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Life & Health Insurance Exam > State Laws > Flashcards

State Laws Flashcards

1
Q

The term “Insurance Producer” does NOT include

A
  • An individual who performs clercial or similar office duties while employed by an insurer
  • A regular salaried officer or employee of an insurer, if the officer or employee is not paid a commission or other compensation that depends directly on the amount of business obtained
  • If not paid a commission, a person that obtains and forwards information for:
  • Group insurance coverage
  • Enrolling individuals under group insurance coverage
  • Issuing certificates under group insurance coverage, or
  • Assisting in administering group plans
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2
Q

An insurance producer may qualify for a license in one or more of the following kinds of insurance:

A
  • Life
  • Accident, health, or sickness
  • Property
  • Casualty
  • Variable life and annuity products
  • Personal lines of property and casualty
  • Limited lines (motor vehicle, credit, travel, title, motor vehicle rental company, HMO, and portable electronics
  • Any other kind of insurance permitted by MD insurance laws
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3
Q

Advisers

A

A person who, for compensation:

  • Examines or offers to examine a policy, annuity, contract, or pure endowment contract for the purpose of giving advice or information about its terms, conditions, benefits, coverage, or premium
  • Gives or offers to give advice or information about a policy’s or contract’s terms, conditions, benefits, coverage, or premium; or the advisability of changing, exchanging, rejecting, accepting, or procuring such a policy or contract
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4
Q

Qualifications to become an Adviser

A
  • Competent and trustworthy
  • Resident of Maryland
  • Must obtain a license/pass written exam
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5
Q

Prospective Adviser is exempt FROM EXAM if:

A
  • Holds at least one of the following professional designations/is a member in good standing of such organization: Chartered Life Underwriter (CLU), Chartered Property and Casualty Underwriter (CPCU), Certified Employee Benefit Specialist (CEBS), or Certified Financial Planner (CFP)
  • Is a member in good standing of the Society of Actuaries, the Casualty Actuarial Society, or the Conference of Actuaries in Public Practice
  • Successfully completes a course of study equivalent to that required for any of the above designations or societies and holds a Certified Insurance Counselor (CIC) designation
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6
Q

The Adviser license does not authorize the licensee to:

A
  • Adjust losses

- Receive compensation from an insurer or producer for the sale or placement of insurance

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7
Q

An agreement between an insurance adviser and another person that relates to the providing of insurance advice or information is NOT enforceable by or for the adviser unless all of the following conditions are met:

A
  • Agreement is in writing, in a form approved by the Commissioner
  • Agreement is executed by the person to be charged (or by the person’s legal representative)
  • Copy of the agreement is delivered to the person when he/she signs it
  • Agreement plainly states the required fee and the services the adviser is to perform
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8
Q

Nonresidents

A
  • ## Must be currently licensed as a resident producer, in good standing, in his/her home state (can be verified by the Commissioner through the NAIC’s producer database)
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9
Q

Home State definition by Maryland Law

A

State in which a person resides or has a primary place of business

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10
Q

Reciprocity

A

Producer’s home state must award nonresident licenses to MD residents on the same basis that nonresident licenses are awarded to nonresidents of MD

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11
Q

Business Entities

A

A corporation, professional association, limited liability company, limited liability partnership, or other legal entity

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12
Q

Qualifications for Business Entities

A

To qualify for a producer’s license, a business entity must deisgnate a licensed insurance producer as its principal contact with the MD Insurance Administration. The designated producer must:

  • Provide Administration with producer’s name, business and email addresses, and business and fax phone numbers. Any changes to this information must be provided within 10 days after the change.
  • Compile and maintain a list of locations where the entity’s records are maintained
  • Submit any trade name to be used by the applicant and name and address of producers doing business under trade name
  • Cooperate with any investigation by the Administration unless doing so would violate a legal privilege asserted by the producer or business entity

**Does not apply for a motor vehicle rental company applying for a limited lines license to sell insurance in connection with, and incidental to, the motor vehicle rental.

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13
Q

Temporary Licenses

A

Commissioner may issue. Valid for 15 months, without regard to education, experience or examination requirements in the following instances:

  • To surviving spouse, next of kin, personal representative, or appointed personal representative of a deceased insurance producer
  • Spouse, next of kin, employee, or legal guardian of a producer who is physically or mentally disabled
  • Employee of a firm or officer or employee of a corporation, on the death or disability of a producer

Person must pay a fee and Commissioner must issue license or provide reasoning for refusal within 30 days.

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14
Q

Address and/or Name Changes

Re: Maintaining a License

A
  • Must file proper forms with Commissioner to change, add to or delete information from a license. - Notification must be made within 30 days for change in legal or trade name or address.
  • Failing to do so is punishable by potential license denial, suspension, revocation, or nonrenewal
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15
Q

Assumed Names/Trade Names

Re: Maintaining a License

A
  • A person that is not an insurer may not assume or use a name that deceptively implies or suggests that it is an insurer.
  • Holder of license may not use any name other than the name on the issued license or trade name files with the Commissioner
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16
Q

Requirement to Report Adverse Administrative Actions or Crimes

A
  • Producer must report being the subject of any adverse administrative action in another jurisdiction or by another governmental unit in the state within 30 days after the matter’s disposition. Copy of order, consent order and any other applicable documents must be included in report.
  • Producer must report being prosecuted for a crime, other than a misdemeanor traffic violation, to Commissioner within 30 days of first appearing in court. Report must include:
    • Charging documentation (citation, indictment, statement of charges, etc.)
    • Any order issued by a court
    • Any other relevant legal documents
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17
Q

Renewal

A
  • Producer License expires every OTHER year on the last day of producer’s birth month
  • Before expiration, producer may renew license for additional 2 years if producer files a renewal application (sent by Commissioner 1 month before expiration), pays fees and completes continuing ed requirements prior to expiration date.
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18
Q

Once renewal application is filed (before license expires) the license remains in effect until:

A
  • Commissioner issues a renewal license

- 5 days after Commissioner refuses to renew license and gives notice of the refusal to the holder

