An insurance producer who conducts business under an assumed or fictitious name must:
Correct Answer: A
Insurance producers using an assumed or fictitious name for their business must file the name with the Maryland Insurance Administration (MIA).
File the name with the Insurance Administration (A): This ensures transparency and compliance with regulatory standards.
Apply for an additional license (B): Not required; the existing license covers the producer.
Apply for an additional appointment (C): Applies when a producer represents multiple insurers, not for fictitious names.
Post a $10,000 bond (D): Irrelevant to this context.
All of the following are reasons for a business organization to purchase key person life insurance EXCEPT:
Correct Answer: D
Purpose of key person life insurance.
Key person (key employee) life insurance is designed to protect a business against financial losses resulting from the death of an individual who is critical to the company’s success.
Evaluate each option.
A . Loss of leadership
A valid reason; leadership loss can disrupt operations and strategy.
B . Reduction of profits
A valid reason; key individuals often generate revenue or manage profit centers.
C . Loss of new business
A valid reason; sales executives or innovators often drive growth.
D . Increased pension liability
Not a valid reason; pension obligations are unrelated to the purpose of key person insurance.
Maryland insurance context.
Maryland recognizes key person insurance as a legitimate business risk management tool, but its purpose is income and continuity protection, not funding employee benefits.
Conclusion.
Increased pension liability is unrelated to key person coverage, making option D correct.
A definite and unqualified proposal of contract terms by one party to another is:
Correct Answer: D
Basic contract law principles applied to insurance.
Maryland follows standard contract law elements: offer, acceptance, consideration, and legal purpose.
The first step in forming a contract is a clear and definite offer.
Evaluate each option.
A . Oral contract
A type of contract, not the proposal itself.
B . Binder
Temporary insurance coverage, not the proposal of terms.
C . Agreement
Occurs after an offer has been accepted.
D . Offer
Correct. An offer is a definite and unqualified proposal of contract terms.
Conclusion.
The correct legal term for such a proposal is an offer.
A producer may be guilty of misrepresentation if the producer:
Correct Answer: A
Misrepresentation involves providing false, misleading, or incomplete information about a policy:
Failed to disclose exclusions of the policy (A): Correct. Not informing the insured about policy exclusions misrepresents the coverage and violates Maryland law.
Denied a claim for failure to prove damages (B): This relates to claims handling and is not misrepresentation.
Required written notice of loss (C): This is a legitimate policy requirement, not misrepresentation.
Issued a full settlement check (D): Standard claims settlement practice when agreed upon; not related to misrepresentation.
An order from the Commissioner MUST include all of the following EXCEPT:
Correct Answer: D
Authority of the Maryland Insurance Commissioner.
The Commissioner has independent statutory authority to issue orders, rulings, and enforcement actions.
Required elements of an administrative order.
A valid order must clearly state:
The effective date
The purpose of the order
The legal and factual grounds supporting the decision
Why the Governor’s signature is not required.
The Commissioner acts under delegated legislative authority.
Orders are administrative, not executive proclamations.
Evaluate each option.
A . Effective date — required
B . Purpose — required
C . Grounds — required
D . Governor’s signature — not required
Due process relevance.
These requirements ensure transparency and allow for judicial review.
Conclusion.
An order does not require the Governor’s signature.
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