Montana Life & Disability (Accident & Health) Insurance License, Practice Exams

If the named beneficiary of a life policy is a minor child, the death proceeds:

1. Are forfeited entirely until the child reaches the age of majority
2. Must by law be split equally among all of the insured's relatives
3. Are usually paid to a guardian or trust, not directly to the minor ✓
4. Revert to the insurance company until a court orders otherwise

Why: Insurers generally will not pay proceeds directly to a minor; a guardian, custodian, or trust receives and manages the funds.

What does 33-20-309 prohibit?

1. A surrender penalty on an annuity contract after five years from the date of issuance, or from the date of each separate voluntary premium deposit.
2. A surrender penalty on an annuity contract at any time, whatever the date of issuance and whatever separate premium deposits have been made.
3. A surrender penalty on an annuity contract after ten years from the date of issuance, whatever separate premium deposits the annuitant has made.
4. A surrender penalty on an annuity contract after ten years from the date of issuance, or from the date of each separate voluntary premium deposit. ✓

Why: 33-20-309(1) forbids a surrender penalty after ten years from the date of issuance, or, for a contract under which the annuitant voluntarily deposits a separate premium not required by the contract, from the date of each separate deposit; within ten years after such a deposit the insurer may charge a penalty for that deposit.

Nonforfeiture provisions in an annuity guarantee the owner:

1. A doubling of the account value after ten years
2. Free withdrawals of the entire balance in the first year
3. A minimum surrender value if the contract is cashed in ✓
4. The full original premium back with no charges at any time

Why: Annuity nonforfeiture laws guarantee a minimum cash surrender value, protecting the owner's accumulated funds.

A joint and survivor annuity covering a couple continues full or reduced payments:

1. Only until the first annuitant dies
2. Until the second of the two annuitants dies ✓
3. To the couple's heirs after both die
4. For a fixed ten-year term regardless of survival

Why: A joint and survivor annuity pays as long as either annuitant lives, often reducing to a percentage for the survivor.

How many employees must a public employee group policy cover under 33-20-1104(4)?

1. At least ten employees at date of issue. ✓
2. At least two employees at date of issue.
3. At least twenty-five employees at date of issue.
4. At least one hundred employees at date of issue.

Why: 33-20-1104(4) requires a public employee group policy to cover at least ten employees at date of issue. 33-20-1104(3) requires at least seventy-five per cent of eligible employees to elect to contribute and become insured, and 33-20-1104(1) allows the term employees to include retired employees and, for a public body, elected or appointed officials.

The provision that automatically uses available cash value to pay a premium not paid by the end of the grace period is the:

1. Paid-up addition
2. Reinstatement provision
3. Automatic premium loan ✓
4. Accelerated benefit

Why: The automatic premium loan provision borrows against cash value to cover an unpaid premium, preventing a lapse.

What does the second limb of 33-22-205(1) bar for a claim commencing more than two years after issue?

1. Denial or reduction on the ground that a disease or condition not excluded by name or specific description existed before coverage began. ✓
2. Denial or reduction on any ground at all, including a condition that the policy excludes by name or by specific description on the date of loss.
3. Denial on the ground of a preexisting condition, though the insurer may still reduce the claim by one half for any condition that existed before coverage.
4. Denial or reduction on the ground of fraud in the application, the preexisting condition defence remaining open to the insurer for the whole term.

Why: 33-22-205(1) requires the provision that no claim for loss incurred or disability commencing after two years from the date of issue shall be reduced or denied on the ground that a disease or physical condition not excluded from coverage by name or specific description effective on the date of loss had existed before the effective date of coverage.

What must a trustee group policy cover at date of issue under 33-20-1103(3)?

1. At least twenty-five persons and not less than an average of two persons per employer unit.
2. At least one hundred persons, whatever the average number per employer unit may turn out to be.
3. At least one hundred persons and not less than an average of five persons per employer unit. ✓
4. At least six hundred persons where the fund is established by an association of employers.

Why: 33-20-1103(3) requires the policy to cover at date of issue at least one hundred persons and not less than an average of five persons per employer unit. Where the fund is established by an association of employers, the participating employers must be at least sixty per cent of members whose employees are not already covered, or the total covered must exceed six hundred, and the policy may not end an employer's cover solely because it leaves the association.

A producer writes and runs his own newspaper ad for an insurer's policy. Under the NAIC advertising model regulations, the insurer:

1. Is responsible only if it approved the wording in advance
2. Must file the ad with the NAIC before it may be published
3. Bears no responsibility, since the producer wrote it alone
4. Is responsible for the ad, whoever wrote or designed it ✓

Why: The NAIC advertising models make the insurer responsible for every advertisement of its policies, however and by whomever produced. Insurers must keep a system of control over ads, which is why producer ads usually need prior insurer sign-off.

What limits apply to newborn coverage under 33-22-301(2)?

1. It may carry a waiting period of up to 31 days, the coverage otherwise matching that of the other covered persons.
2. It must match the coverage for other covered persons, with no waiting or elimination periods for the newborn. ✓
3. It may be limited to congenital defects for the first 31 days, full coverage following once the premium is paid.
4. It may carry a separate deductible for the newborn, whatever the deductible that applies to the other covered persons.

Why: 33-22-301(2) requires coverage for newborn infants to be the same as provided for the other covered persons, with no waiting or elimination periods for newborns, and permits a deductible or reduction in benefits only if consistent with that applicable to all other covered persons.

A 'usual, customary, and reasonable' (UCR) charge is used to determine:

1. The fixed dollar copayment that the insured owes at the time of each office visit
2. The monthly capitation paid to a network physician
3. The amount a plan considers reasonable for a service in a given area ✓
4. The annual deductible the insured must satisfy first

Why: UCR is the benchmark a plan uses for covered charges based on the usual fee, the customary range in the area, and what is reasonable for the service.

Under the uniform individual health provisions, written notice of a claim must generally be given within:

1. 6 months after the insured has fully recovered from the loss
2. One year, but only if the insurer specifically requests it
3. 48 hours of the event, regardless of the circumstances
4. 20 days after the loss (or as soon as reasonably possible) ✓

Why: Notice of claim is required within 20 days (or as soon as reasonably possible); the insurer must then supply claim forms, with proof of loss due within 90 days.

What does the entire contract provision required by 33-20-304 say?