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19
Q

Reinstatement

A
  • If license lapses, producer may apply for reinstatement for up to 1 year by filing reinstatement application, paying renewal and reinstatement fees (if any) and submitting proof of continuing ed requirements
  • If reinstating within 60 days after expiration, license will be reinstated effective on the date it expired. If after 60 days, license will be effective on date of reinstatement.
  • Licensee who does not apply for reinstatement within 1 year of expiration must apply for license in the manner required for initial license. Commissioner may waive reinstatement procedures for a producer who is unable to comply with renewal/reinstatement procedures due to military service or other extenuating circumstances, including long-term medical disability.
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20
Q

Continuing Education

A
  • 24 hours per renewal period (including 3 hours relating to ethics)
    • For producers who have held a license for 25 or more consecutive years, only 8 hours per renewal period is required
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21
Q

The following individuals are exempts from the continuing ed requirements:

A
  • Employees of a HMO who are employed solely to solicit membership under a contract between HMO and Department of Health and Mental Hygiene
  • Attorneys at law of the state who are qualified as title insurance producers and who do not hold a license in any other kind of insurance
  • Individuals who hold only limited lines license and act as a producer for limited line credit insurance
  • Insurance producers who hold any limited lines license in any type of insurance designated by the Commissioner
  • Anyone obtaining a waver from the Commissioner for reasons Commissioner determines warrant the waiver
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22
Q

Nonresident Producer Continuing Education

A

Nonresident producer has met continuing ed requirements of MD if he/she satisfies the continuing ed requirements of his/her home state and his/her home state allows insurance producers from MD to satisfy their continuing on the same basis

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23
Q

Continuing Education for specific policies

A
  • Each producer who possesses a license to sell health insurance and who sells Long-Term Care insurance must take continuing ed that directly relates to LTC insurance.
  • Producers selling health insurance and marketing senior prescription drug assistance program must receive continuing ed that directly relates

-

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24
Q

Appointment

A

Agreement between an insurance producer and insurer under which the producer, for compensation, may sell, solicit, or negotiate policies issued by the insurer.

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25
Q

Producer Register

A

A register of appointed insurance producers authorized to sell, solicit, or negotiate contracts of insurance on behalf of an insurer.

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26
Q

Insurer’s Responsibilities

Re: Producer Register

A

Insurer is required to keep a Producer Register of its appointed agents. Within 30 days after appointing a producer, the insurer must add the following information to its producer register:

  • Producer’s name and license number
  • Date the producer was appointed
  • Any additional information that the Commissioner might require
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27
Q

Individual vs. Business Entity

A

Licensed producer appointed by an insurer must maintain documentation of the insurer’s appointment and a list of the insurers that have appointed the producer.

Before a business entity may accept compensation for acting in its own name as a producer in the State, the business entity must obtain:

  • A LICENSE in the kind of insurance for which the business entity intends to act as a producer
  • An APPOINTMENT for the kind of insurance for which it intends to act as a producer
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28
Q

Insurance Producers NOT Appointed by Insurer

A

Insurer may initially accept an application for life insurance, health insurance, or an annuity from a producer who is not appointed by the insurer and is not on the insurer’s producer registry if, within 30 days of accepting the application, the insurer:

  • Rejects the application
  • Appoints producer and enters required information into the producer register

Producer must receive written documentation of the appointment from insurer.

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29
Q

Termination of Appointment

A
  • Upon termination of producer, the insurer must update producer register of termination date within 30 days following termination.
  • Within 15 after providing notice to Commissioner, insurer must mail a copy of the notice to the producer to last known address (by certified mail)
  • Insurer must notify Commissioner of termination and include any additional information, documents, record, or date pertaining to the termination or activities.
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30
Q

Termination “activities”

A
  • Any activities that could result in the denial, suspension, revocation, refusal to renew, or reinstate the insurance license
  • Any findings by a court, government unit, or self-regulatory organization authorized by law
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31
Q

Disciplinary Actions

A
  • Probation, Denial, Suspension, Revocation or Refusal to Renew
  • Following notice and opportunity for a hearing, the Commissioner may deny, suspend, revoke, or refuse to renew or reinstate an insurance producer license for many reasons (relating to fraud, misrepresenting, concealing, violating, etc.)
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32
Q

Child Support Arrears or Subpoena

Re: Disciplinary Actions

A

A peron’s license may be denied or suspended for being over 120 days in arrears in paying child support or for failing to comply with a subpoena issued by the Child Support Enforcement Administration

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33
Q

Cease and Desist Orders Against INSURERS

A

Without notice and before a hearing, the Commissioner may issue and serve on an insurer an order requiring the insurer to immediately cease and desist from writing insurance in MD if it appears that:

  • Insurer is conducting business that threatens to cause insolvency or is hazardous to its policyholders, creditors, or the public
  • Insurer is engaged in an act, practice, or transaction that is grounds o cause insurer conservation or liquidation proceedings
  • Irreparable loss and injury to insurer’s property and business or the public may occur unless the Commissioner acts immediately

Commissioner will issue and serve the insurer a notice of hearing within 5 days of the order, unless 5-day requirement is waived by insurer in which case the hearing will be held within 30 days of order

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34
Q

Cease and Desist Orders Against Producers

A
  • If Commissioner finds that producer has engaged in prohibited acts or practices, cease and desist order can be issued. If producer continues practice following order, he/she may face penalties prescribed by Commissioner.
  • Hearing will be held prior to issuing order and Commissioner will give producer notice of hearing and charges against them.
  • Order is final when the time allowed for taking an appeal expires. If appeal is taken, order is affirmed or dismissed when final court decision is made.
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35
Q

Penalties

A

Any party who violates any provision of MD insurance law (for which a greater penalty is not specifically provided by other state laws) is guilty of a misdemeanor, and upon conviction, may be fined between $100 and $50,000 for EACH violation. Fine will be in addition to administrative penalties that may be applicable, such as loss of authority, loss of license to conduct business, orders to pay restitution to injured parties and administrative fines.

