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MD LIFE FINAL EXAM QUESTIONS AND
ANSWERS 2025
All of the following actions are considered rebating EXCEPT
1. sharing commissions with other licensed and appointed
agents
2.refunding part of the premium as an inducement for purchase
3.offering special dividends
4. offering anything of value not specified in the policy - correct
answer- 1. sharing commissions with other licensed and
appointed agents
Peter has a policy where 80% to 90% of the premium is
invested in traditional fixed income securities and the remainder
of the premium is invested in contracts tied to a stipulated stock
index. What kind of policy is this?
1. Modified Endowment Contract
2. Current assumptive whole life
3.Credit life insurance
4. Equity index whole life - correct answer- 4."Equity index
whole life". The type of policy where 80% to 90% of the
premium is invested in traditional fixed income securities and
the remainder of the premium is invested in contracts tied to a
stipulated stock index is equity index whole life.
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A tax-free Section 1035 Exchange of a life insurance policy to a
different policy is permitted if it occurs
1. in the same state as the original transaction
2. within a 12 month period
3. from insurer to insurer and no cash is received by the
policyowner
4. from agent to agent as long as the agents are licensed in the
same line - correct answer- 3. from insurer to insurer and no
cash is received by the policyowner
*The Internal Revenue Code (IRC) enables a tax-free Section
1035 Exchange of a life insurance policy to a different policy if it
occurs from insurer to insurer and the policyowner does not
receive any cash.
According to life insurance contract law, insurable interest
exists
1.when any business relationship exists
2. at the time of application
3. at the time of death
4. only when determined by a judge - correct answer- 2.at the
time of application
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*According to life insurance in contract law, a person most likely
will have an insurable interest in insuring a person's life if at the
time of application
An example of replacement is
1.canceling disability policy to buy a term life policy
2. canceling a term life policy to buy a whole life policy
3. canceling a long-term care policy to buy a whole life policy
4. canceling a whole life policy to buy a major medical policy -
correct answer- 2.canceling a term life policy to buy a whole life
policy
When must a claim on a life insurance policy be paid after proof
of loss has been received by the insurer?
1. Promptly
2.Within 10 days
3. Within 20 days
4. Within 30 days - correct answer- 1. Promptly
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Variable life insurance and Universal life insurance are very
similar. Which of these features are held exclusively by variable
universal life insurance?
1. Policyowner may increase or decrease the premium
payments
2.Policyowner may increase or decrease the face amount
3.Policyowner can contribute large sums of money
4.Policyowner has the right to select the investment which will
provide the greatest return - correct answer- 4.Policyowner has
the right to select the investment which will provide the greatest
return
Which of these is affected by the frequency of an insurance
policy's premium payments?
1.Settlement options
2.Cash value
3.Death benefit
4. Cost - correct answer- 4. Cost
MD LIFE FINAL EXAM QUESTIONS AND
ANSWERS 2025
All of the following actions are considered rebating EXCEPT
1. sharing commissions with other licensed and appointed
agents
2.refunding part of the premium as an inducement for purchase
3.offering special dividends
4. offering anything of value not specified in the policy - correct
answer- 1. sharing commissions with other licensed and
appointed agents
Peter has a policy where 80% to 90% of the premium is
invested in traditional fixed income securities and the remainder
of the premium is invested in contracts tied to a stipulated stock
index. What kind of policy is this?
1. Modified Endowment Contract
2. Current assumptive whole life
3.Credit life insurance
4. Equity index whole life - correct answer- 4."Equity index
whole life". The type of policy where 80% to 90% of the
premium is invested in traditional fixed income securities and
the remainder of the premium is invested in contracts tied to a
stipulated stock index is equity index whole life.
,2 | Page
A tax-free Section 1035 Exchange of a life insurance policy to a
different policy is permitted if it occurs
1. in the same state as the original transaction
2. within a 12 month period
3. from insurer to insurer and no cash is received by the
policyowner
4. from agent to agent as long as the agents are licensed in the
same line - correct answer- 3. from insurer to insurer and no
cash is received by the policyowner
*The Internal Revenue Code (IRC) enables a tax-free Section
1035 Exchange of a life insurance policy to a different policy if it
occurs from insurer to insurer and the policyowner does not
receive any cash.
According to life insurance contract law, insurable interest
exists
1.when any business relationship exists
2. at the time of application
3. at the time of death
4. only when determined by a judge - correct answer- 2.at the
time of application
,3 | Page
*According to life insurance in contract law, a person most likely
will have an insurable interest in insuring a person's life if at the
time of application
An example of replacement is
1.canceling disability policy to buy a term life policy
2. canceling a term life policy to buy a whole life policy
3. canceling a long-term care policy to buy a whole life policy
4. canceling a whole life policy to buy a major medical policy -
correct answer- 2.canceling a term life policy to buy a whole life
policy
When must a claim on a life insurance policy be paid after proof
of loss has been received by the insurer?
1. Promptly
2.Within 10 days
3. Within 20 days
4. Within 30 days - correct answer- 1. Promptly
, 4 | Page
Variable life insurance and Universal life insurance are very
similar. Which of these features are held exclusively by variable
universal life insurance?
1. Policyowner may increase or decrease the premium
payments
2.Policyowner may increase or decrease the face amount
3.Policyowner can contribute large sums of money
4.Policyowner has the right to select the investment which will
provide the greatest return - correct answer- 4.Policyowner has
the right to select the investment which will provide the greatest
return
Which of these is affected by the frequency of an insurance
policy's premium payments?
1.Settlement options
2.Cash value
3.Death benefit
4. Cost - correct answer- 4. Cost