1. The contract constitutes the entire contract between the parties in every case, the application never forming part of it whether or not a copy is endorsed on or attached to the contract when it is issued.
2. The contract, the application and any statement made by the applicant to the producer together constitute the entire contract between the parties to it, whether or not a copy of the application is attached.
3. The contract constitutes the entire contract between the parties, or, where a copy of the application is endorsed on or attached to it when issued, the contract and the application together do so. ✓
4. The contract constitutes the entire contract, and no change in it is valid unless an executive officer approves it.

Why: 33-20-304 requires a provision that the contract constitutes the entire contract between the parties, or, if a copy of the application is endorsed upon or attached to the contract when issued, that the contract and the application constitute the entire contract.

The elimination period in a disability income policy functions as:

1. A flat dollar deductible the insurer subtracts from every monthly benefit check before paying
2. A time deductible the insured must wait through before benefits begin ✓
3. The outside limit, stated in years, on how long monthly benefits will ever be paid
4. A 31-day window for paying an overdue premium

Why: The elimination (waiting) period is a 'time deductible'; a longer elimination period lowers the premium because the insurer pays for fewer short claims.

Which settlement option pays the beneficiary an income that cannot be outlived?

1. Fixed period
2. Interest only
3. Fixed amount
4. Life income ✓

Why: A life income settlement option pays for the beneficiary's lifetime, regardless of how long they live.

The four essential elements required to form a valid insurance contract are offer and acceptance, competent parties, legal purpose, and:

1. A guaranteed minimum interest rate
2. A medical examination of the applicant
3. Approval by the state insurance commissioner
4. Consideration ✓

Why: A valid contract requires agreement (offer/acceptance), consideration, competent parties, and a legal purpose.

A family deductible provision in a health plan provides that:

1. The individual deductible is doubled for each additional dependent added to the contract
2. Only the named policyholder's own expenses count toward it, never a covered dependent's bills
3. Once a set aggregate amount is met, the deductible is satisfied for the whole family ✓
4. Each covered family member must satisfy the full individual deductible over again every month

Why: A family deductible caps total deductible exposure: when the combined family expenses reach the stated aggregate, the deductible is met for all members.

A SEP (Simplified Employee Pension) plan is funded by:

1. Premiums paid into a variable life insurance policy
2. Mandatory after-tax contributions from every employee's paycheck
3. Employer contributions made into each eligible employee's IRA ✓
4. A single lump sum the government deposits for low-income workers

Why: Under a SEP, the employer contributes to a traditional IRA established for each eligible employee; contributions are discretionary and tax-deductible to the employer.

What hearing coverage must be provided for a child under 33-22-128?

1. Diagnosis and treatment for a child 21 or younger, with up to one hearing device per ear every 5 years.
2. Diagnosis and treatment for a child 18 or younger, with up to one hearing device per ear every 3 years. ✓
3. Diagnosis only for a child 18 or younger, hearing devices being excluded under the section.
4. Diagnosis and treatment for a child 18 or younger, with no limit on the number of hearing devices provided.

Why: 33-22-128(1) requires group and individual coverage to cover diagnosis and treatment of various auditory ranges for a covered child 18 years of age or younger, and 33-22-128(2)(b) limits treatment to one hearing device with accessories for each ear every three years or as required by a licensed audiologist.

Increasing term insurance is characterized by a death benefit that:

1. Falls steadily until it reaches zero at the end of the term
2. Is determined each year by the performance of a market index
3. Rises over the policy term ✓
4. Stays exactly level for the whole duration of the contract

Why: Increasing term's face amount grows over time (often used with return-of-premium or to track inflation); decreasing term does the opposite.

What penalties does 33-21-113 set for violating a final order of the commissioner?

1. Up to $250 if the violation is not wilful and up to $1,000 if it is wilful, with possible licence suspension or revocation. ✓
2. Up to $500 if the violation is not wilful and up to $10,000 if it is wilful, with possible licence suspension or revocation.
3. Up to $1,000 whether or not the violation is wilful, licence suspension or revocation not being available for it.
4. Up to $250 if the violation is not wilful and up to $1,000 if it is wilful; licence action is not available.

Why: 33-21-113 provides that a person who violates an order of the commissioner after it has become final shall, on proof to a court, pay a sum not exceeding $250 if the violation is not wilful and not exceeding $1,000 if it is wilful, and allows the commissioner to revoke or suspend the licence or certificate of authority of the violator.

Rosa had no employer coverage at 65 and enrolled in Part B 26 months after her Initial Enrollment Period ended. Her Part B late enrollment penalty is:

1. 10%, lasting for as long as she has Part B
2. 20%, lasting for as long as she has Part B ✓
3. 20%, removed once she has paid it for two full years
4. 26%, lasting for as long as she has Part B

Why: The Part B penalty is 10% for each full 12-month period without coverage, and 26 months contains two full periods. It is added to every premium for as long as she keeps Part B, not dropped after a set time.

What does 33-22-603 dispense with for persons covered under a blanket policy?

1. Any proof of loss, benefits being paid on the notice of claim.
2. Filing of the policy form with the commissioner under 33-1-501.
3. An individual application, and a certificate for each person. ✓
4. The entire contract provision required of other disability forms.

Why: 33-22-603 provides that an individual application is not required from a person covered under a blanket disability policy, and that the insurer need not furnish each person a certificate. The policy form itself must still be filed under 33-22-602.

Under a 'guaranteed renewable' health policy, the insurer must renew the coverage but:

1. May refuse renewal on any individual policy anniversary date
2. Can cancel mid-term whenever the insured files a large claim
3. Must keep the premium the same for the life of the contract
4. May increase the premium for an entire class of insureds ✓

Why: Guaranteed renewable guarantees renewal to a stated age but permits premium increases applied to a whole class, not to one insured.

Which of the following is EXEMPT from the definition of insurance producer by MCA 33-17-103?

1. Any salaried officer or employee of an insurer, whatever that person's duties, the exemption turning on the fact of salaried employment by an insurer rather than on the character of the work done, so that an insurer's own sales staff need hold no producer licence in this State under the chapter as enacted.
2. Any employee of an insurance producer's office, whatever that person's duties and however that person is paid, the chapter treating the agency's licence as covering everyone who works in it and requiring an individual licence only of the principal who is named on the face of the agency's licence.
3. A regularly salaried officer or employee of an insurer engaged in usual and customary executive, administrative or clerical duties whose duties do not include the negotiation, sale, or solicitation of insurance. ✓
4. Any person who does not receive a commission, the exemption being framed around the method of remuneration alone, so that a person who sells insurance for a salary rather than for commission falls outside the definition and outside the licensing requirement altogether in this State.

