Accident-and-Health-or-Sickness-Producer Practice Exam Questions with Answers MarylandAccident and Health or Sickness Producer Series 20-24 Exam Certification

Multi-state group plans (Insurance Article, § 15-1202) are governed by the state where the master contract is issued, typically the employer’s home state, ensuring consistent legal oversight regardless of employee location or producer residence.

References:Maryland Insurance Article, § 15-1202; MIA multi-state group rules.

Comprehensive and Detailed Step by Step Explanation:Premium determination in life insurance depends on factors that measure risk, butrace (D)is not and cannot be used due to anti-discrimination laws.

Age (A):A primary factor; younger applicants are charged lower premiums due to lower mortality risk.

Health (B):Significant; poor health or pre-existing conditions increase premiums.

Occupation (C):Risky professions (e.g., construction or aviation) may result in higher premiums.

Race (D):Prohibited by Maryland law, which ensures fairness and prohibits underwriting based on race, ethnicity, or similar discriminatory criteria.

References:Maryland Insurance Article §27-501, COMAR 31.09.03, and Anti-Discrimination Standards in Insurance.

Standard risk applicants (Insurance Article, § 15-201) receive the standard premium rate, as their risk aligns with the average pool. Declining coverage or adjusting payment terms applies to higher risks, not standard ones.

References:Maryland Insurance Article, § 15-201; MIA underwriting guidelines.

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

10 days (A):Maryland law requires a minimum free-look period of 10 days for life insurance policies, allowing buyers to review the policy without financial obligation.

31 days (B), 45 days (C), and 60 days (D):These exceed Maryland’s statutory minimum and are not standard requirements unless specifically offered by the insurer.

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

Producers hold premiums in a fiduciary capacity (Insurance Article, § 10-126) and must remit them to the insurer or a trust account. Depositing them into a personal account is fraud—specifically misappropriation—violating state law. Twisting, rebating, and replacement involve different unethical acts, not fund misuse.

References:Maryland Insurance Article, § 10-126; MIA producer conduct regulations.

Comprehensive and Detailed Step by Step Explanation:The Maryland Insurance Administration (MIA) has sole authority to regulate, suspend, or revoke an insurance producer’s license for violations of state insurance laws:

Maryland Insurance Administration (C):Correct. The MIA oversees producer licensing, compliance, and disciplinary actions.

Appointing insurer (A):Can terminate an appointment but cannot revoke a license.

Continuing education provider (B):Only offers training and has no regulatory authority.

Attorney General (D):Handles legal actions but does not directly manage licensing.

References:Maryland Insurance Article §10-126, Producer Regulation Guidelines, COMAR 31.03.13.

Errors and omissions liability arises from professional negligence (Insurance Article, § 10-126). Misleading a client about policy replacement (twisting, § 27-203) directly harms them, unlike accounting errors, overpayments, or tax issues, which are internal or personal.

References:Maryland Insurance Article, § 10-126, § 27-203; MIA producer liability rules.

Advertisements must identify the insurer (Insurance Article, § 27-503) to ensure transparency and avoid confusion. The Commissioner, beneficiary, and insured aren’t required in ads, as they don’t issue the policy.

References:Maryland Insurance Article, § 27-503; MIA advertising guidelines.

Insurance (Insurance Article, § 12-101) covers legal risks like skydiving, events, or plants, but not illegal acts like drug smuggling, barred by public policy.

References:Maryland Insurance Article, § 12-101; MIA insurability guidelines.

Under IRC § 162, premiums paid by a corporation for group disability coverage for employees are deductible as a business expense, with benefits taxable to employees. Partnerships can’t deduct for partners (owners), individual premiums aren’t deductible (IRC § 213), and employee-paid premiums don’t qualify unless under specific plans. Maryland follows federal tax treatment.

References:Maryland Insurance Article; IRC § 162, § 213; MIA tax guidelines.

Federal law (18 U.S.C. § 1033) criminalizes embezzlement by a producer, a felony punishable by prison if interstate commerce is affected. Nonresident licensing is a state issue, inducing applications is legal, and suing is a civil action, not criminal.

References:18 U.S.C. § 1033; MIA producer conduct alignment.

Certificates (Insurance Article, § 15-1207) summarize policy features and benefits for group members, not the full contract, physician lists, or financial statements, which are separate or irrelevant. This ensures employees understand their coverage.

References:Maryland Insurance Article, § 15-1207; MIA group insurance rules.

The certificate (Insurance Article, § 15-1207) provides employees with evidence of coverage under the group plan, not a binding contract (master policy) or employer-specific by location. It summarizes benefits for clarity.

References:Maryland Insurance Article, § 15-1207; MIA group insurance rules.

Accident and health plans (Insurance Article, § 15-201) cover acute needs like hospital, physician, and surgical expenses. Custodial care—non-medical daily assistance—is excluded, typically covered by long-term care insurance.

References:Maryland Insurance Article, § 15-201; MIA health insurance standards.

A loss on May 30, while covered (Insurance Article, § 15-201), obligates the insurer to pay upon proof, despite termination on June 1. Termination or pre-existing exclusions don’t negate prior coverage, and no one-year rule applies.

References:Maryland Insurance Article, § 15-201; MIA claims rules.

The Maryland Insurance Administration (MIA) is a state agency under Insurance Article, § 2-101, regulating insurance within Maryland. The federal government oversees broader laws, the NAIC is a voluntary group, and the General Assembly legislates, but the MIA operates as an executive state entity.

References:Maryland Insurance Article, § 2-101; MIA official structure.

A material misrepresentation (Insurance Article, § 12-206) allows the insurer to void the policy within the contestability period (typically 2 years) if willful. It’s not automatically void, nor must it continue or wait until renewal; the insurer decides based on materiality.

References:Maryland Insurance Article, § 12-206; MIA misrepresentation rules.

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.

Federal tax rules (IRC § 105, § 106) make employer-paid medical benefits (major medical, dental, HMO) tax-free, but disability income benefits are taxable if employer-funded, as they replace income.

References:IRC § 105, § 106; Maryland Insurance Article, § 15-1201; MIA tax guidelines.

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.

Major medical plans (Insurance Article, § 15-201) cover hospice, drugs, and therapy, but excluderoutine dental care, which requires separate dental insurance.

References:Maryland Insurance Article, § 15-201; MIA major medical standards.

SHOP Exchange (Insurance Article, § 31-101) serves employers with 1-50 employees; a 200-employee firm exceeds this, so the navigator should refer them to a producer for large group plans, not assist via SHOP, refer personally, or send to the MIA.

References:Maryland Insurance Article, § 31-101; MIA SHOP Exchange guidelines.