[Aug 10, 2026] Fast Exam Updates Life-and-Accident-and-Health-or-Sickness-Producer-Combo dumps with PDF Test Engine Practice
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NEW QUESTION # 121
All of the following are characteristics of a preferred risk applicant for disability income insurance EXCEPT:
- A. High income
- B. Non-hazardous occupation
- C. Physically active
- D. Non-smoker
Answer: A
Explanation:
Preferred risk applicants (Insurance Article, § 15-201) have low disability risk due to non-smoking, safe jobs, and physical activity. High income affects benefit amounts, not risk classification, making it the exception.
References:Maryland Insurance Article, § 15-201; MIA underwriting standards.
NEW QUESTION # 122
Medical expense insurance typically EXCLUDES coverage for:
- A. Hospital laboratory tests
- B. Maternity care benefits
- C. Expenses incurred for primarily cosmetic surgery
- D. Hospital care extending past 30 days
Answer: C
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 # 123
Which one of the following statements about the automatic premium loan (APL) provision in a life insurance policy is true?
- A. It waives policy premiums if the policyowner becomes totally and permanently disabled
- B. It provides for a series of bank loans to finance the purchase of split-dollar life insurance
- C. It provides for a policy loan to pay any premium not paid by the end of the grace period
- D. It is a required provision that provides for the purchase of additional insurance at guaranteed rates
Answer: C
Explanation:
Purpose of the automatic premium loan provision.
The APL provision prevents unintentional policy lapse due to nonpayment of premium.
How the APL works.
If a premium is not paid by the end of the grace period:
The insurer automatically makes a policy loan
The loan amount equals the unpaid premium
The loan is secured by the policy's cash value
Why the other options are incorrect.
A). Additional insurance: Describes paid-up additions, not APL.
B). Bank loans: APL uses internal policy loans.
C). Waiver of premium: A separate rider, not APL.
Maryland disclosure relevance.
Producers must explain that APL loans accrue interest and reduce cash value and death benefits.
Conclusion.
The APL provision uses a policy loan to pay overdue premiums.
NEW QUESTION # 124
All of the following are true of managing general agents EXCEPT:
- A. It is unlawful to act as a managing general agent without a license
- B. A managing general agent must have a valid written contract with an insurance company
- C. A managing general agent is primarily a representative of the insured
- D. Once issued, a managing general agent's license must be renewed every two years
Answer: C
Explanation:
Who is a managing general agent (MGA).
A managing general agent is a person or entity that performs significant underwriting, policy issuance, or claims authority on behalf of an insurer.
MGAs act as an extension of the insurer, not the insured.
Licensing requirement in Maryland.
Maryland law requires MGAs to be properly licensed.
Acting as an MGA without a license is unlawful.
Contractual requirement.
Maryland requires a written agreement between the MGA and the insurer that clearly defines authority, duties, and limitations.
License renewal.
MGA licenses follow Maryland's standard biennial renewal cycle, consistent with producer licensing.
Why option D is incorrect.
MGAs primarily represent the insurer, not the insured.
Representing the insured is the role of an agent or broker, not an MGA.
Conclusion.
The incorrect statement is that an MGA represents the insured.
NEW QUESTION # 125
Which activity is an unfair claims settlement practice?
- A. Negotiating the payment of claims where coverage or liability is in question
- B. Offering settlements that are less than the fair value to offset insurer expenses
- C. Including an arbitration provision in the insurer ' s policies
- D. Denying claims on the basis of specific policy provisions
Answer: B
Explanation:
Offering settlements below fair value (D) is prohibited as an unfair claims settlement practice under Maryland law. Insurers must handle claims in good faith and pay fair settlements based on policy terms.
Negotiating claims (A): Permitted when there are legitimate disputes over coverage or liability.
Denying claims (B): Allowed if based on valid policy exclusions or conditions.
Including arbitration provisions (C): Legal, provided they comply with state guidelines and are not coercive.
Unfair claims settlement practices include:
Misrepresenting policy provisions.
Failing to promptly investigate or settle claims.
Attempting to settle for less than reasonable amounts.
