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

Purpose of the Maryland Life and Health Insurance Guaranty Corporation.

Maryland established the Life and Health Insurance Guaranty Corporation to provide limited protection to policyholders when a licensed insurer becomes insolvent or impaired.

The protection applies only to policies and contracts issued by authorized insurers.

Evaluate each option.

A. Impairment of the insurer

Correct. The guaranty association exists specifically to protect consumers when an insurer fails to meet contractual obligations due to insolvency or impairment.

B. Riots, war, or acts of God

These are risks addressed by insurance policies, not guaranty associations.

C. Producer’s fraudulent actions

Producer misconduct is addressed through licensing enforcement and legal remedies, not guaranty funds.

D. Impending insurance legislation

Legislative changes do not trigger guaranty association protection.

Conclusion.

The guaranty corporation protects against insurer insolvency, making option A correct.

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.

When a death claim is filed on a life insurance policy with an outstanding loan:

Deducted from the face amount (A): The death benefit is reduced by the loan balance plus any accrued interest, ensuring the insurer recovers the outstanding debt.

Beneficiary obligation (B): Incorrect. The beneficiary receives the adjusted benefit without personal liability for the loan.

Claim against the estate (C): Incorrect. The loan is tied to the policy, not the estate.

Canceled without adjustment (D): Incorrect, as insurers must recoup the loan amount from the death benefit.