18 Free Maryland Life Producer Exam Practice Questions (2026)

18 min read|Updated 2026-10-18

How to Use This Life Producer Question Set

Maryland's Life Producer exam is one of two paths to a Life license — the other being the combined exam that also covers Accident and Health. Sat on its own, it delivers 80 scored questions plus 10 unscored pretest questions mixed in without being labeled, for 90 items in 105 minutes, at $62 per attempt from Prometric. Passing takes 70% or higher, stated as a plain percentage rather than a scaled score.

Prometric's content outline splits the 80 scored items across eight sections: Insurance Regulation (30%, 24 items), General Insurance (10%, 8 items), Life Insurance Basics (18%, 14 items), Life Insurance Policies (10%, 8 items), Life Insurance Policy Provisions, Options and Riders (14%, 11 items), Annuities (9%, 7 items), Federal Tax Considerations for Life Insurance and Annuities (8%, 6 items), and Qualified Plans (3%, 2 items). Insurance Regulation is the single largest section, at nearly a third of the exam.

These 18 questions come from chapters 2, 3 and 4 of LanePrep's Maryland Life, Accident & Health quiz bank, none of them repeated from the free 25-question sample across both exams: six on life insurance basics (chapter 2), six on life insurance policies, provisions, options and riders (chapter 3), and six on annuities, federal tax and qualified plans (chapter 4). Each question shows its chapter, so a miss tells you exactly which audio lesson to replay.

Maryland does not currently require a pre-licensing course for Life Producer candidates. The NAIC's compiled pass-rate data puts the first-time Life pass rate at roughly 51%, noticeably lower than the Accident and Health or Sickness exam's 67-71% — close to half of first-time candidates do not pass, so this is not a set to guess through.

Work them before you read the answer. Every question has the explanation folded underneath it. Guessing and then reading is worth more than reading and then agreeing.

Practice Questions 1-6: Life Insurance Basics

Life Insurance Basics is 18% of the Life Producer exam, the second-largest section after Insurance Regulation. These six move through insurable interest in a key employee, buy-sell funding, the Maryland Life & Health Insurance Guaranty Corporation, the Medical Information Bureau, the point-of-sale disclosures that go with a life insurance illustration, and a prohibited statement about guaranteed dividends.

Question 1 (Chapter 2)

Michael owns a small business and wants to ensure that if his top sales executive, Sarah, were to pass away, the business would not suffer a significant financial loss due to her absence. Michael decides to purchase a life insurance policy on Sarah's life, naming the business as the beneficiary. Which of the following statements regarding insurable interest is TRUE in this scenario?

A) Michael, as an individual, must have an emotional connection to Sarah for insurable interest to exist.
B) Insurable interest must exist at the time of Sarah's death for the policy to pay out.
C) Sarah must be a direct family member of Michael for insurable interest to be valid.
D) The business has an insurable interest in Sarah because her death would cause a financial loss to the business.

Show answer & explanation

Answer: D

Insurable interest exists when the policyowner would suffer a financial or emotional loss if the insured died. In a business context, a business has an insurable interest in a key employee like Sarah because her death would result in a financial detriment to the company. Insurable interest must exist at the time the policy is purchased, not necessarily at the time of death (B). Emotional connection (A) or family relationship (C) are not the sole determinants of insurable interest, especially in a business context.

Question 2 (Chapter 2)

Three partners, Alex, Brenda, and Chris, own a successful consulting firm in Maryland. They want to ensure that if one partner dies, the surviving partners will have the necessary funds to purchase the deceased partner's share of the business from their heirs, preventing outside ownership and maintaining business continuity. What business use of life insurance would best suit their needs?

A) Key person insurance
B) Buy-sell funding
C) Executive bonus plan
D) Deferred compensation

Show answer & explanation

Answer: B

Buy-sell funding (also known as a buy-sell agreement) uses life insurance to provide the capital for surviving business owners to purchase a deceased owner's interest from their estate, ensuring smooth transfer of ownership and business continuity. Key person insurance (A) protects the business from the financial loss due to the death of a vital employee, but not specifically for buying out their ownership share. Executive bonus plans (C) and deferred compensation (D) are employee benefit strategies, not ownership transfer mechanisms.

Question 3 (Chapter 2)

A Maryland-licensed life insurance producer is explaining the benefits of purchasing a life insurance policy to a prospective client. The client asks what would happen if their insurer became insolvent. The producer should accurately explain the role of which entity in Maryland?

