Minnesota Life & Health Insurance License, Practice Exams

A lender wants group life on a pool of eight mortgage borrowers, for the loan balance plus an amount equal to two monthly payments. Its application form does not mention that the insurance is optional. A borrower whose group cover ends asks about converting. Separately an insurer proposes group cover excluding a person whose individual insurability it is not satisfied about.

1. The pool is large enough - such a master policy may be issued to cover groups of not less than five debtors of a creditor - but the notice is required, and each application offered before or at loan closing must state clearly and conspicuously that the insurance is optional and is not a condition of obtaining the loan; the borrower may convert without evidence of insurability to an individual decreasing term policy within 30 days of termination for any reason other than nonpayment of premiums, at the same premium; but an insurer may not exclude or limit coverage on a person whose individual insurability is unsatisfactory to it, group underwriting being done on a pooled basis rather than life by life.
2. The pool is too small and the notice is required; but the conversion is to an individual policy in any one of the forms the insurer customarily issues except term insurance, in line with the general group conversion right, and it must be applied for within 31 days of termination; and the insurer may exclude or limit coverage on a person whose individual insurability is not satisfactory to it. The two conversion rights are otherwise identical in substance, both being exercisable without evidence of insurability and both preserving the amount of protection the borrower held at termination, so the only differences are the single day between the windows and the form the replacement contract takes.
3. The pool is too small - the minimum is ten debtors of a creditor - the notice is required, the conversion right is as described, and an insurer may exclude a person whose individual insurability is unsatisfactory; but the amount insured may not exceed the actual amount of the borrower's indebtedness, the additional amount equal to two monthly payments being available only where the loan carries a variable rate of finance charge, so a policy written for the loan balance plus two monthly payments on this fixed-rate pool exceeds the ceiling the subdivision sets, and the certificate would have to be reissued for the lower amount.
4. The pool is too small - such policies may be issued to cover groups of not less than ten debtors of a creditor - and each application offered before or at loan closing must contain a clear and conspicuous notice that the insurance is optional and is not a condition of obtaining the loan; the borrower may convert without evidence of insurability to an individual decreasing term policy within 30 days of termination for any reason other than nonpayment of premiums, at the same premium; and an insurer may exclude or limit coverage on a person whose individual insurability is not satisfactory to it. ✓

Why: Minn. Stat. 61A.09 subd. 3(a) permits group life policies “to cover groups of not less than ten debtors of a creditor written under a master policy issued to a creditor to insure its debtors in connection with real estate mortgage loans, in an amount not to exceed the actual amount of their indebtedness plus an amount equal to two monthly payments or scheduled amount of their indebtedness, plus an amount equal to two monthly payments, whichever is greater” - ten, not five, and the two monthly payments are part of the general ceiling rather than a variable-rate special, which is the "variable rate of finance charge" answer's misreading; the variable rate sentence that follows governs which rate is used to compute the scheduled amount. “Each application for group mortgage insurance offered prior to or at the time of loan closing shall contain a clear and conspicuous notice that the insurance is optional and is not a condition for obtaining the loan.” The certificate must include “a conversion privilege permitting an insured debtor to convert, without evidence of insurability, to an individual policy of DECREASING TERM insurance within 30 days of the date the insured debtor's group coverage is terminated for any reason other than the nonpayment of premiums”, in an amount equal to the terminated cover, decreasing over a term corresponding to the mortgage, at the same premium - a different right from the general 31-day conversion in subd. 1(h), which is what the "except term insurance" answer substitutes. Subdivision 4(4): “an insurer may exclude or limit the coverage on any person as to whom evidence of individual insurability is not satisfactory to the insurer”, which the "may not exclude or limit coverage" answer denies.

At contract signing a provider tells the viator its name and address and the current death benefit, and nothing else. The broker tells the viator his own name and address and nothing else. The provider later changes the beneficiary and writes to the insured about it 35 days afterwards. The policy is a joint policy with a family rider.

1. All four are deficient: the provider must also disclose any affiliation with the issuer of the policy, any affiliations or contractual arrangements with the broker, whether funds will be escrowed with an independent third party together with that agent's details and the viator's right to inspect the escrow documents, and, on a joint policy or one involving family riders, must inform the viator of the possible loss of coverage on the other lives and advise consulting the producer or issuing insurer; the broker must also disclose a full, complete and accurate description of all offers, counteroffers, acceptances and rejections, any affiliations with a person making an offer, the name of each broker receiving compensation and the amount, and where compensation comes out of an offer, the total amount of the offer and the percentage his compensation represents; and a change of ownership or beneficiary must be communicated in writing to the insured within 20 days. ✓
2. Three are deficient but the beneficiary notice is in time: the provider must communicate a change of ownership or beneficiary to the insured within 60 days, the 20-day figure belonging to the notice a provider gives the insurer that a policy has become a viaticated policy; the provider and broker disclosure lists are as described.
3. Two are deficient - the provider's list and the broker's list. The joint policy point is a matter for the insurer rather than the provider, since only the insurer knows what other lives the contract covers; and the beneficiary notice is owed to the insurer rather than to the insured, the insured having no continuing interest once the policy is sold; and the provider's own list is in any event satisfied by naming itself and stating the death benefit, the affiliation and escrow items belonging to the information a provider files with the commissioner on its licence application rather than to anything the viator is entitled to see, since a viator who is being paid a fixed sum has no interest in how the provider is funded or in who holds the money before it reaches him; and the joint policy warning is owed only where the viator asks about the other lives covered, a provider being under no duty to volunteer what the viator can read on the face of the policy he is selling.
4. All four are deficient, and the broker's compensation disclosure goes further: he must disclose the amount of compensation received by every broker in the chain and by the provider, since a viator cannot judge an offer without knowing what everyone between him and the money is taking out of it.

Why: Minn. Stat. 60A.9577 subd. 2 lists six disclosures the PROVIDER owes no later than the date the contract is signed, conspicuously displayed in the contract or in a separate document signed by the viator: "(1) the AFFILIATION, IF ANY, BETWEEN THE VIATICAL SETTLEMENT PROVIDER AND THE ISSUER of the insurance policy to be viaticated; (2) the ... NAME, BUSINESS ADDRESS, AND TELEPHONE NUMBER of the viatical settlement provider; (3) any AFFILIATIONS OR CONTRACTUAL ARRANGEMENTS BETWEEN THE PROVIDER AND THE BROKER; (4) if an insurance policy to be viaticated has been issued as a JOINT POLICY OR INVOLVES FAMILY RIDERS or any coverage of a life other than the insured ... the viator shall be informed of the POSSIBLE LOSS OF COVERAGE ON THE OTHER LIVES and shall be advised to consult with the viator's insurance producer or the insurer issuing the policy; (5) state the DOLLAR AMOUNT of the current death benefit" and, if known, additional guaranteed insurance benefits and accidental death and dismemberment benefits and the extent to which the viator's interest in them transfers; "and (6) state WHETHER THE FUNDS WILL BE ESCROWED with an independent third party", with that agent's name, address and telephone number and the fact that the viator may inspect or receive copies of the escrow or trust documents. The joint policy duty is on the provider, which is the "a matter for the insurer rather than the provider" answer's error. Subd. 3 lists five disclosures the BROKER owes on the same timing: his name, business address and telephone number; "a FULL, COMPLETE, AND ACCURATE DESCRIPTION OF ALL OFFERS, COUNTEROFFERS, ACCEPTANCES, AND REJECTIONS"; written disclosure of affiliations or contractual arrangements with any person making an offer; "the NAME OF EACH BROKER WHO RECEIVES COMPENSATION AND THE AMOUNT of compensation received by that broker"; and where any part of it comes out of a proposed offer, "the TOTAL AMOUNT OF THE VIATICAL SETTLEMENT OFFER AND THE PERCENTAGE of the ... offer comprised by the ... broker's compensation." The list names brokers, not the provider's own margin, which is the "AND by the provider" answer's addition. Subd. 4: "If the viatical settlement provider transfers ownership or changes the beneficiary ... the provider shall communicate IN WRITING the change ... TO THE INSURED WITHIN 20 DAYS after the change" - to the insured, and 20 days, which is the "within 60 days" answer's confusion with the separate 20-day notice to the INSURER under Minn. Stat. 60A.9579 subd. 1(b).

