Maryland Laws and Rules

Which of these statements regarding a managing general agent is NOT true?

1. A managing general agent generally represents the insured

2. An insurer's appointment is required to act as a managing general agent

3. A contract must be in force between the insurer and the managing general agent

4. A managing general agent manages all or part of the insurance business of an insurer

A managing general agent generally represents the insured

John has a criminal record in which he was convicted of a felony that involved dishonesty. Under Federal law, how would John be able to engage in insurance transactions?

1. Given written consent by the state insurance regulatory agency

2. Paying a fine of up to $50,000

3. Completing a court-ordered prison sentence

4. Completing a court-ordered probation period

Correct. Under Federal law, an individual convicted of a f

Given written consent by the state insurance regulatory agency

The maximum prison sentence given under federal law for unfair and deceptive insurance practices is

1. 1 year

2. 10 years

3. 5 years

4. 15 years

15 years

Which group is the Do Not Call Registry designed to protect against?

1. Relatives

2. Charities

3. Telemarketers

4. Political organizations

Telemarketers

A producer may share commission with

1. an unlicensed person who has sold, solicited. or negotiated a policy of insurance

2. the underwriter of the insurance company

3. another licensed but unappointed producer

4. the insured to offset a portion of the premium payable

another licensed but unappointed producer

The Maryland Life and Health Insurance Guaranty Corporation is funded by

1. the state government

2. assessments of member insurers

3. the Federal government

4. the National Association of Insurance Commissioners

assessments of member insurers

Carlos' producer license has been suspended due to non-renewal. He may apply for reinstatement within the ___ month period following the date when the license should have been renewed.

1. 3

2. 6

3. 12

4. 24

12

At what point must a producer give notification to the Commissioner about using an assumed name?

1. Prior to using the assumed name

2. Within 90 days of using the assumed name

3. Notification is not required

4. Upon license renewal

Prior to using the assumed name

Which of these is NOT an Unfair Claims Settlement Practice?

1. Denying unsubstantiated claims on a timely basis

2. Compelling insureds to initiate a lawsuit by offering less on insurance claims

3. Refusing to pay claims without conducting a reasonable investigation

4. Failing to acknowledge and act promptly with respect to insurance claims

Denying unsubstantiated claims on a timely basis

Which of the following is NOT required to be reported by a producer?

1. Producer's change of financial status

2. Producer's conviction of a felony

3. Producer's change of address

4. Producer's change of name

Producer's change of financial status

Which of the following is NOT a valid reason for revoking a Maryland producer's license?

1. Committing an unfair trade practice

2. Failure to pay state income tax

3. Failure to pay court-ordered child support

4. Having no insurance appointment in effect for 10 days

Having no insurance appointment in effect for 10 days

Which of the following is an example of illegal inducement?

1. Replacing an existing insurance policy with a new one

2. Advertising lower insurance rates than a competitor's

3. Publishing guaranteed dividend rates on an insurance policy

4. Paying claims in a timely manner

Publishing guaranteed dividend rates on an insurance policy

Which of the following entities is the Maryland Insurance Administration associated with?

1. Local government

2. Federal Government

3. County government

4. State government

State government

Which of the following is a requirement for an individual to receive an insurance license in Maryland?

1. Passing the appropriate examination

2. Be 21 years of age

3. Post a $50,000 surety bond

4. Be a U.S. citizen for at least 5 years

Passing the appropriate examination

A producer's license may only be suspended or revoked if the producer

1. filed for bankruptcy

2. did not meet a sales quota

3. has engaged in replacement of an existing policy

4. has been afforded a right to a hearing

has been afforded a right to a hearing

Which of the following has the power to examine the books and records of Maryland insurers?

1. The Governor

2. Attorney General

3. Maryland Insurance Administration

4. National Association of Insurance Commissioners (NAIC)

Maryland Insurance Administration

Which of the following approves continuing education coursework in the State of Maryland?

1. Governor

2. Maryland Insurance Administration

3. Maryland Board of Continuing Education

4. NAIC

Maryland Insurance Administration

Which of the following must clearly be illustrated in ALL sales material for market value adjusted annuities?