Instead of, or in addition to suspending or revoking the license, the Commissioner may:

  • Impose a penalty of $100-$500 for each violation
  • Require licensee pass an exam and file a new application before suspension is lifted
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36
Q

Hearings

A

Most hearings are open to the public. Exceptions, as determined by the Commissioner, include:

  • Not in the public’s interest
  • Determine whether and insurer’s operation is hazardous and could result in impairment
  • Request by an insurer to hold a private hearing

All parties to a hearing can inspect documentary evidence, present evidence, examine witnesses, and have the Commissioner issue subpoenas to compel attendance of witnesses and production of evidence.

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37
Q

After Hearing

A

Within 30 days after a hearing, Commissioner issues an order on the hearing and gives each party a copy of the order that was given a notice of the hearing. The order affirms, modifies, or nullifies previous action, or precipitates new action.

An order of the Commissioner will include:

  • Statement of facts found by Commissioner
  • Commissioner’s conclusions from the facts
  • Grounds on which it is based
  • Provisions of this statute under which action is, or proposed to be, taken
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38
Q

No one may be subject to civil liability for reporting suspected insurance fraud if:

A
  • Report was made to the Commissioner, the Fraud Division, or an appropriate federal, state, local law enforcement authority, and
  • The person that reported the suspected insurance fraud acted in good faith when making the report
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39
Q

All applications for insurance and all claim forms must contain the following statement or a substantially similar one:

A

“Any person who knowingly or willfully presents a false or fraudulent claim for payment of a loss or benefit or who knowingly or willfully presents false information in an application for insurance is guilty of a crime and may be subject to fines and confinement in prison.”

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40
Q

Insurance Fraud Division, established under the Maryland Insurance Administration, includes the following powers and duties:

A
  • Authority to investigate each person suspected of engaging in insurance fraud
  • After an investigation, refer suspected cases of fraud to the Office of the Attorney General or local State’s Attorney to criminally prosecute the suspected offender
  • Compile and abstract information regarding the confirmed acts of fraud
  • Cooperate with the Department of State Police, Attorney General, and State’s Attorney
  • Provide a toll-free hot line to receive and record information about alleged acts of insurance fraud
  • Conduct public outreach and awareness programs on the costs of insurance fraud to the public
  • Investigate allegations of civil fraud, and, if appropriate, impose administrative penalties and order restitution
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41
Q

It is a fraudulent act to:

A
  • Commit fraudulent act in obtaining a license
  • Commit fraudulent act in the transaction of insurance
  • Have a license suspended or revoked for having committed a fraudulent act
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42
Q

MD Fraudulent Insurance Acts specify the following as crimes of insurance fraud

A
  • Failing to return premiums with respect to a claim
  • False or misleading information with respect to a claim
  • Misappropriation of benefits
  • Except for the prepayment of premiums or excess contributions allowed under the policy, to willfully collect a premium in excess of those approved by the Commissioner or set by the insurer
  • Supporting an application for a viatical settlement contract with knowledge that it contains false and misleading information
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43
Q

Penalties for these violations are:

A

Felony - If monetary value is $300 or more, it is punishable by a fine of $10,000 or 3 times the fraudulent amount, whichever is greater (but must be at least $500), or up to 15 years imprisonment or both
- Misdemeanor - If the monetary value involved is less than $300, the violator must restore either the property or pay the monetary value of the fraud

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44
Q

The Commissioner’s primary duties include:

A
  • Issuance, refusal, suspension, or revocation of Certificates of Authority to insurers and licenses to producers involved in the insurance business
  • Establishing rules and regulations necessary to conduct and fulfill MD insurance laws
  • Conducting investigations, exams, and hearings associated with administering MD insurance laws
  • Preparing annual report to the Governor detailing the activities of the MD Insurance Administration for the previous fiscal year
  • Preparing a report when required, but at least once every 5 years, concerning recommended changes to financial requirements for insurers
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45
Q

The Commissioner shall establish divisions or sections in the Administration, along the following lines of responsibility:

A
  • Life insurance and health insurance
  • Property insurance and casualty insurance
  • Audit and examination
  • Insurance professions
  • Consumer affairs
  • Insurance fraud
  • Examinations
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46
Q

The Commissioner, as often as advisable, may examine the accounts, records, documents, and transactions relating to the insurance business. The examinee must:

A
  • Provide and make freely available all records, documents, files, accounts, and information related to the examination
  • Pay the examination expenses, including the expense of an actuary, accountant, or other expert who is not otherwise a part of the Commissioner’s staff, if expert is necessary to conduct the examination
  • Receive a copy of the examination report at least 30 days before it is filed - Examinee may request in writing, within the 30-day period before filing, a hearing on its report. Such request delays the report’s filing until after the hearing
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47
Q

An order of the Commissioner shall state:

A
  • Its effective date and purpose
  • The grounds on which it is based, and
  • The provisions of the Insurance Code under which action is or proposed to be taken
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48
Q

Forms Filings

A

Each form for a policy, certificate of insurance, notice of proposed insurance, application for insurance, endorsement, or rider delivered or issued for delivery in MD must be filed with the Commissioner for approval.

Any standard certificate of insurance form required by a federal agency or adopted by the Association for Cooperative Operations Research and Development (ACORD) or the Insurance Services Office (ISO) that otherwise complies with these requirements is deemed approved by the Commissioner

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49
Q

Approval Process for Forms Filings

A

Commissioner must approve the filing, disapprove the filing or withdraw approval within 60 days after form is filed. An insurer may not issue or use a form filed with the Commissioner until the end of the 60-day waiting period unless Commissioner approves the filing in writing before the end of the period.

Commissioner will NOT approve a form if it contains provisions that:

  • Are unjust, unfair, inequitable, misleading, or deceptive
  • Encourage misrepresentation of the coverage
  • Are contrary to a regulation
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50
Q

Rates Filings

A

Commissioner must, within 60 days after a premium rate is filed, approve the rates or disapprove them if the table of premium rates appears by reasonable assumptions to be excessive in relation to the benefits.