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.

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.

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.

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.

Two advertisements are reviewed. The first is for an individual policy and says the cover “continues as long as you need it”, saying nothing about the insurer's right not to renew. The second is for a group policy and describes the benefits without setting out the group contract's renewal and termination terms.

1. Both breach the part: an advertisement which refers to renewability, cancelability or termination, or to a policy benefit, or which states or illustrates time or age in connection with eligibility or continuation, must disclose the provisions relating to renewability, cancelability and termination, and the part draws no distinction between individual and group advertising in imposing that duty.
2. The first breaches the part; the second does not, but only if it states as a minimum that the insured's coverage is contingent on continued membership in the group and on continuation of the plan - an advertisement of a group or blanket policy being relieved of the full disclosure of renewability, cancelability and termination provisions but not of that minimum. ✓
3. Neither breaches the part: the first says nothing about renewability in terms, and the disclosure duty is triggered only by an express reference to renewal, cancellation or termination; the second is relieved of the duty altogether because the group contract is made between the insurer and the group rather than with the insured, whose rights arise under a certificate.
4. The first breaches the part and the second does not, the relief for group and blanket advertising being unconditional: members' rights rest on a contract they are not parties to, so an advertisement that summarised its renewal terms would mislead more than it informed.

Why: Minn. R. 2790.0700 has three sentences. The first fixes the trigger widely: an advertisement “which refers to renewability, cancelability, or termination of a policy, or which refers to a policy benefit, or which states or illustrates time or age in connection with eligibility of applicants or continuation of the policy, must disclose the provisions relating to renewability, cancelability, and termination and any modification of benefits, losses covered, or premiums because of age or for other reasons, in a manner which would not have the capacity or tendency to mislead, deceive, minimize, or render obscure the qualifying conditions”. A reference to a POLICY BENEFIT is enough, so the "Neither breaches the part" answer's requirement of an express reference to renewal is wrong, and “continues as long as you need it” refers to continuation as well. The second sentence gives the group relief: “An advertisement of a group or blanket policy which would otherwise be subject to the disclosure requirements of this part need not disclose the policy's provisions relating to renewability, cancelability, and termination” - so the part does distinguish, which is the "draws no distinction" answer's error. The third sentence attaches the condition the "being unconditional" answer drops: “The advertisement must provide, however, as a minimum, that an insured's coverage is contingent upon his or her continued membership in the group and the continuation of the plan.”

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 Section 1035 exchange permits a tax-free exchange of:

1. An annuity for stocks
2. A life insurance policy for an annuity ✓
3. A life policy for a mutual fund
4. An annuity for a life insurance policy

Why: 1035 allows tax-free life-to-life, life-to-annuity, and annuity-to-annuity exchanges, but NOT annuity-to-life.

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.

Federal law (IRC 101(j)) generally requires that, for employer-owned life insurance death proceeds to remain tax-free, the employer must:

1. Pay the employee a cash bonus equal to the death benefit
2. Surrender the policy if the employee ever changes jobs
3. Limit the coverage to highly compensated executives only
4. Notify the employee and obtain consent before issue ✓

Why: For employer-owned (COLI/BOLI) policies, the insured employee must be notified and consent in writing before issue, or the death benefit above basis becomes taxable.

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.

A pre-existing condition provision in a health policy refers to a condition for which the insured:

1. Received advice or treatment before the policy's effective date ✓
2. Must pay a permanently rated-up premium for as long as the policy stays in force
3. Automatically qualifies for an accelerated benefit equal to part of the face amount
4. Will never be covered under the policy, no matter how many years pass

Why: A pre-existing condition is one for which the insured received diagnosis, advice, or treatment within a stated period before the coverage took effect.

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.

The reinstatement provision of a lapsed life policy generally allows the owner to restore coverage by:

1. Surrendering a different policy they own with the insurer
2. Waiting until the original contestable period has expired
3. Paying back premiums with interest and proving insurability ✓
4. Simply notifying the insurer that they wish to continue it

Why: Reinstatement typically requires payment of overdue premiums with interest, repayment or reinstatement of any loan, and evidence of insurability, usually within a set period after lapse.

Because an insurance policy is drafted entirely by the insurer and the applicant simply accepts it, it is legally a contract of:

1. Aleatory exchange, in which the dollar amounts traded by the parties are unequal
2. Indemnity
3. Adhesion ✓
4. Warranty

Why: A contract of adhesion is written by one party and offered on a take-it-or-leave-it basis, so ambiguities are construed against the drafter (the insurer).

A provider submits a prelicensing course for approval. It runs to 20 hours, is offered to applicants for the property line, and covers types of policies, policy provisions, perils, exclusions, deductibles, liability and evaluating needs, but says nothing about Minnesota law. The provider argues that law is covered in the introductory course every applicant takes.

1. The course is deficient: a course covering a specific major line of authority must include, for property, personal lines, commercial lines and the Minnesota laws, rules and regulations pertinent to property insurance, and that content is required of the line course whatever the introductory course contains. ✓
2. The course is sufficient: the requirement that Minnesota laws, rules and regulations be covered belongs to the introductory course, which must consist of rules, regulations and law, and a line course carries the technical content of the line alone, so the law need not be taught twice.
3. The course is deficient only as to its hours: prelicense education runs to 20 hours per line of authority and a single-line course that also carries the law content must run to 40, the prescribed topics being a minimum the commissioner may excuse on a showing of equivalent coverage elsewhere.
4. The course is sufficient as to content but must be resubmitted as a general course: the section prescribes content for a course covering all of the major lines and not for one confined to a single line, which is permitted only for variable life and variable annuity products.

