Maine Life, Accident & Health Insurance License, Practice Exams

An approved service cannot be given on the approved date. Under 24-A M.R.S. s 4304(2)(E), when may it be given without the claim being denied?

1. Within 30 days after the approved date only.
2. Within 7 calendar days before or after the approved date.
3. Only after a new prior authorization is given.
4. Within 14 days before or after the approved date. ✓

Why: 24-A M.R.S. s 4304(2)(E): a carrier may not deny the claim if the covered medically necessary service is provided within 14 days before or after the approved date.

How much notice must a carrier give an enrollee when the enrollee's provider leaves the network, under 24-A M.R.S. s 4303(6)(A)?

1. At least 30 days before the termination date, in every case.
2. At least 90 days before the termination date, where possible.
3. At least 60 days before the termination, where possible. ✓
4. At least 10 days after the termination takes effect.

Why: 24-A M.R.S. s 4303(6)(A) requires notice at least 60 days before the provider's termination, or as much as is reasonably possible, with help finding an alternate provider. Treatment may continue for a transitional period of at least 60 days.

Who may change a Maine individual health policy under the Entire Contract provision, 24-A M.R.S. s 2705?

1. Only an executive officer of the insurer, by endorsement or attachment. ✓
2. Any agent of the insurer who sold the policy, by a signed letter to the insured.
3. The superintendent, on the insured's written application for the change.
4. The insured alone, by written notice to the insurer's home office at any time.

Why: 24-A M.R.S. s 2705 requires the provision that the policy with endorsements and attached papers is the entire contract, that no change is valid until approved by an executive officer of the insurer and endorsed on or attached to the policy, and that no agent may change it or waive its provisions.

The period during which an annuity owner pays premiums and the contract grows is the:

1. Elimination period
2. Accumulation period ✓
3. Probationary period
4. Annuitization period

Why: During the accumulation period money is paid in and grows tax-deferred; the annuitization (payout) period is when income payments are made.

The 'reduced paid-up' nonforfeiture option uses the policy's cash value to:

1. Pay the entire surrender value to the owner in one lump sum
2. Buy a smaller, fully paid-up permanent policy ✓
3. Convert the coverage into an immediate lifetime income annuity
4. Keep the full face amount in force as term insurance for a limited time

Why: Reduced paid-up uses the net cash value as a single premium to purchase a smaller amount of fully paid-up permanent insurance; extended term instead keeps the full face for a limited period.

How does 24-A M.R.S. s 401 define a 'mutual' insurer?

1. An unincorporated association of policyholders who agree to indemnify one another, the governing body being the attorney-in-fact appointed under the subscribers' agreement to act for all of them in the conduct of the business.
2. An incorporated insurer with permanent capital stock which is owned by its policyholders rather than by outside investors, each policy in force carrying one share of that stock for so long as the policy remains in force.
3. An incorporated insurer without permanent capital stock of any kind, the governing body of which is elected by its own policyholders, or else by those particular policyholders who are specified in its own charter. ✓
4. An incorporated insurer without permanent capital stock whose governing body is appointed by the superintendent from among its policyholders, on nomination by the outgoing governing body, at intervals fixed in its charter.

Why: 24-A M.R.S. s 401: a mutual insurer is an incorporated insurer without permanent capital stock, the governing body of which is elected by its policyholders or those specified in its charter (or by another reasonable method the section allows). It is incorporated; an unincorporated association of subscribers exchanging indemnity through an attorney-in-fact is a reciprocal, a separate form listed in s 406.

How can a Maine group health policy validly be changed, under 24-A M.R.S. s 2817?

1. By officer approval shown by endorsement, or by an amendment the policyholder and insurer sign. ✓
2. By the producer of record, in a signed letter sent to the policyholder and filed with the insurer.
3. By the policyholder alone, on written notice to all certificate holders 30 days ahead.
4. By the superintendent only, on a joint written request by the insurer and the policyholder.

Why: 24-A M.R.S. s 2817: no change is valid unless approved by an officer of the insurer and evidenced by endorsement on the policy, or by an amendment signed by the policyholder and the insurer. No agent may change the policy or waive its provisions.

When is a nonresident owner covered by the Maine association under 24-A M.R.S. s 4603(1-A)(B)?

1. Where the insurer was licensed in the owner's state and that state has no association of its own to cover the owner at all.
2. Whenever the policy was sold by a producer licensed in Maine, wherever the owner lives and whatever other cover exists.
3. Where the insurer is domiciled here and never licensed in the owner's state, which has a similar association not covering the owner. ✓
4. Never; the Maine association covers only persons resident in Maine on the date the policy was first issued.

Why: 24-A M.R.S. s 4603(1-A)(B)(2) covers a nonresident owner only if the insurer is domiciled in Maine, never held a licence or certificate of authority in the owner's state, the owner's state has a similar association, and the owner is not eligible for coverage by that state's association.

How many home health care visits must a Maine long-term care policy cover, under 24-A M.R.S. s 5051-A(2)(C)?

1. At least 90 visits in any continuous 12-month period. ✓
2. At least 60 visits in any 12-month period.
3. At least 90 visits over the lifetime of the policy.
4. At least 120 visits in each calendar year of cover.

Why: 24-A M.R.S. s 5051-A(2)(C) requires home health care coverage for at least 90 visits in any continuous 12-month period during which coverage is in force.

Under 24-A M.R.S. s 2208, who must sign a disclosure authorization form?

