Minnesota Life & Health Insurance License, Practice Exams

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.

A PPO member chooses an out-of-network provider. Compared with in-network care, the member will usually pay:

1. Exactly the same as in-network care
2. More in cost-sharing, but still receive some coverage ✓
3. A flat $5 copay regardless of the charge
4. Nothing, because PPOs never cover out-of-network care

Why: PPOs allow out-of-network care at higher cost-sharing; coverage continues but at a less favorable level.

An applicant's completed application reaches the writing carrier on 3 April. She was treated in February for a condition she still has. The carrier neither rejects nor acknowledges it until 12 May. She also holds a second state plan policy taken out last year, and has just moved to Wisconsin.

1. The carrier is on time and the rest is as described: the writing carrier has 60 days from receipt of a completed application either to reject it for failing to comply or to forward a notice of acceptance and billing information, the longer period allowing it to verify the six months of residence history and the evidence of rejection, restrictive rider, rate up or preexisting conditions limitation that the application must contain before it commits itself; the six-month preexisting condition limitation reaches a condition diagnosed or treated in the 90 days before the application was received, an eligible person may not purchase more than one policy from the state plan, and a person who ceases to be a resident may no longer purchase or renew coverage.
2. The carrier is late, the condition is excluded for six months, the second policy is not allowed and the move ends her eligibility: the writing carrier shall within 30 days of receipt either reject the application for failing to comply or forward a notice of acceptance and billing information; a person is not covered for any preexisting condition during the first six months if diagnosed or treated for it during the 90 days immediately preceding the date the application was received; an eligible person may not purchase more than one policy from the state plan; and upon ceasing to be a resident a person is no longer eligible to purchase or renew coverage, except as state or federal law requires for renewal of Medicare supplement coverage. ✓
3. The carrier is late and the second policy is not allowed, but the condition is covered and the move does not end her eligibility: the preexisting condition limitation reaches only a condition diagnosed or treated within the 30 days immediately preceding receipt of the application, and residence is tested at the date of application rather than continuously throughout the term of coverage.
4. The carrier is late and the condition is excluded for six months, but the second policy is allowed and the move does not end her eligibility: the one-policy sentence bars an applicant from taking two policies out of a single application rather than from holding more than one over time, and residence outside Minnesota is dealt with through the out-of-area conversion machinery rather than by loss of eligibility, since an enrollee who has paid state plan premiums for a year would otherwise forfeit the preexisting condition period she has already served; the residence requirement is expressed as the six months immediately preceding receipt of a completed certificate of eligibility, which is language about the moment of application and says nothing about what follows, and the express carve-out for renewal of Medicare supplement coverage shows that the drafters knew how to speak to continuing coverage when they meant to.

Why: Four rules, three subdivisions. Minn. Stat. 62E.14, subd. 2: within 30 days of receipt of the application the writing carrier shall either reject it for failing to comply with subd. 1 or forward the eligible person a notice of acceptance and billing information; if the applicant otherwise complies, insurance is effective immediately on receipt of the first month's state plan premium and is RETROACTIVE to the date the application was received. 12 May is 39 days after 3 April. Subd. 3: a person is not covered for any preexisting condition during the FIRST SIX MONTHS of coverage if diagnosed or treated for that condition during the 90 DAYS IMMEDIATELY PRECEDING the date the application was received - February treatment is inside 90 days of 3 April - except as provided in the long list of waiver subdivisions (3a, 4, 4a to 4g, 5, 6 and 7) and section 62E.18. Subd. 1 closes with two sentences that answer the rest: AN ELIGIBLE PERSON MAY NOT PURCHASE MORE THAN ONE POLICY FROM THE STATE PLAN, and upon ceasing to be a resident of Minnesota a person is no longer eligible to purchase or renew coverage under the state plan, except as required by state or federal law with respect to renewal of Medicare supplement coverage. Subd. 1 also lists what the application must contain, including six months of residence history and evidence of rejection, a restrictive rider, a rate up or a preexisting conditions limitation by at least one association member within six months of the date of application.

A producer with express authority to bind agrees on the telephone to add a scheduled item to a client's cover. He sends nothing, and the insurer sends nothing, for eight business days. He then emails the binder without having asked the client whether email is acceptable. On a separate account he issues a certificate of insurance stating that the policy will give the certificate holder 60 days' notice of cancellation, where the policy and the statute both require 30.

1. Three things are wrong: a producer having express authority to bind who orally agrees on behalf of an insurer to provide coverage or to alter an existing agreement must execute and forward a memorandum or binder containing the terms within five business days from the time the oral agreement is entered, unless the insurer forwards the information; the memorandum must be forwarded by mail unless the insured authorizes facsimile or electronic transmission; and a producer shall not issue a certificate of insurance or other evidence of coverage that affirmatively or negatively amends, extends or alters the coverage the policy provides, or that provides notice of cancellation to a third party that exceeds the statutory notice requirement to a policyholder. ✓
2. Two things are wrong - the delay and the email. The certificate is unobjectionable: a 60-day notice of cancellation is more favourable to the certificate holder than the policy gives, and the subdivision is aimed at evidence of coverage that cuts down what the policy provides, a document that improves the holder's position misleading nobody about the risk actually carried.
3. Two things are wrong - the delay and the certificate. The email is unobjectionable: the subdivision names mail, facsimile and electronic transmission as three permitted methods and leaves the choice among them to the producer, the insured's authorisation being needed only where the producer wants to use a method the subdivision does not name at all.
4. Three things are wrong, and the binder duty is stricter still: the producer having express authority must forward the memorandum within five business days whatever the insurer does, the words about the insurer forwarding the information describing an additional duty on the insurer rather than an alternative that discharges the producer; and the certificate prohibition reaches only a document that cuts down the coverage the policy provides, so a certificate that enlarges cover offends nothing unless it also states a cancellation notice longer than the statute requires; and the memorandum may go by mail, facsimile or electronic transmission at the producer's option once the insured has been told in advance which of the three methods will be used.

Why: Minn. Stat. 60K.46 subd. 7: an insurance producer having express authority to bind coverage "who orally agrees on behalf of an insurer to provide insurance coverage, OR TO ALTER AN EXISTING INSURANCE AGREEMENT, shall execute and forward a memorandum or binder containing the terms of the oral agreement to the insured WITHIN FIVE BUSINESS DAYS from the time the oral agreement is entered, UNLESS THE INSURER FORWARDS THE INFORMATION." The insurer's forwarding discharges the producer, which is the "binder duty is stricter" answer's error. "The memorandum of coverage or binder may be forwarded by mail, facsimile, or electronically. The memorandum of coverage or binder MUST BE FORWARDED BY MAIL, UNLESS THE INSURED AUTHORIZES facsimile or electronic transmission of it." The three methods are listed and then ranked: mail is the default and the other two need the insured's authority, which is the "email is unobjectionable" answer's error. The subdivision closes by requiring the insurer to provide a memorandum or binder to the policyholder on request. Subd. 8: "An insurance producer shall not issue a certificate of insurance, or other evidence of insurance coverage that EITHER AFFIRMATIVELY OR NEGATIVELY AMENDS, EXTENDS, OR ALTERS the coverage as provided by the policy, or PROVIDES NOTICE OF CANCELLATION TO A THIRD PARTY THAT EXCEEDS THE STATUTORY NOTICE REQUIREMENT TO A POLICYHOLDER." "Affirmatively or negatively" and "extends" put a certificate that improves on the policy squarely inside the prohibition, which is the "certificate is unobjectionable" answer's error, and the notice limb is written in terms of EXCEEDING the statutory period.

An insurer drafts a monthly premium accident and sickness policy with a seven-day grace period. A weekly premium policy in the same series has a ten-day grace period, and an annually paid policy has 21 days. The insurer reserves the right to refuse renewal but adds nothing to the grace period wording.

1. Only the annual policy is wrong: seven days is the minimum for every policy and the longer periods named in the provision are the insurer's own option, so a monthly premium policy with a seven-day grace period complies; and a policy reserving the right to refuse renewal adds its wording at the end of the grace period provision, alongside any cancellation wording the insurer chooses to add there.
2. The monthly and annual policies are wrong and the weekly policy is right, and the renewal reservation needs wording the insurer has not added: the grace period must be not less than seven days for weekly premium policies, ten days for monthly premium policies and 31 days for all other policies, during which the policy continues in force; and a policy in which the insurer reserves the right to refuse any renewal must carry, at the beginning of the grace period provision, wording that the grace period applies unless not less than five days prior to the premium due date the insurer has delivered or mailed to the insured's last address written notice of its intention not to renew. ✓
3. The monthly and annual policies are wrong and the weekly policy is right, but the renewal reservation needs nothing added: the five-day notice wording belongs to a policy containing a cancellation provision, and an insurer that merely reserves the right to refuse a renewal at the end of a term has not reserved a right to cancel and so has nothing to disclose in the grace period clause, the two additions in the clause being alternatives that answer to the same reserved power described in different words. An insurer that adds nothing may still decline to renew, provided it gives the insured whatever notice the policy itself specifies, and the grace period then simply runs on the last premium the insurer accepted for the term that is ending.
4. All three are wrong: the grace period must be at least 31 days on every accident and sickness policy, the shorter figures in the provision being the periods that applied before the chapter was amended to a single standard, and an insurer that writes seven or ten days into a weekly or monthly premium form is short by more than three weeks on each; and the renewal reservation wording is required at the beginning of the provision as the section requires. A qualified health plan sold through MNsure to an individual receiving advance payments of the premium tax credit stands on the same footing as every other policy, the reference to such plans in the section going to who may sell them rather than to what grace period they must carry, so an issuer may use one clause across its whole book without distinguishing exchange from off-exchange business.

Why: Minn. Stat. 62A.04 subd. 2(3)(a), GRACE PERIOD: "A grace period of ..... (INSERT A NUMBER NOT LESS THAN '7' FOR WEEKLY PREMIUM POLICIES, '10' FOR MONTHLY PREMIUM POLICIES AND '31' FOR ALL OTHER POLICIES) days will be granted for the payment of each premium falling due after the first premium, during which grace period THE POLICY SHALL CONTINUE IN FORCE." Three different floors keyed to the premium frequency - the "seven days is the minimum for every policy" and "at least 31 days on every" answers each collapse them to one, in opposite directions. Seven days on a monthly premium policy is short by three, and 21 days on an annually paid policy is short by ten. The clause then gives two additions and they attach at opposite ends: "A policy which contains a CANCELLATION provision may add, AT THE END of the above provision, 'subject to the right of the insurer to cancel in accordance with the cancellation provision hereof.' A policy in which the INSURER RESERVES THE RIGHT TO REFUSE ANY RENEWAL shall have, AT THE BEGINNING of the above provision, 'Unless NOT LESS THAN FIVE DAYS PRIOR TO THE PREMIUM DUE DATE the insurer has delivered to the insured or has mailed to the insured's last address as shown by the records of the insurer WRITTEN NOTICE OF ITS INTENTION NOT TO RENEW this policy beyond the period for which the premium has been accepted.'" The cancellation addition is permissive and goes at the end; the nonrenewal addition is mandatory and goes at the beginning - which is the "needs nothing added" answer's error and the "seven days is the minimum for every policy" answer's other one. Paragraph (b) is the exception the "at least 31 days on every" answer denies: for qualified health plans sold through MNsure to individuals receiving advance payments of the premium tax credit, a grace period provision complying with the Affordable Care Act and NO LESS RESTRICTIVE than the grace period that Act requires must be included instead, and paragraph (a) opens with those plans expressly excepted.

In an indexed universal life policy, the interest credited to cash value is:

1. Determined each year solely by the policyowner's own elections
2. Based entirely on separate-account mutual fund performance and risk
3. Guaranteed at a fixed rate set for the life of the contract
4. Tied to a stated market index, subject to a cap and a guaranteed floor ✓

Why: Indexed UL credits interest linked to an external index (e.g., S&P 500) with a cap/participation rate and a guaranteed minimum floor.