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51
Q

Commissioner considerations when reviewing the rate filing

A
  • Past and prospective loss experience in and outside MD
  • Underwriting practice and judgement to the extent appropriate
  • A reasonable margin for underwriting profit and contingencies
  • Past and prospective expenses, whether countrywide or specially applicable in MD
  • Any other relevant factors in and outside of MD
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52
Q

Hearing for disapproved Rate Filing

A

A hearing will be held within 20 days after receipt of a written request by the insurer

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53
Q

Complaint Records

A

Insurers must maintain a complaint system to provide reasonable procedures for the resolution of written complaints initiated by policyholders.

A record of all written complaints must be maintained by the insurer. The Commissioner may examine the complaint record at any time.

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54
Q

To qualify for a Certificate of Authority, the insurer must:

A
  • Be in compliance with its charter policies and Maryland insurance statutes
  • Be an incorporated stock insurer, incorporated mutual insurer, or reciprocal insurer
  • Have and maintain capital stock and surplus required by statute for the type of insurer
  • Have assets and surplus that is reasonable in relation to the insurer’s outstanding liabilities and adequate to its financial needs
  • Provide: articles of incorporation including all amendments, certified copies of bylaws and all amendments, and the annual statement as of the preceding December 31
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55
Q

Certificate of Authority Expiration/Renewal

A

A Certificate of Authority expires on the first June 30 after its effective date unless it is renewed by the insurer. Insurer must file a renewal application and pay the appropriate renewal fee. Failure to renew on or before June 30 may incur a monetary penalty and the Commissioner may issue a cease and desist order directing the company to stop writing insurance.

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56
Q

Commissioner is required (mandatory grounds) to deny, refuse to renew, suspend, or revoke a Certificate of Authority if the insurer:

A
  • No longer meets the requirement for Certificate of Authority of a deficiency in assets or other reason
  • Conducts its business fraudulently
  • Is insolvent or its assets are not sufficient for the business
  • Fails to pay premium taxes
  • Operates contrary to public interest
  • Is managed by individuals who are untrustworthy, not of good character, or so lacking in insurer managerial experience that the Commissioner finds their operation of the company would be hazardous to the public or stockholders
  • If affiliated with anyone whose business operations are marked by manipulation or bad faith to the detriment of insureds, stockholders, or creditors
  • Violates other laws requiring mandatory denial, refusal to renew, suspension or revocation
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57
Q

Penalty

Re: Certificate of Authority

A

Instead of or in addition to suspending or revoking a Certificate of Authority, the Commissioner may:

  • Impose on the holder a penalty of $100-$125,000 for each violation
  • Require the holder to make restitution to any person who has suffered financial injury because of the violation
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58
Q

Record Retention

A

An independent insurance producer is required to maintain records of insurance transactions. A producer must maintain a copy of signed disclosure forms for a period of 5 years.

59
Q

Activities of Unlicensed Individuals

A

It is a fraudulent insurance act to represent yourself to the public as a producer if you don’t have the appropriate license. This means you cannot solicit or take an application for, procure, or place for other insurance for which you have not obtained an appropriate license, even if you are licensed for another line of insurance.

60
Q

Payment and Sharing of Commissions

A

Commission may only be paid to licensed insurance producers. Renewal or other deferred commissions on life and health insurance may be paid to a person who formerly held a license and, if applicable, an appointment. Promotional or referral fees are also permitted to nonlicensed individuals if the amount is no more than $25 and the payment is made regardless of whether a policy sold.

Resident and nonresident producers may share commissions on policies signed and countersigned by each other.

61
Q

Penalty

Re: Payment and Sharing Commissions

A

A person violating MD insurance law concerning licensing, appointments, termination of appointments, and payment of commissions is guilty of a misdemeanor and will be fined up to $500, imprisoned for up to 6 months, or both for each violation.

62
Q

Insurance Advisors Charging for fees

A
  • An agreement between an advisor and another person mist be in writing and specifically state the fee amount paid or is to be paid by the person for the advisor’s service.
  • A person may not pay a fee or charge to a producer, employee of a producer or to any other person as an inducement.
  • Producer, employee of a producer or any other person may not accept (directly or indirectly) any valuable consideration as an inducement to facilitate and agreement.
63
Q

Surplus Lines Broker

A
  • May charge a reasonable policy fee on a policy issued by a surplus lines insurer not exceeding:
  • Up to $100 on each personal lines policy procured by a licensed producer not affiliated or controlled by the surplus lines broker
  • Up to $250 on each commercial lines policy procured by a licensed producer not affiliated with the surplus lines broker
64
Q

An insurance producer may not make withdrawals from the premium account except for the following reasons:

A
  • Payment of premiums to principals
  • Transfer of interest into an operating account if the principals have consented in writing
  • Transfer of average or actual commissions to an operating account
  • Withdrawal of voluntary deposits
  • Payment of return deposits to insureds
  • Payment of return premiums to insureds in the ordinary course of business when the principal authorizes the practice by written agreement
65
Q

Commingling of Funds

A

Is prohibited. Separate accounts must be maintained, where officers, directors, or principal management of an insurer have a substantial interest in an agency’s or brokerage business’s conduct or operation, or vice versa.

A principal must give an insurance producer at least 30 days written notice before canceling his/her written consent to commingle funds.

66
Q

An insurance producer using an account current system must:

A
  • Maintain at least the net balance of premiums, return premiums, and deposits received but not remitted
  • Be able to determine each principal’s funds from his/her records
67
Q

Exception (must be disclosed in advertising)

A

Any policy provision whereby coverage for a specified hazard is entirely eliminated. It is a statement of a risk not assumed under the policy.

68
Q

Reduction (must be disclosed in advertising)

A

Any provision that reduces the benefit amount. A risk of loss is assumed but payment upon the occurrence of the loss is limited to some amount or period less than would be otherwise payable had the reduction clause not been used.

69
Q

Limitation (must be disclosed in advertising)

A

Any provision that restricts coverage under the policy other than an exception or a reduction.

70
Q

An advertisement must disclose:

A
  • Waiting, elimination, probationary, or similar periods
  • The extent to which any loss is not covered if the cause of a loss is traceable to a preexisting condition. Limits the use of the phrase “no medical examination required” and similar phrases
71
Q

Advertisements

A

A copy must be submitted to the Commissioner for review before a carrier advertises on television or radio, or in writing.