1. The insurance consumer personally and in every case, the section admitting no substitute signature whatever, so that where a consumer is incapacitated the carrier must apply to the Probate Court for authority before any information about that consumer may lawfully be disclosed.
2. The insurance consumer or the producer who took the application, the producer's signature standing in for the consumer's on the ground that the producer is the consumer's agent for the purpose of the transaction and is answerable to the superintendent for its correctness.
3. The insurance consumer or any adult member of the consumer's household, the section treating household membership as sufficient evidence of authority to act and requiring no power of attorney, guardianship or other written appointment before that signature is accepted.
4. The insurance consumer, except that a spouse, family member or other authorized individual may sign under a valid written power of attorney, under the Uniform Health Care Decisions Act, or as the consumer's parent or legal guardian within that person's exclusive authority to consent. ✓

Why: 24-A M.R.S. s 2208(1) requires the form to be SIGNED BY THE INSURANCE CONSUMER, with one paragraph of exceptions: a SPOUSE, FAMILY MEMBER OR OTHER AUTHORIZED INDIVIDUAL may sign where acting under a VALID WRITTEN POWER OF ATTORNEY or under the UNIFORM HEALTH CARE DECISIONS ACT, or as the consumer's PARENT OR LEGAL GUARDIAN - and in the parent or guardian case only so far as that person has EXCLUSIVE AUTHORITY to consent to the health care services for which payment is sought.

If an insured dies during the grace period with a premium still unpaid, the insurer:

1. Pays the death benefit minus the premium that was owed ✓
2. Refunds only the prior premiums and pays no benefit
3. Denies the claim entirely because the premium was late
4. Pays double the face amount as a good-faith gesture

Why: Coverage stays in force during the grace period; a death claim is paid, with the overdue premium deducted from the proceeds.

What is the largest benefit differential allowed between preferred and nonpreferred providers, under 24-A M.R.S. s 2677-A(2)?

1. 30% of the plan's allowable charge.
2. 10% of the plan's allowable charge.
3. 50% of the provider's billed charge.
4. 20% of the allowable charge. ✓

Why: 24-A M.R.S. s 2677-A requires payment for covered services by nonpreferred providers, with a benefit level differential of no more than 20% of the allowable charge, unless the superintendent waives it.

Which type of life insurance provides lifelong coverage with a level premium and a guaranteed cash value?

1. Annually renewable term
2. Whole (ordinary) life ✓
3. Level term to age 65
4. Credit life

Why: Whole life is permanent coverage with a level premium and a guaranteed, tax-deferred cash value. Term provides only temporary coverage with no cash value.

What grace period must an annuity or pure endowment contract allow under 24-A M.R.S. s 2518?

1. Two months, but not less than 60 days, with interest at up to 8% a year at the insurer's option.
2. 31 days in every case, no interest being chargeable by the insurer on a late stipulated payment.
3. One month, but not less than 30 days, with interest at up to 6% a year at the insurer's option. ✓
4. None, annuity payments to the insurer being due strictly on the date stated in the contract.

Why: 24-A M.R.S. s 2518 requires in an annuity or pure endowment contract (other than reversionary, survivorship or group annuities) a grace period of one month, but not less than 30 days, for any payment after the first, subject at the insurer's option to interest not exceeding 6% a year.

Eligibility for Medicaid is based primarily on:

1. Enrollment in a private health plan
2. Financial need (limited income and assets) ✓
3. Reaching age 65 regardless of income
4. Having paid 40 quarters into the system

Why: Medicaid is a means-tested, joint federal-state program for low-income individuals; eligibility varies by state.

Under 24-A M.R.S. s 2834, from when must a group health policy cover a newborn child of the insured?

1. From the moment of birth. ✓
2. From the 14th day after birth.
3. From the 31st day after birth.
4. From the date of first enrolment.

Why: 24-A M.R.S. s 2834 requires benefits for a newly born child from the moment of birth, including care of diagnosed congenital defects. An adopted child is treated as newly born from the date of the signed placement agreement.

What does 24-A M.R.S. s 1467 require of a consultant towards a client?

1. To serve the client with reasonable care and skill and to act in good faith, the standard being that of an ordinarily competent consultant in the kinds of insurance covered by the licence rather than one of complete loyalty.
2. To disclose to the client every commission the consultant may receive on business arising out of the engagement, the section being a disclosure obligation rather than a standard of conduct owed to the client by the licensee.
3. To serve with objectivity and complete loyalty the client's interests, and to render the information, counsel and service which, within the consultant's knowledge, understanding and good faith opinion, best serves the client's insurance or annuity needs. ✓
4. To serve the client's interests so far as is consistent with the consultant's duties to any insurer for which the consultant also holds a producer appointment, the two sets of duties being reconciled by full disclosure.

Why: 24-A M.R.S. s 1467: a consultant is obligated UNDER THE LICENSE TO SERVE WITH OBJECTIVITY AND COMPLETE LOYALTY THE INTERESTS OF THE CLIENT and to render such information, counsel and service that, WITHIN THE KNOWLEDGE, UNDERSTANDING AND OPINION IN GOOD FAITH OF THE CONSULTANT, BEST SERVES THE CLIENT'S INSURANCE OR ANNUITY NEEDS AND INTERESTS. Complete loyalty - not a reasonable-care standard.