A child (children's) term rider added to a parent's life policy:

1. Converts the parent's policy into a joint survivorship contract covering both parents and each child
2. Pays a monthly income to the parent until each child turns 18
3. Waives the parent's premiums while a covered child is hospitalized
4. Provides level term coverage on the insured's children for a small added premium ✓

Why: A child term rider covers the insured's children under one rider, usually convertible to permanent coverage without evidence.

Medicare Part B helps pay for:

1. Physician services, outpatient care, and preventive services ✓
2. Inpatient hospital room and board during an admission
3. Custodial assistance with bathing, dressing, and eating
4. Only prescription drugs obtained through a private drug plan

Why: Part B covers physician services, outpatient care, durable medical equipment, and preventive services, typically paying 80% after the deductible.

A 'Social Insurance Supplement' (SIS) rider stops paying once the insured:

1. Recovers fully from the disabling condition
2. Begins receiving the expected Social Security benefit ✓
3. Returns to any form of part-time employment
4. Reaches the policy's stated benefit maximum age

Why: An SIS rider supplements income while Social Security is not yet payable; it reduces or stops once Social Security benefits begin.

Transfers of property to a surviving spouse at death generally escape federal estate tax because of the:

1. Transfer-for-value rule
2. Three-year incidents-of-ownership rule
3. Annual gift tax exclusion
4. Unlimited marital deduction ✓

Why: The unlimited marital deduction lets a decedent pass any amount to a surviving (citizen) spouse free of federal estate tax.

A provision allowing a terminally ill insured to receive part of the death benefit while still living is the:

1. An accelerated (living) death benefit for the terminally ill ✓
2. An automatic premium loan against the death benefit, used by the terminally ill to keep the policy in force while living
3. A reinstatement putting a lapsed policy back in force after proof of insurability
4. A coordination-of-benefits offset

Why: The accelerated death benefit lets a terminally or chronically ill insured access part of the face amount before death; the remainder goes to beneficiaries.

An annuitant has a $90,000 basis and a $150,000 expected return. Of each $15,000 payment, the taxable amount is:

1. $6,000 ✓
2. $9,000
3. $15,000
4. $3,000

Why: Exclusion ratio = 90,000/150,000 = 60%; $9,000 excluded, $6,000 taxable.

An exclusive provider organization (EPO) plan generally:

1. Requires a referral from a primary care physician for routine visits
2. Covers care only from network providers, with no out-of-network benefits ✓
3. Lets members see any provider nationwide at the same low cost share
4. Pays a fixed indemnity amount per day regardless of actual charges

Why: An EPO covers only in-network care (no out-of-network benefits except emergencies) but usually does not require referrals.

The association submits proposed state plan premiums. The commissioner says nothing until 20 days before the effective date, then rejects them. The proposed figures were 130 percent of the weighted averages the association had computed.

1. The rejection stands: the 45-day period fixes the date by which the association must file its proposed premiums rather than a deadline binding the commissioner, and 130 percent exceeds the 125 percent ceiling in any event, so a decision issued at 20 days was both timely and correct on the merits.
2. The rejection is too late and the premiums took effect, and, rejected only 20 days before, they were within the commissioner's power to approve as proposed: the 101 to 125 percent band constrains how the association computed the weighted averages rather than the premium the commissioner may approve, and the ten listed criteria expressly direct the commissioner to the relative solvency of the contributing members and to the effect of the proposal on enrolment and on the risks assumed by the plan, any of which will carry a figure above the band where the plan's finances require it; the written findings requirement is what disciplines that judgment, and a proposal that becomes effective by default stands as though those findings had been made.
3. The rejection is too late but the premiums did not take effect: silence from the commissioner leaves a proposal pending rather than approving it, and the remedy the section supplies is that the association may continue to charge its most recent approved premiums until a decision issues, which is why the commissioner must support any approval, modification or rejection with written findings and conclusions addressing each criterion - a reasoned decision, not the passage of time, being the operative act; the 101 to 125 percent band is correctly stated, so a proposal at 130 percent of the weighted averages would have had to be modified downwards before it could take effect, and enrollees would in any event be entitled to at least 30 days' notice of the increase.
4. The rejection is too late and the premiums took effect, but they could not lawfully have been approved as proposed: if the commissioner does not approve, modify or reject the proposed premiums sooner than 45 days before the effective date, the premiums proposed by the association become effective; and in no case may the commissioner approve premiums for the plans described in section 62E.08, subdivision 1, paragraphs (a) to (d), that are lower than 101 percent or greater than 125 percent of the weighted averages computed by the association. ✓

Why: Minn. Stat. 62E.091 requires the association to submit proposed comprehensive health insurance plan premiums to the commissioner, and requires the commissioner to approve, modify or reject them NO LATER THAN 45 DAYS BEFORE the effective date specified in section 62E.08, subd. 3, on ten listed criteria - among them whether the association complied with the public comment duty in section 62E.11, subd. 11; whether enrollees will get at least 30 days' notice of an increase; the consistency of the association's computations with section 62E.08; the financial consequences to enrollees; the effect on enrolment and on the risks assumed by the plan; and the relative solvency of the contributing members. The section then does two things that pull in opposite directions and are both absolute. The first is a floor and ceiling: IN NO CASE may the commissioner approve premiums for the plans described in section 62E.08, subd. 1, paragraphs (a) to (d) that are lower than 101 percent or greater than 125 percent of the weighted averages the association computed - so a 130 percent proposal was never approvable. The second is a default: if the commissioner does not approve, modify or reject sooner than 45 days before the effective date, THE PREMIUMS PROPOSED BY THE ASSOCIATION BECOME EFFECTIVE. A decision at 20 days is not a decision at all. The commissioner must also support any approval, modification or rejection with written findings and conclusions addressing each criterion.

A producer resident in a neighbouring state is currently licensed and in good standing there, has transmitted the application she filed in her home state and has paid the Minnesota fees. Her home state, however, does not license Minnesota residents as nonresident producers on the same basis. She asks whether Minnesota must issue her a nonresident licence.

1. No: reciprocity is one of the four conditions, the applicant's home state having to award nonresident producer licences to residents of this state on the same basis, and the commissioner has no power to issue where that condition fails. ✓
2. Yes: Minnesota must issue once the applicant is licensed and in good standing at home, has requested licensure and paid the fees and has transmitted her home-state application; reciprocity is a discretionary consideration only.
3. Yes, but as a limited lines producer only: where the home state does not reciprocate, the nonresident licence is restricted to the limited lines the home state grants, the major lines requiring reciprocity.
4. No, but for a different reason: the section requires a nonresident to have held the home-state licence for a full year, reciprocity going only to whether status is verified through the NAIC database.

Why: Minn. Stat. 60K.39 subd. 1 states that, unless denied under section 60K.43, a nonresident “shall receive” a nonresident producer licence if four things are true: (1) the person is currently licensed as a resident and in good standing in the home state; (2) the person has submitted the proper request for licensure and paid the fees required by section 60K.55; (3) the person has submitted or transmitted the application filed in the home state, or in lieu of it a completed Uniform Application; and (4) “the person's home state awards nonresident producer licenses to residents of this state on the same basis”. The fourth clause is a condition of the mandatory duty, not a discretionary consideration, which disposes of the "discretionary consideration only" answer; nothing in the section splits the licence between major and limited lines on reciprocity grounds, which is the "as a limited lines producer only" answer's invention. The producer database in subd. 2 is a verification tool the commissioner “may” use, and no minimum holding period appears anywhere in the section, so the "for a full year" answer misstates both.

The 'consideration clause' of an insurance contract identifies:

1. The specific perils and conditions the policy will never cover
2. The right of the owner to return the policy during the free-look period
3. The premium and the applicant's statements as the consideration given ✓
4. The insurer's promise to renew the coverage for the life of the insured

Why: The consideration clause states what each party gives: the applicant's premium and statements in exchange for the insurer's promise to pay.

A foreign insurance company authorised to transact business in Minnesota is adjudicated insolvent. The commissioner turns to notifying Minnesota policyholders and asks how long she has, whether she must trace the policyholders herself, and whether she may work through the company's Minnesota agents instead.

1. The commissioner must ascertain the names and last known addresses of all Minnesota policyholders and notify them within ninety days of the adjudication, and may not hand the task to the company's licensed agents in any circumstances, the duty to notify being personal to the commissioner whatever the insurer's state of domicile.
2. The commissioner must notify all Minnesota policyholders within thirty days of the adjudication, but the agent route is available only where the insurer is a domestic company, the Minnesota agents of a foreign insurer answering to the regulator of its home state rather than to the commissioner of commerce here.
3. The commissioner must ascertain the names and last known addresses of all Minnesota policyholders and notify them within thirty days of the adjudication; but because the company is a foreign insurer authorised to do business here, she may instead elect to notify all of its licensed Minnesota agents with a directive that the agents notify all insureds. ✓
4. The commissioner must notify all Minnesota policyholders within thirty days, or may instead notify the company's licensed Minnesota agents with a directive that they notify all insureds; but the duty arises only on an adjudication of insolvency, a court order declaring the company's policies null and void leaving policyholders to learn of it from the court.

Why: Minn. Stat. 60A.25 subd. 1 applies whenever a foreign or domestic insurance company authorised to transact business in Minnesota “is adjudicated insolvent, or whenever its policies are declared null and void by court order” - both events, which is where the "duty arises only on an adjudication of insolvency" answer fails. The commissioner “shall ascertain the names and last known addresses of all Minnesota policyholders” and “shall notify all Minnesota policyholders within 30 days” of the adjudication or order: thirty days, not ninety. The alternative route is confined by its own words to one case: “In the case of FOREIGN insurers authorized to do business in this state, the commissioner of commerce may elect to notify all of the company's licensed agents in Minnesota with a directive that the agents notify all insureds.” So the agent route exists, which the "may not hand the task" answer denies, and it belongs to foreign insurers rather than domestic ones, which is the "only where the insurer is a DOMESTIC company" answer's reversal.

Four entities are considered under the unfair trade practices article: a fraternal benefit society, an independent adjuster, a licensed agent, and a printing firm that is not in the insurance business but is alleged to have taken part in conduct caught by the sections on unfair competition and procedure.

1. All four can be a “person” for the relevant purposes: the definition covers any individual, corporation, association, partnership, reciprocal exchange, interinsurer, Lloyds insurer, fraternal benefit society or other legal entity engaged in the business of insurance, including an agent, a solicitor or an adjuster; and for the purposes of sections 72A.31 and 72A.32 “person” additionally means any person, firm or corporation even though not engaged in the business of insurance. ✓
2. The first three are and the printing firm is not: the definition is confined to entities engaged in the business of insurance, and the extension in the definition operates to bring agents, solicitors and adjusters within it rather than to reach outsiders.
3. Only the fraternal benefit society and the agent are: adjusters are regulated separately and are not persons for the purposes of this article, and the extension for sections 72A.31 and 72A.32 reaches only firms and corporations, not individuals.
4. All four are, and the extension is general: once a person outside the insurance business is brought within the definition by sections 72A.31 and 72A.32, that person is a “person” for the whole of sections 72A.17 to 72A.32, the two sections being the gateway rather than the limit of the extension, so that a printing firm once caught by the unfair competition provisions answers under every section of the article thereafter, including those that presuppose an insurance business.