Insurer shall maintain at its home or principal office a complete file with a copy of every advertisement used. The file shall be subject to regular inspection and shall be maintained for at least 3 years. Each ad must have a notation of the manner and extent of distribution and the form number of any policy advertised.

72
Q

Unfair Trade Practices

A

Unfair methods of competition and unfair and deceptive acts in the business of insurance

73
Q

Misrepresentation includes:

A
  • Making misleading representations or fraudulent comparisons of insurance policies or misrepresenting the terms or benefits of an insurance policy
  • Making misleading representations as to the financial condition of an insurer
  • Making a false or misleading statement about the dividends or share of the surplus previously paid on similar policies
  • Using a name or title of a policy or class of policies that misrepresents the policy’s or class’s true nature
74
Q

False Advertising

A

Presentation of any information or ad that is false or misleading about the insurance benefits or any person in the conduct of his/her insurance business

75
Q

Defamation

A

The making of any false oral or written statement that is maliciously critical or derogatory of any insurer’s financial condition with intent to injure someone in the business of insurance

76
Q

Boycott, Coercion and Intimidation

A

No person may enter into an agreement to commit, or by converted action commit, an act of boycott, coercion, or intimidation that results in or event tends to result in unreasonable restraint of trade or monopoly in the business of insurance

77
Q

False Financial Statements

A

No person may knowingly make a false statement of an insurer’s financial condition. This includes making known false entries in a book, report, or statement with intent to deceive an agent or examiner lawfully appointed to examine an insurer.

78
Q

Prohibited Inducements

A

No person may issue, deliver, or allow the issue or delivery of agency company stock, other capital stock, benefit certificates, shares in a corporation, an advisory board contract, or other similar contract that promises returns and profits as an inducement to purchase insurance.

79
Q

Unfair Discrimination Applicable to Life Insurance and Annuity Contracts

A

No person may make or allow unfair discrimination between individuals of the same class and equal expectation of life in:

  • The rates charged
  • Dividends or other benefits payable on a contract
  • Any other terms or conditions of a contract
80
Q

Unfair Discrimination Applicable to Health Insurance

A

No person may make or allow unfair discrimination between individuals of the same class and of essentially the same hazard in:

  • The amount of premium, policy fees, or rates charged
  • Benefits payable under a policy or contract
  • Any terms or conditions of a policy or contract
  • Any other manner
81
Q

An insurer may not make or allow a differential in ratings, premium payments, or dividends for a reason based on the:

A
  • Sex of applicant or policyholder (unless there is actuarial justification for the differential)
  • Blindness or other physical handicap/disability (unless there is actuarial justification for the differential - but actuarial justification is not considered for blindness or hearing impairment)
82
Q

Rebating

A

Is prohibited, unless specified in contract. Examples include:

  • Rebate or return of premiums
  • A special favor or advantage in the policy dividends or other benefits
  • Paid employment or a contract for services of any kind
  • Promise of returns or profits
  • Educational or promotional materials or merchandise with a value of more than $25
  • Offering any interest in or ownership of any stocks, bonds, or other securities, WHETHER OR NOT specified in the policy
83
Q

Twisting

A

A prohibited unfair trade practice. It is misrepresenting or using incomplete comparisons about policy terms, conditions, or benefits with the purpose of inducing a person to lapse, cease, or forfeit an existing policy for a new policy to the person’s detriment.

84
Q

Opt out

A

Direction by the consumer that the licensee not disclose nonpublic personal financial information about that consumer to a nonaffiliated third party, other than as permitted by statute.

85
Q

An insurer that takes a consumer’s nonpublic personal financial information or nonpublic personal health information must:

A
  • Notify customers about its privacy practices

- Give customers a reasonable opportunity to opt out of any disclosure of this personal information.

86
Q

Limits on the Use of Personal Financial Information

A

Disclosure is allowed to affiliates and, unless legally prohibited, to any other person. The only nonaffiliated third party at which a licensee may disclose a policy number for marketing purposes is a consumer reporting agency

Exceptions - The Consumer may exempt an insolvent licensee from notice requirements that could impose a financial burden on the licensee or decrease the ability to pay claims.

87
Q

Any authorization to disclose personal health information must:

A
  • Identify, and be signed by, the consumer
  • Describe the information disclosed, the parties receiving the information, and how the information will be used
  • State the period, which may be up to 24 months, for which the authorization is valid

Consumer may revoke authorization at any time.

A licensee is not subject to authorization rules when complying with HIPAA requirements.

88
Q

A licensee must have a consumer’s authorization before disclosing his/her personal health information, EXCEPT:

A
  • For underwriting, actuarial work, and claims handling
  • For investigations of criminal behavior
  • To control losses
  • To guaranty funds and reinsurers
  • To manage risk, case, or disease; assure or improve quality of care; and review utilization of health services or evaluate peers
  • To evaluate licensee or policy performance
  • To verify credentials
  • For any other actions where disclosure is not required by law or where the Commissioner determines that disclosure is both necessary to do business an in consumers’ interest
89
Q

To confirm that applicant understands effects of replacements before the final purchase decision, the applicant must answer the following questions:

A
  • Are you considering discontinuing premium payments, surrendering, forfeiting, assigning to the insurer, or otherwise terminating your existing life insurance policy or annuity contract?
  • Are you considering using funds from your existing policies or annuity contracts to pay premiums due on the new life insurance policy or annuity contract?

If applicant answers “yes” to either question, each existing life insurance policy or annuity contract contemplating replacement must be listed.

90
Q

In MD, a group life policy may be issued to:

A
  • An employer/employee group
  • A labor union or similar employee organization
  • A trust or to the trustees of a fund
  • A professional association that has at least 100 members and that has been in existence for at least 2 years
  • A public employer or a public employees association
  • Debtor groups
  • Credit union groups
  • A volunteer fire, rescue squad, or ambulance service organization
91
Q

Dependent Coverage - Life Insurance

A

Dependent coverage under a group life policy may extend to cover insured’s spouse, domestic partner (meaning as stated in the policy), and dependent children, which includes:

  • Children under 18
  • Children over 18 who attend educational institution and are dependent upon insured for financial support

The amount of coverage on a spouse, partner, or child may not exceed the amount of coverage on the insured.