A policy has a 60-day elimination period and a $4,500 monthly benefit. If the insured is disabled for 10 months, the approximate total paid is:

1. $36,000 ✓
2. $45,000
3. $27,000
4. $40,500

Why: The first ~2 months (60-day elimination) pay nothing; 8 months × $4,500 = $36,000.

An insurer refuses to pay a clearly valid claim promptly, hoping the insured will accept less. This is:

1. A lawful subrogation action
2. Coordination of benefits
3. Permissible claims investigation
4. An unfair claims settlement practice ✓

Why: Failing to act in good faith to settle a clear claim is an unfair claims settlement practice.

What limit applies to one owner of multiple nongroup life policies under 24-A M.R.S. s 4603(4)(B)?

1. $1 million in benefits, however many policies an owner holds.
2. $5 million in benefits, however many policies the owner holds. ✓
3. $300,000 per policy held, without any overall limit on benefits.
4. $10 million in benefits, where the owner is a firm or corporation.

Why: 24-A M.R.S. s 4603(4)(B) caps the association's obligation at $5 million in benefits, regardless of the number of policies held, with respect to one owner of multiple nongroup life policies, whether an individual, firm or corporation and whoever the insured persons are.

How much aggregate federally creditable coverage must a 'federally eligible individual' have, under 24-A M.R.S. s 2848(1-C)?

1. At least 12 months in a row.
2. At least 24 months, ending within 90 days.
3. At least 18 months. ✓
4. At least 6 months.

Why: 24-A M.R.S. s 2848(1-C)(A) requires continuing creditable coverage ending not more than 63 days before applying, with an aggregate of at least 18 months, the most recent under a group, governmental or church plan.

Under 24-A M.R.S. s 4310, which enrollee qualifies for cover of routine costs in an approved clinical trial?

1. Any enrollee who volunteers for a trial run by a hospital in this State.
2. One with a life-threatening illness for which no standard treatment is effective. ✓
3. One whose own physician is running the trial and asks the carrier to pay.
4. Any enrollee under age 26 who is enrolled on a family plan.

Why: 24-A M.R.S. s 4310(1) requires a life-threatening illness with no effective standard treatment, eligibility under the protocol, meaningful potential benefit, and the referring physician's conclusion that participation is appropriate.

Which of these is NOT federally creditable coverage under 24-A M.R.S. s 2848(1-B)?

1. Medicare Part A or Part B.
2. Accident or disability income cover alone. ✓
3. An employer group health plan.
4. A state children's health plan.

Why: 24-A M.R.S. s 2848(1-B)(A) lists group health plans, Medicare, Medicaid, CHIP, CHAMPUS, FEHBP and others. Paragraph B excludes coverage consisting solely of accident or disability income insurance, liability cover, workers' compensation and similar.

Which policy is excepted from Maine's life nonforfeiture requirements by 24-A M.R.S. s 2534(5)?

1. Uniform term of 30 years or less expiring before age 65, with uniform premiums and no guaranteed values at all.
2. Uniform term of 20 years or less expiring before age 71, with uniform premiums and no guaranteed values. ✓
3. Any whole life policy with premiums payable to age 100, whatever nonforfeiture values it guarantees.
4. Uniform term of any length at all, whether or not it guarantees any nonforfeiture values.

Why: 24-A M.R.S. s 2534(5) excepts from sections 2529 to 2534 any term policy of uniform amount providing no guaranteed nonforfeiture or endowment benefits, or its renewal, of 20 years or less expiring before age 71, for which uniform premiums are payable during the entire term.

A client deposits a single $100,000 premium and wants income to start in 15 years. The product is a:

1. Variable life insurance policy
2. Single-premium immediate annuity
3. Flexible-premium deferred annuity
4. Single-premium deferred annuity ✓

Why: One lump sum with income deferred to a future date is a single-premium deferred annuity (SPDA).

An insurer issues group cover replacing a discontinued HMO contract. Under 24-A M.R.S. s 4232(1), within what period must it immediately cover all validly covered enrollees?

1. Within 30 days of the date of the HMO contract's discontinuance.
2. Within 90 days of the date of the HMO contract's discontinuance.
3. Within 31 days of the first enrollee's written application.
4. Within 60 days of the HMO contract's discontinuance. ✓

Why: 24-A M.R.S. s 4232(1): replacement cover issued within 60 days of discontinuance of a prior HMO contract must immediately cover all validly covered enrollees, regardless of active-employment, confinement or pregnancy provisions.

A fraternal benefit society provides insurance:

1. To its members through a lodge or membership system, on a nonprofit basis ✓
2. To the general public for a profit, distributing earnings to its stockholders
3. Exclusively through group annuity contracts sold to employers
4. Only to federal, state, and municipal government employees

Why: Fraternal benefit societies are nonprofit membership organizations providing insurance to members under a lodge system.

An annuitant has an $80,000 basis and a $200,000 expected return. Of each $10,000 payment, the taxable amount is:

1. $6,000 ✓
2. $4,000
3. $10,000
4. $2,000

Why: Exclusion ratio = 80,000/200,000 = 40%; $4,000 excluded, $6,000 taxable per payment.

A 'change of plan' provision in a life policy lets the owner:

1. Draw part of the death benefit while still living
2. Name a different insured under the contract
3. Exchange the policy for a different plan of insurance ✓
4. Skip premium payments during a period of financial hardship without lapsing

Why: A change-of-plan provision permits converting to another policy plan (e.g., term to whole life), with premium and possibly evidence adjustments.