Why: Minn. Stat. 60K.361 paragraph (a) fixes prelicense education at “20 hours of education per line of authority”. Paragraph (b) prescribes the content of the introductory course, which must cover all of the major lines except variable life and variable annuities and must consist of rules, regulations and law; basic fundamentals of insurance; and then property, casualty, life and accident and health topics. Paragraph (c) prescribes separately what “courses that cover a specific major line of authority” must include, and for property that is “(i) personal lines; (ii) commercial lines; and (iii) Minnesota laws, rules, and regulations pertinent to property insurance”. The two paragraphs operate together, so the law content required of a line course by paragraph (c) is not discharged by the law content required of the introductory course by paragraph (b) - which is the "law need not be taught twice" answer's error. Single-line courses are expressly contemplated by paragraph (c), disposing of the "resubmitted as a general course" answer, and nothing in the section gives the commissioner a dispensing power over the prescribed content, which is the "deficient only as to its hours" answer's invention.

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

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

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

A flexible spending account (FSA) is characterized by which feature?

1. Generally 'use it or lose it' — unused funds may be forfeited each year ✓
2. Full portability, moving with the employee from job to job for life
3. Eligibility only for those enrolled in a high-deductible health plan
4. Tax-free growth of invested balances over the employee's career

Why: An FSA is employer-established, funded with pre-tax salary deferrals, and is generally use-it-or-lose-it within the plan year (limited carryover/grace).

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.

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.

A Medicare beneficiary delayed Part D for three years without other creditable drug coverage. The result is:

1. A one-time penalty collected at the first prescription fill
2. A permanent late-enrollment surcharge added to the Part D premium ✓
3. No consequence, because Part D enrollment is voluntary
4. A permanent bar from enrolling in any Part D drug plan

Why: Going without creditable coverage adds a permanent late-enrollment surcharge to the Part D premium.

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.

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 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.

A tax-qualified long-term care policy that meets federal standards generally offers:

1. Coverage only for care delivered in a skilled nursing facility
2. Tax-free benefits and premiums that may be deductible within limits ✓
3. A guaranteed cash refund of all premiums at the insured's death
4. Benefits that are always fully taxable as ordinary income

Why: Tax-qualified LTC policies (under HIPAA standards) pay benefits income-tax-free (within per-diem limits) and allow a limited premium deduction.

Long-term care benefits are most often triggered by a covered person's inability to perform a stated number of activities of daily living OR by:

1. Voluntary retirement from full-time employment
2. A temporary illness expected to resolve within a week
3. Severe cognitive impairment such as dementia ✓
4. Reaching the policy's stated maturity age while healthy

Why: Benefits trigger on inability to perform a set number of ADLs (usually 2 of 6) or on severe cognitive impairment.

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.

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.

An insurer terminates an agent's appointment. Part of its reason is an unremitted premium it has been chasing; it also knows of an allegation, which it has not investigated, that the agent altered an application. It plans to write to the commissioner in a month's time saying only that the appointment has ended by mutual agreement.

1. That will not do as to the content, but a month is inside the deadline: the rule allows 30 days from the date of the termination for the written statement, and the ten working days it names is the time within which the insurer must hand the agent a copy of everything it sends the commissioner. The content fails because a bare assertion of mutual agreement supplies none of what the statement must contain - the reason for the termination, the names, addresses and available telephone numbers of every person with knowledge of the matter, the applications, checks and other documents relating to the allegation that are in the insurer's possession or control, copies of every statement or affidavit taken, and a current statement of the agent's account.
2. That will not do: an insurer or agency terminating an agent's appointment, contract or association based entirely or in part on a complaint or alleged violation of law, or with knowledge of an alleged violation, including failure to remit premiums, must within ten working days forward the commissioner a written statement of the reason, including the names, addresses and any telephone numbers of all persons having knowledge of the matter, copies of applications, checks or other documents relating to the matter in its possession or control, copies of all statements or affidavits taken, and a current statement of the agent's account. ✓
3. That will do: the rule bites only where the termination is based entirely on a complaint or an alleged violation of law, and this one rests only in part on the unremitted premium, the balance being an ordinary commercial decision the insurer may describe to the commissioner as it wishes.
4. That will not do, and the rule asks more of the insurer than that: alongside the reason and the documents, it must forward the findings of any investigation into the allegation, so an insurer that knows of an allegation it has never looked into must complete an inquiry into the claimed alteration of the application before the ten-working-day statement can properly be filed at all. That duty is why the rule speaks of documents in the insurer's possession or control: control extends to material the insurer could obtain by asking its own staff and the applicant, and an insurer that reports without those findings is in breach whatever else its statement sets out about the unremitted premium.

Why: Minn. R. 2795.1600 requires an insurer or agency “which terminates an agent's appointment, or its contract or association with an agent based entirely or in part on a complaint or alleged violation of law, or with knowledge of an alleged violation of law, including, but not limited to, the failure to remit premiums”, to forward the commissioner a written statement of the reason for the termination “within ten working days of the termination”. “Entirely or in part” is in the trigger, so a mixed reason engages it - the "That will do" answer's error - and so does mere knowledge of an alleged violation. The period is ten working days and is the period for the statement itself, not for a copy to the agent, which is the "a month is inside the deadline" answer's invention. The statement “must include the names, addresses, and, if available, telephone numbers of all persons having knowledge of the matter; copies of any applications, checks, or other documents relating to the complaint or alleged violation which are in the insurer's or agency's possession or control; copies of all statements or affidavits taken from any person in connection with the complaint or allegations; and a current statement of the agent's account with the insurer or agency”. Documents in the insurer's possession or control are what must be forwarded; nothing requires an investigation to be carried out first, which is the "findings of any investigation" answer's addition.

A replacing agent shows an applicant a printed comparison of the two policies and keeps the only copy. He sends the insurer the application and the applicant's signed statement but not the replacement notice. Meanwhile the existing insurer's agent visits the applicant with a printed sheet arguing against the change, and takes that sheet away with him.

1. The first two are breaches; the third is not: the conservation duty in the section binds the replacing agent alone, an existing insurer defending business it already holds being outside a statute written to regulate those who propose replacements, and the printed sheet the existing insurer's agent used is his own sales material to take away with him; the replacing agent's failures are as described, since he must leave the applicant the original or a copy of any written or printed communication used in his presentation and must submit the fully completed and signed replacement notice to the replacing insurer with the application.
2. Only the second is a breach: the duty to leave printed material with the applicant attaches to the replacement notice alone, any comparison sheet or illustration the agent prepared for the interview remaining his own property, and the conservation provision requires only that material used to dissuade a policy owner not be substantially inaccurate rather than that a copy of it be left behind; the failure to submit the signed notice to the replacing insurer with the application is a breach, that clause naming both the document and the moment expressly.
3. All three are breaches, and the replacing agent has a fourth problem: the copy of the completed notice must go to the existing insurer as well as to the replacing insurer, direct from the agent and with the application, so that the existing insurer learns of the proposal at the same moment the replacing insurer does rather than afterwards; the five working day period elsewhere in the act governs only the case in which the agent has failed to send the notice with the application as this section requires.
4. All three are breaches: the replacing agent must leave with the applicant the original or a copy of any written or printed communications used for presentation to the applicant; he must submit to the replacing insurer with the application a copy of the fully completed and signed replacement notice; and each agent or broker who uses written or printed communications in a conservation must leave with the applicant the original or a copy of those communications. ✓