Why: Minn. Stat. 72A.18 subd. 2 defines “person” for sections 72A.17 to 72A.32 as “any individual, corporation, association, partnership, reciprocal exchange, interinsurer, Lloyds insurer, fraternal benefit society, or any other legal entity, engaged in the business of insurance, including an agent, a solicitor, or an adjuster”. Adjusters are named, which disposes of the "adjusters are regulated separately" answer. The subdivision then adds: “and for the purposes of sections 72A.31 and 72A.32 'person' shall in addition mean any person, firm or corporation even though not engaged in the business of insurance.” That extension is real, which the "printing firm is not" answer denies, and it is confined to those two sections, which is what the "extension is general" answer generalises; it also names a “person” as well as a firm or corporation, so the "adjusters are regulated separately" answer's second limb is wrong too. Subdivision 1 applies the definitions “unless the context clearly indicates otherwise”.

Under the fixed-amount settlement option, a beneficiary chooses $1,000 per month. Payments continue:

1. For the beneficiary's entire lifetime
2. Until the proceeds plus interest are exhausted ✓
3. For exactly ten years and then stop
4. Only while the beneficiary remains unmarried

Why: Fixed-amount pays the chosen amount each period until the proceeds and interest are used up; the duration depends on the total available.

All other factors being equal, paying premiums monthly rather than annually generally results in:

1. A lower total cost due to a volume discount for frequent payments
2. An automatic reduction in the policy's face amount each month
3. A higher total annual cost because of added administrative loading ✓
4. Exactly the same total cost regardless of the payment frequency

Why: More frequent modes carry higher total cost (loading) to offset administrative expense and lost interest to the insurer.

An insurer's mailing leaves out the fact that a benefit is payable only after a thirty-day elimination period. The insurer says the omission cannot be a breach because nothing stated is untrue, and that in any event the mailing offers a full premium refund to anyone not satisfied and the policy is available for inspection before the sale.

1. The first fails and the second succeeds: an omission is within the general prohibition, but the rule treats an offer of inspection or of a premium refund as curing an omission, the prospective purchaser being able to discover the elimination period for himself before the sale is consummated; what cannot be cured that way is an affirmative misstatement.
2. The first succeeds and the second fails: the prohibition is directed at the use of misleading words, phrases, statements, references or illustrations, so silence is addressed instead through the specific disclosure duties elsewhere in the chapter; but neither inspection nor a refund offer cures anything.
3. Both of the insurer's points fail: the general prohibition reaches the omission of information as well as the use of words, phrases, statements, references or illustrations, where the omission or use has the capacity, tendency or effect of misleading purchasers or prospective purchasers as to the nature or extent of any policy benefit payable, loss covered or premium payable; and the rule says in terms that making the policy available for inspection or offering to refund the premium does not remedy misleading statements. ✓
4. Both of the insurer's points fail, but the prohibition is narrower than its first point suggests: it reaches an omission only where the omitted information concerns the extent of a benefit payable, an omission going to the premium or to the losses covered being dealt with under the specific parts on premium levels and on exceptions rather than under the general prohibition, whose reach is fixed by the subject matter of the omission rather than by its effect on the reader, so that the same silence may be actionable in one advertisement and not in another.

Why: Minn. R. 2790.0500 subp. 1 opens the longest part of the chapter: “No advertisement or representation, written or oral, may omit information or use words, phrases, statements, references, or illustrations if the omission of the information or use of the words, phrases, statements, references, or illustrations has the capacity, tendency, or effect of misleading or deceiving purchasers or prospective purchasers as to the nature or extent of any policy benefit payable, loss covered, or premium payable.” Omission is the first thing named, which is the "silence is addressed instead" answer's error, and all three subject matters - benefit, loss covered and premium - are inside the same sentence, which is the "only where the omitted information concerns" answer's. The subpart then closes the escape route the insurer relies on: “The fact that the policy offered is made available to a prospective insured for inspection prior to consummation of the sale or an offer is made to refund the premium if the purchaser is not satisfied does not remedy misleading statements.” No distinction is drawn there between omissions and misstatements, which is what the "as curing an omission" answer supplies; part 2790.1600 subp. 1 makes the same point about a free inspection offer in its own terms.

In the application process, the producer often acts as the 'field underwriter,' meaning they:

1. Approve and pay death claims for the insurer
2. Audit the insurer's annual financial statement and certify the adequacy of its policy reserves to the state
3. Gather information and make an initial assessment of the risk ✓
4. Set the final rate class, approve the application for issue, and calculate the reserve the insurer must hold

Why: As field underwriter the producer collects accurate information and screens obvious risks before formal underwriting.

While a permanent life policy is in force, the growth of its cash value is:

1. Taxed annually as a capital gain
2. Tax-deferred (not taxed as it accrues) ✓
3. Subject to an annual excise tax
4. Taxed annually as ordinary income

Why: Inside-buildup of cash value grows tax-deferred; tax may apply only on surrender of a gain or in a MEC.

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.

To keep a producer license active, most states require the producer to:

1. Maintain membership in a fraternal benefit society or trade association
2. Re-take and pass the original state licensing examination every two years
3. Sell a minimum of $250,000 in new annual premium each calendar year
4. Complete continuing education and renew the license periodically ✓

Why: License renewal generally requires periodic continuing education; specific hours and cycles are set by each state.

State guaranty association protection may NOT be:

1. Used by producers as a selling point in advertising ✓
2. Subject to statutory coverage limits
3. Available to policyholders of an insolvent insurer
4. Funded by assessments on member insurers

Why: Using guaranty fund protection to induce a sale is prohibited; the fund exists to protect policyholders of insolvent insurers, within limits.

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.

A worker contributes to an HSA, then uses the funds for a non-qualified expense before age 65. The withdrawal is:

1. Deductible as a medical expense
2. Taxable and subject to an additional penalty ✓
3. Completely tax-free in all cases
4. Exempt because it is the worker's own money

Why: Non-qualified HSA withdrawals before 65 are taxable and subject to an additional 20% penalty; qualified medical withdrawals are tax-free.

'Unfair discrimination' in insurance means:

1. Setting premiums using actuarially sound mortality tables
2. Declining an applicant who genuinely presents a substandard risk
3. Offering preferred rates to applicants who do not use tobacco
4. Charging different rates to individuals of the same class and risk ✓

Why: Unfair discrimination is applying different rates or terms to insureds of the same class and equal risk; risk-based distinctions are permitted.

Under capitation, a network physician is paid:

1. Only when a member files a claim for reimbursement
2. A fixed amount per member per month, regardless of services rendered ✓
3. A share of the plan's collected premiums, paid quarterly in proportion to enrollment
4. A negotiated fee for each individual service, billed after the visit occurs

Why: Capitation pays providers a set per-member-per-month amount regardless of utilization, shifting some risk to the provider.

A typical annuity 'free withdrawal' provision allows the owner to withdraw, each year without a surrender charge, up to:

1. Nothing until the contract is annuitized
2. Only the interest credited that month
3. The entire accumulated account value
4. About 10% of the contract value ✓

Why: Many deferred annuities permit penalty-free withdrawals of roughly 10% of the value per year during the surrender-charge period.

An insurer issues Medicare supplement policies two ways: through agents, and by direct response solicitation to people eligible for Medicare by reason of age. It asks what notice each policy must carry and how quickly a premium must be returned to someone who sends the policy back.

1. Both must carry the notice as described, and both must state that the premium is refunded within ten days after the insurer receives the returned policy: the ten-day figure is the general rule for Medicare supplement business however the policy was sold, and the reference to direct response solicitation in the section identifies the policies that need not carry the notice at all, a purchaser who never met an agent having had the outline of coverage in front of her before she applied; and the notice may be placed anywhere in the policy so long as it is legible, the reference to the first page describing where insurers usually put it rather than fixing where it must go.
2. Only the agent-sold policy must carry the notice: a Medicare supplement policy issued pursuant to a direct response solicitation is expressly excepted by the opening words of the section, the right of return on such a policy being governed instead by the unconditional refund period that the replacement act gives a replacing applicant; and the notice on the agent-sold policy must be prominently printed on the first page or attached to it, give 30 days from delivery to return the policy and promise a refund within ten days after the insurer has received it back, that ten-day figure being what marks a Medicare supplement free look off from an ordinary one.
3. Both must carry a notice prominently printed on the first page or attached to it, stating in substance a right to return the policy or certificate within 30 days of its delivery and have the premium refunded if, after examination, the insured is not satisfied for any reason. On an agent-sold policy the notice states that the premium is refunded in full; on one issued pursuant to a direct response solicitation to persons eligible for Medicare by reason of age, the notice states that the premium is refunded within ten days after receipt of the returned policy or certificate by the insurer. ✓
4. Both must carry the notice as described, but it is the return period that differs rather than the refund: an agent-sold policy may be returned within 30 days of its delivery and one issued pursuant to a direct response solicitation within ten days of its delivery, the shorter window reflecting that a direct response purchaser has had the outline of coverage and the application in hand before the contract was ever issued; and both notices promise the premium refunded in full, the section drawing no distinction between the two on that point once the returned policy has come back into the insurer's hands.

Why: Minn. Stat. 62A.38 is a single section in two halves. "Medicare supplement policies or certificates, OTHER THAN THOSE ISSUED PURSUANT TO DIRECT RESPONSE SOLICITATION, shall have a notice PROMINENTLY PRINTED ON THE FIRST PAGE OF THE POLICY OR ATTACHED THERETO stating in substance that the policyholder or certificate holder shall have the right to RETURN THE POLICY OR CERTIFICATE WITHIN 30 DAYS OF ITS DELIVERY and to have the PREMIUM REFUNDED IN FULL if, after examination of the policy or certificate, the insured person is NOT SATISFIED FOR ANY REASON." The second half: "Medicare supplement policies or certificates, ISSUED PURSUANT TO A DIRECT RESPONSE SOLICITATION TO PERSONS ELIGIBLE FOR MEDICARE BY REASON OF AGE, shall have a notice prominently printed on the first page or attached thereto" giving the same right to return WITHIN 30 DAYS OF ITS DELIVERY "and to have the premium refunded WITHIN TEN DAYS AFTER RECEIPT OF THE RETURNED POLICY OR CERTIFICATE TO THE INSURER". Both kinds carry a notice - the words "other than" in the first half hand the direct response case to the second half rather than exempting it, which is the "Only the agent-sold policy must carry the notice" answer's error - and both give 30 days from delivery to return, which is the "it is the RETURN period that differs" answer's substitution. What differs is the refund: in full on the agent-sold policy, within ten days of the insurer receiving it back on the direct response one. The "ten-day figure is the general rule" answer applies the ten-day figure to both.

A pre-2018 non-ACA plan is submitted for certification on 1 March and the commissioner has said nothing by 1 August. The insurer prints the contract with no "qualified" or "nonqualified" marking and no plan number. A state agency that paid premiums for association enrollees has filed nothing by 20 September.

1. Only the agency's report is late: the 90-day period is a target rather than a deadline, and the labelling requirement applies to plans the commissioner has certified as qualified, a plan awaiting determination having nothing yet to label.
2. The commissioner is out of time, the contract is non-compliant, and the agency's report is late: the commissioner shall make a determination within 90 days as to whether the plan is qualified; all plans of health coverage except Medicare supplement policies shall be labeled "qualified" or "nonqualified" on the front of the policy or contract or on the schedule page, and all qualified plans shall indicate whether they are number one, two or three coverage plans; and the state and its agencies shall report to the association and the commissioner no later than September 15 of each year. ✓
3. The commissioner is out of time and the contract is non-compliant, but the agency's report is not late: the reporting date is 15 September of each year for the 12-month period ending the preceding 30 June, and an agency has until the end of that month to file in practice, the section fixing no consequence for a late report.
4. The commissioner is out of time and the state agency's report on association premiums is late, but the contract is compliant without a qualified or nonqualified marking: the labelling obligation reaches only the schedule page and only where the insurer has chosen to place the information there, the front-of-contract alternative in the section being permissive, and the requirement to indicate a plan number applies to Medicare supplement policies alone, since those are the plans a consumer is most likely to confuse with one another; the 90-day determination period likewise runs from the date the commissioner treats the application as complete rather than from the date of submission, so an insurer that has heard nothing has no way of knowing when the clock began.

