Life-Producer Exam Dumps : Maryland Life Producer Exam (Series 20-27)

Comprehensive and Detailed Step by Step Explanation:Universal life insurance policies offer flexibility and adaptability, but they also have specific rules:

Minimum cash value vs. death benefit (A):Correct. IRS rules require a minimum difference to maintain tax-advantaged status.

Level or increasing death benefits (B):Correct. Policyholders can choose based on their needs.

Cash value withdrawals (C):Correct. Withdrawals are allowed but may incur surrender charges.

Automatic lapse (D):Incorrect. Universal life does not immediately lapse due to missed payments; instead, costs are deducted from the cash value, and the policy remains in force until the cash value is depleted.

References:Maryland Insurance Administration Policy Lapse Guidelines, IRS Tax Code §7702, and COMAR 31.09.13.

Comprehensive and Detailed Step by Step Explanation:Accelerated benefits allow a policyholder to receive a portion of the death benefit early, often due to terminal illness or specific qualifying conditions:

Decreases the death benefit (D):The accelerated amount reduces the death benefit available to beneficiaries.

Increases the cash value (A):Incorrect; accelerated benefits are drawn from the policy, reducing cash value and death benefits.

Increases the policy premium (B):Premiums generally remain unchanged.

Decreases the grace period (C):Not affected by accelerated benefits.

References:Maryland Accelerated Benefit Provisions, COMAR 31.09.04, and IRS Tax Treatment of Accelerated Death Benefits.

Comprehensive and Detailed Step by Step Explanation:A viatical settlement allows a policyowner (often with a terminal illness) to sell their life insurance policy for immediate cash, typically to a third party.

Less than the death benefit (D):The settlement amount is a fraction of the policy's face value, reflecting the buyer's expected profit after paying premiums and collecting the death benefit.

Equal to the sum of all premiums paid (A):This is incorrect as premiums paid do not determine the settlement amount.

Equal to the death benefit (B):The buyer profits from receiving the full death benefit upon the insured’s death, so they pay less upfront.

Greater than the death benefit (C):This would result in a financial loss for the buyer, which is not the case in viatical settlements.

References: Maryland Viatical Settlement Act, COMAR 31.09.10, and Terminal Illness Policyholder Assistance Guidelines.