When may an insured person's statement be used in a contest of group life cover, under 24-A M.R.S. s 2616?

1. At any time, the statements of insured persons being warranties under a group life policy.
2. Only if the policyholder signed it on the insured person's behalf when enrolling the person.
3. Only if the person, or after death the beneficiary, was given a copy of the instrument. ✓
4. Never; statements of insured persons may not be used in a contest of group life cover.

Why: 24-A M.R.S. s 2616 requires a provision that a copy of the policyholder's application is attached to the policy, that statements of the policyholder and insured persons are representations and not warranties, and that no statement of an insured person may be used in a contest unless a copy of the instrument containing it has been furnished to that person or, on death or incapacity, the beneficiary or personal representative.

How long may a disclosure authorization remain valid for HEALTH or MEDICAL insurance under 24-A M.R.S. s 2208(8)?

1. No longer than 30 months from the date the authorization is signed, which is the same outer limit the subsection sets for life, disability and long-term care insurance taken in connection with an application or a request for a change in policy benefits.
2. No longer than the duration of the claim for which it was signed, health and medical authorizations being treated by the subsection as claim-specific and expiring as soon as the claim to which they relate has been paid, denied or otherwise closed.
3. No longer than one year from the date the authorization is signed, that being the same period section 2215 allows for an authorization submitted by a person other than a regulated insurance entity or an insurance support organization.
4. No longer than the term of coverage of the policy and any renewals of that policy - a period fixed by the line of insurance rather than by the purpose for which the authorization was signed or by any date computed from the date of signature. ✓

Why: 24-A M.R.S. s 2208(8)(B): in the case of HEALTH OR MEDICAL insurance, the period may be no longer than THE TERM OF COVERAGE OF THE POLICY AND ANY RENEWALS OF THAT POLICY. The 30-month and duration-of-the-claim limits are s 2208(8)(A) and apply to life, disability and long-term care. The one-year figure is s 2215(1)(A)(2)(c) and is about third-party authorizations, not about the line of insurance.

Financial underwriting of a life insurance application ensures that:

1. Confirm through an MIB search that the applicant holds no in-force coverage with any other insurer
2. The amount of coverage is justified by the applicant's financial situation ✓
3. Guarantee that premiums will be paid on schedule throughout the entire premium-paying period
4. A paramedical exam and blood profile were completed

Why: Financial underwriting confirms the requested amount is reasonable relative to income, net worth, or the economic loss being insured.

What remedy does 24-A M.R.S. s 2436-A(1) give, and against whom?

1. A person injured by any of the listed actions taken by that person's own insurer may bring a civil action against it and recover damages, together with costs and disbursements, reasonable attorney's fees and interest on damages at 1 1/2% per month. ✓
2. A person injured by any of the listed actions may complain to the superintendent, who may impose civil penalties under section 12-A, the section creating no private remedy because the conduct it describes is a regulatory matter for the Bureau of Insurance.
3. A person injured by any of the listed actions taken by any insurer, whether or not that insurer is the person's own, may bring a civil action, so that a claimant injured by the conduct of a liability insurer defending another party may sue on the section.
4. A person injured by any of the listed actions may bring a civil action for damages alone, the section leaving costs, attorney's fees and interest to be dealt with under the general law of this State applicable to civil actions on a contract.

Why: 24-A M.R.S. s 2436-A(1): A PERSON INJURED BY ANY OF THE FOLLOWING ACTIONS TAKEN BY THAT PERSON'S OWN INSURER MAY BRING A CIVIL ACTION AND RECOVER DAMAGES, TOGETHER WITH COSTS AND DISBURSEMENTS, REASONABLE ATTORNEY'S FEES AND INTEREST ON DAMAGES AT THE RATE OF 1 1/2% PER MONTH. Note the contrast with s 2164-D(8), which creates NO private cause of action - that is the chapter 23 section and is enforced by the superintendent.

What may a replacing insurer NOT do for a person protected under 24-A M.R.S. s 2849(3)?

1. Ask that person for evidence of individual insurability. ✓
2. Use group health information to set the rates for the group.
3. Apply its own benefit design and limits to the replacement group.
4. Charge the group the premium it has filed for the new policy.

Why: 24-A M.R.S. s 2849(3) bars requesting evidence of insurability, declining enrolment on that basis, imposing a new exclusion or waiting period, or steering the person to an individual plan. Using group health information for rating is expressly preserved.

Under the 'paid-up additions' dividend option, dividends are used to:

1. Pay the policyowner the dividend directly in cash each year
2. Reduce the premium due on the next policy anniversary date
3. Purchase one-year term insurance equal to the cash value
4. Buy small amounts of additional paid-up whole life coverage ✓

Why: Paid-up additions use dividends to buy single-premium whole life, increasing both death benefit and cash value with no new underwriting.

What training must an individual complete before selling long-term care insurance in Maine, under 24-A M.R.S. s 5081(1)?

1. A 4-hour one-time course, then 8 more hours every 24 months.
2. An 8-hour one-time course, then 4 hours a year.
3. An 8-hour one-time course, then 4 hours every 24 months. ✓
4. A 16-hour one-time course, then 8 hours every 2 years.

Why: 24-A M.R.S. s 5081(1) requires a life or health licence, a one-time course of at least 8 hours, and ongoing training of at least 4 hours every 24 months. Training in another state satisfies the requirement.