References: Maryland Insurance Article §27-303, Unfair Claims Practices Act, and COMAR 31.15.07.
NEW QUESTION # 126
Which life annuity contract feature provides that benefit payments will continue for a minimum number of years regardless of when the annuitant dies?
- A. Cash refund
- B. Cost recovery
- C. Period certain
- D. Installment refund
Answer: C
Explanation:
A "period certain" provision ensures payment for a specified period regardless of whether the annuitant survives:
Period certain (B) guarantees payments for a set number of years, protecting beneficiaries.
Cost recovery (A) and refund options (C and D) relate to refunding premiums or unpaid amounts but do not guarantee a payment period.
References: Maryland Annuity Regulations, Payment Options.
NEW QUESTION # 127
A transaction in which an existing annuity contract is terminated and a new one is issued is called:
- A. Continuation
- B. Conversion
- C. Reinstatement
- D. Replacement
Answer: D
Explanation:
Definition of annuity replacement.
Replacement occurs when an existing annuity is surrendered, lapsed, or terminated and replaced with a new annuity.
Why replacements are regulated.
Replacements may trigger:
Surrender charges
Loss of benefits
Restart of surrender periods
Maryland disclosure requirements.
Producers must disclose all consequences of annuity replacement to comply with good-faith and suitability rules.
Why the other options are incorrect.
Conversion: Applies to term-to-permanent policies.
Continuation: Keeping the same contract.
Reinstatement: Restoring a lapsed policy.
Conclusion.
Terminating one annuity and issuing another is a replacement.
NEW QUESTION # 128
Reasonable and customary charges for health care are based primarily on:
- A. Average charges within a geographic area
- B. Actuarial tables
- C. Insurance industry studies
- D. National physician surveys
Answer: A
Explanation:
Reasonable and customary charges (Insurance Article, § 15-1005) reflect average fees for procedures in a specific geographic area (e.g., 80th percentile), ensuring fair reimbursement. Actuarial tables, studies, and national surveys aren't the primary basis.
References:Maryland Insurance Article, § 15-1005; MIA health insurance guidelines.
NEW QUESTION # 129
An individual purchased an annuity contract with $100,000 received in settlement of a lawsuit. No further purchase payments are permitted, and benefit payments are to start in 17 years. The contract is:
- A. An individual life annuity
- B. A retirement annuity
- C. A single premium deferred annuity
- D. An individual retirement annuity (IRA)
Answer: C
Explanation:
Key facts from the question.
One lump-sum payment
No additional premiums allowed
Payments begin in the future (17 years later)
Define single premium deferred annuity (SPDA).
Funded with one premium payment
Includes an accumulation period
Income begins at a future date
Why this is not another type of annuity.
Individual life annuity: Describes payout form, not funding method.
IRA annuity: Must be held within an IRA; lawsuit proceeds are non-qualified.
Retirement annuity: A general term, not a specific contract type.
Maryland suitability and disclosure relevance.
Maryland requires clear explanation of surrender periods and deferred income timing for SPDAs.
Conclusion.
The described contract is a single premium deferred annuity.
NEW QUESTION # 130
The purpose of regulation of insurance advertising is to do all of the following EXCEPT:
- A. Maintain a low profile for insurance products
- B. Present an accurate description of insurance to the public
- C. Prevent unfair competition among insurers
- D. Establish minimum standards of conduct
Answer: A
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 # 131
Who has the right to change the beneficiary of an accident and health policy with a revocable beneficiary designation?
- A. The policyowner
- B. The producer
- C. The beneficiary
- D. The insurer
Answer: A
Explanation:
With a revocable beneficiary (Insurance Article, § 16-201), the policyowner retains the right to change the beneficiary, not the beneficiary, insurer, or producer, who lack such authority.
References:Maryland Insurance Article, § 16-201; MIA policy ownership rules.
NEW QUESTION # 132
Which of the following is a requirement of an insurable risk?
- A. The chance of loss must be calculable.
- B. The loss must be intentional.
- C. There must be a large number of different loss exposures.
- D. The loss must be catastrophic.