Why: MCA 33-17-103(1): the definition DOES NOT INCLUDE AN INDIVIDUAL WHO IS A REGULARLY SALARIED OFFICER OR EMPLOYEE OF AN INSURER AND WHO IS ENGAGED IN THE PERFORMANCE OF USUAL AND CUSTOMARY EXECUTIVE, ADMINISTRATIVE, OR CLERICAL DUTIES AND WHOSE DUTIES DO NOT INCLUDE THE NEGOTIATION, SALE, OR SOLICITATION OF INSURANCE. The last limb is the operative one: salaried employment alone does not exempt a person who sells.

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.

Within what time must an HMO acknowledge a complaint, and how long must it keep complaint records, under 33-31-303(1)?

1. Acknowledge within 30 days of receipt, and retain the records for 5 years.
2. Acknowledge within 10 days of receipt, and retain the records for 1 year.
3. Acknowledge within 5 days of receipt, and retain the records for 7 years.
4. Acknowledge within 10 days of receipt, and retain the records for 3 years. ✓

Why: 33-31-303(1)(c) requires each HMO to acknowledge a complaint within 10 days of receiving it, and 33-31-303(1)(d) to retain records of all complaints for three years and develop an annual summary of them.

A group plan's 'probationary period' (waiting period) is the time a new employee must:

1. Wait after filing a claim before the insurer must pay it
2. Remain disabled before any disability benefit becomes payable
3. Hold the coverage before pre-existing conditions are covered
4. Wait after being hired before becoming eligible to enroll ✓

Why: The probationary/waiting period is the length of employment required before a new hire becomes eligible to enroll in the group plan.

What happens under 33-20-302 where the annuitant dies during the grace period with a payment overdue?

1. The amount of the overdue payment, with interest, must be paid by the estate before the insurer is obliged to make any settlement under the contract on the death of the annuitant.
2. The contract lapses on the date the payment fell due, the grace period protecting the annuitant against lapse only where the annuitant survives to the end of that period.
3. The overdue payment is waived and the full settlement is payable, the grace period answering any claim by the insurer.
4. The amount of the overdue payment, with interest, and any deferred payments of the current contract year may be deducted from the amount payable under the contract in settlement. ✓

Why: 33-20-302 provides that where a claim arises on account of death before the expiration of the grace period and before the overdue payment or the deferred payments of the current contract year are made, the amount of those payments, with interest on any overdue payments, may be deducted from any amount payable under the contract in settlement.

Respite care, often covered by long-term care policies, is intended to:

1. Pay the insured a cash bonus for staying out of a nursing home
2. Provide permanent placement in a skilled nursing facility
3. Cover the cost of prescription drugs used during a hospital stay
4. Give a temporary break to the insured's regular unpaid caregiver ✓

Why: Respite care provides short-term relief for a family member or other informal caregiver.

An inflation protection rider on a long-term care policy:

1. Reduces the annual premium in any year the consumer price index falls, tracking deflation
2. Refunds a share of the premium in any year the cost of nursing home care rises sharply
3. Shortens the elimination period by 10 days on every policy anniversary after age 75
4. Increases the daily benefit amount over time to offset rising care costs ✓

Why: Inflation protection raises the benefit (simple or compound) over the years so the coverage keeps pace with the rising cost of care.

A person acts as an administrator in Montana without a certificate of registration, and no waiver has been granted. What penalty does MCA 33-17-603(5) prescribe?

1. A fine of not less than $1,000 or more than $10,000 for each month during which the person acted without a certificate, together with an order requiring the person to account to the insurer for every premium and charge collected while unregistered in this State.
2. No monetary penalty is prescribed by the section; the commissioner's only remedy is a cease and desist order under the general enforcement provisions of chapter 1, breach of which is then punishable as a contempt on petition to the district court of the county.
3. A fine of not less than $500 or more than $1,500, unless the certification requirement has been waived by the commissioner for that person or for a class of persons. ✓
4. A fine of not less than $500 or more than $1,500 for a first offence and the mandatory revocation of every other licence the person holds under this code for a second, no waiver of the certification requirement being available to any person or class of persons.

Why: MCA 33-17-603(5): UNLESS A CERTIFICATION REQUIREMENT IS WAIVED, A PERSON WHO ACTS AS AN ADMINISTRATOR WITHOUT A CERTIFICATE OF REGISTRATION IS SUBJECT TO A FINE OF NOT LESS THAN $500 OR MORE THAN $1,500. MCA 33-17-604 lets THE COMMISSIONER WAIVE THE REQUIREMENTS OF 33-17-603 FOR ANY PERSON OR CLASS OF PERSONS, the factors including but not limited to whether the person is PRIMARILY IN A BUSINESS OTHER THAN THAT OF ADMINISTRATOR, whether the FINANCIAL STRENGTH AND HISTORY of the organization INDICATES STABILITY IN ITS CONTINUITY OF DOING BUSINESS, and whether the REGULAR DUTIES being performed are such that COVERED PERSONS ARE NOT LIKELY TO BE INJURED by a waiver.

To whom may an insurer issue a refund under a long-term care policy, under 33-22-1114(1)?

1. Only to the owner of the policy or certificate. ✓
2. To the owner or to any beneficiary named in it.
3. To the producer who sold the policy, for the owner.
4. To whoever paid the premium, whether or not the owner.

Why: 33-22-1114(1) provides that an insurance company may not issue a refund to a person other than the owner of the policy or certificate.

A policy has an irrevocable beneficiary. To change that beneficiary, the owner must:

1. Obtain the irrevocable beneficiary's consent ✓
2. Wait until the next policy anniversary
3. Simply submit a change form to the insurer
4. Cancel and reissue the entire policy

Why: An irrevocable beneficiary's rights are vested; the owner cannot change it without that beneficiary's written consent.

Which portion of a policy is excluded from association coverage by 33-10-224(2)(b)(i)?

1. A portion providing a death benefit, where the insured died after the date of insolvency.
2. A portion providing a cash value, where the policy has been in force for less than 2 years.
3. A portion providing health benefits, where the insurer was chiefly a life insurer.
4. A portion the member insurer does not guarantee, or under which the owner bears risk. ✓

Why: 33-10-224(2)(b)(i) provides that the part does not cover a portion of a policy or contract not guaranteed by the member insurer or under which the risk is borne by the policy or contract owner, as under a variable product.

Under the capitation method of provider payment used by many HMOs, a provider receives:

1. A percentage of the total premiums the HMO collects annually
2. A fixed amount per enrolled member per month, regardless of services used ✓
3. A separate fee for each individual service actually performed
4. Reimbursement calculated from the usual, customary, and reasonable charges in the local area

Why: Capitation pays the provider a set amount per member per month (PMPM) regardless of how much care that member uses.