A key difference between a Roth IRA and a traditional IRA is that the Roth IRA:

1. Is funded with after-tax dollars, and qualified withdrawals are tax-free ✓
2. Can only be opened by employees of governmental or nonprofit employers
3. Requires the owner to begin distributions immediately at age fifty-nine
4. Always provides a current tax deduction for every contribution made

Why: Roth contributions are after-tax with tax-free qualified distributions; traditional contributions may be deductible with taxable distributions.

A retiree takes a distribution from a traditional (qualified) 401(k). The distribution is:

1. Subject to capital-gains rates only
2. Fully taxable as ordinary income ✓
3. Completely income-tax-free
4. Taxed only on the growth portion

Why: Pre-tax qualified plan distributions are fully taxable as ordinary income when received.

To which of these does 24-A M.R.S. ch. 67 NOT apply, under s 5001-A(2)?

1. A group Medicare supplement certificate delivered to a resident of Maine by mail.
2. A plan of an employer or union for its employees, former employees or members. ✓
3. An individual Medicare supplement policy sold by a Maine HMO to a resident aged 65.
4. A Medicare supplement policy issued by a fraternal benefit society.

Why: 24-A M.R.S. s 5001-A(2) excludes policies of employers or labour organizations, or trustees of their funds, for employees, former employees or members. 'Issuer' in s 5001(2-B) includes HMOs and fraternal benefit societies.

Credit life insurance is typically written as:

1. A variable policy whose benefit rises and falls with interest rates
2. Whole life insurance with a growing cash value that the borrower may freely access at any time
3. Decreasing term equal to the outstanding loan balance, payable to the creditor ✓
4. Level term naming the borrower's family as the primary beneficiary

Why: Credit life is decreasing term tied to the loan balance; if the borrower dies, it pays the remaining debt to the creditor.

What immunity does 24-A M.R.S. s 1420-N give to those who report a termination?

1. Absolute immunity from civil liability for any statement made or information provided under the section, whatever the maker's state of mind, the remedy for a false report lying against the superintendent rather than the reporter.
2. Immunity from civil liability where the reporter acted reasonably and in good faith, the burden of establishing reasonableness resting on the person claiming the immunity if the point is put in issue in the proceedings.
3. Immunity from civil liability for the insurer alone, the superintendent and any compiling organization being protected instead by the general immunity of public officers rather than by this particular section.
4. In the absence of actual malice, no civil liability and no civil cause of action arises against the insurer, its representative, a producer, the superintendent or a compiling organization, or any of their agents or employees. ✓

Why: 24-A M.R.S. s 1420-N(5)(A): IN THE ABSENCE OF ACTUAL MALICE, the insurer, its authorized representative, a producer, THE SUPERINTENDENT, or an organization of which the superintendent is a member that compiles the information, IS NOT SUBJECT TO CIVIL LIABILITY, and NO CIVIL CAUSE OF ACTION MAY ARISE against them or their agents or employees. Under (5)(B) a plaintiff must PLEAD ACTUAL MALICE SPECIFICALLY; under (5)(C) existing privileges are not abrogated.

Which condition must a nonresident meet to be issued a Maine producer licence, under 24-A M.R.S. s 1420-G(1)?

1. The applicant must pass the Maine state law examination first.
2. The applicant must keep a Maine office.
3. The home state licenses Maine residents on the same basis. ✓
4. The applicant must have held a licence for at least 2 years.

Why: 24-A M.R.S. s 1420-G(1) requires a current resident licence in good standing in the home state, the proper request and fees, the home state or uniform application, and that the home state awards nonresident licences to Maine residents on the same basis.

An insured and the primary beneficiary die together in a car accident, and the order of death cannot be determined. Under the common disaster clause, the proceeds go to:

1. The insurer, which retains the proceeds as an unclaimed death benefit
2. The primary beneficiary's own named contingent payee
3. The contingent beneficiary (or the insured's estate) ✓
4. The primary beneficiary's estate, since that beneficiary was alive when the policy was issued

Why: The common disaster provision presumes the insured survived the beneficiary, so proceeds pass to the contingent beneficiary or the insured's estate.

How are HMO contracts treated for the association's scope under 24-A M.R.S. s 4603(1)(A)?

1. As outside the chapter, HMO members having no association protection.
2. As health insurance policies, HMOs being treated as health insurers. ✓
3. As annuity contracts, HMO reserves being allocated to the annuity account.
4. As covered only where the HMO elects to join the association in writing.

Why: 24-A M.R.S. s 4603(1)(A) provides that for the chapter health insurance policies include individual and group health maintenance organization enrollment contracts, and that HMOs are considered to be health insurers. Under s 4603(1)(C) a long-term care rider is the same type of benefit as its base policy.

A variable life insurance policy typically guarantees:

1. A fixed cash value that can never decline in any market
2. That the policy can never become a modified endowment contract
3. A level premium that is invested entirely in government bonds
4. A minimum death benefit regardless of separate-account performance ✓

Why: Variable life guarantees a minimum death benefit, but the cash value (and any benefit above the minimum) varies with the separate accounts the owner directs.

A life policy has a two-year suicide clause. The insured dies by suicide in the third policy year. The insurer:

1. Pays the full death benefit ✓
2. Denies the claim and keeps the premiums
3. Pays one half of the policy's face amount
4. Refunds only the premiums that were paid

Why: Because the suicide occurred after the two-year period, the death is treated as any other and the full benefit is paid.

