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NEW QUESTION # 114
Prescription drug plans sometimes control expenses by encouraging the use of:
- A. Brand-name drugs
- B. Legend drugs
- C. Federally approved drugs
- D. Generic drugs
Answer: D
Explanation:
Comprehensive and Detailed in Depth Explanation:
Prescription drug plans commonly control costs by encouraging members to usegeneric drugs. The Maryland Insurance Administration explains that prescription drug coverage often uses aformulary, or list of covered drugs, arranged by tiers. In Maryland's consumer guidance,Tier 1 is generic drugs, and these are described as
"lower-cost drugs," while preferred and non-preferred brand-name drugs are placed in higher tiers and generally cost more. Therefore, the correct answer isC. Generic drugs.
A "legend drug" simply means a drug that generally requires a prescription; it does not specifically identify the lower-cost option. "Federally approved drugs" is too broad because both generic and brand-name drugs may be federally approved. "Brand-name drugs" are usually more expensive than generic drugs, so encouraging brand-name drugs would not typically be the cost-control method tested here. Official Maryland Reference: Maryland Insurance Administration, prescription drug coverage and formulary tiers.
NEW QUESTION # 115
Medicare Supplement insurance is specifically designed for individuals who:
- A. Cannot obtain commercial coverage due to health problems
- B. Have low incomes and limited assets
- C. Are ineligible for coverage under an employer group accident and health plan
- D. Have enrolled in Medicare
Answer: D
Explanation:
Medicare Supplement (Medigap, Insurance Article, § 15-901) is for Medicare enrollees (Parts A and B) to cover gaps, not low-income (Medicaid), uninsurable (pre-ACA pools), or employer-ineligible individuals.
References:Maryland Insurance Article, § 15-901; MIA Medigap rules.
NEW QUESTION # 116
If an insurer pays an individual accident and health insurance claim during a policy's grace period:
- A. The policy is canceled automatically at the end of the grace period
- B. The amount of unpaid premium may be subtracted from the reimbursement
- C. A 10% service fee is charged
- D. The deductible is waived
Answer: B
Explanation:
During the grace period (Insurance Article, § 15-209), insurers can deduct unpaid premiums from claims paid, maintaining coverage without waiving deductibles, charging fees, or auto-canceling.
References:Maryland Insurance Article, § 15-209; MIA policy payment rules.
NEW QUESTION # 117
An applicant for life insurance must be informed that testing for Human Immunodeficiency Virus (HIV) infection is used to help determine:
- A. Whether an insurable interest exists
- B. The effective date and term of coverage
- C. The type of policy that will be issued
- D. The insurability of the proposed insured
Answer: D
Explanation:
HIV testing is used by insurers to evaluate the health risks associated with the applicant and determine insurability.
The insurability of the proposed insured (D): Correct. HIV status can impact underwriting decisions, subject to Maryland's anti-discrimination laws.
The type of policy issued (A): Irrelevant, as this is determined by the applicant's preferences and eligibility.
Effective date and term of coverage (B): Determined separately from medical testing.
Whether an insurable interest exists (C): Based on the relationship between the policyholder and insured, not medical testing.
References: Maryland Insurance Code §27-208, HIV Testing Disclosure Guidelines, and Maryland Human Rights Act.
NEW QUESTION # 118
All of the following statements about the life insurance protection provided by a family life insurance policy are true EXCEPT:
- A. Coverage is available only to heads of households who are 30 years old or younger
- B. Most of the premium amount purchases whole life insurance for the head of the household
- C. Life insurance coverage is provided automatically to children born during the policy period
- D. Coverage for dependents can be converted to whole life insurance without evidence of insurability
Answer: A
Explanation:
Family life insurance policies provide comprehensive coverage for families, including automatic coverage for certain dependents.
Option A: Correct. A significant portion of the premium funds whole life insurance for the primary insured (typically the head of household).
Option B: Correct. Dependent children born after the policy is issued are automatically covered, often without additional cost or underwriting.