Answer: A
Explanation:
Comprehensive and Detailed Step by Step Explanation:Aninsurable riskmust meet specific criteria to ensure fair and financially viable coverage:
Chance of loss must be calculable (C):Correct. Insurers need statistical data to assess risk and determine premiums.
Loss must be intentional (A):Incorrect; intentional losses are not insurable.
Loss must be catastrophic (B):Incorrect; catastrophic losses (e.g., war or large-scale disasters) are often excluded or managed through reinsurance.
Large number of different loss exposures (D):A large number of similar, not different, exposures is required for risk pooling.
References:Maryland Insurance Principles, Actuarial Standards, and COMAR 31.09.14.
NEW QUESTION # 133
Anything of value given to produce a contract is the definition of:
- A. A covenant
- B. A grant
- C. A codicil
- D. A consideration
Answer: D
Explanation:
Essential elements of a valid contract.
Under Maryland contract law (which governs insurance contracts), a legally binding contract requires:
Offer
Acceptance
Consideration
Competent parties
Legal purpose
Meaning of consideration.
Consideration is anything of value exchanged between the parties that induces them to enter into the contract.
In insurance, consideration is:
The premium paid by the policyowner, and
The promise to pay benefits made by the insurer.
Why consideration is critical in insurance.
Without consideration, an insurance policy would be a gratuitous promise, which is unenforceable.
Maryland courts consistently require consideration for enforceability of insurance contracts.
Why the other options are incorrect.
Grant: A transfer of property or rights, not a contract element.
Codicil: An amendment to a will, unrelated to insurance contracts.
Covenant: A promise within a contract, not the exchange of value itself.
Conclusion.
The exchange of value that creates a binding insurance contract is consideration.
NEW QUESTION # 134
A universal life insurance policy can be described most accurately as a combination of:
- A. A term insurance policy and an annuity
- B. A mutual fund and a whole life insurance policy
- C. A flexible premium deposit fund and a monthly renewable term insurance policy
- D. An endowment policy and an interest-sensitive deposit fund
Answer: C
Explanation:
Universal life insurance is a flexible product that combines features of term insurance and a savings component:
Flexible premium deposit fund and a monthly renewable term insurance policy (D): Universal life allows policyholders to adjust premiums and coverage amounts. The policy includes a savings element (cash value) and provides renewable term insurance protection.
Mutual fund and whole life insurance policy (A): Incorrect, as universal life does not involve mutual funds or strict whole life coverage.
Term insurance and an annuity (B): Universal life lacks the payout structure of an annuity.
Endowment and interest-sensitive deposit fund (C): While it includes interest-sensitive growth, it is not structured as an endowment policy.
References: Maryland Life Insurance Product Guidelines, Universal Life Policy Features, and COMAR
31.09.13.
NEW QUESTION # 135
A valid contract requires all of the following EXCEPT:
- A. Written evidence
- B. Offer and acceptance
- C. Consideration
- D. Competent parties
Answer: A
Explanation:
To be legally enforceable, a contract must meet the following requirements:
Offer and acceptance (A): One party must propose terms, and the other must agree to them.
Competent parties (B): Individuals must have the legal capacity to enter a contract (e.g., not minors or mentally incapacitated).
Consideration (C): Each party must provide something of value (e.g., money, services, or promises).
Written evidence (D) is not required for all contracts, as some verbal agreements are enforceable depending on the type of contract (except for specific cases like real estate).
References: Maryland Contract Law Principles.
NEW QUESTION # 136
An individual purchased a flexible premium deferred annuity. When must the interest income be reported for federal income tax purposes?
- A. After first recovering the principal invested in the contract
- B. Upon receiving distributions or income benefits from the contract
- C. At least annually throughout the period of the contract
- D. Never at any time because an annuity has tax-exempt status
Answer: B
Explanation:
Tax treatment of deferred annuities.
A deferred annuity accumulates interest on a tax-deferred basis.
Interest earnings are not reported annually while they remain in the contract.
Trigger for taxation.
Federal tax law, followed by Maryland for income reporting, requires taxation only when distributions are received.
Interest is taxed as ordinary income, not capital gains.
Evaluate each option.