Why: Minn. Stat. 61A.55 subd. 2 imposes three duties on the agent where a replacement is involved. Clause (2): "LEAVE WITH THE APPLICANT the original or a copy of ANY WRITTEN OR PRINTED COMMUNICATIONS USED FOR PRESENTATION to the applicant" - all such material, not only the notice, which is the "attaches to the REPLACEMENT NOTICE alone" answer's error. Clause (3): "SUBMIT TO THE REPLACING INSURER WITH THE APPLICATION a copy of the fully completed and signed replacement notice provided under this subdivision." The agent's copy goes to the replacing insurer; it is the replacing INSURER, under Minn. Stat. 61A.57 paragraph (b) clause (2), that then writes to each existing insurer within five working days - which is why the "EXISTING insurer as well" answer's extra duty is not one the agent owes. Subd. 3 is a separate duty binding the OTHER side of the transaction: "Each agent or broker WHO USES WRITTEN OR PRINTED COMMUNICATIONS IN A CONSERVATION shall leave with the applicant the original or a copy of the communications." Conservation is defined in Minn. Stat. 61A.53 subd. 3 as the existing insurer's attempt to dissuade, so the subdivision is aimed squarely at the existing insurer's agent, which is the "binds the REPLACING agent alone" answer's error.

A convertible term policyholder converts to whole life before the conversion deadline. They:

1. Can only convert to another term policy
2. Need not provide new evidence of insurability ✓
3. Forfeit all prior premiums paid
4. Must pass a new medical exam

Why: A conversion privilege lets the insured switch term to permanent coverage without new evidence of insurability.

A plan has a $500 deductible, 80/20 coinsurance, and a $2,500 out-of-pocket maximum. On a $25,000 bill, the insured pays:

1. $2,500 ✓
2. $5,400
3. $4,900
4. $500

Why: Deductible $500 + 20% of $24,500 = $5,400, but the $2,500 out-of-pocket maximum caps the insured's cost at $2,500.

A 'per-cause' deductible differs from a calendar-year deductible because the per-cause deductible:

1. Applies separately to each distinct illness or injury ✓
2. Is satisfied only once for all claims in a given year
3. Decreases automatically with each year the policy is held
4. Is waived entirely for any in-network covered service

Why: A per-cause (per-occurrence) deductible must be met for each separate cause of loss; a calendar-year deductible applies once per year across all causes.

Under a 'recurrent disability' provision, if the insured becomes disabled again from the same cause within the stated time, the insurer treats it as:

1. Grounds to cancel the policy and refund the premiums paid since the first disability
2. A continuation of the prior claim, with no new elimination period ✓
3. An automatic doubling of the monthly benefit for the second period of disability
4. A new claim with a new elimination period

Why: A recurrence of the same disability within the stated period (e.g., six months) is a continuation, so the insured need not satisfy a new elimination period.

Medicare Part B generally pays what share of the approved amount after the annual deductible is met?

1. 80% ✓
2. 100%
3. 50%
4. 20%

Why: After the Part B deductible, Medicare typically pays 80% of the approved amount and the beneficiary pays the remaining 20% coinsurance.

In a whole life policy, the 'net amount at risk' is the:

1. Difference between the death benefit and the cash value ✓
2. Cash value remaining after a policy loan is repaid
3. Total of all premiums the policyowner has paid to date
4. Portion of the premium used to cover the insurer's expenses

Why: The net amount at risk is the death benefit minus the accumulated cash value; it shrinks over time as the cash value grows toward the face amount.

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 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.

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.

An agent recommends a long-term care policy to a client without considering whether it fits her circumstances. A different insurer markets group coverage on a direct response basis with no agent contact and asks what standard it must meet. A third asks how a health plan's specific policy limit is to be measured.

1. The suitability duty applies as described, but there is no relaxation for direct response group business - the insurer must satisfy itself as to each member of the group - and a policy limit is calculated using the billed charge, which is the figure the provider has actually claimed.
2. The suitability duty applies only to annuity and Medicare supplement business, those being the products where unsuitable sales have caused most concern; the direct response relaxation and the policy limit rule apply as the subdivision states them.
3. The suitability duty and the relaxation for group coverage marketed on a direct response basis without agent contact are as described; but a policy limit must always be calculated using the amount actually paid, with no exception, the reference to the billed charge going to what the provider may recover from the patient rather than to the calculation of the limit; and the suitability duty is discharged, for every product on the list, once the insurer has obtained a signed acknowledgement from the customer that the recommendation was explained to her, the subdivision treating that acknowledgement as conclusive evidence of reasonable grounds and leaving the insurer free to rely on it however the recommendation was in fact arrived at and however little the agent knew of her circumstances.
4. In recommending or issuing life, endowment, individual accident and sickness, long-term care, annuity, life-endowment or Medicare supplement insurance, an insurer, directly or through its agent, must have reasonable grounds for believing the recommendation is suitable for the customer; for group insurance marketed on a direct response basis without direct agent contact it is enough that the insurer has reasonable grounds to believe the insurance is generally suitable for the group to whom the offer is made; and a specific policy limit must be calculated using the amount actually paid on behalf of the insured for covered services, unless that amount is greater than the billed charge. ✓

Why: Minn. Stat. 72A.20 subd. 34 states the suitability duty across a named list of products - “life, endowment, individual accident and sickness, long-term care, annuity, life-endowment, or Medicare supplement insurance” - so it is far wider than the two products the "only to annuity and Medicare supplement business" answer confines it to. The insurer must have “reasonable grounds for believing that the recommendation is suitable for the customer”, and the duty binds the insurer “either directly or through its agent”. The second paragraph supplies the relaxation the "no relaxation for direct response group business" answer denies: “In the case of group insurance marketed on a direct response basis without the use of direct agent contact, this subdivision is satisfied if the insurer has reasonable grounds to believe that the insurance offered is generally suitable for the group to whom the offer is made.” Subd. 35 requires a health plan with a specific policy limit to “calculate the policy limit by using the amount ACTUALLY PAID on behalf of the insured ... UNLESS THE AMOUNT PAID IS GREATER THAN THE BILLED CHARGE” - so there is an exception, which the "with no exception" answer removes, and the default is the amount paid rather than the billed charge, which the "no relaxation for direct response group business" answer reverses. The subdivision does not permit a limit that the Affordable Care Act prohibits.

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.

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.

An endowment policy is distinguished by the fact that it:

1. Pays the face amount at a set maturity date if the insured is still living ✓
2. Decreases its face amount steadily over the policy's term
3. Provides only temporary coverage that expires with no value
4. Invests the entire premium in the insurer's separate investment accounts chosen by the owner

Why: An endowment pays the face amount either at the insured's death or upon reaching the maturity date while living; modern tax rules limit their use.

A course provider submits a seminar for accreditation. Roughly half of it deals with insurance law and practice and half with general business development. The provider says it is for the Department to show why the seminar should not be accredited, and asks who fixes the credit hours.

