Pass Your Maryland Insurance Life-Producer Exam Easily with Accurate PDF Questions [Sep 26, 2025]
Life-Producer Certification Exam Dumps Questions in here
NEW QUESTION # 12
If a life insurer denies a policy of life insurance, the insurer shall disclose the results of any medicalexamination administered to determine insurability to the:
- A. Physician of the applicant's choice upon the request of the applicant
- B. Company's underwriter
- C. Physician that furnished medical information to the insurer
- D. Beneficiary of the policy
Answer: A
Explanation:
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.
NEW QUESTION # 13
Splitting the commission with the buyer on a sale of insurance is an unfair trade practice known as:
- A. Binding
- B. Rebating
- C. Soliciting
- D. Twisting
Answer: B
Explanation:
Comprehensive and Detailed Step by Step Explanation:Rebatingoccurs when an insurance producer offers a portion of their commission, premium reductions, or other inducements to buyers that are not explicitly stated in the policy. It is prohibited under Maryland law to ensure fair competition and maintain ethical standards.
* Rebating (D):Involves returning part of the commission or providing benefits not in the policy to incentivize a sale, violating Maryland Insurance Article §27-212.
* Twisting (A):Refers to persuading a policyholder to lapse or replace a policy through misrepresentation, unrelated to commission-sharing.
* Binding (B):Relates to confirming coverage but does not involve commissions.
* Soliciting (C):Refers to seeking potential clients, not the unfair practice of rebating.
References:Maryland Unfair Trade Practices Act, COMAR 31.15.05, and Maryland Insurance Article §27-
209.
NEW QUESTION # 14
How long will income benefit payments continue under a life annuity with ten years certain?
- A. Until the annuitant dies, and for an additional ten years
- B. Only until the annuitant dies, regardless of when death occurs
- C. Until the annuitant dies, or for ten years, whichever is longer
- D. Only for ten years, regardless of how long the annuitant lives
Answer: C
Explanation:
Comprehensive and Detailed Step by Step Explanation:A life annuity with aten years certainprovision guarantees payments for at least ten years. If theannuitant dies before the end of ten years, payments continue to the beneficiary for the remainder of the period.
* Until the annuitant dies, or for ten years, whichever is longer (A):Ensures payments for life with a minimum ten-year guarantee.
* Until the annuitant dies, and for an additional ten years (B):Incorrect; payments cease after the guaranteed period or the annuitant's lifetime.
* Only until the annuitant dies (C):Incorrect; the ten-year guarantee applies.
* Only for ten years (D):Incorrect; payments continue if the annuitant outlives the guaranteed period.
References:Maryland Annuity Payout Options Guidelines, COMAR 31.09.08.
NEW QUESTION # 15
The Maryland Insurance Administration may suspend an agent's license for all of the following reasons EXCEPT:
- A. Sharing commissions with agents holding the same license type
- B. Violating a regulation or order of the Maryland Insurance Administration
- C. Engaging in fraudulent or dishonest practices
- D. Mishandling premium payments
Answer: A
Explanation:
Comprehensive and Detailed Step by Step Explanation:
The Maryland Insurance Administration enforces disciplinary measures:
Fraudulent practices (A), mishandling premiums (B), and violating regulations (D) are grounds for suspension or revocation.
Sharing commissions (C) with agents of the same license type is permitted under Maryland law if done legally and transparently.
References: Maryland Insurance Administration Regulatory Code and Enforcement Procedures.
NEW QUESTION # 16
An insurance agent's license may be revoked for all of the following reasons EXCEPT:
- A. Having no insurer appointment in effect for ten days
- B. Having been found guilty of rebating
- C. Being convicted of a felony
- D. Violating any insurance statute or regulation
Answer: A
Explanation:
Comprehensive and Detailed Step by Step Explanation:An agent's license can be revoked for serious infractions that violate Maryland's insurance laws:
* Rebating (B):Prohibited under Maryland's Unfair Trade Practices Act.
* Felony conviction (C):Grounds for revocation as it questions the agent's moral character.
* Violating insurance statutes or regulations (D):Includes infractions such as fraud, misrepresentation, or failure to meet ethical standards.