A). Annually
Incorrect. This would describe taxable interest accounts, not annuities.
B). After recovering principal
Incorrect. Under the LIFO rules for annuities, interest is taxed first.
C). Upon receiving distributions or income benefits
Correct. This is when taxation occurs.
D). Tax-exempt
Incorrect. Annuities are tax-deferred, not tax-exempt.
Conclusion.
Interest income is reported when distributions are received.
NEW QUESTION # 137
(One of the purposes of a qualified profit-sharing plan is to:)
- A. Distribute a portion of company earnings to employees.
- B. Liquidate the assets of a corporation.
- C. Reward the stockholders of a corporation.
- D. Motivate management to achieve a 25% profit margin.
Answer: A
Explanation:
Comprehensive and Detailed Step by Step Explanation:
* What a profit-sharing plan is:An employer-sponsored retirement plan where the employer may make discretionary contributions, often tied to profits, allocating contributions to employees under a formula.
* Purpose:To share company success with employees and provide retirement/compensation benefits.
* Why B is correct:It directly states the core purpose-distribute a portion of company earnings to employees.
* Why others are wrong:
* A: Plans are not designed to guarantee a profit margin goal.
* C: Liquidation is unrelated.
* D: Stockholders benefit through dividends/stock appreciation, not through an employee qualified plan.
* Maryland reference (consumer-facing fairness):If these plans are sold/represented alongside insurance products, any misleading description of plan nature/benefits could be a misrepresentation; Maryland prohibits misleading disclosure of pertinent facts or provisions in the insurance context.
NEW QUESTION # 138
The Medical Information Bureau may release information in the proposed insured ' s file to:
- A. The insured ' s employer
- B. Member insurance companies
- C. Employment agencies
- D. Any physician
Answer: B
Explanation:
The Medical Information Bureau (MIB) collects and shares medical information among member insurance companies to assess risk:
Member insurance companies (B) are the only entities authorized to access MIB data, ensuring confidentiality and appropriate use.
Employment agencies (A) and employers (C) cannot access MIB data.
Physicians (D) are also excluded, as MIB serves the insurance underwriting process exclusively.
References: Maryland Insurance Privacy Regulations and MIB Operational Guidelines.
NEW QUESTION # 139
Medical expense insurance typically EXCLUDES coverage for treatment of:
- A. Intentionally self-inflicted injuries
- B. Undiagnosed diseases
- C. Eating disorders
- D. Chronic back pain
Answer: A
Explanation:
Medical expense insurance covers necessary treatments like chronic pain, eating disorders (under parity laws,
§ 15-802), and undiagnosed conditions if treated, but excludes intentionally self-inflicted injuries (e.g., suicide attempts) as non-accidental losses (Insurance Article, § 15-201).
References:Maryland Insurance Article, § 15-201, § 15-802; MIA health insurance exclusions.
NEW QUESTION # 140
Taking out a loan under a life insurance policy:
- A. Reduces the amount receivable upon surrender of the contract
- B. Results in loss of the tax-exempt status of the death proceeds
- C. Changes the policy into a modified endowment contract (MEC)
- D. Results in a distribution of taxable income to the policyowner
Answer: A
Explanation:
How policy loans work in life insurance.
A policy loan is taken against the policy's cash value, not from the insurer's general funds.
Under both federal tax rules and Maryland insurance principles, policy loans are not taxable income as long as the policy remains in force.
Evaluate each option.
A). Taxable income
Incorrect. Policy loans are generally not taxable unless the policy lapses.
B). Loss of tax-exempt death benefit
Incorrect. Death benefits remain income-tax free, though the loan balance is deducted.
C). Becomes a modified endowment contract (MEC)
Incorrect. A loan does not convert a policy into a MEC.
D). Reduces amount receivable upon surrender
Correct. Any outstanding loan plus interest is deducted from the cash surrender value.
Maryland relevance.
Maryland regulates policy disclosures to ensure consumers understand that loans reduce cash value and net proceeds, which aligns with fair-dealing standards.
Conclusion.
The correct effect of a policy loan is a reduction in the amount receivable upon surrender.