Why: Minn. Stat. 62E.05, subd. 1 gives the commissioner 90 days from an application by an insurer, fraternal or employer to determine whether a plan of health coverage is a qualified plan or a qualified Medicare supplement plan. Five months have run. The same subdivision carries two labelling rules that operate whether or not certification has issued: ALL plans of health coverage, EXCEPT Medicare supplement policies, must be labelled QUALIFIED or NONQUALIFIED on the front of the policy or contract or on the schedule page - the exception runs the opposite way from the "Medicare supplement policies alone" answer - and all QUALIFIED plans must indicate whether they are number one, two or three coverage plans. Subd. 2 sets the public-body reporting duty: the state, or any of its departments, agencies, programs, instrumentalities or political subdivisions, shall report in writing to the association and to the commissioner of commerce NO LATER THAN SEPTEMBER 15 each year on the number of persons and the amount of premiums, deductibles, co-payments or coinsurance it paid on behalf of association enrollees, covering the 12 months ending the preceding June 30, in summary form with no individually identifiable data. Like sections 62E.04 and 62E.06, this section does not apply to an ACA-subject policy offered, sold, issued or renewed on or after 1 January 2018.

Variable universal life (VUL) insurance combines:

1. Flexible premiums with policyowner-directed separate-account investments ✓
2. Decreasing term coverage with a built-in cost-of-living adjustment
3. Group coverage that requires no individual evidence of insurability
4. A fixed level premium with a guaranteed minimum cash value at all times

Why: VUL merges universal life's premium and death-benefit flexibility with variable separate accounts; the owner bears the investment risk.

A lump-sum life insurance death benefit paid to a named beneficiary is generally:

1. Income-tax-free ✓
2. Taxed as a capital gain
3. Subject to a 10% penalty
4. Fully taxable as ordinary income

Why: Death benefits paid to a beneficiary are generally received income-tax-free.

Two Minnesota domestic insurance corporations propose to combine, and a third corporation formed under the laws of another state wishes to join the transaction. The boards ask what combinations the statute permits and how a plan of merger is adopted.

1. Only domestic insurance corporations may merge or consolidate with one another; a foreign insurance corporation may not be a constituent party to a merger with a Minnesota domestic insurer in any circumstances, and must instead acquire the domestic corporation's business by assumption reinsurance; and the plan must be approved by the shareholders or members of each constituent corporation.
2. Any combination of domestic and foreign insurance corporations is permitted without restriction, including consolidation into a new corporation formed under the law of a foreign government whether or not that law authorises the foreign corporation to take part; and the plan of merger requires the affirmative vote of a majority of the directors of the surviving corporation alone.
3. Two or more domestic corporations may merge into one of them but may not consolidate into a newly formed corporation; domestic and foreign corporations may merge only into one of the domestic corporations, so that the survivor is always a Minnesota company; and the plan of merger must be approved by a majority of the directors of each constituent corporation and then by the commissioner before any vote is taken, the commissioner's prior consent being a precondition of the directors' authority to resolve upon a plan of merger at all, and a plan adopted without it being void rather than merely unenforceable against the state.
4. Two or more domestic insurance corporations may be merged into one of them or consolidated into a new corporation formed under the laws of this state; domestic and foreign insurance corporations may be merged into one of the domestic corporations, or into one of the foreign corporations, or consolidated into a new corporation formed under the law governing one of the foreign corporations, provided each foreign corporation is authorised by that law to effect the merger or consolidation; and the plan of merger must be approved by the affirmative vote of a majority of the directors of the board of each constituent corporation. ✓

Why: Minn. Stat. 60A.16 subd. 1 sets out the permitted combinations in two clauses. Clause (1), domestic with domestic: any two or more domestic insurance corporations formed for purposes for which stock, mutual, or stock and mutual corporations, or reciprocal or interinsurance contract exchanges might be formed under the laws of this state, may be “(a) merged into one of such domestic insurance corporations, or (b) consolidated into a new insurance corporation to be formed under the laws of this state” - so consolidation into a new company is available, which the "may not consolidate into a newly formed corporation" answer denies. Clause (2), domestic with foreign: such domestic corporations and foreign insurance corporations formed to carry on an insurance business for which a corporation might be organized under the laws of this state may be merged into one of the domestic corporations, OR merged into one of the foreign corporations, OR consolidated into a new corporation formed under the law of the government under which one of the foreign corporations was formed - the last “provided that each of such foreign insurance corporations is authorized by the laws of the government under which it was formed to effect such merger or consolidation”. So the survivor need not be a Minnesota company (the "may not consolidate into a newly formed corporation" answer), a foreign corporation may certainly be a constituent party (the "Only domestic insurance corporations may merge" answer), and the foreign-law authorisation proviso is a real condition (the "without restriction" answer). Subdivision 2(1)(a) supplies the approval threshold: a resolution containing the plan of merger “shall be approved by the affirmative vote of a majority of the directors of the board of EACH constituent corporation” - directors rather than shareholders or members, and each corporation separately rather than the survivor alone. The plan must prescribe the terms and conditions of the merger or consolidation and the mode of carrying it into effect, and where stock corporations are involved it may prescribe that stock be converted, in whole or in part, into stock or other securities of a corporation that is not itself a merging or consolidating corporation, or into cash.

The guaranteed insurability rider allows the insured to:

1. Exchange the life policy for an immediate income annuity at any time without a surrender charge
2. Elect the cash dividend option each year
3. Buy more coverage at set option dates without proving insurability ✓
4. Stop premium payments during a period of total disability

Why: It guarantees the right to purchase more coverage at set option dates without re-proving insurability.

Three children are named 'per stirpes.' One child dies before the insured, leaving two children. Each surviving child gets 1/3, and the deceased child's 1/3 is:

1. Split between that child's two children ✓
2. Kept by the insurer
3. Divided among the two surviving children
4. Paid to the insured's estate

Why: Per stirpes passes a deceased beneficiary's share to that beneficiary's descendants — here, the deceased child's two children split the 1/3.

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

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

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

Since 2006, a newly issued Medicare Supplement (Medigap) policy may NOT include:

1. Coverage of the Part A coinsurance
2. Prescription drug coverage ✓
3. Coverage for the first three pints of blood
4. The Part B coinsurance benefit

Why: Drug coverage is provided through Part D; Medigap policies issued after 2005 cannot include prescription drug benefits.

An applicant who regularly scuba dives in caves is most likely to be:

1. Declined outright, as no insurer covers a hazardous hobby
2. Charged a higher (rated) premium or have the avocation excluded ✓
3. Required to buy an annuity rather than life insurance
4. Offered the preferred rate class, since diving is a sport

Why: Hazardous avocations increase risk; insurers respond with a rating, an exclusion rider, or a higher premium.

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.

Credit life insurance is typically written as:

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

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

A Buyer's Guide and policy summary must generally be delivered to a life applicant:

1. At or before policy delivery ✓
2. Exclusively to applicants who are purchasing variable or indexed products
3. Within one full year after the policy has already been issued and paid for
4. Only if the applicant specifically asks the agent for written disclosure materials

Why: They must be provided no later than policy delivery so the buyer can evaluate the purchase.

'Misrepresentation' as an unfair trade practice means:

1. Returning part of an unearned premium to a policyowner who cancels coverage before the end of the policy period
2. Making false statements about a policy's terms or benefits to induce action ✓
3. Recommending the lowest-cost policy an applicant qualifies for after comparing the rates of several insurers
4. Charging an applicant in poor health a higher premium that reflects the substandard rate class underwriting assigned

Why: Misrepresentation is issuing or circulating untrue statements about the terms, benefits, or nature of a policy.

A 'bonus' annuity credits an extra percentage to the premium up front but usually comes with:

1. No surrender charges at all
2. Immediate tax-free withdrawals
3. A longer surrender-charge period ✓
4. A guaranteed doubling of the account

Why: Bonus annuities add an upfront credit but typically offset it with longer or higher surrender charges and sometimes lower base rates.

Under the Fair Credit Reporting Act, if an insurer may obtain an investigative consumer report on an applicant, the insurer must:

1. Pay the applicant a fee for the use of their personal information
2. Obtain a court order before any report can be gathered
3. Notify the applicant in advance that such a report may be requested ✓
4. Share the full report with every other insurer in the state

Why: FCRA requires advance written notice to the applicant when an investigative consumer report (involving interviews about character and reputation) may be obtained.

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

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

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

An insured returns to work, then becomes disabled again from the same cause five months later. Under a recurrent disability provision (six-month period), the insured:

1. Receives only half of the original monthly benefit
2. Continues the prior claim with no new elimination period ✓
3. Loses all coverage for that recurring condition
4. Must satisfy a brand-new elimination period first

Why: A recurrence from the same cause within the stated period is treated as a continuation, so no new elimination period applies.

An insurer wants to assign commissions to an incorporated agency whose staff do not themselves sell, solicit or negotiate in Minnesota. A producer separately wants his commissions directed to a corporation in which he is an officer. Both ask whether the commission provisions permit it.

1. Neither is permitted: the prohibition on paying a commission to an unlicensed person is absolute, and an agency or corporation whose staff do not themselves sell, solicit or negotiate insurance in this state is by definition not licensed to do so, the licence being granted to the individual who performs those acts and to nobody else; the only exceptions the section makes are for renewal and other deferred commissions on business written while the producer's own licence was in force, which is why that permission is drafted as a narrow exception rather than as a general rule; and a producer who directs his commissions to a corporation in which he is an officer is doing indirectly what the acceptance provision forbids the corporation to do directly.
2. Both are permitted, subject to one limit: an insurer or insurance producer may pay or assign commissions, service fees, brokerages or other valuable consideration to an insurance agency or to persons who do not sell, solicit or negotiate insurance in this state, unless the payment would constitute an illegal rebate or otherwise violate the unfair trade practices provision the paragraph cross-refers to; and a duly licensed producer may pay commissions, or assign or direct that they be paid, to a partnership of which the producer is a member, employee or agent, or to a corporation of which the agent is an officer, employee or agent. ✓
3. The assignment to the agency is permitted and the direction to the corporation is not: the section allows an insurer or producer to pay or assign commissions to an insurance agency or to persons who do not sell, solicit or negotiate insurance in this state, and that permission carries no qualification of any kind; but a producer who directs his own commissions elsewhere is disposing of earnings the licence was granted to him personally to produce, and only a partnership of which he is a member, employee or agent is named as a permitted destination, a corporation being a separate legal person whose officers may change and through which the commission could reach someone the licence was never granted to at all.
4. Both are permitted without qualification: the section says that an insurer or insurance producer may pay or assign commissions, service fees, brokerages or other valuable consideration to an insurance agency or to persons who do not sell, solicit or negotiate insurance in this state, and the reference to an illegal rebate later in the paragraph concerns payments made to the insured as an inducement to buy rather than any limit on payments to an agency or to a corporation; the rebate provisions of the unfair trade practices article govern what a producer may hand back to a customer out of his own commission, so they can have nothing to say about where the commission itself is sent once it has been earned.