* Having no insurer appointment for ten days (A):Incorrect. A lack of appointment does not constitute a violation; it only affects the ability to conduct business temporarily.
References:Maryland Insurance Article §10-126, COMAR 31.03.02, and Licensing Enforcement Guidelines.
NEW QUESTION # 17
A life insurance policy beneficiary's life expectancy has a direct bearing upon:
- A. The policy value that will be includable in the insured's estate
- B. The premium rate for each $1,000 of face amount
- C. The taxable portion of each benefit payment under a life income settlement option
- D. The total amount payable under the policy as a result of the insured's death
Answer: C
Explanation:
Comprehensive and Detailed Step by Step Explanation:Thetaxable portion of benefit payments under a life income settlement optiondepends on the beneficiary's life expectancy:
* Life expectancy impacts (B)how the payments are taxed, as longer payment durations result in more taxable income over time.
* Thepolicy's inclusion in the estate (A)is unrelated to the beneficiary's life expectancy.
* Thetotal death benefit (C)is fixed and not influenced by the beneficiary's lifespan.
* Premium rates (D)are determined during underwriting, not affected by beneficiary life expectancy.
References: Maryland Life Insurance Taxation Guidelines and IRS Settlement Option Rules.
NEW QUESTION # 18
In the event of a death claim under a life insurance policy, what happens to the amount of any existing policy loan?
- A. It is deducted from the face amount of the policy together with any interest due.
- B. The beneficiary has an obligation to pay the amount to the insurance company.
- C. It represents a primary claim against the estate of the insured.
- D. It is canceled, and the beneficiary receives the face amount of the policy.
Answer: A
Explanation:
Comprehensive and Detailed Step by Step Explanation:When a death claim is filed on a life insurance policy with an outstanding loan:
* Deducted from the face amount (A):The death benefit is reduced by the loan balance plus any accrued interest, ensuring the insurer recovers the outstanding debt.
* Beneficiary obligation (B):Incorrect. The beneficiary receives the adjusted benefit without personal liability for the loan.
* Claim against the estate (C):Incorrect. The loan is tied to the policy, not the estate.
* Canceled without adjustment (D):Incorrect, as insurers must recoup the loan amount from the death benefit.
References:Maryland Life Insurance Policy Loan Provisions, COMAR 31.09.03, and Standard Death Claim Settlement Practices.
NEW QUESTION # 19
A policyholder uses a Section 1035 exchange to replace an existing life insurance policy. If the new policy is later surrendered, the gain realized on termination is taxed as:
- A. Ordinary income plus a 10% surcharge
- B. A capital gain
- C. Ordinary income
- D. A deferred capital gain
Answer: C
Explanation:
Comprehensive and Detailed Step by Step Explanation:ASection 1035 exchangeallows a policyholder to replace a life insurance policy, annuity, or endowment without immediate tax consequences. However, when the new policy is surrendered:
* The gain is taxed asordinary income (A), calculated as the difference between the policy's cash surrender value and the cost basis (total premiums paid).
* Capital gain (B):Incorrect. Gains from life insurance policies are classified as ordinary income, not capital gains.
* Ordinary income plus a 10% surcharge (C):The 10% penalty applies only to premature distributions from retirement accounts, not life insurance.
* Deferred capital gain (D):Incorrect, as life insurance gains are not subject to capital gain rules.
References:IRS Code §1035, Maryland Tax Code on Life Insurance, and COMAR 31.09.12.
NEW QUESTION # 20
A transaction in which a new life insurance policy is purchased, and an existing life insurance policy is surrendered is called:
- A. Reinvestment
- B. Nonforfeiture
- C. Rollover
- D. Replacement
Answer: D
Explanation:
Comprehensive and Detailed Step by Step Explanation:Areplacementoccurs when a new life insurance policy is purchased, and the existing policy is surrendered, terminated, or its benefits reduced to make way for the new policy.
* Replacement (B):This is regulated to ensure the policyholder is not disadvantaged by switching policies, often requiring additional disclosures and forms, like Maryland's "Important Notice Replacement of Life Insurance or Annuities."