Option C: Incorrect. Family life insurance policies are not restricted to individuals under 30; this criterion does not exist in standard policy guidelines.
Option D: Correct. Coverage for dependents can often be converted to whole life insurance at specific ages or policy milestones without medical underwriting.
References: Maryland Family Life Insurance Policy Standards, COMAR 31.09.04, and Maryland Insurance Administration Dependent Coverage Guidelines.
NEW QUESTION # 119
(Which annuity pays a monthly benefit that begins approximately one month after issuance?)
- A. An immediate annuity
- B. A retirement annuity
- C. A survivorship annuity
- D. A retirement income policy
Answer: A
Explanation:
Comprehensive and Detailed Step by Step Explanation:
* Immediate annuity definition:An annuity where payments begin soon after purchase-commonly within about one payment interval (often ~30 days).
* Why D is correct:"Begins approximately one month after issuance" is the classic description of animmediate annuity.
* Why others are wrong:The other choices are not the standard term for the "start right away" annuity structure.
* Maryland reference:As with all products, describing payment start dates inaccurately can be a misleading disclosure; Maryland treats incomplete or misleading disclosure as misrepresentation.
NEW QUESTION # 120
An insured's statements on an accident and health insurance application are deemed to be:
- A. Representations
- B. General provisions
- C. Categorical
- D. Warranties
Answer: A
Explanation:
Statements on applications (Insurance Article, § 12-206) are representations-factual assertions to the best of the insured's knowledge-where only material misrepresentations void a policy. Warranties are stricter and less common, while categorical and general provisions don't apply.
References:Maryland Insurance Article, § 12-206; MIA application rules.
NEW QUESTION # 121
A producer who attempts to intimidate a prospective insured is guilty of:
- A. Twisting
- B. Coercion
- C. Defamation
- D. Discrimination
Answer: B
Explanation:
Definition of coercion.
Coercion involves using threats, intimidation, or pressure to force a purchase.
Apply the facts.
The producer attempts to intimidate the prospective insured.
This directly meets the definition of coercion.
Why other options are incorrect.
Defamation: False statements harming reputation.
Twisting: Misrepresentation to replace a policy.
Discrimination: Unequal treatment of insureds.
Maryland enforcement relevance.
Coercion is prohibited as an unfair trade practice and may result in license discipline.
Conclusion.
Intimidation constitutes coercion.
NEW QUESTION # 122
A temporary insurance license may be issued to all of the following EXCEPT:
- A. An employee of the producer upon the sale of the producer's business
- B. A nonresident producer in the process of moving to Maryland
- C. An employee upon the disability of the producer
- D. A surviving spouse upon the death of a licensed producer
Answer: B
Explanation:
Comprehensive and Detailed in Depth Explanation:
The correct single-best answer is B. A nonresident producer in the process of moving to Maryland. Under current Maryland Insurance Article §10-120, a temporary producer license may be issued, without examination, to certain individuals connected to a deceased or disabled producer, including the surviving spouse, next of kin, personal representative, spouse, employee, legal guardian, or certain employees or officers of a firm or corporation of a deceased or disabled producer. A nonresident producer moving to Maryland is handled under the resident licensing rules, not the temporary license rule; Maryland law gives the moving producer a 90-day period to apply for a resident producer license under §10-119(h).
Important verification note: Option D is also not listed in current Maryland §10-120 exactly as worded, because Maryland's current temporary license statute refers to death or disability, not sale of the producer's business. If this is a forced single-answer exam item, B is the intended exception because it clearly belongs under nonresident-to-resident licensing, not temporary licensing. Official Maryland References: Maryland Insurance Article §10-120 and §10-119(h).
NEW QUESTION # 123
If a life insurer denies a policy of life insurance, the insurer shall disclose the results of any medical examination administered to determine insurability to the:
- A. Company's underwriter
- B. Physician of the applicant ' s choice upon the request of the applicant
- C. Physician that furnished medical information to the insurer
- D. Beneficiary of the policy
Answer: B
Explanation:
Maryland law requires that the results of medical examinations used to determine insurability:
Be disclosed to the physician of the applicant's choice (B), but only if the applicant requests it.