NEW QUESTION # 141
Under federal law, an insurance producer may be sentenced to prison for:
- A. Suing an insurer over contract violations
- B. Inducing a client to sign an application for insurance
- C. Embezzling money from an insurance company
- D. Selling insurance with a nonresident license
Answer: C
Explanation:
Criminal vs. administrative violations.
Not all insurance violations are crimes.
Criminal penalties apply when conduct involves fraud, theft, or embezzlement.
Define embezzlement.
Embezzlement involves misappropriating funds entrusted to the producer, such as:
Premium payments
Trust account funds
Evaluate each option.
A). Selling with a nonresident license
Typically an administrative violation, not a felony.
B). Embezzling money
Correct. This is a federal and state crime punishable by imprisonment.
C). Inducing a client to sign an application
Lawful solicitation activity.
D). Suing an insurer
A legal right, not a crime.
Maryland enforcement context.
Embezzlement may result in:
License revocation
Criminal prosecution
Restitution orders
Conclusion.
Embezzlement can result in prison sentencing.
NEW QUESTION # 142
Replacing an existing life insurance policy with a new one may result in:
- A. Surrender costs
- B. Small business taxation
- C. An illegal transaction
- D. Capital gains taxation
Answer: A
Explanation:
Understanding life insurance replacement.
Policy replacement occurs when an existing policy is lapsed, surrendered, or exchanged for a new policy.
Maryland strictly regulates replacements to protect consumers from unnecessary financial harm.
Evaluate each option.
A). Capital gains taxation
Life insurance generally does not produce capital gains tax upon replacement.
B). Small business taxation
Not relevant to individual policy replacement.
C). An illegal transaction
Replacement is legal when properly disclosed and documented.
D). Surrender costs
Correct. Surrender charges may apply if the old policy is terminated early.
Maryland consumer protection context.
Maryland replacement regulations require producers to explain surrender charges, loss of benefits, and new contestability periods to ensure good-faith conduct.
Conclusion.
Policy replacement may result in surrender costs, making option D correct.
NEW QUESTION # 143
In order to qualify for a company convention, an insurance producer agrees to pay the first quarterly premium for the applicant for new insurance. This is called a:
- A. Rebate
- B. Gift
- C. Loan
- D. Cost of doing business
Answer: A
Explanation:
Paying an applicant's premium is considered a rebate, which is generally prohibited in Maryland unless explicitly permitted by law.
Rebates (B) involve offering inducements not specified in the policy, which can undermine fairness and market stability.
Gifts (A) and loans (C) imply separate intentions and are distinct from policy-related payments.
Cost of doing business (D) does not apply, as paying premiums on behalf of clients violates anti-rebating laws.
References: Maryland Rebating Laws, Unfair Trade Practices Act.
NEW QUESTION # 144
When a wage earner dies, the surviving family members may have all of the following expenses EXCEPT:
- A. Family living expenses
- B. Death taxes
- C. Final expenses
- D. Unemployment tax liabilities
Answer: D
Explanation:
When a wage earner dies, surviving families face significant financial obligations:
Final expenses (A): Include funeral costs and related end-of-life expenses.
Family living expenses (C): Cover ongoing needs like housing, food, and utilities.
Death taxes (D): May apply based on estate value and Maryland inheritance laws.
Unemployment tax liabilities (B) are irrelevant as they apply only to employers, not surviving family members.
References: Maryland Estate Tax and Death Benefit Regulations.
NEW QUESTION # 145
The purpose of licensing insurance agents is to:
- A. Demonstrate that the agent is qualified to act on behalf of insurers in Maryland
- B. Limit the number of agents who do business within Maryland
- C. Monitor insurance sales activity in Maryland
- D. Regulate rates to prevent unfair discrimination among insureds
Answer: A
Explanation:
Insurance licensing ensures agents meet professional standards:
Licensure demonstrates qualifications (B) to act ethically and competently on behalf of insurers.
It does not limit the number of agents (A).
Sales activity monitoring (C) and rate regulation (D) are separate regulatory functions.
References: Maryland Insurance Administration Licensing Standards.
NEW QUESTION # 146
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