How is the amount of a conversion policy limited under 24-A M.R.S. s 2621(2)?

1. To twice the insurance that ceases, whatever other group life the person later becomes eligible for.
2. To $10,000 in every case, however much group life insurance ceased on the termination of employment.
3. To the cover ceasing, less any group life the person becomes eligible for within 31 days. ✓
4. To the insurance that ceases, plus any amount the person chooses on evidence of insurability.

Why: 24-A M.R.S. s 2621(2) limits the individual policy to the amount of life insurance that ceases because of the termination, less any life insurance for which the person is or becomes eligible under the same or any other group policy within 31 days after the termination.

COBRA generally allows a qualified employee who loses group coverage due to a reduction in hours or termination to continue that coverage for:

1. Only 30 days while they search for replacement coverage
2. The rest of their life, at the original employee contribution rate
3. Up to 10 years, fully subsidized by the former employer
4. Up to 18 months, by paying the premium themselves ✓

Why: COBRA continuation is typically 18 months (29 or 36 in some cases); the individual pays up to 102% of the full premium.

A 66-year-old just enrolled in Part B applies for a Medigap policy two months later. The insurer must:

1. Offer only its most comprehensive plan, at the highest premium
2. Decline the application, since Medigap open enrollment closed at age 65
3. Require a health questionnaire and an attending physician statement
4. Issue any offered plan on a guaranteed-issue basis ✓

Why: Within the 6-month Medigap open enrollment period (age 65 + Part B), coverage is guaranteed issue regardless of health.

An insured becomes totally disabled and, after the waiting period, the life policy's waiver of premium applies. The insured:

1. Owes no premiums while disabled, and coverage stays in force ✓
2. Receives an accelerated payout of the death benefit in cash
3. Must keep paying premiums, but the insurer refunds half each year
4. Loses coverage until premium payments resume after recovery

Why: Waiver of premium keeps the policy in force without premium payments during the insured's continued total disability.

What does 24-A M.R.S. s 2174 prohibit as to collecting premiums?

1. Collecting any premium before the policy has actually been issued and delivered to the insured, the section requiring the contract to be in existence before money may be taken for it from an applicant in this State.
2. Knowingly collecting a premium for insurance placed with an unauthorized insurer, the section being the enforcement provision behind the certificate of authority requirement in section 404 of the Insurance Code.
3. Collecting a premium in cash rather than by a means that leaves a record, the section being directed at the handling of trust funds by producers and supplementing section 1449 of the Insurance Code.
4. Knowingly collecting any sum as premium or charge for insurance which is not then provided, or not in due course to be provided subject to acceptance of the risk, by a policy issued by an authorized insurer. ✓

Why: 24-A M.R.S. s 2174(1): NO PERSON SHALL KNOWINGLY COLLECT ANY SUM AS PREMIUM OR CHARGE FOR INSURANCE, WHICH INSURANCE IS NOT THEN PROVIDED OR IS NOT IN DUE COURSE TO BE PROVIDED, SUBJECT TO ACCEPTANCE OF THE RISK BY THE INSURER, BY AN INSURANCE POLICY ISSUED BY AN INSURER AS AUTHORIZED BY THIS TITLE. Money taken for cover that is not and will not be there.

Which type of care is generally NOT covered by Medicare?

1. Inpatient hospital care following an approved admission
2. Physician services and outpatient diagnostic testing
3. Long-term custodial care ✓
4. Hospice care for a terminally ill beneficiary

Why: Medicare generally does not pay for long-term custodial care (help with daily living); it covers hospital, physician, and hospice care.

A 52-year-old withdraws $8,000 of gain from a nonqualified annuity. The IRS penalty (besides income tax) is:

1. $800 ✓
2. $1,600
3. $400
4. $0

Why: Premature distributions before 59½ incur a 10% penalty: 10% × $8,000 = $800.

A consumer who buys insurance through a producer representing the buyer (not the insurer) is working with a(n):

1. Adjuster
2. Underwriter
3. Captive agent
4. Broker ✓

Why: A broker legally represents the insurance buyer; an agent represents the insurer.

Which word may a Maine HMO NOT use in its name or literature unless licensed as an insurer, under 24-A M.R.S. s 4212(3)?

1. Health.
2. Maine.
3. Plan.
4. Insurance. ✓

Why: 24-A M.R.S. s 4212(3) bars an HMO not licensed as an insurer from using 'insurance', 'casualty', 'surety', 'mutual' or other words descriptive of the insurance business.

What caps the assessments on a member insurer for each account in a calendar year under 24-A M.R.S. s 4609(4)?

1. 5% of its Maine premiums on the policies within the account.
2. 2% of its Maine premiums on the policies covered by the account. ✓
3. 2% of its premiums written in all states on every line of business.
4. Nothing; the board may assess whatever the account needs that year.

Why: 24-A M.R.S. s 4609(4) provides that the total of all assessments on a member insurer for each account may not in any one calendar year exceed 2% of its premiums in this State on the policies covered by the account. A shortfall assessed on other accounts under s 4609(8) is similarly capped at 2%.

A guaranteed insurability rider lets the insured:

1. Skip premium payments during any year of financial hardship
2. Convert the policy into an annuity with a guaranteed income for life
3. Cancel the policy at any time and recover all premiums paid
4. Buy more coverage at set dates without proving insurability ✓

Why: The guaranteed insurability option permits purchasing additional coverage at specified ages or events with no new evidence of medical insurability.

