Ch. 12 Maryland Laws and Rules

An example of rebating would be a. a mutual insurance company paying dividends to its policyowners b. reducing the premiums across the board for a specific risk class c. a producer who shares commissions with a client d. using intimidation in order to restrain or monopolize the business of insurance

a producer who shares commissions with a client

A domestic insurance company in Maryland MUST a. be formed under Maryland insurance laws b. own real estate in Maryland c. write insurance on risks located only in Maryland d. honor the charter of the National Association of Insurance Commissioners (NAIC)

be formed under Maryland insurance laws

ABC Insurance Agency is entering each applicant who purchases insurance through their agency into a drawing to win a free trip. This is an unlawful insurance practice known as... a. illegal inducement b. false advertising c. concealment d. fraud

illegal inducement

An underwriter

negotiates an insurance contract on behalf of an insurer

When must a claim on a life insurance policy be paid after proof of loss has been received by the insurer? a. promptly b. within 10 days c. within 20 days d. within 30 days

promptly

A life insurance policyowner is allowed ____ 30 days upon policy delivery to return the policy for a full premium refund a. 10 b. 31 c. 45 d. 60

10

appointment

(in Maryland) an insurance producer cannot sell, solicit, or negotiate policies for an insurer unless there is an agreement in place between the producer and insurer

A producer who sells an individual life insurance policy in Maryland MUST deliver to the policyowner a(n) a. AM Best rating b. financial report from the previous year c. Policy Summary and Buyer's Guide d. letter showing NAIC compliance

Policy Summary and Buyer's Guide

Which of the following is NOT a requirement for soliciting insurance in Maryland? a. pass insurance examination b. at least 21 years old c. good character d. appointed by an insurer

at least 21 years old

A producer may begin to solicit insurance only when a. registered for the state insurance examination b. licensed by the state c. appointed by an insurer d. none of these

appointed by the insurer

An example of replacement is a. canceling disability policy to buy a term life policy b. canceling a term life policy to buy a whole life policy c. canceling a long-term care policy to buy a whole life policy d. canceling a whole life policy to buy a major medical policy

canceling a term life policy to buy a whole life policy

Which of the following is NOT information found in a life insurance buyer's guide? a. How to take legal action against an insurance company b. How to compare life insurance policy rates c. How to compare life insurance policy requirements d. How to determine how much life insurance to purchase

How to take legal action against an insurance company

To conduct insurance business in this State, an insurer must be issued a certificate of authority. The entity which issues the certificate of authority is the a. commissioner b. governor c. Better Business Bureau d. NAIC

Commissioner

advisor

a person who, for a fee, gives advice or recommendations on benefits provided by an insurance contract

ABC Corporation has a group life insurance policy that covers its employees and their dependent children. Which of the following would be considered a "dependent child"? a. employed 22 year old child who relies on the insured employee for financial support b. child over the age of 18 who attends an educational institution and relies on the insured employee for financial support c. child age 27 still living at home and attending an educational institution d. married child over the age of 26

child over the age of 18 who attends an educational institution and relies on the insured employee for financial support

Which of the following is NOT considered to be an act of fraud? a. collecting a premium for insurance that is not provided b. collecting a charge for insurance that is less than the charge applicable to that insurance c. misappropriate or unreasonably withhold premiums or returned premiums d. willfully collecting a premium that exceeds the amount of the actual premium

collecting a charge for insurance that is less than the charge applicable to that insurance

Which of the following basics is a producer's fiduciary responsibility? a. collecting premiums and paying them to the insurance company b. maintaining a separate bank account for each insurance company the producer represents c. acting as a referee in the event of a disagreement between an insured and the insurance company d. advising prospective insureds of the lowest rate available

collecting premiums and paying them to the insurance company

A Maryland insurance producer solicits an insurance policy. In the event of an controversy between the insured and the company, the producer is considered to represent the a. insured b. beneficiary c. company d. policyholder

company

The Maryland Insurance Commissioner

counsels and advises the Governor on all matters assigned to the Maryland Insurance Administration

When collecting insurance premiums from a client, a producer MUST a. temporarily deposit the funds in a personal account b. pay the client interest on any monies held c. send receipt of payment to the Commissioner d. forward premiums to the insurer on a timely basis

forward premiums to the insurer on a timely basis

Maria the insurance producer completes a sale by collecting required signatures on the application and obtaining the initial premium. Afterwards, she deposits the check into her personal checking account. Maria has committed what crime? a. coercion b. twisting c. fraud d. defamation

fraud

Each delivered life insurance policy in Maryland MUST include a(n) a. legible and brief description of the policy on the first page b. underwriting manual c. actuarial table on the first page d. notary seal

legible and brief description of the policy on the first page

Producer commissions may NOT be paid to a. licensed and appointed producers b. licensed and appointed producers who are sharing commissions c. non-resident producers d. licensed producers not appointed by an insurer

licensed producers not appointed by an insurer

A viatical settlement broker may NOT a. advertise their services b. recommend a settlement provider to a viator c. charge fees d. make any transactions before being approved for a license