92
Q

Group life policies in MD must contain the following standard provisions:

A
  • Grace period of 31 days
  • Incontestability after 2 years
  • Application attached to policy
  • Evidence of insurability requirement described
  • Adjustment method for misstatement of age
  • Provision for payment of benefits
  • Individual certificates
93
Q

Payment of Benefits (in a Group Life Policy in MD)

A

The policy must provide that any sum due because of the death of the insured is payable to the beneficiary designated by the insured, subject to the death of the beneficiary. If not beneficiary is living when the insured dies, the insurer has the right to pay up to $2,500 to any person the insurer considers equitably entitled to payment because the person sustained expenses related to the insured’s death or last illness.

94
Q

An insured’s spouse and dependent children covered under a group policy are entitled to conversion to an individual policy:

A

If the group coverage is terminated because of the insured’s termination of employment or membership in a class eligible for coverage, the insured is entitled to convert to an individual policy. The same is available if the group coverage is terminated or amended to terminate coverage for the spouse or dependent child.

95
Q

Assignment of Proceeds (Group Life Policy)

A

An insured under a group life policy may assign to any person any or all of the policy’s rights and benefits, including:

  • The right to have the group policy converted to an individual policy, and
  • The right to name a beneficiary

The assignment vests in the assignee all rights and benefits that are assigned and entitles the insurer to deal with the assignee as the owner of all rights and benefits conferred on the insured.

96
Q

Maryland Life and Health Insurance Guaranty Corporation

A

A private, nonprofit, nonstock corporation that protects resident policy and contract owners, certificate holders, beneficiaries, payees, and assignees of life insurance policies, health insurance policies, annuity contracts, and supplemental contracts against failure in the performance of contractual obligations due to the impairment or insolvency of the insurer that issued the policies or contracts.

97
Q

Member Insurers of MD Life and Health Insurance Guaranty Corporation

A

A member insurer is an authorized insurer that writes life and health insurance and annuities, but is NOT a(n):

  • HMO
  • Fraternal benefit society
  • Mandatory State pooling plan
  • Mutual assessment company
  • Insurance exchange
98
Q

Insolvent Insurer

Re: MD Life and Health Insurance Guaranty Corporation

A

A member insurer that is placed under an order of liquidation by a court of competent jurisdiction with a finding of insolvency.

99
Q

The Corporation’s obligation for a covered claim cannot exceed the lesser of the following amounts for any one life, regardless of the number of policies in effect:

A
  • $300,000 in life insurance death benefits, but not more than $100,000 in net cash surrender and net cash withdrawal
  • $500,000 for basic hospital, medical, and surgical insurance or major medical insurance provided by health benefit plans
  • $300,000 for disability insurance and $300,000 for long-term care insurance
  • $100,000 for coverages not included as basic hospital, medical, and surgical insurance, or major medical, disability, or LTC insurance, including any net cash surrender and net cash withdrawals
  • $250,000 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values
100
Q

Insurers

A

Any person engaged as indemnitor, surety, or contractor in the business of entering into insurance contracts. Health insurers sell health insurance that includes accident insurance, disability insurance, but does not include workers’ compensation insurance. Health insurance means insurance of human beings against:

  • Bodily injury, disablement, or death by accidental means, and the related expenses
  • Disablement or expenses resulting from sickness or childbirth
  • Expenses incurred in prevention of sickness or dental care
101
Q

Health care providers in NONPROFIT health service plans include:

A
  • Chiropractors
  • Dental
  • Hospital
  • Optometrist
  • Pharmacist
  • Physician
  • Podiatrist
  • Psychologist
102
Q

Nonprofit health service plans:

A
  • Are committed to a nonprofit corporate structure
  • Seek to provide individuals, businesses, and other groups with affordable and accessible health insurance
  • Recognize a responsibility to contribute to the improvement of the overall health status of the residents of the jurisdictions in which the nonprofit health service plans operation, and
  • Are public benefit corporations EXEMPT from taxation
103
Q

The mission of the nonprofit health service plans, in accordance with the charter, is to:

A
  • Provide affordable and accessible health insurance to the plan’s insureds and those persons insured or issued health benefit plans by affiliates or subsidiaries of the plan
  • Assist and support public and private health care initiatives for individuals without health insurance, and
  • Promote the integration of a health care system that meets the needs of all residents of the jurisdictions in which the nonprofit health service plan operates
104
Q

Certificate of Authority

Re: Nonprofit Health Service Plans

A

Is issued to an insurer of HMO wholly owned or controlled by a nonprofit health service plan doing business in MD.

A corporation WITHOUT capital stock organized for the purpose of establishing, maintaining and operating a nonprofit health service plan to provide health care services to subscribers is subject to the non profit health service plan statutes.

105
Q

Dental Plan Organization Act

A

Dental plans/dental plan organizations may NOT be established or operated without a specific Certificate of Authority issued by the Commissioner.

106
Q

Health Maintenance Organization (HMO)

A

Can be a profit or nonprofit corporation that provides members the following health care services:

  • Physician
  • Hospitalization
  • Laboratory
  • X-ray
  • Emergency
  • Preventive services
  • Out-of-area coverage

Services are provided on an insured or prepaid basis in the area serviced by the HMO.

107
Q

Benefit Package

Re: HMOs

A

A set of health care services, called covered services, provided to a member of a HMO under a contract that entitles the member to the health care services.

108
Q

Emergency Services

Re: HMOs

A

Provided in a hospital emergency facility after the sudden onset of medical condition that manifests itself by symptoms of sufficient severity, including severe pain, that the absence of immediate medical attention could reasonably be expected by a prudent layperson, who possesses an average knowledge of health and medicine, to result in:

  • Placing the patient’s health in serious jeopardy
  • Serious impairment to bodily functions
  • Serious dysfunction of any bodily organ or part
109
Q

Member

Re: HMOs

A

A person who makes a contract or on whose behalf a contract is made with a HMO for health care services

110
Q

Provider

Re: HMOs

A

Any person, including a physician or hospital, which is licensed otherwise authorized in MD to provide health care services

111
Q

Subscriber

Re: HMOs

A

A person who makes a contract with a HMO, either directly or through an insurer or marketing organization, under which the person or other designated persons, are entitled to the health care services.