1. The market value adjustment is always downward

2. The market value adjustment can be either upward or downward

3. The market value adjustment must always be approved by the Maryland Insurance Administration

4. The market value adjustment is always upward

The market value adjustment can be either upward or downward

A producer may NOT advertise an insurance product if he/she

1. publishes the ad in a trade journal

2. uses a paid spokesperson

3. points out differences with the competition

4. uses a policy title to misrepresent the coverage

uses a policy title to misrepresent the coverage

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

1. a navigator

2. a broker

3. a producer

4. an advisor

advisor

A licensee who is required to take continuing education must complete 24 hours of continuing education, which includes ___ hour(s) of ethics coursework.

1. 1

2. 3

3. 2

4. 4

3

__________ can be defined as "replacing a policy when it is NOT in the best interest of the client".

1. Twisting

2. Rebating

3. Coercion

4. Subrogation

Twisting

A life insurance policy that is paid annually usually contains a grace period of at least ___ days.

1. 20

2. 30

3. 40

4. 10

30

When must a claim on a life insurance policy be paid after proof of loss has been received by the insurer?

1. Promptly

2. Within 30 days

3. Within 10 days

4. Within 20 days

Promptly

When a producer is replacing an existing ordinary life insurance policy, the producer must take all of the following actions EXCEPT

1. obtain the beneficiary's signature

2. provide the applicant with a Notice Regarding Replacement

3. provide the applicant with a copy of the sales proposal

4. submit to the producer's insurance company a copy of the signed Notice Regarding Replacement

obtain the beneficiary's signature

The Commissioner has reason to believe a producer is in violation of Maryland insurance law. Which of the following may be issued against the producer?

1. Cease and desist order

2. Termination notice

3. Appointment

4. Certificate of authority

Cease and desist order

The _________ is required to notify the Maryland Insurance Administration of a licensee's change in name or address.

1. trustee

2. insurer

3. licensee

4. agency

licensee

How many days notice must a producer be given prior to a scheduled hearing?

1. 30 days

2. 10 days

3. 14 days

4. 21 days

10 days

Which of these would likely be considered an Unfair Claims Settlement Practice?

1. Requiring a time limit for submitting claims

2. Making it mandatory that proof of loss be provided for each claim

3. Offering settlements that are less than the fair value to offset insurer expenses

4. Paying claims in a timely matter

Offering settlements that are less than the fair value to offset insurer expenses

Who is required to notify the Commissioner in the event of a producer's appointment termination?

1. Governor

2. Producer

3. Attorney General

4. Insurer

Insurer

Whose interests are being protected under replacement rules?

1. Producer

2. Policyowner

3. Beneficiary

4. Insurer

Policyowner

Any administrative action taken against a producer MUST be reported to the Commissioner within ___ days after the final disposition.

1. 20

2. 30

3. 50

4. 40

30

Before soliciting insurance applications for an insurer, a producer must secure a(n)

1. designation

2. surety bond

3. anointment

4. appointment

appointment

Chuck and Shaquille are both licensed producers in the same line of insurance. Chuck provides Shaquille with a referral that results in a sale. Commissions on this sale will likely be

1. given only to Chuck

2. paid to neither

3. given to the client

4. shared by both producers

shared by both producers

Discouraging consumers from purchasing products from an insurer is called a(n)

1. rebate

2. sanction

3. avoidance

4. boycott

boycott

Exchanging a new policy for one already in force is called

1. subrogation

2. exchange

3. substitution

4. replacement

replacement

Insurance agents are required to be licensed in order to protect the

1. producer

2. agency

3. public

4. Commissioner

public

Licensed producers in Maryland are authorized to

1. classify rates

2. rate coverages

3. solicit, receive, and forward applications to the insurer

4. approve coverages

solicit, receive, and forward applications to the insurer

An example of replacement is

1. canceling a term life policy to buy a whole life policy

2. canceling a whole life policy to buy a major medical policy

3. canceling disability policy to buy a term life policy

4. canceling a long-term care policy to buy a whole life policy

canceling a term life policy to buy a whole life policy

Each delivered life insurance policy in Maryland MUST include a(n)

1. underwriting manual

2. legible and brief description of the policy on the first page

3. notary seal

4. actuarial table on the first page

legible and brief description of the policy on the first page

Replacement regulations exist in order to

1. generate revenues for the state

2. ensure that the original producer is paid renewal commissions

3. ensure that all insurers get equal exposure

4. protect policyowners from misrepresentations and loss of benefits

protect policyowners from misrepresentations and loss of benefits

Interest on death benefits are NOT required to be paid by an insurance company as long as proceeds are paid within ___ after the date of the death of the insured.