What does MCA 33-17-231(5) require of an insurer selling a qualified health plan in an exchange?

1. It shall appoint any producer who is certified by the commissioner under 33-17-243 and follows the appointment application process the insurer requires; and to maintain the appointment the producer shall maintain the certification and license in good standing. ✓
2. It may appoint whichever producers it chooses, the subsection leaving the selection of producers to the insurer's commercial judgment as in any other line of business, and imposing no obligation to appoint a producer merely because that producer has been certified by the commissioner of this State.
3. It shall appoint every producer holding a health line of authority in this state, whether or not certified in relation to the exchange, so that any licensed producer may place qualified health plan business with any insurer participating in the exchange operating within the boundaries of this State.
4. It shall appoint any producer certified by the federal department of health and human services as a navigator, the subsection tying the appointment obligation to the federal certification rather than to any certification issued by the commissioner of this State under this chapter as enacted.

Why: MCA 33-17-231(5): (a) AN INSURER THAT SELLS A QUALIFIED HEALTH PLAN IN AN EXCHANGE OPERATING IN THIS STATE SHALL APPOINT ANY PRODUCER WHO IS CERTIFIED BY THE COMMISSIONER PURSUANT TO 33-17-243 AND FOLLOWS THE APPOINTMENT APPLICATION PROCESS REQUIRED BY THAT INSURER. (b) TO MAINTAIN THE APPOINTMENT, THE PRODUCER SHALL MAINTAIN THE PRODUCER'S CERTIFICATION AND LICENSE IN GOOD STANDING. It is a certification by the COMMISSIONER, not a federal navigator certification.

The 'needs approach' to setting the amount of life insurance focuses on:

1. The projected cash value the policy is expected to build over twenty years
2. The total dollar amount of premium the applicant is willing to pay monthly
3. A simple fixed multiple of the insured's current gross annual salary
4. The family's actual financial obligations and goals ✓

Why: The needs approach totals the specific obligations and goals the coverage must fund, versus the human-life-value (income multiple) approach.

What does 33-20-1111 permit, and how must the premium be paid?

1. Extension of employee, labor union and trustee group policies to insure against the death of spouses and minor children, the premium coming from the employer or union alone and never from the employees or members themselves.
2. Extension of any group policy, including debtor and credit union groups, to insure against the death of spouses, minor children and parents, the premium coming from the employer, the employees, or both of them together.
3. Extension of employee group policies alone to insure against the death of spouses, the premium coming from the employees; minor children may be insured only under a separate individual policy issued to the employee concerned.
4. Extension of employee, labor union and trustee group policies to insure against the death of spouses and minor children, the premium coming from the employer or union, the employees or members, or both. ✓

Why: 33-20-1111 allows any group life policy issued under 33-20-1101, 1102 or 1103 to be extended to insure employees or members against loss due to the death of their spouses and minor children. Under 33-20-1111(1)(a) the premium may be paid from the employer's or union's funds, from the employees' or members' contributions, or a combination. Where no part comes from employees or members, all eligible employees or members must be insured for their dependants, excepting unsatisfactory evidence of insurability.

An applicant placed in a 'substandard' (rated) risk classification:

1. Pays a higher premium because of greater-than-average mortality risk ✓
2. Receives the lowest premium available because of excellent health
3. Must purchase only group coverage offered through an employer
4. Is always declined and cannot obtain coverage from any insurer

Why: Substandard (rated) applicants present above-average risk and pay higher premiums; preferred risks pay the least, declined applicants are refused.

Under a presumptive disability provision, certain severe losses are:

1. Paid at half the normal monthly disability benefit amount
2. Excluded from coverage because they are considered partial
3. Presumed to be total disability, paying full benefits ✓
4. Covered only after a 90-day elimination period has passed

Why: Presumptive disability treats losses such as sight, hearing, speech, or two limbs as total disability, paying full benefits, often without the usual elimination period.

How often must accrued periodic indemnities be paid under 33-22-211?

1. Not less frequently than quarterly, subject to due written proof of loss.
2. Not less frequently than weekly, whether or not proof of loss is given.
3. At the end of the disability only, in a single sum on written proof.
4. Not less frequently than monthly, subject to due written proof of loss. ✓

Why: 33-22-211 requires the provision that, subject to due written proof of loss, all accrued indemnities for loss for which the policy provides periodic payment will be paid at intervals not less frequently than monthly, any balance remaining on termination of liability being paid immediately on receipt of due written proof.

What must the commissioner verify about an individual applicant under MCA 33-17-211(1)?

1. That the applicant is 21 or older, has passed the examinations within 24 months of application, has paid the fees and is a resident of this state, the remaining matters being left to the commissioner's discretion on the material the application discloses about the individual concerned in this State.
2. That the applicant has been appointed by at least one authorised insurer, has passed the examinations and has paid the fees, the chapter making an appointment a condition precedent to the issue of a producer's licence and the other qualifications being verified by the appointing insurer rather than by the commissioner.
3. That the applicant is 18 or older; has committed no 33-17-1001 ground; has paid the fees; passed the examinations within 12 months of application; is a resident here or of a reciprocating state; is trustworthy; and has had a background examination. ✓
4. That the applicant has completed a prescribed course of prelicensing education, has passed the examinations and has no criminal conviction of any kind, the section imposing an absolute bar on any applicant with a conviction rather than referring to the grounds for refusal set out elsewhere in the chapter.

Why: MCA 33-17-211(1): the commissioner shall verify that the individual (a) IS 18 YEARS OF AGE OR OLDER; (b) HAS NOT COMMITTED AN ACT THAT IS A GROUND FOR REFUSAL, SUSPENSION, OR REVOCATION as set forth in 33-17-1001; (c) HAS PAID THE LICENSE FEES stated in 33-2-708; (d) HAS SUCCESSFULLY PASSED THE EXAMINATIONS FOR EACH KIND OF INSURANCE APPLIED FOR WITHIN 12 MONTHS OF APPLICATION; (e) IS A RESIDENT OF THIS STATE OR OF ANOTHER STATE THAT GRANTS SIMILAR PRIVILEGES; (f) IS COMPETENT, TRUSTWORTHY, AND OF GOOD REPUTATION; (g) HAS EXPERIENCE OR TRAINING or is otherwise qualified and is REASONABLY FAMILIAR WITH THE CODE provisions governing the applicant's operations; (h) meets the FUNERAL DIRECTOR bar for life or disability lines; and (i) HAS COMPLETED A BACKGROUND EXAMINATION under 33-17-220. The application is DECLARED UNDER PENALTY of refusal, suspension or revocation.