112
Q

Maryland Health Insurance Plan (MHIP)

A

An independent unit of the MD state government, whose purpose is to decrease uncompensated care costs by providing access to affordable, comprehensive health benefit for medically uninsurable MD residents.

**MHIP will provide coverage until January 1, 2020

113
Q

Members receive notice that they may NOT be denied health insurance because of a preexisting health condition and that they may be eligible to:

A
  • Enroll in MD Medical Assistance Program
  • Purchase a health benefit plan offered in the MD Health Benefit Exchange or outside of the Exchange
  • Receive federal premium and cost-sharing assistance for the purpose of a health benefit plan in the MD Health Benefit Exchange
114
Q

Dependent Child Age Limit

A

Under the Patient Protection and Affordable Care Act (PPACA/ACA), and unmarried child must be covered on his/her parent’s health insurance until age 26

115
Q

Coverage for Adopted Children

A

Adoption coverage begins when the child is placed in the home even though the adoption process is not yet finalized. Coverage may not be required to be extended to a child if the insured is appointed custody for less than 12 months.

116
Q

Hospitalization for Childbirth

Re: Newborn Child Coverage

A

Health policies must provide coverage for hospitalization after childbirth to the same extent as for any covered illness, if necessary. Whenever a mother is required to remain hospitalized after childbirth for medical reasons and requests that the newborn remain in the hospital, insurer or nonprofit health service plan MUST pay the cost of additional hospitalization for the NEWBORN for up to 4 days.

In patient hospitalization for a mother AND newborn must be covered at least 48 hours for an uncomplicated, vaginal delivery or up to 96 hours for an uncomplicated c-section. A mother may request a shorter stay if she and the provider agree less time is needed. When a mother and newborn stay in the hospital for less time than the policy allows, the policy must cover one home visit within 24 hours of discharge and an additional visit if prescribed by her physician. If mother and baby stay for at least the length of time allowed by the policy, one home visit must be covered if prescribed by her physician.

117
Q

Unmarried Dependent Incapacitated Child Coverage

A

Notwithstanding any limiting age stated in the policy or contract, a child, grandchild, or individual for whom guardianship is granted by court must continue to be covered under the policy as a dependent when the person reaches the limiting age if the person is unmarried and is incapable of self-support because of mental or physical incapacity that started before he/she attained the limiting age.

118
Q

Surviving Spouses and Dependent Children

Re: Continuation Coverage

A

A spouse of a deceased insured under group coverage and any dependent children of the insured may elect to continue coverage. To qualify for continuation coverage, the spouse must have been married to the insured for at least 30 days immediately preceding the insured’s death.

119
Q

Divorced Spouses and Dependent Children

A

A divorced spouse of an individual insured under a group contract may elect to continue coverage. Coverage must be identical to the coverage offered under the group contract to similarly situated beneficiaries for whom there has not been a change in status.

120
Q

Employees Terminated Other Than for Cause

A

An individual who becomes ineligible for a group health plan though termination of employment may elect continuation of coverage.

121
Q

Benefits for Alzheimer’s Disease and Care of Elderly Patients

A

Applicable for group or blanket health insurance policies written on an expense-incurred basis or nonprofit health service plans issuing/delivering medical or major medical contracts, an entity must offer the policyholder the option of providing benefits for expenses arising from care, including nursing home care and intermediate or custodial nursing care, of:

  • Individuals who have Alzheimer’s disease
  • Elderly individuals who have any disease, other than Alzheimer’s disease, that are designated in regulations by the Commissioner.

An entity may establish reasonable limits on the offered benefits, including copayment and deductible provisions and maximum annual and lifetime dollar limits.

122
Q

A Health Benefit Plan includes a:

Re: Benefits for Treatment of Mental illnesses, Emotional Disorders, and Drug and Alcohol Abuse

A
  • Hospital or medical policy, including those issued under multiple employer trusts or associations located in MD or any other state covering MD residents
  • Policy or contract issued by a nonprofit health service plan that covers MD residents
  • HMO subscriber or group master contract
123
Q

Large Employer

A

Has more than 50 employees

124
Q

Managed Care System

A

A system of cost containment that a carrier uses to review and preauthorize a treatment plan developed by a health care provider for a covered individual in order to control utilization, quality, and claims

125
Q

Partial Hospiralization

A

The provision of medically directed intensive or intermediate short-term treatment:

  • To an insured, subscriber, or member
  • In a licensed or certified facility or program
  • For mental illness, emotional disorders, drug abuse, or alcohol abuse, and
  • For a period of less than 24 hours by more than 4 hours in a day
126
Q

Small Employer

A

Employed an average of 2-50 employees on business days during the preceding calendar year, and employs at least 2 employees on the first day of the plan year.

127
Q

A Governmental Plan is:

A
  • Established or maintained for employees of any agency or instrumentally of the government of the US or the government of any State or its political subdivisions.
  • Any plan to which the Railroad Retirement Act applies
  • Any plan of an intentional organization which is exempt from taxation under the provisions of the International Organizations Immunities Act
  • A plan which is established and maintained by an Indian tribe government or a subdivision of an Indian tribal government, or an agency or instrumentality of either.
  • All of the participants of which are employees of such entity substantially all of whose services as such an employee are in the performance of essential governmental functions but not in the performance of commercial activities (whether or not an essential government function).
128
Q

Eligible Employee

Re: Small Employer Health Insurance

A
  • An employee, partner of a partnership, or independent contractor who is included as an employee under a health benefit plan and works on a full-time basis and has a normal workweek of at least 30 hours.
  • A sole employee of an exempt nonprofit who has a normal workweek of at least 20 hours and is not covered under a public or private plan for health insurance or other health benefit arrangement.