An alien insurer is one that is:

1. Incorporated in this state
2. Incorporated outside the United States ✓
3. Incorporated in another U.S. state
4. Not licensed in any state

Why: Alien = incorporated in another country; domestic = this state; foreign = another U.S. state.

Annuity suitability rules require a producer recommending an annuity to:

1. Recommend whichever annuity product happens to pay the producer the highest available commission
2. Have reasonable grounds that it fits the consumer's financial needs and situation ✓
3. Sell only immediate annuities to consumers over the age of sixty
4. Guarantee the annuity will outperform every available alternative

Why: Suitability standards require the recommendation be appropriate based on the consumer's financial situation, needs, and objectives.

Under a Section 162 executive bonus plan, the employer pays the premium as a bonus. The employer:

1. Owns the policy and its cash value, with the employee named only as insured
2. Deducts the bonus, and the employee reports it as income ✓
3. Takes no deduction, and the employee owes no tax
4. Cannot deduct the bonus, because it funds life insurance

Why: The employer deducts the bonus as compensation; the employee owns the policy and includes the bonus in taxable income.

A deductible 'carryover' provision in a major medical plan allows expenses incurred in the last months of the year to:

1. Be refunded in full to the insured at year end
2. Double the plan's annual out-of-pocket maximum amount
3. Apply toward the next year's deductible ✓
4. Permanently eliminate the deductible for all future years

Why: A carryover provision lets eligible expenses from the final months (often the last three) count toward the following year's deductible.

Compared with an HMO, a PPO generally:

1. Is offered only to Medicare-eligible senior enrollees
2. Provides no coverage at all outside its provider network
3. Allows out-of-network care at higher cost without referrals ✓
4. Requires a primary care physician and referrals to specialists

Why: A PPO offers more flexibility: out-of-network care is covered at higher cost, with no gatekeeper or referrals required.

The ownership provision of a life policy establishes that the policyowner has the right to:

1. Name the beneficiary, take loans, and surrender the policy ✓
2. Only pay premiums, with no other rights over the contract
3. Receive the death benefit even while the insured is still living
4. Change the insurer's underwriting decision after the policy is issued

Why: The owner holds the contractual rights (naming beneficiaries, loans, surrender, assignment); the owner and the insured may be different people.

A key feature of convertible term insurance is that it can be changed to a permanent policy:

1. Only if the insured becomes totally disabled first
2. Only after a new medical exam confirms insurability
3. Only during the first policy year
4. Without providing evidence of insurability ✓

Why: Convertible term can be converted to permanent coverage without evidence of insurability.

Under a conditional receipt given with a life application and the initial premium, coverage takes effect:

1. Only after the policy has been in force a full year
2. As of the application/exam date if the applicant is insurable ✓
3. Only when the issued policy is physically delivered
4. At whatever future date the soliciting agent approves it

Why: A conditional receipt provides coverage retroactive to the application/exam date if the applicant proves insurable, provided premium accompanied the application.

When a covered employee leaves the company, the group life conversion privilege generally allows them to:

1. Continue the identical group term certificate at the employer's group rate for up to 18 months under COBRA
2. Convert within 60 days, but only after passing a paramedical exam and blood profile
3. Convert to an individual permanent policy within 31 days without evidence of insurability ✓
4. Receive a cash surrender value equal to the employer's share of past premiums

Why: On termination, the employee may convert group coverage to an individual permanent policy (usually within 31 days) without proving insurability, though at individual rates.

Long-term care benefits are most often triggered by a covered person's inability to perform a stated number of activities of daily living OR by:

1. Voluntary retirement from full-time employment
2. A temporary illness expected to resolve within a week
3. Severe cognitive impairment such as dementia ✓
4. Reaching the policy's stated maturity age while healthy

Why: Benefits trigger on inability to perform a set number of ADLs (usually 2 of 6) or on severe cognitive impairment.

An insured and the sole primary beneficiary die in the same crash, order of death unknown. Under the Uniform Simultaneous Death Act, proceeds go to:

1. The contingent beneficiary or the insured's estate ✓
2. Whoever was pronounced dead first at the scene
3. The insurer, as unclaimed property
4. The primary beneficiary's own heirs, through that beneficiary's estate

Why: The Act presumes the insured survived the beneficiary, so the proceeds pass to the contingent beneficiary or the insured's estate.

May a producer contract with a financial institution under 24-A M.R.S. s 1442?

1. Yes - a producer may join a financial institution's finance programme, and the institution need not be licensed if the purpose is for the producer to refer customers for loans or to arrange leases, loans or credit applications. ✓
2. Yes - but only if the financial institution is itself licensed as an insurance producer in this State, the exception in the paragraph applying to the institution's employees rather than to the institution.
3. No - an arrangement between a producer and a financial institution for the referral of customers is an unlawful inducement, the referral fee being a commission paid to an unlicensed person contrary to section 1450.
4. Yes - provided the arrangement is filed with and approved by the superintendent before it takes effect, and the producer receives no compensation from the financial institution for any referral made under it.

Why: 24-A M.R.S. s 1442(1)(D): a producer may ENTER INTO A CONTRACT OR ARRANGEMENT WITH A FINANCIAL INSTITUTION for the purpose of PARTICIPATING IN A FINANCE PROGRAM, and IN THIS CASE THE FINANCIAL INSTITUTION NEED NOT BE LICENSED AS A PRODUCER, as long as the purpose is to authorize the producer TO FACILITATE, DIRECT OR REFER insureds, prospective insureds or other customers to the institution for loans, or to facilitate arrangements for LEASES, LOANS OR CREDIT APPLICATIONS.