This ensures privacy and confidentiality while giving the applicant access to critical information.
Beneficiaries (A) and underwriters (C) do not receive this information.
Physicians furnishing information (D) already have access to their own submissions.
References: Maryland Insurance Code on Privacy and Disclosure of Medical Information.
NEW QUESTION # 124
In a deferred annuity, which event initiates benefit payments to the annuitant?
- A. A cash refund is paid
- B. The contract is annuitized
- C. The beneficiary dies
- D. The contract is surrendered
Answer: B
Explanation:
Comprehensive and Detailed in Depth Explanation:
The correct answer isC. The contract is annuitized. A deferred annuity has an accumulation period first, during which contributions are made and the annuity value builds. Benefit payments begin when the annuity enters the payout phase. The Maryland Insurance Administration explains thatannuitizationis the process of converting an annuity into a series of periodic payments, and that deferred annuities begin the payout phase sometime after purchase according to the contract.
Surrendering the contract is not the normal event that begins annuity benefit payments; it usually means terminating the contract for its surrender value and may involve charges. A cash refund is a settlement feature, not the event that starts regular benefits. The beneficiary's death does not initiate normal annuity payments to the annuitant. Official Maryland Reference: Maryland Insurance Administration, Annuities 101, annuitization and deferred annuity payout phase.
NEW QUESTION # 125
Which benefit is usually excluded from major medical expense plan coverage?
- A. Routine dental care
- B. Prescription drugs
- C. Hospice care
- D. Physical therapy
Answer: A
Explanation:
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.
NEW QUESTION # 126
All of the following are true of insurance EXCEPT:
- A. It eliminates risk
- B. It transfers risk
- C. It is a means of sharing losses
- D. It protects against uncertainty
Answer: A
Explanation:
Insurance (Insurance Article, § 1-101) transfers risk, shares losses, and protects against uncertainty, but it mitigates, not eliminates, risk, which remains inherent.
References:Maryland Insurance Article, § 1-101; MIA insurance basics.
NEW QUESTION # 127
In accident and health insurance, a waiting period for pre-existing conditions means that:
- A. A period of time must elapse before pre-existing conditions are covered
- B. Coverage for pre-existing conditions is permanently excluded by a new insurer
- C. Payment for expenses resulting from pre-existing conditions is held in escrow
- D. Coverage for pre-existing conditions starts at the inception of the new policy
Answer: A
Explanation:
A waiting period (Insurance Article, § 15-109) delays coverage for pre-existing conditions (e.g., 6-12 months), not permanently excluding them, starting at inception, or holding payments in escrow.
References:Maryland Insurance Article, § 15-109; MIA pre-existing condition rules.
NEW QUESTION # 128
A business often buys life insurance on a key employee to:
- A. Take a tax deduction
- B. Pay estate taxes for the key employee
- C. Pay for finding and training a replacement if the key employee dies prematurely
- D. Pay the remaining balance of the key employee's mortgage
Answer: C
Explanation:
Purpose of key person life insurance.
Key person insurance protects a business against financial loss caused by the premature death of a critical employee.
Types of losses covered indirectly.
Loss of revenue
Loss of expertise or leadership
Costs associated with:
Recruiting a replacement
Training a replacement
Loss of business continuity
Evaluate each option carefully.
A). Tax deduction
Incorrect. Premiums for key person insurance are generally not tax-deductible.
B). Pay estate taxes for the employee
Incorrect. Estate taxes are a personal matter, not a business obligation.
C). Pay the employee's mortgage
Incorrect. This is unrelated to the business's financial exposure.
D). Pay for replacement costs
Correct. This is a classic and legitimate use of key person insurance.
Maryland insurable interest relevance.
Maryland law recognizes that businesses have an insurable interest in key employees whose death would cause economic harm.