Social Security disability benefits use a strict 'any occupation' definition and require a waiting period of:

1. 1 month
2. 3 months
3. 5 months ✓
4. 12 months

Why: SSDI uses a strict any-occupation definition and has a 5-month elimination period before benefits begin.

What do MCA 33-17-612 and 33-17-616 require of an administrator with respect to advertising and to documents the insurer sends it?

1. Advertising must be filed with the commissioner 30 days before use and may be used unless disapproved within that period, and documents received from the insurer must be delivered to policyholders within ten working days of receipt whether or not instructions accompany them.
2. Advertising may be used without the insurer's approval provided it does not name the insurer, and documents received from the insurer must be delivered within the time the written agreement specifies, the statute leaving the period to the parties to fix between them.
3. Advertising must be approved by the insurer and by the commissioner before use, and termination notices must be sent by the insurer directly to policyholders rather than through the administrator, other written communications passing through the administrator as usual.
4. An administrator may use only such advertising pertaining to the business underwritten by an insurer as is approved by the insurer in advance of its use; and written communications given to it for its policyholders shall be delivered promptly after the insurer instructs it. ✓

Why: MCA 33-17-612: AN ADMINISTRATOR MAY USE ONLY SUCH ADVERTISING PERTAINING TO THE BUSINESS UNDERWRITTEN BY AN INSURER AS IS APPROVED BY THE INSURER IN ADVANCE OF ITS USE - the insurer's approval, not the commissioner's, and in advance. MCA 33-17-616: ANY POLICIES, CERTIFICATES, BOOKLETS, TERMINATION NOTICES, OR OTHER WRITTEN COMMUNICATIONS DELIVERED BY THE INSURER TO THE ADMINISTRATOR FOR DELIVERY TO ITS POLICYHOLDERS SHALL BE DELIVERED BY THE ADMINISTRATOR PROMPTLY AFTER RECEIPT OF INSTRUCTIONS FROM THE INSURER TO DO SO.

What does 33-20-105(2) provide about an exchange or conversion with the same insurer?

1. The new coverage is incontestable, except for nonpayment of premiums, where the covered person is alive and the policy exchanged or converted has been in effect two years, including as to any amount exceeding the coverage exchanged.
2. The new coverage is incontestable, except for nonpayment of premiums, where the covered person is alive and the policy exchanged or converted has been in effect two years; but not as to any amount exceeding the coverage exchanged. ✓
3. The new coverage starts a fresh two-year contestable period from its own date of issue, the history of the policy that has been exchanged or converted being irrelevant to the contestability of the new one.
4. The new coverage is incontestable from the date of the exchange or conversion in every case, whether or not the covered person is alive and whatever period the earlier policy had been in effect before it.

Why: 33-20-105(2)(a) makes life coverage issued as the result of an exchange or conversion of existing coverage with the same insurer or its subsidiaries incontestable, except for nonpayment of premiums, where the covered person is alive and the policy being exchanged or converted has been in effect for two years from its date of issue. 33-20-105(2)(b) excludes any amount of insurance under the new policy exceeding the coverage amount exchanged or converted.

To contribute to a Health Savings Account, a person must be covered by a qualified high-deductible health plan and:

1. Have modified adjusted gross income below the federal poverty line for the household
2. Have reached age 65, the age at which HSA contributions first become available
3. Not be enrolled in Medicare or other disqualifying coverage ✓
4. Work for an employer with fewer than 50 employees, since large groups are excluded

Why: HSA eligibility requires HDHP coverage and no disqualifying coverage (including Medicare enrollment).

How does MCA 33-1-201 distinguish a DOMESTIC, a FOREIGN and an ALIEN insurer?

1. Domestic is incorporated under the laws of this state; alien is formed under the laws of a country other than the United States; foreign is formed under the laws of any jurisdiction other than this state and includes an alien insurer. ✓
2. Domestic is incorporated under the laws of this state; foreign is formed under the laws of another state of the United States; and alien is formed under the laws of another country - the three classes being mutually exclusive under the code as enacted in this State.
3. Domestic is an insurer whose principal place of business is in this state whatever its state of incorporation; foreign is one whose principal place of business is elsewhere in the United States; and alien is one whose principal place of business is outside it.
4. Domestic is any insurer holding a certificate of authority from the commissioner; foreign is one authorised in another state but not here; and alien is one authorised in a country other than the United States, the classes turning on authorisation.

Why: MCA 33-1-201: (3) DOMESTIC INSURER is an insurer INCORPORATED UNDER THE LAWS OF THIS STATE. (1) ALIEN INSURER is an insurer FORMED UNDER THE LAWS OF ANY COUNTRY OTHER THAN THE UNITED STATES or its states, districts, territories and commonwealths. (5) FOREIGN INSURER is an insurer FORMED UNDER THE LAWS OF ANY JURISDICTION OTHER THAN THIS STATE - and EXCEPT WHEN DISTINGUISHED BY CONTEXT, THE TERM INCLUDES AN ALIEN INSURER. Foreign and alien are not mutually exclusive.

When is a nonresident policyowner covered by the Montana association under 33-10-224(1)(a)?

1. Whenever the policy was sold by a producer licensed in Montana, whatever the domicile of the insurer that issued it.
2. Only if the person owned the policy while resident here, however long ago the person left the State.
3. Only if the insurer is domiciled here, the person's state has a similar association, and the person cannot be covered elsewhere. ✓
4. Never; the association covers residents of Montana only, whatever the circumstances of the case.

Why: 33-10-224(1)(a)(ii) covers owners, certificate holders and enrollees who are residents, and nonresidents only where the member insurer is domiciled in this State, the person's state of residence has a similar association, and the person is not eligible for coverage by an association in any other state because the insurer was not licensed there at the relevant time.

A client wants to move funds from an old annuity into an LTC insurance policy tax-free. Under Section 1035, this is:

1. Treated as a full surrender, with the gain taxed as ordinary income
2. Allowed only when the receiving contract is a term life policy
3. Barred, because an annuity may be exchanged only for another annuity
4. Permitted (annuity-to-LTC is a valid 1035 exchange) ✓

Why: Section 1035 permits tax-free exchanges from an annuity to a qualified long-term care policy.

When must the association's approved summary document reach the policyowner, under 33-10-210(2)?