Why: Minn. Stat. 60K.48 subd. 3(b): "An insurer or insurance producer MAY PAY OR ASSIGN commissions, service fees, brokerages, or other valuable consideration TO AN INSURANCE AGENCY OR TO PERSONS WHO DO NOT SELL, SOLICIT, OR NEGOTIATE INSURANCE IN THIS STATE, UNLESS THE PAYMENT WOULD CONSTITUTE AN ILLEGAL REBATE" or otherwise violate the unfair trade practices provision it cross-refers to. That is an express exception to subds 1 and 2, which is the "Neither is permitted" answer's error, and it carries a real qualification, which is the "Both are permitted without qualification" answer's. The paragraph continues: "A duly licensed producer may pay commissions or assign or direct that commissions be paid to a PARTNERSHIP of which the producer is a member, employee, or agent, OR TO A CORPORATION OF WHICH THE AGENT IS AN OFFICER, EMPLOYEE, OR AGENT" - corporations are named alongside partnerships here and in Minn. Stat. 60K.46 subd. 3, which is the "direction to the corporation is not" answer's error. NOTE ON THE CROSS-REFERENCE: the rebate proviso in paragraph (b) points at Minn. Stat. 72A.20, subdivision 10, which was REPEALED in 2022. Nothing in this item turns on what that subdivision said; the proviso is described here by its subject, and the rebate prohibition now in force is Minn. Stat. 72A.071.

Insurers usually limit disability income benefits to about 60–70% of the insured's gross income in order to:

1. Guarantee the insurer a profit on every policy that is sold
2. Comply with a federal cap on all insurance benefit amounts
3. Match the benefit exactly to the insured's monthly expenses
4. Preserve the insured's financial incentive to return to work ✓

Why: Benefits are capped below full income (and are tax-free when individually paid) so the insured retains a financial incentive to recover and return to work.

An irrevocable life insurance trust (ILIT) is used primarily to:

1. Keep life insurance proceeds out of the insured's taxable estate ✓
2. Allow the insured to freely change the policy's terms at any time
3. Convert the death benefit into a currently deductible expense
4. Guarantee the policy's cash value against any market loss

Why: An ILIT owns the policy so the proceeds are excluded from the insured's gross estate; because it is irrevocable, the insured gives up control.

The common disaster provision is designed to address a situation in which:

1. A natural disaster damages the insurer's ability to pay claims
2. The insured and the primary beneficiary die in the same event ✓
3. Several insureds under one group policy die within the same year
4. The insured dies before the contestable period has expired

Why: The common disaster (simultaneous death) provision presumes the beneficiary died first so proceeds pass to the contingent beneficiary or as the insured intended.

A health plan company underwriting an application asks the applicant whether her brother has ever been tested for a hereditary condition. It also asks the applicant for a copy of a cholesterol panel taken by her own doctor. When she declines to take a presymptomatic test of her chromosomes, the company records the refusal and prices the cover accordingly.

1. Only the pricing on the refusal breaches the section: the prohibitions run to the individual applying for or already covered by the health plan and not to that person's relatives, whose test history is their own information and outside a section written to protect the applicant; the cholesterol request is outside the definition of a genetic test for the reason given; and asking about a brother is at worst an ordinary family-history question of the kind every underwriter puts, the section leaving family history untouched so long as the underwriter draws no inference from a presymptomatic test a relative has actually taken.
2. All three breach the section: the definition of a genetic test turns on what the insurer wants the result for rather than on what the test measures, so a cholesterol panel called for while assessing an applicant's inherited risk becomes a genetic test in the underwriter's hands, the exclusion in the definitions reaching only a cholesterol result the applicant volunteers unasked.
3. The question about the brother breaches the section but the pricing on the refusal does not: what the subdivision forbids is requiring or requesting the test, and an applicant who has made a free choice not to be tested has left the company to underwrite on the information it actually holds, a company being entitled to treat an unexplained gap in the medical evidence as it would treat any other gap and to load the premium for it; and the cholesterol request is outside the definition, a lipid panel measuring a gene product only in the loosest sense and not being conducted to determine the presence or absence of any gene.
4. The question about the brother and the pricing on the refusal both breach the section; the cholesterol request does not: a health plan company may not make any inquiry to determine whether an individual or a blood relative has taken or refused a genetic test, nor take into consideration the fact that a test was taken or refused, but the definition of a genetic test expressly excludes a cholesterol test or other test not conducted for the purpose of determining the presence or absence of a person's gene or genes. ✓

Why: Minn. Stat. 72A.139 subd. 3 bars a health plan company, in determining eligibility, establishing premiums, limiting coverage, renewing coverage "or any other underwriting decision", from four things: requiring or requesting that an individual "or a BLOOD RELATIVE of the individual" take a genetic test; making "any inquiry to determine whether an individual or a blood relative of the individual has taken or REFUSED a genetic test, or what the results of any such test were"; taking into consideration "the fact that a genetic test was taken or REFUSED"; and taking into consideration the results. Blood relatives are named in each of the first three, which is the "not to that person's relatives" answer's omission, and the refusal is named alongside the taking, which is the "pricing on the refusal does not" answer's. Subd. 2(b) defines a genetic test as "a presymptomatic test of a person's genes, gene products, or chromosomes" for the purpose of determining the presence or absence of abnormal, defective or deficient genes, including carrier status, and then says in terms: "'Genetic test' does not include a CHOLESTEROL TEST or other test not conducted for the purpose of determining the presence or absence of a person's gene or genes." The exclusion is written on the test, not on who asked for it or why, which is the "what the insurer wants the result FOR" answer's rewriting of it. Subd. 8 leaves enforcement with the commissioner, who under subd. 2(a) is the commissioner of commerce or of health depending on which regulates the company.

A certificate is issued to a Minnesota resident under a master policy issued in another state. The policyholder is a trade association formed for purposes other than obtaining insurance, incorporated elsewhere with its principal office elsewhere. The policy covers 18 Minnesota residents out of 300 covered persons, and the issuer will file the policy and certificate form on request.

1. The certificate is inside the general rule: the four conditions in the nonapplication subdivision are alternatives rather than cumulative, so failing one of them matters only where the others fail with it, and this policyholder fails the first because a trade association that arranges group cover for its members exists in part to obtain insurance. The certificate must therefore provide coverage for all benefits required to be covered in group policies in Minnesota by this chapter, and the subdivision requiring it supersedes any inconsistent provision of the chapter, so the master policy having been issued elsewhere and covering only 18 Minnesota residents out of 300 makes no difference to what the certificate carries.
2. The certificate issued to a Minnesota resident under a master policy is outside the general rule whatever the policy covers, but the numerical condition is not a conjunctive test: it is met by fewer than 25 Minnesota residents or by Minnesota residents amounting to less than 25 percent of all covered persons, either limb sufficing on its own, and 18 residents out of 300 covered persons happens to satisfy both, so the exception is engaged twice over. The remaining three conditions - a policyholder existing primarily for purposes other than obtaining insurance, no Minnesota incorporation and no principal office here, and filing of the forms on the commissioner's request - are each satisfied on these facts as well.
3. The certificate is outside the general rule: a certificate issued to a Minnesota resident must otherwise provide coverage for all benefits required to be covered in group policies in Minnesota by this chapter, but that does not apply to certificates under a master policy issued outside Minnesota where the policyholder exists primarily for purposes other than to obtain insurance, is not a Minnesota corporation and has no principal office here, the policy covers fewer than 25 Minnesota residents who are less than 25 percent of all covered persons, and the issuer files copies on the commissioner's request - all four being true here. ✓
4. The certificate is inside the general rule: the nonapplication subdivision reaches only certificates issued under a master policy that has itself been filed with and approved by the commissioner before the certificate was issued, the reference to filing copies on request being a condition precedent rather than a duty triggered by a request. Because this master policy was issued in another state and has never been filed here, the certificate must carry every benefit required to be covered in group policies in Minnesota, and the other three conditions fall away as irrelevant however plainly each of them is satisfied on the facts of this policy.

Why: Minn. Stat. 61A.093 subd. 1 requires a certificate of insurance or similar evidence of coverage issued to a Minnesota resident to “provide coverage for all benefits required to be covered in group policies in Minnesota by this chapter”, and provides that the subdivision supersedes any inconsistent provision of the chapter; it also allows a policy issued or delivered here covering a person residing elsewhere to carry less favourable provisions, measured by what the person's home state would have required. Subdivision 2 disapplies subdivision 1 for certificates under a master policy issued outside Minnesota “if ALL of the following are true”, and lists four: the policyholder or certificate holder exists primarily for purposes other than to obtain insurance; is not a Minnesota corporation and has no principal office here; “the policy or certificate covers fewer than 25 persons who are residents of Minnesota AND the Minnesota residents represent less than 25 percent of all covered persons”; and the issuer files copies on the commissioner's request. The conditions are cumulative, which the "alternatives rather than cumulative" answer denies, and the numerical condition is itself conjunctive - both limbs must hold - so the "OR by Minnesota residents" answer's “or” misreads it even though it reaches the right conclusion on these numbers. The filing obligation is triggered by a request rather than being a precondition, which is the "condition precedent" answer's error. Subdivision 3 adds that section 60A.08 subd. 4 does not require a certificate meeting those conditions to comply with the chapter.

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.

An insurer files an individual variable annuity contract. It stipulates the expense, mortality and investment-increment factors, assumes an annual net investment increment of six percent without asking the commissioner, and uses a mortality table with a higher mortality rate at some ages than the 1949 Ultimate Annuity Mortality Table. It does not guarantee that expenses will not affect the dollar amounts adversely.

1. Only two things are wrong: the six percent assumption and the missing guarantee. The mortality table is a matter for the insurer's own actuary, the reference to the Annuity Mortality Table for 1949, Ultimate, being a safe harbour a company may use rather than a ceiling on the rates it may assume, and a higher rate at some ages is conservative for the annuitant in any event; the annual net investment increment assumption on an individual contract may not exceed five percent without the approval of the commissioner, and every variable annuity contract must guarantee that expenses shall not affect the dollar amounts adversely.
2. One thing only is wrong: the missing guarantee. The five percent figure is a floor rather than a ceiling, protecting the contract holder against an assumption so low that the benefits are understated at issue, so a six percent assumption needs no approval; and the 1949 table is a safe harbour rather than a limit, a modification carrying a higher mortality rate at some ages being permissible where the insurer's own actuary certifies it.
3. Three things are wrong: all variable annuity contracts must stipulate the expense, mortality and investment-increment factors and must guarantee that expenses shall not affect the dollar amounts adversely; on an individual contract the annual net investment increment assumption shall not exceed five percent except with the approval of the commissioner; and where the level of benefits may be affected by mortality results the mortality factor must be determined from the annuity mortality table for 1949, ultimate, or a modification of it not having a higher mortality rate at any age, or another table if approved by the commissioner. ✓
4. Three things are wrong, and a fourth: the contract may not exclude taxes or any investment management fee from the term 'expense', the guarantee against adverse expense effects being worthless if the insurer may define expense so as to leave out the charges that actually fall on the contract holder; the five percent ceiling, the prescribed mortality table with no higher rate at any age, and the guarantee itself are as the section provides.

Why: Minn. Stat. 61A.15 subd. 1 requires all variable annuity contracts issued in this state to "stipulate the EXPENSE, MORTALITY, AND INVESTMENT-INCREMENT FACTORS to be used in computing" the dollar amounts, and provides that "All such contracts SHALL GUARANTEE THAT EXPENSES SHALL NOT AFFECT SUCH DOLLAR AMOUNTS ADVERSELY." On an individual contract: "(a) the ANNUAL NET INVESTMENT INCREMENT ASSUMPTION SHALL NOT EXCEED FIVE PERCENT, EXCEPT WITH THE APPROVAL OF THE COMMISSIONER" - a ceiling with a consent gate, not a floor, which is the "a floor rather than a ceiling" answer's inversion; "and (b) to the extent that the level of benefits may be affected by mortality results, the mortality factor SHALL BE DETERMINED FROM THE ANNUITY MORTALITY TABLE FOR 1949, ULTIMATE, OR ANY MODIFICATION OF THAT TABLE NOT HAVING A HIGHER MORTALITY RATE AT ANY AGE, or, IF APPROVED BY THE COMMISSIONER, from another table." The table is prescribed with a defined tolerance and an approval route, not offered as a safe harbour, which is the "Only two things are wrong" answer's error. The subdivision closes with the point the "may not exclude taxes" answer gets backwards: "The term 'expense', as used in this section, MAY EXCLUDE SOME OR ALL TAXES as stipulated in the contracts and MAY ALSO EXCLUDE ANY INVESTMENT MANAGEMENT FEE which is subject to change with the approval by vote of the holders of such contracts." Subd. 2 sets a lighter rule for variable LIFE contracts - stipulate the investment increment factor and guarantee that expense AND MORTALITY results will not adversely affect the dollar amounts.