Conclusion.
Businesses buy key person life insurance to cover financial losses and replacement costs.
NEW QUESTION # 129
A health maintenance organization (HMO) must provide coverage for all of the following EXCEPT:
- A. Well-baby or well-child care
- B. Dental and vision care
- C. Routine physical examinations
- D. Emergency services
Answer: B
Explanation:
Maryland HMOs (Health-General Article, § 19-701) must provide basic health services like routine physicals, well-child care, and emergency services. Dental and vision care, however, are not required unless specified as supplemental benefits. State law mandates pediatric care but excludes routine dental and vision from standard HMO coverage unless the plan explicitly includes them.
References:Maryland Health-General Article, § 19-701; Insurance Article, § 15-1201; MIA HMO guidelines.
NEW QUESTION # 130
Which advantage is available to employees participating in a qualified profit-sharing plan?
- A. The employees have the option of a defined benefit or defined contribution plan
- B. Investment earnings on the plan contributions are received by the employee income tax free
- C. Employees can avoid tax penalties on premature distributions
- D. The contributions are excluded from current taxable income to the employee
Answer: D
Explanation:
Nature of qualified profit-sharing plans.
Profit-sharing plans are qualified retirement plans under federal tax law.
Tax treatment of contributions.
Employer contributions to the plan are not included in the employee's current taxable income.
Taxes are deferred until distribution.
Why the other options are incorrect.
A). Avoid penalties: Early distributions may still be penalized.
C). Defined benefit vs. defined contribution: Profit-sharing plans are defined contribution plans only.
D). Earnings tax-free: Earnings are tax-deferred, not tax-free.
Maryland tax conformity.
Maryland generally follows federal income tax treatment for qualified plans.
Conclusion.
The key advantage is current income tax exclusion of contributions.
NEW QUESTION # 131
An insurance producer or advisor in the State of Maryland can be disciplined by the MarylandInsurance Administration for all of the following EXCEPT:
- A. Making a misleading statement about the financial condition of an insurer
- B. Using inappropriate description of a policy to hide the true nature of the policy
- C. Making false or misleading statements about dividends previously paid on similar policies
- D. Filing a complaint on behalf of the consumer with the Maryland Insurance Administration
Answer: D
Explanation:
The MIA (Insurance Article, § 10-126) disciplines producers for misrepresentation (§ 27-202, § 27-503), but filing a consumer complaint with the MIA is a legitimate advocacy action, not a disciplinary offense. It supports consumer protection, unlike the other deceptive practices.
References:Maryland Insurance Article, § 10-126, § 27-202, § 27-503; MIA producer regulations.
NEW QUESTION # 132
Which life annuity contract feature provides that benefit payments will continue for a minimum number of years regardless of when the annuitant dies?
- A. Cost recovery
- B. Period certain
- C. Cash refund
- D. Installment refund
Answer: B
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 # 133
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. Loan
- B. Rebate
- C. Gift
- D. Cost of doing business
Answer: B
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 # 134
Dental insurance typically excludes coverage for:
- A. Preventive treatments
- B. Cleaning of the teeth
- C. Dental X-rays
- D. Some pre-existing conditions
Answer: D
Explanation:
Comprehensive and Detailed in Depth Explanation:
The correct answer is C. Some pre-existing conditions. Dental insurance commonly covers preventive and diagnostic services such as dental X-rays, cleanings, regular checkups, and fluoride treatments, depending on the plan. Maryland's Healthy Smiles Dental Program lists regular checkups, teeth cleaning, and X-rays as covered dental services, which supports that these are not the typical excluded items in this question.
Maryland Insurance Administration claim-denial coding also includes "Pre-existing condition not covered," showing that pre-existing condition exclusions can apply in health/dental claim handling. Official Maryland References: Maryland Department of Health, Maryland Healthy Smiles Dental Program; Maryland Insurance Administration claim-denial codes.
NEW QUESTION # 135
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