1. 60 days

2. 40 days

3. 50 days

4. 30 days

30 days

The _______ is required to notify the Commissioner in the event of appointment termination.

1. insurer

2. producer

3. underwriter

4. insured

insurer

What may be the result of replacing an existing life insurance policy with a new one?

1. Fine

2. Capital gains tax

3. Penalty tax

4. Surrender charge

Surrender charge

The Commissioner is empowered to perform each of the following acts EXCEPT

1. prosecute producers who violate state insurance laws

2. issue cease and desist orders

3. monitor insurer solvency

4. examine domestic insurance companies

prosecute producers who violate state insurance laws

The financial records of each domestic company MUST be inspected every ___ years by the Commissioner.

1. 4

2. 2

3. 5

4. 3

5

Which of the following is NOT information found in a life insurance buyer's guide?

1. How to compare life insurance policy requirements

2. How to compare life insurance policy rates

3. How to take legal action against an insurance company

4. How to determine how much life insurance to purchase

How to take legal action against an insurance company

A life insurance policy that is paid annually usually contains a grace period of at least ___ days.

1. 30

2. 20

3. 40

4. 10

30

The license required for an insurer to conduct business in the state is referred to as a(n)

1. certificate of approval

2. appointment

3. anointment

4. certificate of authority

certificate of authority

A producer has indicated to a potential client that the proposed life insurance policy is covered by the Maryland Life and Health Insurance Guaranty Corporation. This action taken by the producer is

1. permitted and encouraged

2. prohibited by law

3. permitted only with the Commissioner's authorization

4. legal in every state

prohibited by law

An insurer's life insurance premium rate must be the same for all individuals

1. who pay an annual premium

2. in the same risk class only

3. in the same risk class with an equal life expectancy

4. with an equal life expectancy only

in the same risk class with an equal life expectancy

The Life and Health Insurance Guaranty Corporation protects the public in the event of

1. a member insurer not offering specific products needed by the public

2. a large policy is in need of special underwriting

3. guaranteeing coverage for high-risk insurance applicants

4. the impairment of a member insurer unable to pay claims

the impairment of a member insurer unable to pay claims

A change in a licensee's name or address must be provided to the Commissioner within ___ days.

1. 15

2. 45

3. 30

4. 10

30

The Maryland Insurance Administration has the ability to examine the records of all admitted insurers because

1. the National Association of Insurance Commissioners has made it mandatory

2. due to the Fair Credit Reporting Act

3. of the powers granted through state law

4. the public is entitled to see all of an insurer's records

of the powers granted through state law

Greg had recently been terminated from his job that covered him for group life insurance. How long does he have to convert his coverage to an individual policy?

1. 21 days

2. 14 days

3. 31 days

4. 30 days

31 days

Group life plans sold in Maryland typically contain a conversion option. If the insured elects this option, the new policy

1. does NOT require evidence of insurability

2. is in force for up to 5 years

3. requires evidence of insurability

4. does NOT require premium payments from the insured

does NOT require evidence of insurability

A marketing system which utilizes mass media advertising and mail, instead of a producer, is called a(n) _________ _________ marketing system.

1. mass internet

2. direct response

3. satellite office

4. unmediated response

direct response

A Maryland resident producer must be at least ___ years of age.

1. 20

2. 19

3. 21

4. 18

18

Life insurance replacement can be best defined as

1. reducing the face value of an existing policy

2. accepting a reduced paid-up policy

3. a transaction in which a new life insurance policy is purchased and an existing life insurance policy is surrendered

4. converting existing term coverage to a permanent policy

a transaction in which a new life insurance policy is purchased and an existing life insurance policy is surrendered

Tony the producer induces a policyholder to cancel her existing insurance policy and take out a new one by misrepresenting the benefits of the inferior new policy. Tony has engaged in the unfair trade practice of

1. twisting

2. discrimination

3. defamation

4. rebating

twisting

The Maryland Life and Health Guaranty Corporation protects the ________ in the event of insurer insolvency.