1. The burden is the other way - it is on the individual or organisation seeking accreditation to demonstrate that the course is designed to impart substantive and procedural knowledge of the insurance field - and the course may be accredited only to that extent; the commissioner makes the final determination as to accreditation and the assignment of credit hours. ✓
2. The burden is on the Department once a course is submitted in proper form, accreditation being refused only where the commissioner can show that the course does not impart substantive and procedural knowledge of the insurance field; the commissioner makes the final determination as to accreditation, but the assignment of credit hours follows the contact hours the provider certifies.
3. The burden is on the provider, but accreditation is all or nothing: a course must be designed to impart substantive and procedural knowledge of the insurance field, and one that devotes half its time to general business development fails that test outright rather than being accredited for part of its hours; the commissioner assigns the credit hours.
4. The burden is on the provider and the course may be accredited to the extent it imparts substantive and procedural knowledge of the insurance field; but the assignment of credit hours is fixed by rule rather than by determination, the commissioner being required to adopt rules under the administrative procedure chapter before any course may be accredited at all.

Why: Minn. Stat. 60K.56 subd. 5(a) provides that “the commissioner may accredit a course only to the extent it is designed to impart substantive and procedural knowledge of the insurance field”, and that “the burden of demonstrating that the course satisfies this requirement is on the individual or organization seeking accreditation”. The words “only to the extent” contemplate partial accreditation, which is what the "all or nothing" answer's all-or-nothing reading loses, and the burden is expressly on the applicant, which is what the "burden is on the Department" answer reverses. The commissioner “is authorized to establish a procedure for renewal of course accreditation”. Subdivision 4(a) is equally direct: “The commissioner shall make the final determination as to accreditation and assignment of credit hours for courses” - so the hours are not the provider's to certify. Paragraph (b) requires the commissioner to adopt procedures for reporting compliance, and paragraph (c) says the commissioner “may adopt rules according to chapter 14 to carry out the purposes of this section” - a power, not a precondition, which is the "fixed by rule rather than by determination" answer's error.

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.

At death, an insured personally owned the policy on their own life. The death proceeds are:

1. Included in the insured's gross estate for estate-tax purposes ✓
2. Never reportable for any tax at all
3. Subject to income tax in the beneficiary's hands
4. Excluded from the estate because they go to a beneficiary

Why: Holding incidents of ownership causes the proceeds to be included in the insured's gross estate (though not subject to income tax).

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

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

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

A retiree takes a distribution from a traditional (qualified) 401(k). The distribution is:

1. Subject to capital-gains rates only
2. Fully taxable as ordinary income ✓
3. Completely income-tax-free
4. Taxed only on the growth portion

Why: Pre-tax qualified plan distributions are fully taxable as ordinary income when received.

A person whose producer licence lapsed two years ago continues to write applications and collect premiums for a client base he built while licensed. He asks what exposure he has under the licensing chapter itself, leaving aside any regulatory action.

1. He is guilty of a felony, the chapter grading the offence by reference to the premium collected while unlicensed, so that conduct extending over two years and involving an established client base is charged at the higher level rather than as a misdemeanour of any class.
2. He is guilty of a gross misdemeanour, the chapter making it an offence to act or assume to act as an insurance producer without a licence issued under it. ✓
3. He commits no offence under the chapter, which addresses unlicensed activity only through the commissioner's power to levy a civil penalty; criminal liability arises, if at all, under the general fraud provisions and requires proof that he held himself out as licensed rather than merely acted as a producer.
4. He is guilty of a misdemeanour, the chapter reserving the gross misdemeanour grading for a person who has never held a licence at all; a person whose licence has lapsed is treated more leniently on the footing that he was once found qualified for the lines concerned.

Why: Minn. Stat. 60K.33 is a single sentence: “A person who acts or assumes to act as an insurance producer without a license issued under this chapter is guilty of a gross misdemeanor.” The grading is fixed, so neither the volume of business nor the length of the conduct moves it up to a felony, as the "guilty of a felony" answer supposes, and nothing in the section distinguishes a person whose licence has lapsed from one who never held a licence, which is the "never held a licence at all" answer's invention. The offence is committed by acting or assuming to act as a producer, so holding oneself out as licensed is not an element, which disposes of the "commits no offence" answer; the commissioner's civil powers under section 60K.43 sit alongside the criminal provision rather than replacing it.

Four applicants say they need no prelicensing programme of studies. The first seeks the variable life and variable annuity line. The second holds a two-year Minnesota vocational school degree in insurance. The third seeks the life line and holds the Chartered Life Underwriter designation. The fourth seeks the accident and health line and holds the Chartered Life Underwriter designation.

1. All four are right: the professional designations named in the section operate generally once held, the division of the list between the life and the accident and health lines being a drafting convenience rather than a restriction, so that a designation earned in one discipline excuses the programme of studies for any line the applicant goes on to seek within it.
2. Only the second and third are right: the variable life and variable annuity line is subject to the programme of studies in the ordinary way and is excused only the written examination, and the fourth applicant's designation is for the wrong line.
3. The first three are right and the fourth is wrong: the designations that excuse the programme of studies are listed line by line, and the Chartered Life Underwriter designation appears in the list for the life line of authority and not in the list for the accident and health line. ✓
4. Only the first and the second are right: a professional designation of any kind goes to the written examination rather than to the programme of studies, and neither the third nor the fourth applicant can rely on the Chartered Life Underwriter designation to excuse a course of study, whatever line is sought.

Why: Minn. Stat. 60K.36 subd. 4a provides that a prelicensing programme of studies does not apply to six categories. Clause (1) covers an applicant for the limited lines farm property liability line or “the variable life and variable annuity line of authority”, so the first applicant is right and the "subject to the programme of studies in the ordinary way" answer is wrong to subject that line to the course. Clause (2) covers an applicant who has received a two-year Minnesota vocational school degree in insurance, and clause (3) a four-year college degree in business with an insurance emphasis. Clause (4) covers an applicant “for the life line of authority” holding any of CEBS, ChFC, CIC, CFP, CLU, FLMI or LUTCF; clause (5) covers an applicant “for the health line of authority” holding RHU, CEBS, REBC or HIA. The lists are tied to the line applied for, which is why the "operate generally once held" answer's general operation is wrong and why CLU - present in clause (4) and absent from clause (5) - does not help the fourth applicant. The exemption is from the programme of studies rather than from the examination, which is where the "goes to the written examination" answer inverts the subdivision.

A buyer is offered the Minnesota Medicare supplement plan with high deductible coverage. She asks what she gets once the annual deductible is satisfied, whether her premiums count toward it, and how the deductible figure is arrived at.