A long-term care policy's 'pool of money' (maximum benefit) is generally calculated as:

1. The insured's annual income at the time of the first claim
2. The total premiums the insured has paid over the years
3. The daily benefit multiplied by the benefit period ✓
4. A single flat amount paid regardless of how long care lasts

Why: The pool equals the daily/monthly benefit times the benefit period; spending less than the daily maximum can extend how long the pool lasts.

Sharing or paying a commission to an unlicensed individual is generally:

1. Required by most state laws
2. Permitted for referrals only
3. Prohibited ✓
4. Allowed if the amount is small

Why: Commissions may be paid only to properly licensed persons; paying an unlicensed individual is prohibited (limited nominal referral fees aside).

In an 'entity' (stock redemption) buy-sell agreement funded with life insurance:

1. The agreement applies only to sole proprietorships, never partnerships
2. The business owns one policy on each owner and buys the deceased owner's interest ✓
3. A bank or other third party holds all of the policies in trust until the business is sold or dissolved
4. Each owner personally owns a policy on every other owner of the firm

Why: In an entity plan the business owns the policies and purchases a deceased owner's share; in a cross-purchase plan the owners insure each other.

A pre-existing condition exclusion in an individual health policy refers to:

1. Any condition the insured develops after the effective date but before the first renewal
2. A condition treated within a look-back period before the effective date ✓
3. Only those conditions the insurer names individually in an attached impairment rider
4. A condition covered immediately with no waiting period

Why: A pre-existing condition is one for which care was received within a stated look-back period before coverage began. On ACA-compliant individual major-medical plans, pre-existing condition exclusions are prohibited entirely; time-limited exclusions survive only on excepted or non-ACA products.

A person turns 65 and enrolls in Part B. During the six months that follow, they apply for a Medigap policy. The insurer must:

1. Issue any plan offered, regardless of health ✓
2. Charge a surcharge for pre-existing conditions
3. Require a full medical exam before issuing
4. Decline if the applicant has a chronic illness

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

A plan requires prior authorization for a procedure. The carrier's representative failed to carry out the review it was required to do, the service was provided, and the carrier now wants to refuse payment. On another file the carrier did authorise the service, every policy requirement was met, and it now wants to reopen the decision because it thinks the claim was poor value.

1. The carrier may do both: retroactive review is how an insurer controls the cost of a plan, and the section protects an insured only where the insured relied on an authorisation that was actually given, a failure by the carrier's own representative to carry out a review it was engaged to perform being a matter between the carrier and its delegate rather than something that fixes the carrier with liability to the person it insures; the insured's remedy on the first file lies against the clinic that treated her without confirming that the authorisation had issued, and the carrier's lies in indemnity against the utilization review organisation it appointed. On the second file the bar on denying payment for an authorised service lapses 12 months after the service is provided, so a carrier that reopens within the year may recover what it paid, the section being addressed to the promptness of a denial rather than to its substance.
2. The carrier may not refuse on the first file but may reopen the second: an authorisation certifies that a service is medically necessary and covered on the day the certificate is given, and says nothing about the price of the service or the value of the claim, which the carrier remains free to review once the bill is presented; the exceptions in the section for fraud and substantive misrepresentation are illustrations of the grounds on which an authorised claim may be reopened rather than a closed list, and a course of treatment that costs the plan several times what a comparable course would have cost is reopened on the same footing. The first file is different only because the carrier is answerable for its representative, the section drawing no distinction between the insurer and the organisation it appoints to conduct prior review on its behalf under the plan.
3. The carrier may do neither: where the subscriber or insured is liable for costs beyond applicable co-payments or deductibles, no insurer may retroactively deny payment to a person who is covered when the services are provided for health care services that are otherwise covered, if the insurer or its representative failed to provide prior or concurrent review or authorization when required to do so under the policy; and where prior or concurrent review or authorization was provided and the preexisting condition limitation, the general exclusion and any other coinsurance or policy requirements have been met, the insurer may not deny payment for the authorised service or time period except in cases where fraud or substantive misrepresentation occurred. ✓
4. The carrier may do neither, and the protection is wider still: it applies whether or not the subscriber or insured is liable for costs beyond applicable co-payments or deductibles, a retroactive denial being objectionable in itself, and the opening words about the insured's liability describe the commonest reason a dispute reaches the department rather than a condition on the protection, which is why the section speaks of services that are otherwise covered rather than of amounts the insured must find; and the exception for fraud or substantive misrepresentation reaches only conduct by the provider, so an insured who has said nothing untrue is protected absolutely once an authorisation has been given, whatever the clinic that treated her may have told the carrier in order to obtain it, the insurer's recourse in that case being recoupment from the provider rather than a denial against the person it insures.

Why: Minn. Stat. 62A.60: "In cases where the subscriber or insured IS LIABLE FOR COSTS BEYOND APPLICABLE CO-PAYMENTS OR DEDUCTIBLES, NO INSURER MAY RETROACTIVELY DENY PAYMENT to a person who is covered when the services are provided for health care services that are otherwise covered, IF THE INSURER OR ITS REPRESENTATIVE FAILED TO PROVIDE PRIOR OR CONCURRENT REVIEW OR AUTHORIZATION FOR THE EXPENSES WHEN REQUIRED TO DO SO UNDER THE POLICY, PLAN, OR CERTIFICATE." The carrier is answerable for its representative's failure, which is the "carrier may do both" answer's error, and the opening words are a real condition rather than background - the "whether or not the subscriber or insured is liable" answer's. "IF PRIOR OR CONCURRENT REVIEW OR AUTHORIZATION WAS PROVIDED by the insurer or its representative, AND the preexisting condition limitation provision, the general exclusion provision and any other coinsurance, or other policy requirements HAVE BEEN MET, THE INSURER MAY NOT DENY PAYMENT FOR THE AUTHORIZED SERVICE OR TIME PERIOD EXCEPT IN CASES WHERE FRAUD OR SUBSTANTIVE MISREPRESENTATION OCCURRED." Two exceptions only, and value for money is not among them - the "may reopen the second" answer's error. Minn. Stat. 62A.59 goes further for plans offered, sold, issued or renewed on or after 1 January 2026: a health carrier "MUST NOT RETROSPECTIVELY DENY OR LIMIT COVERAGE OF A HEALTH CARE SERVICE FOR WHICH PRIOR AUTHORIZATION WAS NOT REQUIRED by the health carrier, UNLESS THERE IS EVIDENCE THAT THE HEALTH CARE SERVICE WAS PROVIDED BASED ON FRAUD OR MISINFORMATION", and "MUST NOT DENY OR LIMIT COVERAGE OF A HEALTH CARE SERVICE WHICH THE ENROLLEE HAS ALREADY RECEIVED SOLELY ON THE BASIS OF LACK OF PRIOR AUTHORIZATION IF THE SERVICE WOULD OTHERWISE HAVE BEEN COVERED had the prior authorization been obtained."

An agent requests a hearing before the board of review. He nominates his brother-in-law; the insurer nominates a former officer of a company the agent represents. The two cannot agree on a third member. The insurer says it will not pay any part of the third member's fee.

1. The agent's nomination is bad but the insurer's is not, and the fee point is right: the restriction on association with an insurer represented by the agent applies to the third member alone, whose neutrality is what the provision protects, and the third member's fee is borne by the party who fails to agree.
2. Each nomination is bad but the fee point is right: the parties each bear their own costs, and the third member is remunerated by the commissioner out of the Department's appropriation; where the parties do not agree, the commissioner appoints the third member directly rather than through any outside body.
3. Each nomination is bad and the fee point is wrong: the member selected by the agent may not be a relative of the agent, the members selected by the agent and the insurer may not be presently or formerly associated with an insurer represented by the agent, and the insurer and the agent must each pay one-half of the fee charged by the third member. Where the parties do not agree on a third member the commissioner requests three names from the American Arbitration Association, or from the commissioner of the Bureau of Mediation Services if that association declines, and each side strikes one. ✓
4. Each nomination is bad and the fee point is wrong, but the striking process is different: where the parties do not agree, the commissioner supplies three names from the list of ten agents and ten insurer representatives already compiled, the American Arbitration Association being approached only where that list is exhausted. The nominations fail because the member selected by the agent may not be a relative of the agent and the members selected by either party may not be presently or formerly associated with an insurer the agent represents; and the fee point fails because the insurer and the agent must each pay one-half of the third member's fee.

Why: Minn. Stat. 60A.177 subd. 3 constitutes a three-member board “selected from a list of ten agents and ten insurer representatives compiled by the commissioner”, one member chosen by the agent, one by the insurer and the third “mutually agreed upon by both parties”. If the parties do not agree, “the commissioner shall request the American Arbitration Association to provide the commissioner with three names of potential members. If the American Arbitration Association declines to provide the names, the commissioner of the Bureau of Mediation Services shall provide the names.” The agent member and the insurer member then each strike one, and the remaining person is the third member - so the outside body is the first port of call, not the compiled list, which is the "striking process is different" answer's substitution, and the commissioner does not appoint directly, which is the "appoints the third member directly" answer's. The subdivision then provides: “The insurer and the agent shall each pay one-half of the fee charged by the third member. The board member selected by the agent may not be a relative of the agent. The board members selected by the agent and insurer may not be presently or formerly associated with an insurer represented by the agent.” The association restriction is expressly on the party-selected members, which is what the "applies to the third member alone" answer moves to the third member. The subdivision closes by giving an insurer immunity from civil liability to the agent for disclosures made at the hearing, an immunity that does not extend to disclosures made in bad faith or with knowledge of their falseness.

A 67-year-old Minnesota resident is not eligible for Medicare. She wants a number two qualified plan from the association but has never been rejected by any insurer, and she was treated last month for a chronic condition.

1. She may buy it without either obstacle: a Minnesota resident who is age 65 or over and is not eligible for the health insurance benefits of the federal Medicare program is entitled to purchase the benefits of a qualified plan, one or two, or the $2,000, $5,000 or $10,000 annual deductible plan if available, without any of the limitations set forth in section 62E.14, subdivision 1, paragraph (c), and subdivision 3 - that is, without the evidence of rejection and without the preexisting condition limitation. ✓
2. She may buy it but the condition is excluded for six months: the section relieves a Minnesota resident aged 65 or over who is not eligible for Medicare of the requirement to produce evidence of rejection, a restrictive rider, a rate up or a preexisting conditions limitation by an association member, that being the requirement such a person cannot realistically meet because no individual market is willing to underwrite her; it says nothing about the six-month limitation for a condition diagnosed or treated in the 90 days before the application was received, which continues to apply, so last month's treatment is excluded until she has held the plan for six months.
3. She may not buy it: the association's qualified plans are open to persons under 65, an applicant of 65 or over being directed to the basic Medicare supplement plan the association must offer, and a person not eligible for Medicare must take the general eligibility route with evidence of rejection by an association member within six months of the application.
4. She may buy it without evidence of rejection, but only a number one plan: the section lists the plans available to a person in her position in ascending order of deductible and the association is required to place such an applicant in the first of them, because an applicant taken without evidence of rejection and without the six-month preexisting condition period represents a risk the plan has had no opportunity to price - the same reasoning that supports the special assessment on employers elsewhere in the chapter.