An individual who works on a temporary or substitute basis or for less than 30 hours in a normal work week is NOT an eligible employee.

129
Q

Late Enrollee

Re: Small Employer Health Insurance

A

Member, subscriber, or dependent who enrolls in a group health benefit plan other than during the first period in which the individual is eligible to enroll under the plan or special enrollment period.

130
Q

Community Rate

Re: Small Business Rating

A

In establishing a community rate for a health benefit plan, a carrier must use a rating methodology that is based on the experience of all risks covered by that health benefit plan without regard to any factor not specifically authorized by statute.

131
Q

Risk Adjustment Factors

Re: Small Business Rating

A

A carrier may adjust the community rate only for the following risk adjustment factors: age, health status, and geography based on the following contiguous areas:

  • Baltimore metropolitan area
  • District of Columbia metropolitan area
  • Western Maryland
  • Eastern and Southern Maryland
132
Q

After applying the risk adjustment factors, a carrier may offer a discount not to exceed 20% to a small employer for participation in a wellness program, which must be:

A
  • Applied to reduce the rate otherwise payable by the small employer
  • Actuarially justified
  • Offered uniformly to all small employers
  • Approved by the Commissioner
133
Q

Based on the adjustments, a carrier may charge a rate that is up to 50% above or 50% below the community rate. Based on the adjustment allowed, and in addition to the adjustments, a carrier may charge in the:

A
  • 1st year of enrollment, a rate that is 10% above or below the community rate
  • 2nd year of enrollment, a rate that is 5% above or below the community rate
  • 3rd year of enrollment, a rate that is 2% above or below the community rate

A carrier may NOT make any adjustment for health status in the community rate of a health benefit plan issued after the third year of enrollment of a small employer in the health benefit plan.

134
Q

A small business carrier must:

A
  • Demonstrate capacity to administer the health benefit plan
  • Have a satisfactory grievance procedure and responds to enrollee’s calls, questions, and complaints
  • Provide coordination of coverage of all plans, if applicable
  • Have designed policies to help ensure adequate access to providers of health care
  • Offer at least the Standard Plan
135
Q

Prominent Carrier

A

Must insure at least 10% of the total lives insured in a small group market, and must offer a wellness benefit for a health benefit plan.

Carriers that are NOT prominent carriers may offer a wellness benefit for a health benefit plan.

136
Q

Except relating to pregnancy, a carrier may impose a preexisting condition provision only if it:

A

Relates to a condition, regardless of the cause, for which medical advice, diagnosis, care, or treatment was recommended to received within the 6-month period ending on the enrollment date

  • Extends for a period of not more than 12 months after the enrollment date or 18 months in the case of a late enrollee
  • Is reduced by the aggregate of the periods of creditable coverage
137
Q

Purpose of Medical Supplement Insurance

A

Regulated to provide the minimum benefits required by federal law in order to cover deductibles or coinsurance amounts under Medicare.

138
Q

Small Business Health Options Program (SHOP)

A
  • The SHOP Exchange must be a separate insurance market within the Exchange for small employers with 50 employees (100 employees after 1/1/2016) and self-insureds.
  • For group health policies
  • Does NOT offer tax credits
  • Navigator program must focus outreach efforts and provide health insurance enrollment and eligibility services to small employers that do not offer health insurance to their employees.
  • Navigator must hold a SHOP navigator license and may not be required to hold an insurance producer license.
  • Navigator cannot be affiliated with a carrier, insurance producer, third-party administrator, and be compensated only through the SHOP Exchange
139
Q

Individual Exchange

A
  • Assists qualified employers of any size in the enrollment of their employees in qualified health plans and self-insured employers
  • For individual AND group health policies
  • Offers tax credits
  • Provides authorization to sell qualified plans to a licensed insurance producer
  • Will not compensate the insurance producer for a qualified plan offered by the Individual Exchange, but instead the insurance producer is compensated by the carrier.
140
Q

Open Enrollment Period

A

Any carrier that sells health benefit plans to individuals in the State must have an annual open enrollment period that begins on October 15 and extends through December 7 each year

During the annual open enrollment period, an individual shall be permitted to:

  • Enroll in a health benefit plan offered by the carrier
  • Discontinue enrollment in a health benefit plan offered by the carrier
  • Change enrollment in a health benefit plan offered by the carrier or a different health benefit plan offered by the carrier.

If an individual enrolls during the open enrollment period, the effective date of coverage will be January 1 of the following calendar year.

141
Q

Special Enrollment Period

A

Must be for at least 60 days, beginning on the date of the triggering event. The special enrollment period shall begin at least 60 days before the end of the individual’s or dependent’s coverage under the employer-sponsored plan.

142
Q

The SHOP Exchange must allow qualified employers to:

A
  • Designate a coverage level within which their employees may choose any qualified health plan
  • Designate a carrier or an insurance holding company system and a menu of qualified health plans in the SHOP Exchange from which their employees may choose.
  • Designate one or more qualified dental or vision plans to be made available to their employees.
143
Q

Mandated Referrals

A

A SHOP navigator must refer any inquiries about health benefit plans or other products not offered in the Exchange to any resources that may be maintained by the Exchange or to carriers and licensed insurance producers.

A producer who is licensed in MD may sell any qualified plan offered in the Individual Exchange without being separately certified as an Individual Exchange Navigator. Insurance producer must refer individuals seeking insurance who may be eligible for the MD Medical Assistance Program or the MD Children’s Health Program to the navigator Program for the Individual Exchange.

144
Q

Deductibility of Premiums for LTC Insurance for State Income Tax Purposes

A

Application must contain clear and unambiguous questions to ascertain the health condition of the applicant. If application asks about prescribed medication, all must be listed. If medication listed at the time of application is directly related to a medical condition for which coverage would otherwise be denied, the LTC policy may not be rescinded for that condition.

At time of application for one who is at least 80 years old, unless for guaranteed issue, carrier must obtain at least one of the following:

  • Report of a physical exam
  • Assessment of functional capacity
  • Copies of medical records

An individual or corporation may apply the credit against the State income tax.

Life & Health Insurance Exam (15 decks)

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