* Nonforfeiture (A):Refers to retaining cash value benefits when a policy lapses or is canceled, not applicable here.
* Reinvestment (C):Generally relates to financial or investment accounts, not life insurance.
* Rollover (D):Pertains to tax-advantaged accounts like IRAs, not applicable to insurance.
References: Maryland Replacement Regulations, Disclosure Requirements, and Consumer Protections.
NEW QUESTION # 21
An insurer may refuse to underwrite a particular insurance applicant for a reason based wholly on:
- A. Creed
- B. Gender
- C. Race
- D. Medical condition
Answer: D
Explanation:
Comprehensive and Detailed Step by Step Explanation:Maryland law allows insurers to considermedical conditions (A)as part of the underwriting process, provided it is done fairly and within legal boundaries.
* Race (B), Gender (C), and Creed (D):Discrimination based on these factors is strictly prohibited under Maryland's anti-discrimination laws and the Unfair Trade Practices Act.
Insurers must comply with state and federal regulations, ensuring underwriting decisions are based on actuarially justified factors, such as health and lifestyle, rather than prohibited discriminatory criteria.
References:Maryland Insurance Article §27-501, Anti-Discrimination Guidelines, and COMAR 31.15.03.
NEW QUESTION # 22
An individual life insurance policy may include coverage for all of the following EXCEPT:
- A. Long-term care
- B. Workers' compensation
- C. Burial
- D. Disability
Answer: B
Explanation:
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.
NEW QUESTION # 23
In determining the payment of accelerated life insurance benefits, all of the following are considered activities of daily living EXCEPT:
- A. Dressing
- B. Bathing
- C. Eating
- D. Speaking
Answer: D
Explanation:
Comprehensive and Detailed Step by Step Explanation:Accelerated benefits are often triggered by the inability to performactivities of daily living (ADLs), which are standard measures of functional capacity.
* Dressing (A), Eating (B), Bathing (C):Correctly identified as ADLs used to assess eligibility for benefits.
* Speaking (D):Not classified as an ADL under Maryland insurance definitions or long-term care benefit triggers.
References:Maryland Accelerated Benefits Guidelines, Long-Term Care Standards, and COMAR 31.09.04.
NEW QUESTION # 24
How does the payment of an accelerated benefit affect a life insurance policy?
- A. It decreases the death benefit.
- B. It decreases the grace period.
- C. It increases the cash value.
- D. It increases the policy premium.
Answer: A
Explanation:
Comprehensive and Detailed Step by Step Explanation:Accelerated benefits allow a policyholder to receive a portion of the death benefit early, often due to terminal illness or specific qualifying conditions:
* Decreases the death benefit (D):The accelerated amount reduces the death benefit available to beneficiaries.
* Increases the cash value (A):Incorrect; accelerated benefits are drawn from the policy, reducing cash value and death benefits.
* Increases the policy premium (B):Premiums generally remain unchanged.
* Decreases the grace period (C):Not affected by accelerated benefits.
References:Maryland Accelerated Benefit Provisions, COMAR 31.09.04, and IRS Tax Treatment of Accelerated Death Benefits.
NEW QUESTION # 25
To determine whether unfair trade practices have been violated, who has the power to examine an insurer's books and records?
- A. The Maryland Insurance Administration
- B. The Maryland Property & Casualty Insurance Guaranty Corporation (PCIGC)
- C. The Federal Deposit Insurance Corporation
- D. The National Association of Insurance Commissioners
Answer: A
Explanation:
Comprehensive and Detailed Step by Step Explanation:The Maryland Insurance Administration (MIA) is the regulatory body responsible for ensuring compliance with state insurance laws, including identifying unfair trade practices:
* The Maryland Insurance Administration (A):Has statutory authority to examine insurers' books and records to investigate potential violations and protect consumers.
* National Association of Insurance Commissioners (B):Provides guidance but lacks enforcement powers in Maryland.
* Federal Deposit Insurance Corporation (C):Regulates banks, not insurers.
* PCIGC (D):Handles claims for insolvent insurers but does not investigate trade practices.
References:Maryland Insurance Article §2-209, COMAR 31.15.07, and MIA EnforcementGuidelines.