Why: Minn. Stat. 62E.18 is short and it removes BOTH obstacles. A Minnesota resident who is age 65 or over and is not eligible for the health insurance benefits of the federal Medicare program is ENTITLED to purchase the benefits of a qualified plan, one or two, or the $2,000, $5,000 or $10,000 annual deductible plan if available, offered by the Minnesota Comprehensive Health Association, WITHOUT ANY OF THE LIMITATIONS SET FORTH IN SECTION 62E.14, SUBDIVISION 1, PARAGRAPH (c), AND SUBDIVISION 3. Those two cross-references are the whole content of the section: subd. 1, paragraph (c) is the requirement to produce evidence of rejection, a requirement of restrictive riders, a rate up, or a preexisting conditions limitation by at least one association member within six months; subd. 3 is the six-month preexisting condition limitation for a condition diagnosed or treated in the 90 days before the application was received. Both are switched off, so last month's treatment does not matter and the absence of any rejection does not matter. Note the group the section is aimed at - a person of Medicare age who is NOT eligible for Medicare, and who therefore cannot buy a Medicare supplement plan and has no realistic private individual market to be rejected by. Section 62E.14, subd. 3 itself lists section 62E.18 among the provisions it is subject to.

A policy loan taken against a life policy's cash value:

1. Is treated as taxable income in the year the loan is taken
2. Must be repaid in full within thirty days or it lapses
3. Requires the owner to submit new evidence of insurability
4. Reduces the death benefit by any unpaid loan and interest ✓

Why: Unpaid loan balance and interest are subtracted from the death benefit; loans are not taxable while the policy stays in force.

A corporation applies for a viatical settlement provider licence. It refuses to identify a shareholder holding twelve percent of its shares. It names two officers in its application and a third joins the board a month after the licence is issued, of which it tells the commissioner nothing. It also asks how the licence is kept alive.

1. Only the omission and the silence are wrong: the commissioner's power to require disclosure of the identity of stockholders reaches only those holding twenty-five percent or more of the shares, a twelve percent holder being too small a participant to materially influence the applicant's conduct, so the corporation was entitled to withhold her name; a licence issued to a legal entity does authorise all partners, officers, members and designated employees to act under it, and all of those persons must be named in the application and any supplements to it; new or revised information about officers and ten percent or more stockholders must be provided to the commissioner within 30 days of the change; and the licence may be renewed from year to year on the anniversary date on payment of the annual renewal fee, expiring if the fee is not paid by the renewal date.
2. All three are wrong, but the duty to supplement runs to a shorter period than the familiar 30-day figure: new or revised information about officers and ten percent or more stockholders must reach the commissioner within ten days of the change, the 30-day figure being the period allowed to a life insurance producer for notifying the commissioner that he has begun operating as a viatical settlement broker; the duty to name every partner, officer, member and designated employee attaches to the original application alone, a supplement being owed only where the commissioner requests one, since a licence granted to a legal entity authorises whoever holds office under it from time to time rather than the particular individuals named when it was issued; and the power to require disclosure of ten percent stockholders may be exercised only while an application is pending, a licensed entity being reached instead through the general examination provisions of the chapter.
3. The refusal, the omission and the silence are all wrong: the commissioner has authority at any time to require an applicant to fully disclose the identity of all stockholders holding more than ten percent of the shares, partners, officers, members and employees, and may refuse a licence to a legal entity if not satisfied that any such person who may materially influence the applicant's conduct meets the statutory standards; a licence issued to a legal entity authorises all partners, officers, members and designated employees to act under it and all those persons shall be named in the application and any supplements to it; new or revised information about officers, ten percent or more stockholders, partners, directors, members or designated employees must be provided within 30 days of the change; and a licence may be renewed from year to year on the anniversary date upon payment of the annual renewal fees, failure to pay by the renewal date resulting in expiration. ✓
4. All three are wrong, and the licence does not expire on non-payment: a viatical settlement provider licence continues in force until the commissioner suspends or revokes it on one of the grounds the section lists, the annual renewal fee being a debt he may recover in an action rather than a condition of the licence itself, which is why the section provides separately for refusal, suspension and revocation; the anniversary date fixes only when the fee falls due.

Why: Minn. Stat. 60A.9572 subd. 6: the applicant provides information on forms required by the commissioner, and "The commissioner shall have authority, AT ANY TIME, to require the applicant to fully disclose the identity of ALL STOCKHOLDERS WHO HOLD MORE THAN TEN PERCENT OF THE SHARES of the company, partners, officers, members, and employees", and may refuse to issue a licence in the name of a legal entity "if not satisfied that any officer, employee, stockholder, partner, or member of the legal entity WHO MAY MATERIALLY INFLUENCE THE APPLICANT'S CONDUCT meets the standards" of the viatical provisions. Twelve percent is more than ten, which is the "twenty-five percent or more" answer's error. Subd. 7: a licence issued to a legal entity "authorizes ALL PARTNERS, OFFICERS, MEMBERS, AND DESIGNATED EMPLOYEES to act as viatical settlement providers, viatical settlement brokers, or viatical settlement investment agents, as applicable, under the license, and ALL THOSE PERSONS SHALL BE NAMED IN THE APPLICATION AND ANY SUPPLEMENTS TO THE APPLICATION." Subd. 10: a provider, broker or investment agent "shall provide to the commissioner NEW OR REVISED INFORMATION ABOUT OFFICERS, TEN PERCENT OR MORE STOCKHOLDERS, PARTNERS, DIRECTORS, MEMBERS, OR DESIGNATED EMPLOYEES WITHIN 30 DAYS OF THE CHANGE" - thirty, not ten, and the 30-day figure in subd. 3(b) for a producer's notification is a separate provision that happens to use the same period, which is the "within ten days of the change" answer's confusion. Subd. 5: "A license MAY BE RENEWED FROM YEAR TO YEAR ON THE ANNIVERSARY DATE upon payment of the annual renewal fees specified in section 60A.964. FAILURE TO PAY THE FEES BY THE RENEWAL DATE RESULTS IN EXPIRATION OF THE LICENSE" - expiry by operation of the subdivision, not a debt, which is the "licence does not expire on non-payment" answer's error.

Annuitization differs from a systematic withdrawal because annuitization:

1. Always returns the full account value in one immediate lump sum
2. Lets the owner take any amount at any time with no schedule at all
3. Permanently freezes the account so no further access is possible
4. Converts the account into a guaranteed stream of income payments ✓

Why: Annuitization exchanges the accumulated value for a guaranteed income stream; systematic withdrawal keeps the account and takes flexible amounts.

A family policy is silent about newborns. A child is born and the parents tell the carrier nothing for two months; the policy charges a per-dependent premium. A grandchild is born, is financially dependent on a covered grandparent and has lived with her since birth. A newborn needs orthodontic treatment for a cleft palate; the family also holds a dental plan.

1. The policy is non-compliant, the carrier may recover the premium but not refuse cover for want of notice, the grandchild is included, and the dental plan pays first: no such policy may be renewed, delivered or issued for delivery unless it includes as insured family members any newborn infants immediately from the moment of birth, covering illness, injury, congenital malformation or premature birth; newborn infants includes grandchildren financially dependent on a covered grandparent who reside with that grandparent continuously from birth; no policy may require notification as a condition of the coverage, though the carrier is entitled to all premiums it would have collected and may withhold payment until compensated; the coverage includes medical and dental treatment, including orthodontic and oral surgery, in the management of cleft lip and cleft palate; and where orthodontic services are eligible under a dental plan and another contract, the dental plan is primary. ✓
2. The policy is non-compliant and the grandchild is included, but notice was required: the section entitles the carrier to the premiums it would have collected, which presupposes a duty on the family to tell it about the child, and a family that says nothing for two months has forfeited the cover for that period and may enrol the infant only from the date the carrier is told; the cleft palate benefit and the primacy of the dental plan on orthodontic services apply exactly as the section provides.
3. The policy is non-compliant and the notice point is as described, but the grandchild is not included and the other contract pays first: the newborn provisions reach the children of the insured, a grandchild being a dependent only under the general dependent coverage provisions, which turn on the child's residence and on any qualifying court order rather than on financial dependency and continuous residence from birth, so a grandparent who wants the child covered must enrol her as a dependent in the ordinary way and satisfy whatever the plan requires of any other dependent; and on orthodontic services the medical policy is primary because the requirement to cover the management of cleft lip and cleft palate, including orthodontic and oral surgery treatment, is imposed on it rather than on the dental plan, so the plan that carries the mandate is the plan that pays first and the dental plan takes whatever the medical policy leaves. The carrier is entitled to the premiums it would have collected for the child once it is told of the birth, and may withhold payment of benefits until it has been compensated with them.
4. The policy is non-compliant, the grandchild is included and the dental plan pays first, but the cleft palate benefit stops at age 19: the section limits benefits for individuals aged 19 and over to nothing at all, treating cleft lip and cleft palate as a condition to be managed in childhood, which is why the coverage is expressed by reference to the limiting age for coverage of the dependent rather than by reference to the treatment actually required; and the grandchild provision requires the covered grandparent to have legal custody as well as financial dependency and continuous residence from birth, since otherwise a carrier could be asked to cover a child whose own parents hold family cover elsewhere, which is why the section speaks of a covered grandparent rather than merely of a grandparent, and why the residence condition is expressed as running from the child's birth rather than from any later date on which the child came to live in that household. Benefits for a dependent aged 19 and over are therefore unavailable however the treatment was scheduled or initiated.

Why: Minn. Stat. 62A.042 subd. 1(a), for individual family policies, and subd. 2(a), for group policies, are in materially the same terms: the policy must include "as insured or covered members of the family ANY NEWBORN INFANTS IMMEDIATELY FROM THE MOMENT OF BIRTH and thereafter", providing coverage "for ILLNESS, INJURY, CONGENITAL MALFORMATION, OR PREMATURE BIRTH." "For purposes of this paragraph, 'NEWBORN INFANTS' INCLUDES GRANDCHILDREN WHO ARE FINANCIALLY DEPENDENT UPON A COVERED GRANDPARENT AND WHO RESIDE WITH THAT COVERED GRANDPARENT CONTINUOUSLY FROM BIRTH" - the "grandchild is not included" answer's error. "NO POLICY OR CONTRACT COVERED BY THIS SECTION MAY REQUIRE NOTIFICATION TO A HEALTH CARRIER AS A CONDITION FOR THIS DEPENDENT COVERAGE. However, if the policy or contract mandates an additional premium for each dependent, THE HEALTH CARRIER SHALL BE ENTITLED TO ALL PREMIUMS THAT WOULD HAVE BEEN COLLECTED had the health carrier been aware of the additional dependent. The health carrier MAY WITHHOLD PAYMENT of any health benefits for the new dependent UNTIL IT HAS BEEN COMPENSATED with the applicable premium." The carrier's remedy is money, not forfeiture of the cover - the "notice was required" answer's error; on a group policy the carrier may instead reduce the benefits owed by the amount of past due premiums. Paragraph (b) in each subdivision extends the coverage to "inpatient or outpatient expenses arising from medical and dental treatment UP TO THE LIMITING AGE FOR COVERAGE OF THE DEPENDENT, INCLUDING ORTHODONTIC AND ORAL SURGERY TREATMENT, involved in the management of birth defects known as CLEFT LIP AND CLEFT PALATE. BENEFITS FOR INDIVIDUALS AGE 19 UP TO THE LIMITING AGE ... ARE LIMITED TO inpatient or outpatient expenses arising from medical and dental treatment THAT WAS SCHEDULED OR INITIATED PRIOR TO THE DEPENDENT TURNING AGE 19." Limited, not extinguished - the "stops at age 19" answer's error. "IF ORTHODONTIC SERVICES ARE ELIGIBLE FOR COVERAGE UNDER A DENTAL INSURANCE PLAN AND ANOTHER POLICY OR CONTRACT, THE DENTAL PLAN SHALL BE PRIMARY and the other policy or contract shall be secondary", and treatment unrelated to the cleft condition is not covered under the provision at all.