A) The Maryland Life & Health Insurance Guaranty Corporation
B) The Maryland Insurance Administration (MIA)
C) The National Association of Insurance Commissioners (NAIC)
D) The Federal Deposit Insurance Corporation (FDIC)

Show answer & explanation

Answer: A

The Maryland Life & Health Insurance Guaranty Corporation is a state-created entity that protects policyowners, within certain limits, in the event that a member life or health insurance company becomes insolvent. The MIA (B) regulates the insurance industry but does not directly pay claims in insolvency. The NAIC (C) is a national organization for state regulators, not a guaranty fund. The FDIC (D) insures bank deposits, not insurance policies.

Question 4 (Chapter 2)

During the underwriting process for a new life insurance policy, the insurer requests information from an organization that maintains a database of medical information on applicants, which helps insurers detect misrepresentations and fraud. What is this organization?

A) Attending Physician Statement (APS)
B) Consumer Reporting Agency
C) Health Insurance Portability and Accountability Act (HIPAA)
D) Medical Information Bureau (MIB)

Show answer & explanation

Answer: D

The Medical Information Bureau (MIB) is a non-profit trade organization that maintains a confidential database of medical information on applicants for life and health insurance. Insurers use MIB reports to compare information provided by applicants with data on file, helping to detect misrepresentations and fraud. An APS (A) is a report from the applicant's doctor. A Consumer Reporting Agency (B) provides investigative consumer reports. HIPAA (C) is a federal law concerning privacy of health information, not an information database for underwriting.

Question 5 (Chapter 2)

A Maryland life insurance producer is preparing an illustration for a prospective client considering a universal life insurance policy. Which of the following disclosures must accompany the illustration at the point of sale?

A) A buyer's guide and policy summary.
B) A statement that the policy is guaranteed to never lapse if premiums are paid.
C) A guarantee that the cash value will earn a minimum of 5% interest annually.
D) A disclosure that the policy is FDIC-insured.

Show answer & explanation

Answer: A

Maryland regulations, in line with NAIC model rules, require that a life insurance illustration be accompanied by a buyer's guide and a policy summary at the point of sale. These documents help consumers understand the policy features and the illustration's limitations. Options B and C are incorrect because universal life policies do not guarantee against lapse or a specific interest rate. Option D is incorrect because life insurance policies are not FDIC-insured; that protection applies to bank deposits.

Question 6 (Chapter 2)

Which of the following is a prohibited act for a life insurance producer in Maryland when presenting a policy to a prospective client?

A) Providing a buyer's guide and policy summary with an illustration.
B) Using an illustration that shows non-guaranteed elements based on current interest rates.
C) Describing the policy's death benefit as guaranteed if premiums are paid as required.
D) Stating that dividends on a participating policy are guaranteed each year.

Show answer & explanation

Answer: D

Maryland producers must not misrepresent policy features. Dividends on participating life insurance policies are not guaranteed; they are declared annually by the insurer's board and depend on financial performance. Stating that dividends are guaranteed each year is a misrepresentation and a prohibited act. Options A, B, and C are permissible: providing required disclosures with illustrations is correct, using non-guaranteed elements in illustrations is allowed if properly labeled, and describing the death benefit as guaranteed when premiums are paid is accurate for most permanent policies.

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Practice Questions 7-12: Life Insurance Policies, Provisions, Options and Riders

Life Insurance Policies and Life Insurance Policy Provisions, Options and Riders together make up nearly a quarter of the exam. These six move through limited payment whole life, the common disaster clause, the extended term nonforfeiture option, the paid-up additions dividend option, a group life conversion privilege, and the purchase limits on a guaranteed insurability rider.

Question 7 (Chapter 3)

Which type of whole life insurance policy is characterized by premiums that are payable for a specified number of years, after which the policy is fully paid up and continues to provide coverage for life?

A) Ordinary whole life
B) Single premium whole life
C) Variable whole life
D) Limited payment whole life

Show answer & explanation

Answer: D

Limited payment whole life policies have premiums payable for a set period (e.g., 10, 20 years, or to age 65), after which no further premiums are due and the policy remains in force. Ordinary whole life (straight life) requires premiums for life. Single premium is paid in one lump sum. Variable whole life involves investment risk in separate accounts.