1. Within 30 days after delivery of the policy; failure to receive it makes the policy voidable at the owner's option.
2. Only when the insurer becomes impaired or insolvent, as part of the notice of the association's liability.
3. Before the application is taken; failure to deliver it entitles the owner to double the statutory limits.
4. Before or at delivery of the policy; not receiving it gives no greater rights than the part confers. ✓

Why: 33-10-210(2) provides that 60 days after approval of the association's summary document a member insurer may not deliver a covered policy unless the document is delivered to the owner before or at the time of delivery of the policy, and that failure to receive it gives no greater rights than those stated in the part. Under 33-10-210(3) it must carry a clear and conspicuous disclaimer.

A producer knowingly takes business from an unlicensed friend who sourced it. How does 33-17-1001(1)(l) treat this?

1. It is no ground so long as the friend receives no share of the commission on the business.
2. It is a ground only for the unlicensed friend, the producer having done nothing wrong.
3. It is a ground only if the insurer did not appoint the producer for that line of cover.
4. Knowingly accepting insurance business from an unlicensed person is a ground for discipline. ✓

Why: 33-17-1001(1)(l) makes it a ground for discipline that the licensee has knowingly accepted insurance business from a person who is not licensed.

Who issues the evidence of coverage where an enrollee obtains HMO coverage through an insurance policy, under 33-31-301(1)?

1. The health maintenance organization always, whoever issued the coverage the enrollee obtains.
2. The insurer, or the health service corporation where coverage is through its contract. ✓
3. The employer, as group policyholder, for delivery to each of its enrolled employees.
4. The commissioner, once the evidence of coverage has been filed and approved for use.

Why: 33-31-301(1) entitles each enrollee residing in this State to an evidence of coverage, issued by the health maintenance organization, except that where the enrollee obtains coverage through an insurance policy or a health service corporation contract the insurer or the health service corporation issues it.

Which of the following is a ground for suspension or revocation under MCA 33-17-1001(1)?

1. Having failed to place a risk with the insurer offering the lowest premium available in the market at the time, the chapter requiring a producer to obtain the best available terms for each client and treating a failure to do so as a ground for disciplinary action in this State.
2. Having improperly withheld, misappropriated or converted to the licensee's own use money or property belonging to policyholders, insurers, beneficiaries or others and received in conduct of business under the license. ✓
3. Having received a complaint from a policyholder which the commissioner has forwarded to the licensee, the making of a complaint being itself a ground on which the commissioner may act against the licence pending an investigation of the matters complained of in this State.
4. Having failed to maintain errors and omissions insurance in an amount the commissioner prescribes by rule, the chapter making that cover a condition of holding a producer's licence and its lapse a ground on which the licence may be suspended by the commissioner here.

Why: MCA 33-17-1001(1)(d): the licensee or applicant has IMPROPERLY WITHHELD, MISAPPROPRIATED, OR CONVERTED TO THE LICENSEE'S OR APPLICANT'S OWN USE MONEY OR PROPERTY BELONGING TO POLICYHOLDERS, INSURERS, BENEFICIARIES, OR OTHERS AND RECEIVED IN CONDUCT OF BUSINESS UNDER THE LICENSE. The other grounds include (b) OBTAINING A LICENSE THROUGH MISREPRESENTATION OR FRAUD, including untrue information in the application OR IN THE CONTINUING EDUCATION AFFIDAVIT; (e) CONVICTION OF A FELONY; (h) being FOUND GUILTY OF AN UNFAIR TRADE PRACTICE OR FRAUD prohibited by Title 33 chapter 18; (i) having a SIMILAR LICENSE DENIED, SUSPENDED, OR REVOKED IN ANY OTHER STATE; (j) FORGING ANOTHER'S NAME; (k) CHEATING ON AN EXAMINATION; and (l) KNOWINGLY ACCEPTING INSURANCE BUSINESS FROM AN UNLICENSED PERSON.

When a sale involves replacing an existing life policy, the producer must:

1. Guarantee in writing that the replacement policy will always cost the client less
2. Give the applicant the required replacement notice ✓
3. Personally surrender the client's existing policy before submitting the new application
4. Wait until the new policy is issued before mentioning the existing coverage at all

Why: Replacement rules require delivering a replacement notice/disclosure and following defined procedures.

A policy has an accidental death benefit rider. The insured dies in a car accident. The beneficiary receives:

1. Nothing, since auto accidents are excluded
2. Only the policy's accumulated cash value at the date of death
3. The face amount plus the additional accidental death benefit ✓
4. The face amount reduced by half because the death was accidental, with no additional benefit

Why: For accidental death within the rider's terms, the beneficiary receives the face amount plus the extra accidental death benefit.

What does 33-19-203 require of questions asked solely for marketing or research?

1. That they be clearly specified as designed solely for marketing or research purposes. ✓
2. That marketing or research questions be put only after the policy has been issued.
3. That they be approved in advance by the commissioner and filed with the application.
4. That they be answered only by an applicant who has first signed a written release.

Why: 33-19-203 requires an insurance institution or producer to clearly specify the questions designed to obtain information from an individual in connection with an insurance transaction solely for marketing or research purposes.

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.

Key person disability insurance provides benefits to:

1. The business, to offset the loss when a key employee is disabled ✓
2. Every employee of the firm equally, regardless of their role
3. A lender, to pay off the company's outstanding commercial loans
4. The disabled employee's family, to replace their lost personal income

Why: Key person disability is owned by and paid to the business to cover losses and the cost of replacing an essential employee who becomes disabled.

What must the commissioner's rules on annuity information cover under 33-20-308?

1. The manner of delivery of the information, when it must be delivered and by whom; its contents are left to the insurer to settle with its producers in each particular case.
2. The contents of the information alone, including the type of annuity being sold and the settlement options; delivery is for the insurer and its producers to arrange.
3. The manner of delivery of the information, when it must be delivered, by whom, and its contents including the type of annuity being sold and the settlement options available. ✓
4. The form of a written acknowledgment to be signed by the prospective annuitant, which the producer files with the commissioner within thirty days of the sale.

Why: 33-20-308 requires the commissioner to promulgate rules prescribing the information to be delivered to prospective annuitants at the time of sale, addressing the manner of delivery, when the information must be delivered, by whom it is to be delivered, and its contents, including the type of annuity being sold and the settlement options available under the contract.

Within what time must a family member exercising continuation or conversion notify the carrier and pay, under 33-22-309?

1. Within 31 days after coverage would otherwise terminate. ✓
2. Within 60 days after coverage would otherwise terminate.
3. Within 31 days after the named insured's policy anniversary.
4. Within 90 days after the death or divorce giving rise to it.