When may a life insurer charge a lower rate for a policy of large amount, under 24-A M.R.S. s 2161(1)(D)?

1. Whenever the selling agent agrees to share the commission.
2. Only for policies with face amounts of over $1 million each.
3. Up to the savings in issue and administration costs. ✓
4. Only if every insured in that class asks for it.

Why: 24-A M.R.S. s 2161(1)(D) excepts a reduced rate for policies of large amount, not exceeding the savings in issuance and administration expenses reasonably attributable to them compared with smaller policies of similar plan.

Which of the following states the superintendent's general duty under 24-A M.R.S. s 211?

1. To enforce the provisions of the Insurance Code only where a complaint has been made by an insured, a producer or another insurer, the superintendent having no authority to act on the superintendent's own motion.
2. To enforce the provisions of the Insurance Code and, where the Code is silent, to apply the National Association of Insurance Commissioners' model acts as though they had been enacted by the Legislature of this State.
3. To enforce the provisions of, and execute the duties imposed upon the superintendent by, the Insurance Code, together with such additional rights, powers and duties as may be provided by other laws. ✓
4. To advise the Governor and the Legislature on insurance policy and to publish the Bureau's annual report, enforcement of the Insurance Code being reserved to the Attorney General under Title 5.

Why: 24-A M.R.S. s 211(1) requires the superintendent to ENFORCE THE PROVISIONS OF, AND EXECUTE THE DUTIES IMPOSED BY, this Title, and s 211(3) adds SUCH ADDITIONAL RIGHTS, POWERS AND DUTIES AS MAY BE PROVIDED BY OTHER LAWS. Nothing conditions the duty on a complaint, and NAIC models are not law in Maine unless enacted.

The 'law of large numbers' is important to insurers because it:

1. Eliminates the need for insurers to classify or underwrite risks
2. Guarantees that no single insured will ever file a large claim
3. Makes losses more predictable as the number of similar risks grows ✓
4. Requires every applicant to be charged the exact same premium

Why: The larger the pool of similar exposures, the more closely actual losses approach predicted losses, allowing accurate pricing.

Under a universal life policy's Option A (Option 1), the death benefit is:

1. Reduced each year by the amount of interest the policy earns
2. Equal to the face amount plus the entire accumulated cash value at all times
3. Level, while the cash value grows inside it ✓
4. Tied directly to the performance of a chosen stock-market index

Why: Option A keeps a level death benefit (cash value accumulates within it); Option B pays the face amount plus the cash value, so it increases.

Does 24-A M.R.S. s 2164-D create a private cause of action?

1. Yes - the section is read to create a private cause of action for damages and for reasonable attorney's fees, so an insured injured by an unfair claims practice may sue as well as complain to the superintendent.
2. No - but an insured may join the superintendent as a party to an action on the policy and obtain a declaration that an unfair claims practice has occurred, which then founds a claim for damages at common law.
3. No - the section may not be construed to create or imply a private cause of action for its violation, nor as abridging an insurer's duty to its insured or altering policy provisions. ✓
4. Yes - where the conduct has been committed with such frequency as to indicate a general business practice, a single instance giving rise to no private remedy but a pattern of conduct doing so.

Why: 24-A M.R.S. s 2164-D(8), PRIVATE ACTION: this section MAY NOT BE CONSTRUED AS ABRIDGING AN INSURER'S DUTY TO ITS INSURED OR ALTERING POLICY PROVISIONS, and MAY NOT BE CONSTRUED TO CREATE OR IMPLY A PRIVATE CAUSE OF ACTION FOR VIOLATION OF THIS SECTION. It is a regulatory standard enforced by the superintendent.

When are association assessments due, and what interest runs on them, under 24-A M.R.S. s 4609?

1. Not less than 10 days after written notice, with interest at 12% a year from the due date.
2. Immediately on notice, with interest at 10% a year from the date the notice was mailed.
3. Not less than 30 days after written notice, no interest accruing on a late assessment.
4. Not less than 30 days after written notice, with interest at 10% a year from the due date. ✓

Why: 24-A M.R.S. s 4609 provides that assessments are due not less than 30 days after prior written notice to the member insurers and accrue interest at 10% a year on and after the due date.

At death, an insured personally owned the policy on their own life. The death proceeds are:

1. Included in the insured's gross estate for estate-tax purposes ✓
2. Never reportable for any tax at all
3. Subject to income tax in the beneficiary's hands
4. Excluded from the estate because they go to a beneficiary

Why: Holding incidents of ownership causes the proceeds to be included in the insured's gross estate (though not subject to income tax).

When may a provider make health inquiries directly to an insured who has named a designee, under 24-A M.R.S. s 6809(9)?

1. Only if it cannot contact the designee for more than 30 days after diligent effort. ✓
2. Only if the designee consents in writing to each contact the provider proposes.
3. Only after the insured has personally asked the provider in writing to make its inquiries directly.
4. Only after the insured's life expectancy has fallen to 6 months or less.

Why: 24-A M.R.S. s 6809(9) lets the insured designate adults in regular contact for all health status inquiries, and bars the provider from making them to the insured unless, for more than 30 days after diligent effort, it is unable to contact the designee. The insured may change the designation on written notice.