Question 8 (Chapter 3)

A policyowner wants to ensure that if they die simultaneously with their spouse in a common accident, the life insurance proceeds will go to their children rather than to the spouse's estate. Which provision should they include in the policy?

A) Revocable beneficiary designation
B) Common disaster clause
C) Irrevocable beneficiary designation
D) Facility of payment clause

Show answer & explanation

Answer: B

A common disaster clause specifies that if the insured and primary beneficiary die in the same accident and it cannot be determined who survived longer, the proceeds are paid as if the beneficiary predeceased the insured (e.g., to contingent beneficiaries). This prevents the proceeds from going to the beneficiary's estate. Options A and B relate to beneficiary change rights. Option D allows the insurer to pay a third party if the beneficiary cannot be located.

Question 9 (Chapter 3)

A policyowner has a whole life policy with a cash value of $15,000. They elect to stop paying premiums and use the cash value to purchase extended term insurance. What happens next?

A) The policy terminates immediately, and the cash value is paid out.
B) The death benefit remains the same, but coverage lasts for a limited time based on the cash value.
C) The death benefit is reduced, but coverage continues for life.
D) The policy automatically loans the premium amount to keep it in force.

Show answer & explanation

Answer: B

Under the extended term nonforfeiture option, the cash value is used to purchase term insurance with the same face amount as the original policy, but for a limited duration. The policy does not terminate for cash surrender (that's a different option), the death benefit is not reduced (that's reduced paid-up), and it does not automatically loan premiums (that's an automatic premium loan provision, which requires the policy to have such a rider and sufficient cash value).

Question 10 (Chapter 3)

A policyowner receives dividends from their participating whole life policy. They elect to use the dividends to purchase additional coverage. Which dividend option are they using?

A) Cash payment
B) Reduction of premium payments
C) Accumulation at interest
D) Paid-up additions

Show answer & explanation

Answer: D

Using dividends to purchase additional insurance coverage is the paid-up additions option. This increases both the death benefit and cash value. Cash payment sends dividends to the policyowner. Reduction of premium uses dividends to lower out-of-pocket premium cost. Accumulation at interest leaves dividends with the insurer to earn interest.

Question 11 (Chapter 3)

Under a group life insurance plan, an employee leaves their job and wishes to continue coverage. Which of the following is true regarding the conversion privilege?

A) The employee can convert the group term coverage to an individual whole life policy without providing evidence of insurability.
B) Conversion is only available if the employee has been covered under the group plan for at least five years.
C) The employee must apply for conversion within 31 days of termination and can convert to an individual policy of the same amount without evidence of insurability.
D) Conversion privileges are not available under group life insurance policies; the employee must purchase a new individual policy.

Show answer & explanation

Answer: C

Under most group life insurance plans, when coverage terminates due to employment termination, the employee has a limited time (typically 31 days) to convert the group term coverage to an individual permanent policy (usually whole life) without providing evidence of insurability. The conversion privilege does not require a minimum period of prior coverage, and it is a standard feature of group life insurance. Option A is incorrect because conversion is to an individual permanent policy, not necessarily whole life (though it often is), but the key point is the time limit and no evidence of insurability. Option B is incorrect due to the lack of a five-year requirement. Option D is incorrect because conversion privileges are a standard feature.

Question 12 (Chapter 3)

A 45-year-old purchases a $300,000 life insurance policy with a guaranteed insurability rider that allows the purchase of additional coverage every three years without evidence of insurability. If the rider is exercised at the first opportunity, which of the following is true?

A) The additional coverage purchased will be term insurance, regardless of the underlying policy type.
B) The premium for the additional coverage will be based on the insured's original age at the time the rider was added to the policy.
C) Evidence of insurability is required if the insured has had any change in health status since the policy was issued.
D) The amount of additional coverage available for purchase is typically limited to a specified dollar amount or percentage of the face amount per interval.

Show answer & explanation

Answer: D

A guaranteed insurability rider (also called a guaranteed purchase option) allows the policyowner to purchase additional amounts of coverage at specified intervals without providing evidence of insurability. However, the amount of additional insurance available for purchase at each interval is usually limited, either to a specific dollar amount or a percentage of the face amount. The type of coverage purchased is usually the same as the underlying policy. The premium for the additional coverage is based on the insured's attained age at the time of purchase, not the original age. Evidence of insurability is not required when exercising the rider, regardless of health changes. Options A, B, and C are incorrect: the coverage type matches the underlying policy, premiums are based on attained age, and no evidence of insurability is required when exercising the rider.