1. 80 percent coverage, premiums count toward the deductible, and the figure is fixed at $1,860: the high deductible plan is a version of the basic Medicare supplement plan and pays at that plan's 80 percent level once the deductible has been satisfied, and a deductible the legislature has written into the statute as a dollar figure does not move until the legislature moves it.
2. 100 percent coverage, premiums count toward the deductible, and the figure is indexed: the plan pays 100 percent of the cost sharing listed in section 62A.3165 once the annual high deductible is satisfied, and the $1,860 basis is adjusted each year from 2010 by the secretary of the United States Department of Health and Human Services to reflect the change in the Consumer Price Index for all urban consumers, rounded to the nearest multiple of $10; the deductible itself, however, is measured by the insured's total annual outlay for the coverage, so the premiums she pays for the high deductible plan count toward it alongside her Medicare cost sharing, which is what allows the plan to be sold at so low a premium and what marks the annual high deductible off from an ordinary policy deductible.
3. 100 percent coverage, premiums do not count, and the figure is indexed from a $1,860 base: the plan pays 100 percent coverage upon payment of the annual high deductible, the annual deductible shall consist of out-of-pocket expenses, other than premiums, for services covered, and the basis for the deductible shall be $1,860, adjusted annually from 2010 by the secretary of the United States Department of Health and Human Services to reflect the change in the Consumer Price Index for all urban consumers for the 12-month period ending with August of the preceding year, rounded to the nearest multiple of $10. ✓
4. 100 percent coverage, premiums do not count, and the figure is indexed from a $1,860 base, but only for services covered by Medicare Part B: the annual high deductible is a Part B construct, and the plan pays the Part A benefits - the hospitalization coinsurance, the 365 days after Medicare benefits end, the coinsurance for days 21 through 100 of skilled nursing care and the first three pints of blood - from the first dollar, because Part A already imposes its own inpatient hospital deductible for each benefit period and a second threshold laid over it would leave an insured facing two deductibles for one hospitalisation; the indexing likewise runs from the base figure for the Part B deductible and is made by the same federal officer who sets that deductible each year.

Why: Minn. Stat. 62A.3165, paragraph (a) opens with the bargain: the plan will pay 100 PERCENT coverage upon payment of the annual high deductible, and the annual deductible SHALL CONSIST OF OUT-OF-POCKET EXPENSES, OTHER THAN PREMIUMS, for services covered. Premiums are excluded by name. The nine benefit clauses that follow are all at 100 percent - Part A hospitalization coinsurance plus 365 days after Medicare benefits end; the Part A inpatient hospital deductible per benefit period; the coinsurance for days 21 through 100 of posthospital skilled nursing care; cost sharing for Part A eligible expenses and respite care; the first three pints of blood; the cost sharing otherwise applicable under Part B; the cost sharing for Part B preventive services and cancer screening after the Part B deductible; hospital and medical expenses incurred travelling outside the United States as a result of a medical emergency; and Part A and B home health care services and medical supplies. So the plan is not a Part B product: it covers both parts, behind one threshold. Clause (10) fixes that threshold: the BASIS for the deductible shall be $1,860, adjusted annually from 2010 by the secretary of the United States Department of Health and Human Services to reflect the change in the Consumer Price Index for all urban consumers for the 12-month period ending with AUGUST of the preceding year, rounded to the nearest multiple of $10. Paragraph (b) carries the newly-eligible-individual bar on any coverage of the Part B deductible.

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.

COBRA generally allows a qualified employee who loses group coverage due to a reduction in hours or termination to continue that coverage for:

1. Only 30 days while they search for replacement coverage
2. The rest of their life, at the original employee contribution rate
3. Up to 10 years, fully subsidized by the former employer
4. Up to 18 months, by paying the premium themselves ✓

Why: COBRA continuation is typically 18 months (29 or 36 in some cases); the individual pays up to 102% of the full premium.

An agent takes a Medicare supplement application, keeps the only signed copy for the insurer's file, and uses a form that asks nothing about the applicant's other coverage. The applicant later says nobody told her she might qualify for Medicaid or that her policy could be suspended.

1. Only the form fails: application forms must include questions designed to elicit whether the applicant has other coverage in force, together with the prescribed statements about Medicaid eligibility and the 24-month suspension right, and this form carries none of them; the applicant's signed copy of the application, however, is delivered with the policy rather than at the time of application, that being the point at which its contents are finally known.
2. The application and the form both fail: no individual Medicare supplement plan shall be issued or delivered in this state unless a signed and completed copy of the application is left with the applicant at the time application is made; and application forms shall include questions designed to elicit whether the applicant has another Medicare supplement or other health insurance policy in force or intends this one to replace one, together with the prescribed statements that the applicant does not need more than one Medicare supplement policy, may be eligible for benefits under Medicaid, and may have benefits and premiums suspended during entitlement to Medicaid for 24 months on request made within 90 days of becoming eligible. ✓
3. Only the applicant's copy fails: leaving a signed and completed copy of the application with the applicant at the time application is made is mandatory and was not done here; the questions about other coverage in force and the statements that she does not need more than one policy, that she may be eligible for Medicaid and that benefits and premiums may be suspended during entitlement to it, however, are a model the commissioner may prescribe by rule rather than requirements of the section itself, and an insurer using its own form is judged by whether the information was in substance obtained.
4. Neither fails: the requirement to leave a copy of the application is satisfied where the insurer sends one to the applicant afterwards, and the prescribed questions and statements belong on the outline of coverage rather than on the application, the application being a document the applicant completes before any advice is owed and the outline the document in which the issuer speaks to her about her alternatives, including Medicaid and the suspension of benefits and premiums during entitlement to it; the application's only statutory content is the list of health and accident insurance she signs under the limitations on sales section, and asking for the same information twice would serve no purpose the outline does not serve.

Why: Minn. Stat. 62A.44, subd. 1 is short and absolute: no individual Medicare supplement plan shall be issued or delivered in this state unless a SIGNED AND COMPLETED COPY of the application for insurance is LEFT WITH THE APPLICANT AT THE TIME APPLICATION IS MADE. Subd. 2, paragraph (a) requires application forms to include questions designed to elicit whether, as of the date of the application, the applicant has another Medicare supplement or other health insurance policy or certificate in force, and whether this policy is intended to replace any other accident and sickness policy in force; a supplementary form signed by the applicant and the agent may carry them. The subdivision then sets out five statements verbatim, and they are the substance of the applicant's complaint here: that she does not need more than one Medicare supplement policy; that she may want to evaluate her existing coverage and decide whether she needs multiple coverages; that she MAY BE ELIGIBLE FOR BENEFITS UNDER MEDICAID and may not need a Medicare supplement policy at all; that benefits and premiums CAN BE SUSPENDED, IF REQUESTED, during entitlement to Medicaid FOR 24 MONTHS, the suspension to be requested WITHIN 90 DAYS of becoming eligible and the policy reinstated if requested within 90 days of losing eligibility; and that COUNSELLING SERVICES may be available in Minnesota concerning medical assistance, Qualified Medicare Beneficiaries and Specified Low-Income Medicare Beneficiaries. The suspension statement tracks the substantive right in section 62A.31, subd. 1f.

An employee's hours are cut so far that she no longer qualifies for the group life plan. The employer says continuation is available only on outright dismissal, that she may be charged 115 percent of the plan cost, and that continuation runs for 36 months. A second employee is dismissed for gross misconduct.