NEW QUESTION # 26
All of the following statements about universal life insurance are true EXCEPT:
- A. The Internal Revenue Code places a minimum limitation on the difference between the cash value and the death benefit
- B. Failure to pay the renewal premium automatically causes the policy to lapse
- C. Withdrawals of the policy cash value are permitted and sometimes subject to a surrender charge
- D. It may be written with either a level death benefit or an increasing death benefit
Answer: B
Explanation:
Comprehensive and Detailed Step by Step Explanation:Universal life insurance policies offer flexibility and adaptability, but they also have specific rules:
* Minimum cash value vs. death benefit (A):Correct. IRS rules require a minimum difference to maintain tax-advantaged status.
* Level or increasing death benefits (B):Correct. Policyholders can choose based on their needs.
* Cash value withdrawals (C):Correct. Withdrawals are allowed but may incur surrender charges.
* Automatic lapse (D):Incorrect. Universal life does not immediately lapse due to missed payments; instead, costs are deducted from the cash value, and the policy remains in force until the cash value is depleted.
References:Maryland Insurance Administration Policy Lapse Guidelines, IRS Tax Code §7702, and COMAR
31.09.13.
NEW QUESTION # 27
A producer may be guilty of misrepresentation if the producer:
- A. Required timely written notice of loss for all claims
- B. Failed to disclose exclusions of the policy
- C. Denied a claim for failure of the policyholder to prove damages
- D. Issued a full settlement check expressly releasing the insurer
Answer: B
Explanation:
Comprehensive and Detailed Step by Step Explanation:Misrepresentation involves providing false, misleading, or incomplete information about a policy:
* Failed to disclose exclusions of the policy (A):Correct. Not informing the insured about policy exclusions misrepresents the coverage and violates Maryland law.
* Denied a claim for failure to prove damages (B):This relates to claims handling and is not misrepresentation.
* Required written notice of loss (C):This is a legitimate policy requirement, not misrepresentation.
* Issued a full settlement check (D):Standard claims settlement practice when agreed upon; not related to misrepresentation.
References:Maryland Insurance Article §27-303, Misrepresentation and False Advertising Standards, COMAR 31.15.03.
NEW QUESTION # 28
Publishing a derogatory article about the financial condition of an insurer that is false and calculated to injure the insurer is an example of:
- A. Extortion
- B. Coercion
- C. Intimidation
- D. Defamation
Answer: D
Explanation:
Comprehensive and Detailed Step by Step Explanation:Defamationinvolves publishing or circulating false, malicious statements intended to harm an insurer's reputation. It is prohibited under Maryland law to protect the integrity of insurers.
* Defamation (A):Includes any written or spoken communication that is untrue and harms the insurer's business standing.
* Intimidation (B):Relates to coercing individuals through threats, not publishing falsehoods.
* Extortion (C):Involves demanding something through threats, unrelated to false statements.
* Coercion (D):Involves forcing a party to act under duress, not relevant to publishing false information.
References:Maryland Insurance Article §27-205, Unfair Trade Practices and Consumer Protection Act.
NEW QUESTION # 29
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 survivorship policy
- B. A nonforfeiture option
- C. An accelerated death benefit
- D. A viatical settlement
Answer: D
Explanation:
Comprehensive and Detailed Step by Step Explanation:Aviatical settlementinvolves 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 # 30
The income benefits distributed during the liquidation phase of an annuity contract are normally payable to:
- A. The annuitant
- B. The beneficiary
- C. The owner
- D. The nominator
Answer: A
Explanation:
Comprehensive and Detailed Step by Step Explanation:
During the liquidation (or payout) phase of an annuity, the annuitant receives periodic payments:
The annuitant (D) is the individual designated to receive the payments, as they are the insured party in the contract.
The owner (A) is often the annuitant but may differ; the owner controls the contract but does not necessarily receive payments.
The beneficiary (B) receives the death benefit if the annuitant passes away, not the periodic payments.
"Nominator" (C) is not relevant terminology in annuities.
References: Maryland Insurance Guidelines on Annuities, Payment Distribution, and Liquidation.
NEW QUESTION # 31
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