make any transactions before being approved for a license

An insurance producer who convinces a prospective insured to purchase a policy by exaggerating the benefits of the policy may be found guilty of a. twisting b. illegal placement c. coercion d. misrepresentation

misrepresentation

All of the following are typically included in a life insurance policy illustration EXCEPT a. premium of the policy b. names of the beneficiaries c. interest charged for the policy loans d. cash surrender value in 20 years

names of the beneficiaries

An insurance producer agrees to pay the first monthly premium for an insurance applicant. This is called a(n) a. incentive b. rebate c. gift d. offer

rebate

insurance producer

sells, solicits, or negotiates insurance contracts for compensation

All of following actions are considered rebating EXCEPT a. sharing commissions with other licensed and appointed agents b. refunding part of the premium as an inducement for purchase c. offering special dividends d. offering anything of value not specified in the policy

sharing commissions with other licensed and appointed agents

What may be the result of replacing an existing life insurance policy with a new one? a. fine b. penalty tax c. capital gains tax d. surrender charge

surrender charge

Which of the following is NOT required in an order from the Commissioner? a. the purpose of the order b. the grounds that the order is based on c. the effective date of the order d. the Governor's signature

the Governor's signature

A producer does NOT have a fiduciary responsibility to... a. insurers b. insureds c. applicants d. the Guaranty Association

the Guaranty Association

A producer's renewal date for his/her resident insurance license is on or before a. the first day of the licensee's birth month b. January 1 every 2 years c. the last day of the licensee's birth month d. December 31 every year

the last day of the licensee's birth month

The Commissioner must examine he financial affairs of each admitted insurer operating in Maryland at least once every how many years? a. 1 b. 3 c. 5 d. 7

5

A life policy loan in Maryland cannot charge a fixed rate of interest higher than a. 6% b. 7% c. 8% d. 9%

8%

The Life and Health Guaranty Corporation provides funds to carry out its powers and duties by assessing a. taxpayers b. policyowners c. beneficiaries d. member insurers

member insurers

Any advertisement that mentions a dollar amount, period of time for which any benefit is payable, cost if policy, policy benefit, or loss for which the benefit is payable MUST disclose a. the date in which the advertisement was approved b. the exceptions, reductions, and limitations affecting the basic provisions of the policy c. how much the advertisement cost to publish d. the person who wrote the advertisement

the exceptions, reductions, and limitations affecting the basic provisions of the policy

An insurance provider who replaces an existing policy by making false written or oral statements is committing the act of a. twisting b. inducement c. coercion d. intimidation

twisting

The act of using misrepresentation to induce an insured person to terminate an existing policy and purchase a new policy is referred to as a. twisting b. subrogation c. a life settlement d. coercion

twisting

Failing to promptly provide a reasonable explanation for the denial of a claim is considered to be a(n) a. fiduciary act b. unfair claim settlement practice c. fraudulent act d. claim liability

unfair claim settlement practice

Which of the following in Not a reason for the Commissioner to dent or refuse a producer license application? a. recently convicted of a felony b. engaged in fraudulent insurance practices c. unintentionally misrepresented a material fact on the application d. intentionally violated state insurance laws

unintentionally misrepresented a material fact on the application

The standard grace period for a life insurance policy sold in Maryland is a. 15 days b. 30 days c. 45 days d. 60 days

30 days

If a producer has been engaged in an administrative action by any governmental agency, within how many days following the final deposition must the producer report the action to the Commissioner? a. 7 b. 15 c. 30 d. 45

30

Interest on death benefits are NOT required to be paid an insurance company as long as proceeds are paid within ____ after the date of the death of the insured a. 30 days b. 40 days c. 50 days d. 60 days

30 days

Nonresident producer

A producer who is licensed in Maryland but resident in another state

rebating

The promise of a discount in premium as an inducement to purchase insurance

An insurance producer is BEST defined as a. a person appointed by more than one insurance company to issue policies b. a person who has a contract with an insurance company to represent it c. a person who places insurance with nonadmitted companies d. an employee of an insurance company who has the authority to underwrite insurance

a person who has a contract with an insurance company to represent it

A Buyer's Guide MUST a. display year-by-year cash surrender values b. have it's content approved by the Commissioner c. include the name of the Commissioner d. explain the company's specific underwriting procedures

have it's content approved by the Commissioner

When a producer is replacing an existing ordinary life insurance policy, the producer must take all of the following actions EXCEPT a. provide the applicant with a copy of the sales proposal b. submit to the producer's insurance company a copy of the signed Notice Regarding Replacement c. obtain the beneficiary's signature d. provide the applicant with a Notice Regarding Replacement

obtain the beneficiary's signature

John the insurance producer has an insurance license that expires in 6 months. If he files an application for renewal before the expiration date, his license will a. remain in effect until a new one is issued b. be automatically renewed regardless of any violations c. be renewed upon determination of legal compliance within a 60-day period following license expiration date d. renew without the normal requirements

remain in effect until a new one is issued