Practice Questions 13-18: Annuities, Federal Tax and Qualified Plans

Annuities, Federal Tax Considerations for Life Insurance and Annuities, and Qualified Plans close out the Life Producer outline. These six move through a declining surrender charge, a Simplified Employee Pension plan requirement, the pre-tax treatment of 401(k) contributions, the seven-pay test for a Modified Endowment Contract, a Section 1035 exchange, and a tax-free trustee-to-trustee IRA transfer.

Question 13 (Chapter 4)

A Maryland resident purchases a fixed deferred annuity with a 5-year surrender charge schedule that declines by 1% each year. After owning the contract for 3 years, they surrender it for cash. What surrender charge percentage applies?

A) 3%
B) 5%
C) 2%
D) 8%

Show answer & explanation

Answer: C

The surrender charge starts at 5% in year 1 and declines by 1% each year. After 3 years, the charge is 5% - (3 × 1%) = 2%. Option A incorrectly uses the years owned as the charge percentage. Option B uses the initial charge. Option D incorrectly adds the years owned to the initial charge.

Question 14 (Chapter 4)

Which of the following is a requirement for a plan to qualify as a Simplified Employee Pension (SEP) under IRS rules?

A) The plan must allow employee elective deferrals.
B) Contributions must be made exclusively by employees.
C) The employer must make contributions to a traditional IRA set up for each eligible employee.
D) The plan must undergo annual nondiscrimination testing like a 401(k) plan.

Show answer & explanation

Answer: C

A SEP requires the employer to contribute to a traditional IRA (or SEP-IRA) established for each eligible employee. Employees do not make elective deferrals; contributions are employer-only. Option A describes a 401(k) or SIMPLE IRA feature. Option B is incorrect; employees do not fund SEPs. Option D is false; SEPs are exempt from the annual nondiscrimination testing required for 401(k) plans.

Question 15 (Chapter 4)

Under federal tax law, what is the primary tax advantage of a qualified plan like a 401(k) for an employee?

A) Employee contributions are made on a pre-tax basis, reducing current taxable income.
B) Employees receive a dollar-for-dollar tax credit for contributions.
C) Withdrawals in retirement are completely tax-free.
D) The employer must match 100% of employee contributions.

Show answer & explanation

Answer: A

The primary tax advantage for employees in a qualified plan such as a 401(k) is that contributions are made on a pre-tax basis (via salary deferral), which reduces the employee's current taxable income. Taxes are deferred until withdrawal. Option B is incorrect; there is no tax credit for 401(k) contributions. Option C describes a Roth 401(k), not a traditional pre-tax 401(k). Option D is false; employer matching is not required for a plan to be qualified.

Question 16 (Chapter 4)

Which of the following statements accurately describes the seven-pay test for determining if a life insurance policy is a Modified Endowment Contract (MEC)?

A) The policy fails the seven-pay test if the sum of premiums paid in the first seven years exceeds the level annual premium needed to pay up the policy in seven years.
B) The policy automatically becomes a MEC if any single premium payment exceeds 7% of the face amount.
C) The seven-pay test applies only to variable life insurance policies, not fixed life insurance.
D) A policy passes the seven-pay test if the cash value at the end of year seven is less than the net single premium that would have funded the policy.

Show answer & explanation

Answer: A

The seven-pay test compares the total premiums paid in the first seven years to the level annual premium that would be required to make the policy paid-up in seven years with no further premiums. If the actual premiums paid exceed this amount, the policy fails the test and is classified as a MEC. Option B is incorrect because there is no 7% of face amount rule; Option C is incorrect because the test applies to all life insurance policies, not just variable; Option D is incorrect because the test does not compare cash value to net single premium in that manner.

Question 17 (Chapter 4)

Under a Section 1035 exchange, a Maryland resident exchanges an old life insurance policy for a new annuity contract. Which statement is correct about the tax treatment of this exchange?

A) The exchange is tax-free if it meets the requirements of Section 1035, and the basis in the old policy carries over to the new annuity.
B) The exchange is taxable to the extent the cash value of the old policy exceeds the premiums paid.
C) The exchange triggers immediate taxation of all gains in the old policy as ordinary income.
D) Section 1035 only allows exchanges between like-kind products, such as life insurance for life insurance or annuity for annuity.

