Free Insurance Licensing Life-Producer Practice Exam with Questions & Answers | Set: 3

Comprehensive and Detailed Step by Step Explanation:The licensing of insurance agents ensures professional competency and ethical conduct:

Licensuredemonstrates qualifications (B)required to represent insurers and serve clients.

Maryland does not impose limits on the number of licensed agents, invalidating (A).

Monitoring sales activity (C) and rate regulation (D) are distinct regulatory functions.

References: Maryland Insurance Administration Licensing Requirements.

Comprehensive and Detailed Step by Step Explanation:Thefree-look periodis a consumer protection feature allowing policyholders to cancel a policy within a specified period for a full refund.

10 days (A):Maryland requires a minimum free-look period of 10 days for most individual life insurance policies. This provides enough time for policy review.

31 days (B), 45 days (C), and 60 days (D):These periods exceed Maryland's legal minimum and are typically not required unless specified by the insurer.

References:Maryland Free-Look Provisions, COMAR 31.09.09, and Maryland Consumer Protection Insurance Guidelines.

Comprehensive and Detailed Step by Step Explanation:Under Maryland insurance law, a terminated employee has31 days (D)to convert a group term life insurance policy into an individual policy without providing evidence of insurability.

This grace period allows individuals to maintain coverage while securing individual insurance.

10 (A), 20 (B), or 30 days (C)are incorrect, as Maryland mandates a specific 31-day window.

References: Maryland Conversion Rights in Group Life Insurance Policies, Section 15-401 of the Insurance Article.

Comprehensive and Detailed Step by Step Explanation:Producers are integral to facilitating insurance transactions but do not have underwriting authority:

Approving policies for issue (C)is the responsibility of the insurer’s underwriting team.

Producers are required todeliver policies (A),notify insurers about replacements (B), andcollect initial premiums (D).

References: Maryland Producer Duties and Regulatory Framework.

Comprehensive and Detailed Step by Step Explanation:In Maryland, the replacement of life insurance policies requires safeguards to protect policyholders.

TheImportant Notice Replacement of Life Insurance or Annuitiesform must be signed byboth the applicant and the insurance producer (B)to ensure informed consent and regulatory compliance.

The applicant only (A)does not suffice, as producer acknowledgment is essential.

The producer only (C)lacks the policyholder’s agreement.

An officer of the insurer (D)does not participate in this process.

References: Maryland Replacement of Life Insurance Regulations, COMAR 31.09.05.

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.

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.