1. insurer

2. insured

3. State

4. beneficiary

insured

Which of the following actions may result in a producer's license being suspended?

1. Rebating a portion of the commission to the insured

2. Soliciting insurance on behalf of a foreign insurer

3. Splitting the commission with another licensed producer

4. Soliciting insurance under a temporary license

Rebating a portion of the commission to the insured

What is a life insurance producer authorized to do?

1. Settle claim disputes

2. Accept or reject an insurance application

3. Solicit, receive and forward applications to the insurer

4. Determine premium ratings

Solicit, receive and forward applications to the insurer

A producer may be found guilty of misrepresentation for

1. soliciting insurance in a state outside of his/her residence

2. making a false statement of the financial condition of an insurer

3. failing to disclose a policy's exclusions

4. sharing commissions with a policyholder

failing to disclose a policy's exclusions

What must be disclosed when a producer advertises a life insurance policy?

1. Name of the actual insurer

2. Producer's home address

3. Producer's commission rate

4. Insurer's trade name

Name of the actual insurer

A producer must maintain customer records for ____ year(s) following the completion date of the insurance transaction.

1. five

2. one

3. three

4. seven

five

Which of the following BEST defines the illegal act of twisting?

1. Misrepresenting a policy for the purpose of inducing a policyholder to change or replace an existing policy

2. Encouraging a policyholder to replace a surrendered policy

3. Encouraging an applicant to purchase insurance by offering a discount.

4. Making false statements on an application for insurance

Misrepresenting a policy for the purpose of inducing a policyholder to change or replace an existing policy

A(n) _________ producer lives in another state and transacts insurance in Maryland.

1. foreign

2. nonresident

3. resident

4. unauthorized

nonresident

An example of misrepresentation is

1. making any public statement or advertisement that contains false information or unsubstantiated criticisms about an insurance company

2. charging different premiums for policyholders in the same risk classification

3. offering a premium rebate or a special advantage of any kind to consumers as an inducement to purchase a contract of insurance

4. falsifying the terms, benefits, advantages, or conditions of an insurance policy

falsifying the terms, benefits, advantages, or conditions of an insurance policy

An example of rebating would be

1. splitting the commission with the buyer on a sale of insurance

2. using intimidation in order to restrain or monopolize the business of insurance

3. a mutual insurance company paying dividends to its policyowners

4. reducing the premiums across the board for a specific risk class

splitting the commission with the buyer on a sale of insurance

An individual appointed by an insurance company that represents the company and presents policies on its behalf is a(n)

1. auditor

2. underwriter

3. producer

4. adjuster

producer

Which of the following is an example of defamation?

1. An insurer using intimidation in order to restrain or monopolize the business of insurance

2. A producer who shares commissions with a client

3. An insurer reducing the premiums across the board for a specific risk class

4. A producer who publicly and erroneously announces that an insurance company is insolvent

A producer who publicly and erroneously announces that an insurance company is insolvent

An individual may sell insurance products in Maryland for an unauthorized insurer only if he/she obtains a(n)

1. nonresident producer license

2. producer license

3. surplus lines license

4. alien broker license

surplus lines license

Which of the following is NOT a valid reason for a producer's license to be revoked?

1. Defamation

2. Committing fraud

3. Rebating a portion of the commission to the insured

4. Sharing commissions with licensed agents

Sharing commissions with licensed agents

An order issued by the Commissioner that prohibits a specific practice listed in the order is called a(n)

1. subrogation order

2. cease and desist order

3. interdiction order

4. suspension order

cease and desist order

Which of these actions would require licensure as an advisor?

1. Representing both the insurer and insured

2. Giving advice on an insurance policy

3. Charging a fee for advisory services of insurance coverage

4. Selling insurance in Maryland when you reside in another state

Charging a fee for advisory services of insurance coverage

Which of these is NOT an Unfair Claims Settlement Practice?

1. Failing to acknowledge and act promptly with respect to insurance claims

2. Compelling insureds to initiate a lawsuit by offering less on insurance claims

3. Refusing to pay claims without conducting a reasonable investigation

4. Offering to settle a claim by arbitration

Offering to settle a claim by arbitration