1. The employer is wrong about the trigger and the percentage but right about the duration, and wrong about the second employee. A reduction in hours to the point where the employee is no longer eligible for coverage is treated as a layoff, so the continuation right is engaged; the premium may not exceed 102 percent of the cost to the plan for other similarly situated employees with respect to whom neither termination nor layoff has occurred; but 36 months is the correct period where the qualifying event is a reduction in hours, the 18 months applying only to an outright termination; and a discharge for gross misconduct goes to the employer's other remedies rather than to the continuation right.
2. The employer is right about the trigger - a reduction in hours is not a termination or a layoff for the purposes of this section, which reaches only an employee who has actually left the employment - and wrong about the percentage and the duration: the premium is capped at 102 percent of the cost to the plan for other similarly situated employees, and continuation runs until the employee obtains coverage under another group policy or for 18 months after the termination or layoff, whichever is shorter; the second employee, discharged for gross misconduct, has no continuation right.
3. The employer is wrong three times, and wrong about the second employee as well: a discharge for gross misconduct does not defeat the continuation right, the section removing only a discharge that is itself unlawful from the meaning of termination.
4. The employer is wrong three times and right about the second employee: a reduction in hours to the point where the employee is no longer eligible counts as a layoff; the premium may not exceed 102 percent of the cost to the plan for other similarly situated employees; continuation runs until the employee obtains coverage under another group policy or for 18 months after termination or layoff, whichever is shorter; and termination does not include discharge for gross misconduct. ✓

Why: Minn. Stat. 61A.092 subd. 1 requires every group policy providing life benefits, issued or renewed here after 1 August 1987, to let employees “who are voluntarily or involuntarily terminated or laid off from their employment, if the policy remains in force for any active employee of the employer, to elect to continue the coverage for themselves and their dependents”. It then defines the trigger: “An employee is considered to be laid off from employment if there is a reduction in hours to the point where the employee is no longer eligible for coverage under the group life insurance policy. Termination does not include discharge for gross misconduct.” Both sentences answer the employer - the first against it, the second for it, which is where the "only a discharge that is itself unlawful" answer's “only an unlawful discharge” gloss goes wrong and the "employer is right about the trigger" answer's trigger reading does. Subdivision 2: the employee pays the former employer monthly, and “in no event shall the amount of premium charged exceed 102 percent of the cost to the plan for such period of coverage for other similarly situated employees with respect to whom neither termination nor layoff has occurred, without respect to whether such cost is paid by the employer or employee”; and “the employee is eligible to continue the coverage until the employee obtains coverage under another group policy, or for a period of 18 months after the termination or layoff from employment, whichever is shorter”. Eighteen months, and no separate period for a reduction in hours, which is the "36 months is the correct period" answer's invention.

A beneficiary elects the fixed-period settlement option for $100,000 over 10 years. The insurer pays:

1. A set dollar amount each month until the $100,000 principal is exhausted
2. A single lump sum of $100,000 at the end of the tenth year
3. Equal installments for 10 years, the amount depending on interest credited ✓
4. Only the interest earned, holding the $100,000 until the beneficiary dies

Why: Fixed-period pays the proceeds plus interest in equal installments over the chosen period; the payment amount varies with the interest rate.

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.

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.

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 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.

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.

A variable annuity contract is drafted with no provision for grace, settlement option, loan or withdrawal, or nonforfeiture. Its first page says nothing about the benefits being variable, and it does not describe how the dollar amounts will be worked out. The insurer says the standard nonforfeiture law for individual deferred annuities compels the omissions.

1. The insurer is right about the nonforfeiture law and the contract is deficient only as to the first page: the standard nonforfeiture law for individual deferred annuities governs variable contracts like any other, and its provisions displace the general requirements for grace, settlement option, loan and nonforfeiture, leaving only the statement on the first page to be added, together with the statement of essential features that every variable contract carries; and the disapplication of the standard nonforfeiture law is confined to individual deferred annuities written on a variable basis, a group variable contract remaining subject to it in full whatever its own benefits happen to do.
2. The insurer has it backwards and the contract is deficient on every count: Minn. Stat. 61A.07 clause (4) and 61A.245 do not apply to contracts on a variable basis, but any such contract must contain in substance provisions for grace, settlement option, loan or withdrawal and nonforfeiture appropriate to it, and a variable life contract should also contain one for reinstatement; and a contract providing benefits payable in variable amounts must contain a statement of the essential features of the procedures for determining the dollar amount, must state the manner in which the dollar amounts will vary, and must carry on its first page a statement that the benefits are on a variable basis. ✓
3. The insurer has it backwards and the contract is deficient, but the first-page requirement attaches to individual contracts only: a group certificate evidencing variable benefits is issued to a member who has not chosen the contract and is served by the statement of essential features rather than by a warning on its face.
4. The insurer has it backwards and the contract is deficient on every count, and the reinstatement provision is mandatory for every contract on a variable basis: an annuity as much as a life contract, since a contract that has lapsed for non-payment is worth more reinstated than surrendered whatever kind of benefit it promises.

Why: Minn. Stat. 61A.21 opens: "Sections 61A.07, clause (4), AND 61A.245 SHALL NOT APPLY to contracts on a variable basis" - 61A.245 being the standard nonforfeiture law for individual deferred annuities, so the insurer has the disapplication exactly the wrong way round, which is the "insurer is right about the nonforfeiture law" answer's error. "All other appropriate provisions of this chapter shall apply to separate accounts and contracts on a variable basis except those which are inconsistent with" 61A.13 to 61A.20. Then the affirmative requirement: "Any contract on a variable basis, delivered or issued for delivery in this state, SHALL CONTAIN IN SUBSTANCE PROVISIONS FOR GRACE, SETTLEMENT OPTION, LOAN OR WITHDRAWAL AND NONFORFEITURE appropriate to such a contract AND A LIFE INSURANCE CONTRACT ON A VARIABLE BASIS SHOULD ALSO CONTAIN IN SUBSTANCE A PROVISION FOR REINSTATEMENT appropriate to such a contract." Reinstatement is put on the life contract alone, which is the "mandatory for every contract" answer's overreach. The section closes by requiring reserve liability to be established by actuarial procedures recognising the variable nature of the benefits and any mortality guarantees. Minn. Stat. 61A.16 supplies the disclosure limb: any contract providing benefits payable in variable amounts "shall contain a STATEMENT OF THE ESSENTIAL FEATURES OF THE PROCEDURES to be followed by the insurance company in determining the dollar amount of such variable benefits. ANY SUCH CONTRACT, INCLUDING A GROUP CONTRACT AND ANY CERTIFICATE in evidence of variable benefits issued thereunder, shall state THE MANNER IN WHICH SUCH DOLLAR AMOUNTS WILL VARY and shall contain ON ITS FIRST PAGE a statement to the effect that the benefits thereunder are on a variable basis." Group contracts and their certificates are named, which is the "attaches to individual contracts only" answer's error.

A prepaid limited health service organization has annual gross premium income of $9,000,000 and no uncovered expenses above $100,000. It asks what tangible net equity it must hold and what it must place on deposit.