A pooled self-insurance group advertises a subscriber contract providing prepaid benefits. A compliance officer says the marketing standards chapter cannot reach it, because the group is not an insurance company and what it issues is not a policy. He also asks what makes two products “similar policies” for the chapter's purposes.

1. He is right that the group is not an insurer but wrong about the contract: the definition of insurer is confined to entities engaged in the business of insurance, a pooled self-insurance group being regulated instead under the statutes that authorise it, while policy is drawn widely enough to reach a subscriber contract; similar policies are those providing the same benefits in the same amounts and on the same renewal terms.
2. He is wrong about the group but right about the contract: insurer expressly includes pooled and joint self-insurance groups, but policy is confined to evidence of coverage issued on an indemnity or reimbursement basis, prepaid and service arrangements being outside it; similar policies are those providing similar benefits, differences in amounts and terms being immaterial.
3. He is wrong on both counts: insurer includes a pooled or joint self-insurance group and any other legal entity engaged in the advertisement of a policy, and policy includes a subscriber contract issuing coverage under a self-insurance plan and coverage on a prepaid basis; similar policies are those providing similar benefits even though benefit amounts, elimination periods, renewal terms or ancillary benefits differ. ✓
4. He is wrong on both counts, but the test for similar policies is narrower than he supposes: policies are similar only where the benefits and the renewal terms are the same, differences in benefit amounts and elimination periods being permitted while a difference in renewal terms takes two products out of the comparison.

Why: Minn. R. 2790.0100 subp. 5 defines “insurer” to include “any individual, corporation, association, partnership, reciprocal exchange, Lloyd's, fraternal benefits society, self-insurer, surplus line insurer, pooled or joint self-insurance group, or self-insurance administrator, nonprofit service plan, and any other legal entity engaged in the advertisement of a policy”, and adds that an insurer includes an affiliate of a group of insurers under common management and control. The list is deliberately wider than the business of insurance, which is what the "confined to entities engaged in the business of insurance" answer narrows it to. Subpart 7 defines “policy” to include any policy, plan, certificate, contract, agreement, statement of coverage, rider or endorsement, binder or other evidence of coverage “which provides insurance or self-insurance, whether on an indemnity, reimbursement, service, or prepaid basis”, and expressly includes “any subscriber contract issuing coverage under a self-insurance plan, annuity, group self-insurance, or pooled or joint self-insurance employee plan” - so prepaid and service arrangements are named, which is the "prepaid and service arrangements being outside it" answer's error. Subpart 10: “'Similar policies' include policies which provide similar benefits even though there may be differences in benefit amounts, elimination periods, renewal terms, or ancillary benefits.” Renewal terms are on the list of permitted differences, which is where the "a difference in renewal terms" answer reverses it.

A Minnesota examiner assigned to examine a life insurer holds a policy issued by that insurer and has a mortgage on their home from a regulated entity taken on ordinary commercial terms. The insurer objects that the examiner is conflicted. Separately the insurer threatens to sue the examiner for statements made in the draft report.

1. Neither holding disqualifies the examiner: the department must have procedures so that no examiner has a conflict of interest or is affiliated with management or owns a pecuniary interest in an examinee, but that is expressly not to be construed to preclude an examiner from being a policyholder or claimant, or a grantor of a mortgage on the examiner's residence to a regulated entity on customary terms in the ordinary course of business; and no cause of action arises against an examiner for statements made or conduct performed in good faith. ✓
2. Both holdings disqualify the examiner, the conflict of interest requirement being absolute and admitting of no exceptions; and the examiner enjoys no immunity, answering in the ordinary way for any statement made in an examination report that proves inaccurate, whether or not it was made in good faith at the time.
3. Neither holding disqualifies the examiner, and the examiner is immune from suit; but the immunity is absolute rather than conditional on good faith, so an examiner is protected even where the statement complained of was made maliciously or with knowledge of its falsity; and the department may never retain an actuary, certified public accountant or similar independent professional who is from time to time also employed or retained by persons subject to examination, whatever safeguards the particular engagement contains and however that other employment is disclosed.
4. The policy does not disqualify the examiner but the mortgage does, a debt owed to a regulated entity being a pecuniary interest for this purpose even where the loan was made upon customary terms in the ordinary course of business; and the examiner is immune for statements made in good faith, but that immunity does not extend to the commissioner or the commissioner's authorized representatives, who answer in the ordinary way for statements made in an adopted examination report, and does not reach statements made in a draft report circulated to the company before adoption.

Why: Minn. Stat. 60A.031 subd. 7a requires the department to establish reasonable procedures so that no examiner, directly or indirectly, has a conflict of interest or is affiliated with the management of, or owns a pecuniary interest in, a person subject to examination. It then lists four things the rule “shall not be construed to automatically preclude an examiner from being”: a policyholder or claimant under an insurance policy; a grantor of a mortgage or similar instrument on the examiner's residence to a regulated entity “if done under customary terms and in the ordinary course of business”; an investment owner in shares of regulated diversified investment companies; and a settlor or beneficiary of a blind trust into which otherwise impermissible holdings have been placed. Both of the insurer's objections fall inside that list. The subdivision also expressly preserves the commissioner's ability to retain, on an individual basis, qualified actuaries, certified public accountants or similar independent professionals “even though the persons may from time to time be similarly employed or retained by persons subject to examination”. Subdivision 9 supplies the immunity and its scope is wider than the examiner: no cause of action arises nor liability is imposed against “the commissioner, the commissioner's authorized representatives, or an examiner appointed by the commissioner for statements made or conduct performed IN GOOD FAITH while carrying out the provisions of this section”. Good faith is the condition, so the immunity is qualified rather than absolute. Paragraph (b) gives a matching protection to a person who communicates or delivers information to the commissioner in good faith and without fraudulent intent, paragraph (c) preserves other privileges and immunities, and paragraph (d) allows a protected person who prevails in a libel, slander or similar action to be awarded attorney fees and costs where the party bringing it “was not substantially justified”, which the subdivision defines as having a reasonable basis in law or fact when the proceeding began.

Under a 'per capita' beneficiary designation, if one of several named beneficiaries dies before the insured, that share:

1. Passes down to that deceased beneficiary's own children
2. Is retained by the insurer as an unclaimed windfall
3. Is divided among the surviving named beneficiaries ✓
4. Reverts to the policyowner's estate for probate handling

Why: Per capita splits proceeds equally among the surviving named beneficiaries; per stirpes instead sends a deceased beneficiary's share to that person's descendants.

A 'dual eligible' individual is someone who qualifies for:

1. Both an HSA and a flexible spending account together
2. Both Medicare and Medicaid ✓
3. Medicare Part A but not Part B coverage
4. Two separate private major medical plans at once

Why: Dual eligibles qualify for both Medicare and Medicaid; Medicaid may help cover Medicare premiums and cost sharing for those with limited income.

A variable life insurance policy typically guarantees:

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

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

For group term life insurance, the cost of employer-provided coverage exceeding $50,000 is:

1. Taxed only when the employee eventually leaves the company
2. Exempt from tax because all group life is a tax-free benefit
3. Imputed as taxable income to the covered employee ✓
4. Fully deductible by the employee on their personal return

Why: Employees are taxed (imputed income, via IRS Table I) on the cost of employer-paid group term coverage above $50,000.

Three questions arise on a Minnesota participating life policy. When must the company begin determining the policyholder's share of divisible surplus, when does the owner acquire a right to take the dividend in cash, and within what period must the company settle a claim once due proof of death has been received?

1. The company must determine and account for divisible surplus beginning not later than the end of the first policy year; the owner may take the dividend in cash from the first year in which one is declared; and settlement must be made within sixty days after the date of death rather than after receipt of proof of it.
2. The company must begin determining divisible surplus not later than the end of the third policy year and the owner may take cash dividends each year after the fifth; but the settlement provision fixes no outside period, requiring only that payment be made within a reasonable time after the company has completed its investigation of the claim.
3. The company must begin determining divisible surplus not later than the end of the fifth policy year and the owner may take cash dividends each year after the third; and settlement must be made within two months after receipt of due proof of death, the two periods running in that order because a dividend right cannot precede the first determination.
4. The company must annually determine and account for the portion of divisible surplus accruing on the policy beginning not later than the end of the third policy year; the owner has the right each year after the fifth to have the current dividend paid in cash; and settlement must be made within two months after receipt of due proof of death. ✓

Why: Two paragraphs of Minn. Stat. 61A.03 subd. 1 answer this. Paragraph (f) requires a participating policy to provide that it will participate in the surplus of the company and that “beginning not later than the end of the THIRD policy year, the company will annually determine and account for the portion of the divisible surplus accruing on the policy”, and that the owner “has the right, EACH YEAR AFTER THE FIFTH, to have the current dividend arising from the participation paid in cash”. Third for the determination, fifth for the cash right - the "not later than the end of the fifth policy year" answer swaps them, which is the natural error since the two figures sit in one sentence. The same paragraph requires the policy to specify which dividend option is effective if the owner elects none, permits any dividend payable during the first five years to be conditioned on payment of the next ensuing annual premium, and disapplies the whole requirement to nonparticipating policies, policies issued on under-average lives, and insurance issued in exchange for lapsed or surrendered policies. Paragraph (i) supplies the settlement rule and it is a fixed outside period rather than a reasonableness standard - the "no outside period" answer's error: “when a policy becomes a claim by the death of the insured, settlement will be made within TWO MONTHS AFTER RECEIPT OF DUE PROOF OF DEATH”. The clock runs from receipt of proof, not from the death itself, which is where the "rather than after receipt of proof" answer goes wrong.

A resident individual producer asks two things about the document she has been issued: what keeps it in force from year to year, and what it has to say on its face.

1. It remains in effect unless revoked or suspended for as long as the fee is paid by the renewal date, continuing education and additional documentation being conditions of renewal that the commissioner enforces separately rather than conditions of the licence remaining in effect; and it must contain her name, address, producer licence number and lines of authority, the date of issuance and expiration date being held on the Department's record rather than shown on the document.
2. It remains in effect unless revoked or suspended for as long as the fee is paid, continuing education requirements for resident individual producers are met, and all additional documentation required by the commissioner is provided by the renewal date; and it must contain her name, address, producer licence number, date of issuance, lines of authority, expiration date and anything else the commissioner considers necessary. ✓
3. It is issued for a fixed term and must be renewed on application before the expiration date, the statute providing no continuing effectiveness independent of that renewal; and it must contain her name, address, producer licence number, date of issuance, lines of authority and expiration date, the commissioner having no power to require anything further on the face of the document.
4. It remains in effect unless revoked or suspended for as long as the fee is paid, continuing education requirements are met and additional documentation is provided by the renewal date, the continuing education condition applying to resident and nonresident individual producers alike; and it must contain her name, address and lines of authority, the producer licence number being assigned separately for the Department's own use.

Why: Minn. Stat. 60K.38 subd. 2 provides that “an insurance producer license remains in effect unless revoked or suspended as long as the fee set forth in section 60K.55 is paid, continuing education requirements for resident individual producers are met, and all additional documentation required by the commissioner is provided by the renewal date”. Continuing effectiveness is therefore the rule and the three conditions are conditions of it, not a separate renewal regime - which is where the "conditions of renewal that the commissioner enforces separately" and "issued for a fixed term" answers depart from the text. The subdivision attaches the continuing education condition to “resident individual producers”, a limb the "resident and nonresident individual producers alike" answer extends to nonresidents; section 60K.53 subd. 2 shows why the distinction matters. Subdivision 5 lists what the licence must contain: “the licensee's name, address, producer license number, and the date of issuance, the lines of authority, the expiration date, and any other information the commissioner considers necessary”. The producer licence number and the dates are on that list, and the closing words give the commissioner exactly the power the "issued for a fixed term" answer denies.