Why: 33-22-309 requires the eligible covered family member exercising the continuation or conversion right to notify the carrier and pay the applicable premium within 31 days following the date coverage otherwise terminates. Under 33-22-306 the right arises on the named insured's death, divorce, annulment, legal separation or other stated terminating event.

When may an issuer refuse to renew a medicare supplement policy whose renewal premium is paid within 31 days of the due date, under 33-22-924(1)?

1. Whenever the insured's claims in the preceding year exceeded the premium paid, on 31 days' written notice to the insured.
2. Only if the insured has moved out of Montana, the issuer then having no duty to offer any replacement policy to the insured.
3. Only if it refuses renewal of all policies of the same form and class in Montana and offers a replacement at actuarially justified rates. ✓
4. Only if it refuses renewal of all policies of the same form in Montana, no replacement offer being required of it at all.

Why: 33-22-924(1) provides that if a person pays a renewal premium when due or within 31 days after, an issuer may not refuse to renew a medicare supplement policy unless it refuses to renew all policies in this State of the same form issued to persons of the same class and offers a replacement policy at actuarially justified rates.

What amount and premium apply to a conversion policy under 33-20-1209(1)(b) and (c)?

1. Not more than the insurance that ceases, less other group life for which the person is insured within thirty-one days; at the insurer's customary rate for the form, amount, class of risk and attained age. ✓
2. Not more than the insurance that ceases, whatever other group life the person obtains afterwards; at the rate the person was paying under the group policy immediately before the termination of the coverage.
3. Not more than $10,000 in every case; at the insurer's customary rate for the form and amount, the class of risk and the age the person had attained when first insured under the group policy concerned.
4. Not more than half the insurance that ceases, less other group life obtained within thirty-one days; at whatever rate the insurer and the person converting agree between themselves at the time.

Why: 33-20-1209(1)(b) caps the individual policy at the amount of life insurance that ceases because of termination, less any life insurance for which the person is insured under another group policy within thirty-one days, excluding any matured endowment. 33-20-1209(1)(c) sets the premium at the insurer's then customary rate for the form and amount, the person's class of risk and the person's age attained on the effective date of the individual policy.

A client exchanges one deferred annuity directly for another deferred annuity with better features. Under Section 1035, this is:

1. Subject to a 10% penalty
2. Taxed only on the earnings
3. A tax-free exchange ✓
4. A fully taxable distribution

Why: Annuity-to-annuity exchanges qualify for tax-free treatment under Section 1035.

Which of these is NOT part of the transaction of life insurance under 33-1-208?

1. Workers' compensation insurance. ✓
2. Endowment benefits under the policy.
3. Additional accidental death benefits.
4. Long-term care benefits.

Why: 33-1-208 provides that the transaction of life insurance includes endowment benefits, additional benefits on death or dismemberment by accident, additional disability benefits, long-term home health care or nursing home benefits and optional modes of settlement, but does not include workers' compensation insurance.

An applicant pays the initial premium and receives a conditional receipt, then dies before the policy is issued — but would have been insurable. The insurer:

1. Pays the death claim ✓
2. Denies the claim because no policy issued
3. Pays half pending an investigation
4. Refunds the premium and pays nothing

Why: Under a conditional receipt, coverage is effective as of the receipt (or exam) date if the applicant was insurable as applied for, so the claim is paid.

A distinguishing feature of adjustable life insurance is that the owner can:

1. Only ever convert it into a fixed single-premium immediate annuity
2. Invest the cash value directly in stocks and bonds of their choosing
3. Receive guaranteed dividends regardless of the insurer's experience
4. Change the premium, face amount, or coverage period as needs change ✓

Why: Adjustable life lets the owner modify premium, face amount, and protection period, effectively shifting between term and permanent coverage.

When may the Montana commissioner waive the requirement that a form also be approved by the insurer's state of domicile, and what follows?

1. The commissioner may waive it only where the state of domicile does not review forms of that kind at all, and the insurer must then file with the commissioner a certificate from the domiciliary official to that effect before the Montana filing will be accepted for review.
2. The commissioner may waive it if the commissioner considers the requirement unnecessary for the protection of Montana insurance consumers. Where it is waived, the insurer shall notify the commissioner in writing within 10 days of disapproval, denial, or withdrawal of approval of a form by the state of domicile. ✓
3. The commissioner may not waive the requirement; approval by the insurer's state of domicile is a statutory condition of delivery in Montana for every form to which the section applies, and the only relief is the general exemption power over documents to which the section cannot practicably apply.
4. The commissioner may waive the requirement at the insurer's written request on a showing of hardship, and the insurer must then file the domiciliary approval within 60 days of obtaining it, failing which the Montana approval lapses and the form may no longer be used in this State.

Why: MCA 33-1-501(1)(c): THE APPROVAL OF an insurance policy or annuity contract form, certificate, enrollment form, application form, or other related insurance form BY THE STATE OF DOMICILE MAY BE WAIVED BY THE COMMISSIONER IF THE COMMISSIONER CONSIDERS THE REQUIREMENTS OF SUBSECTION (1)(a) UNNECESSARY FOR THE PROTECTION OF MONTANA INSURANCE CONSUMERS. IF THE REQUIREMENT IS WAIVED, AN INSURER SHALL NOTIFY THE COMMISSIONER IN WRITING WITHIN 10 DAYS OF DISAPPROVAL, DENIAL, OR WITHDRAWAL OF APPROVAL OF A FORM BY THE STATE OF DOMICILE.

What must a licensing background examination confirm under MCA 33-17-220(1)?

1. The applicant's identity, address and criminal convictions alone, a pending investigation that has not resulted in a conviction being outside the scope of the report because it establishes nothing against the applicant and may not be considered by the commissioner in deciding on the application.
2. The applicant's credit history, employment history and educational qualifications, the report being directed at the applicant's competence and financial responsibility rather than at any question of character, which the commissioner assesses instead from the references filed with the application form.
3. The applicant's identity and fingerprints only, the remaining matters being obtained by the commissioner directly from the Montana department of justice and the federal bureau of investigation rather than being included in the background examination report the applicant is required to obtain.
4. The applicant's identity, current address, professional license certification and military service; and existing or ongoing criminal investigations and court records relating to the applicant together with regulatory agencies' disciplinary actions concerning the applicant. ✓

Why: MCA 33-17-220(1)(a): the background examination report MUST PROVIDE INFORMATION TO CONFIRM (i) THE APPLICANT'S (A) IDENTITY; (B) CURRENT ADDRESS; (C) PROFESSIONAL LICENSE CERTIFICATION; AND (D) MILITARY SERVICE; AND (ii) (A) EXISTING OR ONGOING CRIMINAL INVESTIGATIONS AND COURT RECORDS RELATING TO THE APPLICANT; AND (B) REGULATORY AGENCIES' DISCIPLINARY ACTIONS CONCERNING THE APPLICANT. EACH APPLICANT for a producer's licence or NAVIGATOR CERTIFICATION obtains one, and THE APPLICANT OR INSURER PAYS THE COST.