Show answer & explanation

Answer: A

Section 1035 allows tax-free exchanges of life insurance for annuities (and vice versa) when specific requirements are met. The exchange is not a taxable event, and the cost basis (adjusted basis) from the old life insurance policy carries over to the new annuity contract. Option B is incorrect because there is no taxation of the exchange; Option C is incorrect because gains are not taxed immediately; Option D is incorrect because Section 1035 permits exchanges between life insurance and annuities, not just like-kind.

Question 18 (Chapter 4)

Under federal tax law, what is the tax treatment of a direct trustee-to-trustee transfer of funds from a traditional IRA to another traditional IRA?

A) The transfer is tax-free and not considered a distribution, so it is not subject to tax or the 10% early withdrawal penalty.
B) The transfer is treated as a taxable distribution and is subject to ordinary income tax.
C) The transfer is subject to the 10% early withdrawal penalty if the account owner is under age 59½.
D) The transfer requires mandatory 20% federal income tax withholding.

Show answer & explanation

Answer: A

A direct trustee-to-trustee transfer between IRAs is not considered a distribution and is therefore tax-free. It is not subject to income tax or the 10% early withdrawal penalty, and no tax withholding applies. This method is preferred to avoid the 60-day rollover rule and potential withholding. Option B is incorrect because it is not taxable; Option C is incorrect because no penalty applies to transfers; Option D is incorrect because withholding does not apply to direct transfers.

The Life Producer Mistakes That Cost Marks

Mixing up the business uses of life insurance. Key person coverage insures a critical employee for the business's benefit; buy-sell funding gives surviving owners the cash to buy a deceased owner's share from their heirs. Reading one purpose into a scenario built around the other is a common distractor.

Forgetting what the Maryland Life & Health Insurance Guaranty Corporation actually does. It steps in if a licensed life or health insurer becomes insolvent; it is not the Maryland Insurance Administration, which licenses and disciplines producers and insurers, and it is not a database of an applicant's medical history, which is the Medical Information Bureau's role.

Treating a required disclosure as optional paperwork. A life insurance illustration at the point of sale must come with a buyer's guide and policy summary, and a producer cannot state that dividends on a participating policy are guaranteed — they are declared annually and depend on the insurer's actual experience.

Reversing limited-pay and single-premium whole life. Limited-pay whole life is paid over a set number of years and then stays in force for life; single-premium whole life is paid in one lump sum at purchase. Both build cash value and guarantee a level death benefit, which is why the exam leans on the funding pattern, not the benefit, to tell them apart.

Missing the second half of a nonforfeiture or dividend-option answer. Extended term insurance keeps the original face amount but only for a limited time, funded by the cash value; paid-up additions use dividends to buy more permanent coverage outright. Group life's conversion privilege also has a hard edge: an employee has 31 days after termination to convert, without evidence of insurability, to an individual policy of the same amount.

Underestimating how specific a guaranteed insurability rider's limits are. It lets the policyowner add coverage at set intervals without a medical exam, but the amount available per interval is capped at a stated dollar figure or percentage of the face amount — it is not unlimited, and it is not priced at the original purchase age.

Chapters 2, 3 and 4 of the LanePrep Maryland course cover exactly this material as audio lessons, each with its own chapter quiz; chapter 1 previews free, no signup. For a 25-question sample across both exams, see the free practice set; for the Accident and Health or Sickness Producer exam, see the Accident & Health question set.

Your Next Step

How did you score?

15 or more correct (83%+): You are comfortably above the 70% target. Book the Life Producer exam (or the combined exam, if you are also sitting Accident and Health), then read how to pass the Maryland Life & Health exam on the first try for the full study plan.

12-14 correct: You are in range but close to the line. Note which chapter your misses fell in and re-listen to that chapter's audio lesson before retesting.

Under 12 correct: The Life Producer exam has the lower first-time pass rate of Maryland's two lines, around 51%. Start with chapter 2 of the course and work forward rather than guessing through another set.

Chapter 1 of the LanePrep Maryland course is free at /md/l-and-h/preview — full audio and the chapter quiz, no signup. For the full cost picture, see how much a Maryland L&H license costs.

Exam structure and fees from Prometric's 2024-10-01 Maryland Insurance Administration FAQ. Question counts and content weighting from the Prometric/MIA Life Producer content outline (filename-dated 9/21/21). Pass rates from the NAIC 2024 and 2025 compiled pass-rate reports. Read October 2026.

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