travel accident or sickness coverage, specified disease coverage, and fixed indemnity coverage. Maryland Insurance Article §31-101 also describes hospital indemnity or fixed indemnity insurance as coverage paying a fixed dollar amount per period, such as a daily hospital benefit.
Option B is true because travel insurance may cover sickness, accident, disability, or death occurring during travel. Option C is true because fixed indemnity coverage may pay a fixed dollar amount per period, such as a daily hospital amount. Option D is true because specified disease coverage limits benefits to named diseases or health conditions, such as cancer or other dread diseases. Since the question asks for the statement that is not true, the correct answer is A. Official Maryland References: Maryland Insurance Administration Bulletin on limited/exempt health coverages and travel insurance; Maryland Insurance Article §31-101; COMAR Medicare-related disclosure language for limited benefit policies.
NEW QUESTION # 55
A disability income insurance policy typically provides coverage for disabilities resulting from:
- A. Both accidents and sickness
- B. Accidents only
- C. Occupational 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 # 56
An existing life insurance policy is sold by the policyowner to help finance the cost of a terminal illness. This is an example of:
- A. A nonforfeiture option
- B. A viatical settlement
- C. An accelerated death benefit
- D. A survivorship policy
Answer: B
Explanation:
A viatical settlement involves selling a life insurance policy to a third party for immediate cash, typically to cover expenses associated with terminal illnesses.
Viatical settlement (C): The policyowner receives a percentage of the death benefit to cover high medical costs or improve their quality of life.
Nonforfeiture options (A): Relate to preserving cash value if the policy lapses, not a sale.
Accelerated death benefit (B): Involves accessing a portion of the death benefit directly from the insurer, not through a third party.
Survivorship policies (D): Cover two insureds and pay the death benefit only after both have passed away, unrelated to this case.
References: Maryland Viatical Settlement Law and Insurance Code.
NEW QUESTION # 57
To be eligible for major medical extended care benefits, a patient must:
- A. Have had surgery
- B. Require continuous skilled nursing care
- C. Be terminally ill
- D. Require physical therapy
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 # 58
A refusal to do business with a particular individual or business is known as:
- A. An estoppel
- B. A boycott
- C. An injunction
- D. A binder
Answer: B
Explanation:
Boycott refers to the refusal to engage in business dealings with a particular party as part of an unfair trade practice, often used to coerce or punish. It is prohibited under Maryland's Unfair Trade Practices Act.
Boycott (C): Defined as an unfair method of competition when used in the insurance context.
Estoppel (A): A legal doctrine preventing someone from asserting a claim inconsistent with previous actions, unrelated to business refusal.
Injunction (B): A court order stopping specific actions, not related to refusal to do business.
Binder (D): Temporary insurance coverage, unrelated to trade practices.
References: Maryland Unfair Trade Practices Act, COMAR 31.15.03, and Maryland Insurance Code §27-205.
NEW QUESTION # 59
When a producer engages in unfair practices, all of the following are true EXCEPT:
- A. The Maryland Insurance Administration's decision is final
- B. The Maryland Insurance Administration can investigate the problem and hold a hearing
- C. The Maryland Insurance Administration can suspend the producer's license
- D. The Maryland Insurance Administration can issue a cease and desist order
Answer: A
Explanation:
The MIA (Insurance Article, § 2-201, § 10-126) can investigate, suspend licenses, and issue orders, but its decisions are appealable to Maryland courts, not final.
References:Maryland Insurance Article, § 2-201, § 10-126; MIA enforcement powers.
NEW QUESTION # 60
All of the following may be used as selection criteria in individual life insurance underwriting EXCEPT:
- A. Age
- B. Health status
- C. Smoking habits
- D. National origin
Answer: D
Explanation:
Purpose of underwriting selection criteria.
Underwriting evaluates risk factors that affect life expectancy and mortality.
Evaluate each option.
A). Age
A fundamental actuarial factor.
B). National origin
Prohibited. Maryland and federal law prohibit discrimination based on national origin.
C). Health status
A core underwriting factor.
D). Smoking habits
A valid mortality-related risk factor.
Maryland anti-discrimination rules.
Maryland law prohibits unfair discrimination unrelated to actuarial risk.
Conclusion.
National origin may not be used as an underwriting selection criterion.
NEW QUESTION # 61
Misrepresenting pertinent policy provisions relating to coverages after a loss is:
- A. A violation of the principle of adhesion
- B. An unfair discrimination between individuals
- C. A concealment in insurance applications
- D. An unfair claim settlement practice
Answer: D
Explanation:
Misrepresenting coverage post-loss (Insurance Article, § 27-303) is an unfair claims practice, deceiving claimants about benefits. Concealment applies pre-policy, discrimination involves unequal treatment, and adhesion relates to contract terms, not claims.
References:Maryland Insurance Article, § 27-303; MIA claims practices.
NEW QUESTION # 62
Which employers can offer 403(b) tax-sheltered annuities (TSAs)?
- A. School districts and certain non-profit organizations
- B. States, municipalities, and rural electric cooperatives
- C. Regular business corporations and professional corporations
- D. Subchapter S corporations, partnerships, and sole proprietorships
Answer: A
Explanation:
Purpose of 403(b) plans.
403(b) plans are retirement plans designed for public education and non-profit employees.
Eligible employers under federal tax law.
Only:
Public school systems
Certain tax-exempt organizations (501(c)(3))
are permitted to sponsor 403(b) plans.
Why the other options are incorrect.
Corporations and professional firms use 401(k) plans.
Government employers generally use 457 plans.
Self-employed and partnerships use SEP or SIMPLE plans.
Maryland producer relevance.
Producers must recommend retirement products consistent with employer eligibility to meet suitability and good-faith standards.
Conclusion.
Only school districts and certain non-profit organizations may offer 403(b) TSAs.
NEW QUESTION # 63
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