A business owner is disabled. A business overhead expense (BOE) policy will reimburse:

1. The cost to buy out the owner's business interest
2. Lost business profits the firm would have earned
3. The owner's personal household living expenses
4. Rent, utilities, and employee salaries ✓

Why: BOE covers continuing business operating expenses (not the owner's salary or lost profit) during the owner's disability.

A disability policy has a 14-day elimination period and a $200 weekly benefit. If the insured is disabled for 10 weeks, the total paid is:

1. $1,600 ✓
2. $2,000
3. $1,400
4. $1,800

Why: The first 2 weeks (14-day elimination) pay nothing; 8 weeks × $200 = $1,600.

What three charges does MCA 33-18-212 expressly permit in addition to, or apart from, the premium the insurer requires?

1. A policy fee, an inspection fee and a service fee, each in an amount the producer discloses to the insured in writing before the policy is bound, the subsection permitting any charge that is disclosed and is not calculated by reference to the premium the insurer requires.
2. State and federal taxes on surplus lines business, the cost of a medical examination on a life application, and a reasonable charge for the producer's own services where the insured has agreed to it in writing and no commission is payable to the producer on the business.
3. Premium finance charges under 33-18-213, surplus lines taxes, and the flat fee under 33-2-320, no charge being permitted in connection with a life insurance application because the cost of underwriting a life risk falls on the insurer rather than on the applicant.
4. The charging by surplus lines producers of applicable state and federal taxes in addition to the premium; the charging by a life insurer of amounts actually to be expended for medical examination or for reinstatement; and a flat fee under 33-2-320. ✓

Why: MCA 33-18-212(2) preserves two charges: the CHARGING AND COLLECTION, BY SURPLUS LINES INSURANCE PRODUCERS LICENSED UNDER CHAPTER 2, PART 3, OF THE AMOUNT OF APPLICABLE STATE AND FEDERAL TAXES IN ADDITION TO THE PREMIUM REQUIRED BY THE INSURER; and the CHARGING AND COLLECTION, BY A LIFE INSURER, OF AMOUNTS ACTUALLY TO BE EXPENDED FOR MEDICAL EXAMINATION of an applicant for life insurance OR FOR REINSTATEMENT of a life policy. Subsection (3) adds that the section DOES NOT PROHIBIT THE CHARGING AND COLLECTION OF A FLAT FEE BY A SURPLUS LINES INSURANCE PRODUCER AS SPECIFIED IN 33-2-320 for transaction of surplus lines policies.

How does MCA 33-1-201(7) define INSURANCE, and what does it exclude?

1. A contract of indemnity against loss, the definition being confined to contracts that make good an actual loss and excluding any contract that pays a specified sum on the happening of an event without reference to the loss sustained by the insured.
2. Any contract under which one person assumes a risk of another for consideration, without exception, the subsection deliberately using the widest formula so that no arrangement can escape regulation by being described as something other than insurance.
3. A contract through which one undertakes to indemnify another upon determinable contingencies, excluding only contracts of reinsurance and suretyship, which the code regulates separately under their own chapters rather than as insurance.
4. A contract through which one undertakes to indemnify another or pay a specified or determinable amount upon determinable contingencies - not including inside telecommunications wiring, direct patient care, or a health care sharing ministry. ✓

Why: MCA 33-1-201(7): INSURANCE IS A CONTRACT THROUGH WHICH ONE UNDERTAKES TO INDEMNIFY ANOTHER OR PAY OR PROVIDE A SPECIFIED OR DETERMINABLE AMOUNT OR BENEFIT UPON DETERMINABLE CONTINGENCIES. The term DOES NOT INCLUDE (i) contracts for the installation, maintenance and provision of INSIDE TELECOMMUNICATIONS WIRING to residential or business premises; (ii) DIRECT PATIENT CARE AGREEMENTS under 50-4-107; or (iii) an arrangement with a HEALTH CARE SHARING MINISTRY meeting 50-4-111. (8) INSURER includes every person engaged as INDEMNITOR, SURETY, OR CONTRACTOR in the business of entering into contracts of insurance, and excludes a qualifying health care sharing ministry.

A producer signs a client's name on an application to save time. How does 33-17-1001(1)(j) treat it?

1. It is no ground where the client later confirms the application and the policy duly issues.
2. Forging another's name to an application is a ground for discipline, whatever the motive. ✓
3. It is a ground only where the producer gains a commission that was not otherwise due.
4. It is a matter for the insurer's contract with the producer, not for the commissioner.

Why: 33-17-1001(1)(j) makes it a ground for discipline that the licensee has forged another's name to an application for insurance or to any document related to an insurance transaction.

Key person life insurance is purchased to protect a business against:

1. A decline in the market value of the firm's real-estate holdings
2. The cost of replacing equipment damaged in a covered accident
3. The financial loss from the death of an essential employee ✓
4. The personal estate-tax liability owed by the company's owners

Why: The business owns, pays for, and is beneficiary of a policy on a key employee, offsetting the loss if that person dies.

A producer's biennial continuing education affidavit overstates the hours completed. How does 33-17-1001(1)(b) treat this?

1. It is a ground for discipline, as materially untrue information in the CE affidavit. ✓
2. It is no ground for discipline, the affidavit not being part of the licence application.
3. It is a ground only if the missing hours are not made up within the following biennium.
4. It is a matter for the CE provider alone, which must report the shortfall to the insurer.

Why: 33-17-1001(1)(b) makes it a ground for suspension, revocation, refusal or a civil penalty that the licensee obtained or attempted to obtain a licence through misrepresentation or fraud, including providing incorrect, misleading, incomplete or materially untrue information in the licence application or in the continuing education affidavit.

A family maintenance policy combines whole life with level term to:

1. Provide temporary coverage only, expiring with no cash value at the end of a stated 10- or 20-year term
2. Invest part of each premium in the mutual fund subaccounts the policyowner selects and may switch at will
3. Decrease the death benefit gradually as the children grow up and the family's income need falls away
4. Pay an income for a set period beginning at the insured's death, then the face amount ✓

Why: Family maintenance adds level term to whole life; if the insured dies during the term, it pays income for a stated period from the date of death, then the face amount.