1. $100,000 of tangible net equity and a deposit of $75,000: the fixed sum governs because the percentage figure in subd. 1 operates as a ceiling on what the commissioner may require of a growing organization rather than as an alternative floor, the words up to a maximum in that paragraph doing the same work for the percentage as they do for the capital and surplus comparison; the deposit under subd. 3 is then $50,000 plus 25 percent of the $100,000 required, giving $75,000; and the deposit counts as an admitted asset in computing tangible net equity, so requiring the larger figure would count the same dollars twice.
2. $180,000 of tangible net equity and a deposit of $95,000: the organization shall at all times maintain tangible net equity equal to the greater of $100,000 or two percent of annual gross premium income, up to a maximum of the required capital and surplus of an accident and health insurer - two percent of $9,000,000 is $180,000 - and shall deposit an amount equal to $50,000 plus 25 percent of the tangible net equity required, the deposit not being required to exceed $200,000. ✓
3. $180,000 of tangible net equity and a deposit of $200,000: the net equity calculation is the greater of $100,000 or two percent of the $9,000,000 of annual gross premium income, which is $180,000, but the deposit is then set at the statutory maximum of $200,000 for any organization whose required net equity exceeds $100,000, the $50,000 plus 25 percent formula in subd. 3 applying only to an organization at the $100,000 floor; the maximum is written as a fixed figure rather than as a percentage precisely so that every organization above the floor posts the same protection for its enrollees during a rehabilitation or conservation.
4. $225,000 of tangible net equity and a deposit of $106,250: the percentage is two and a half percent of annual gross premium income for an organization carrying no uncovered expenses above $100,000, the lower two percent figure applying only where the additional 25 percent uncovered-expense layer in paragraph (b) is being carried as well, and the deposit then following the $50,000 plus 25 percent formula on the resulting figure; that is how the section avoids charging the same organization twice for the same risk, and it is also why the commissioner may waive the requirement altogether for an organization holding net equity of at least $10,000,000.

Why: Minn. Stat. 62A.4523, subd. 1, paragraph (a) requires a prepaid limited health service organization to maintain at all times tangible net equity equal to THE GREATER of $100,000 or two percent of annual gross premium income, capped at the required capital and surplus of an accident and health insurer. Two percent of $9,000,000 is $180,000, which is the greater. Paragraph (b) would add 25 percent of any uncovered expense above $100,000, but there is none here. Subd. 3, paragraph (a) then sets the deposit at $50,000 PLUS 25 PERCENT OF THE TANGIBLE NET EQUITY REQUIRED under subd. 1, not to exceed $200,000: 25 percent of $180,000 is $45,000, plus $50,000, giving $95,000. The deposit is an ADMITTED ASSET in determining tangible net equity, its income belongs to the organization, and it may be withdrawn only against a substitute deposit of equal amount and value. It exists to protect enrollees and to keep limited health services running through a rehabilitation or conservation, and on receivership or liquidation it becomes an asset subject to chapter 60B. Subd. 4 lets the commissioner waive some or all of the net equity requirement where the organization itself has net equity of at least $10,000,000, or where an entity with that much net equity gives an acceptable written commitment to cover the organization's uncovered expenses. Context matters for the whole regime: under section 62A.451, subd. 5, LIMITED HEALTH SERVICE means pharmaceutical services covered under Medicare Part D and does NOT include hospital, medical, surgical or emergency services; the certificate of authority comes from the commissioner of COMMERCE; and under section 62A.4522 no individual may place such a contract without a licence to sell accident and health, nonprofit health service plan, or health maintenance organization coverage.

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.

A disability policy's benefits are paid monthly. The 'time of payment of claims' provision requires disability benefits to be paid at least:

1. Once per year
2. Monthly ✓
3. Within 24 hours of each loss
4. At the end of the benefit period

Why: For periodic (disability) claims, benefits must be paid at least monthly under the uniform provision.

An insured with a $4,000 monthly benefit suffers a residual disability causing a 50% loss of income. The residual benefit is about:

1. $2,000 ✓
2. $4,000
3. $1,000
4. $0

Why: Residual benefits are proportional to income lost: 50% income loss × $4,000 = $2,000.

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.

A producer forged a neighbour's signature on a private guarantee unconnected with insurance; was fined by another state's insurance regulator; and sends mailings whose design gives recipients the impression that she writes on behalf of a state agency. She says none of this concerns her Minnesota licence, the first two being outside the insurance business here.

1. Only the mailings are a listed cause: the forgery clause is confined to forging a name to an application for insurance, and the out-of-state discipline clause is engaged only by a denial, suspension or revocation of a licence there, a fine falling short of that and bearing on untrustworthiness only in a proceeding brought on another ground, so the mailings are the only basis for action here.
2. Each is a listed cause: forging another's name to an application for insurance or to any document, whether or not related to an insurance transaction; having been the subject of a fine or any other discipline in any other state, province, district or territory; and making any communication to a potential buyer that gives the impression that the producer is acting on behalf of a government agency. ✓
3. Only the forgery and the out-of-state fine are listed causes: the clause about communications with potential buyers reaches a communication that impersonates the Department of Commerce itself, and a mailing suggesting some unidentified government connection is answered through the unfair trade practices provisions instead.
4. None is a listed cause on these facts, the subdivision reaching conduct involving an aspect of the insurance business and each of the three being either outside the insurance business or outside this state; the commissioner's course is to refer the mailings to the regulator of another state in which they were posted.

Why: Three clauses of Minn. Stat. 60K.43 subd. 1 answer these facts, and each is drawn deliberately wide. Clause (10) names “forging another's name to an application for insurance or to any document, whether or not related to an insurance transaction”, so the private guarantee is within it and the "confined to forging a name to an application" answer's narrowing is wrong. Clause (9) names “having an insurance producer license, or its equivalent, denied, suspended, or revoked, or having been the subject of a fine or any other discipline in any other state, province, district, or territory”, which puts a fine expressly on the list. Clause (16) names “making any communication to a potential buyer that gives the impression that the producer is acting on behalf of a government agency”, without confining the agency to this Department, which disposes of the "impersonates the Department of Commerce" answer. The phrase the "None is a listed cause" answer relies on belongs to clause (15), about being enjoined from conduct involving any aspect of the insurance business; it does not qualify the list, and clause (8) is explicit that incompetence, untrustworthiness or financial irresponsibility count “whether or not involving the business of insurance in this state or elsewhere”.

Under the 'paid-up additions' dividend option, dividends are used to:

1. Pay the policyowner the dividend directly in cash each year
2. Reduce the premium due on the next policy anniversary date
3. Purchase one-year term insurance equal to the cash value
4. Buy small amounts of additional paid-up whole life coverage ✓

Why: Paid-up additions use dividends to buy single-premium whole life, increasing both death benefit and cash value with no new underwriting.

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.

A final expense (burial) policy is typically:

1. A variable policy whose death benefit fluctuates with the market
2. A small whole life policy meant to cover funeral and final costs ✓
3. A large term policy intended to replace decades of lost income
4. A group policy issued automatically to all employees at hire

Why: Final expense is a modest permanent (whole life) policy designed to cover burial and end-of-life expenses, often with simplified underwriting.

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”.

A rehabilitation benefit in a disability income policy:

1. Refunds all premiums once the insured fully recovers from disability
2. Provides a lump sum to the insured's family upon accidental death
3. Doubles the monthly benefit for any injury caused by an accident
4. Helps pay for training to return the insured to work ✓

Why: A rehabilitation benefit covers vocational training or programs intended to help a disabled insured return to gainful employment.

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.

An issuer is designing an extended basic Medicare supplement plan. It proposes to cover 80 percent of the Part A inpatient hospital deductible, to include an outpatient prescription drug benefit in a policy to be issued next year, and to cap the preventive medical care benefit at $120 a year.

1. The first two fail and the third is right: the extended basic plan must provide coverage for all of the Medicare part a inpatient hospital deductible and coinsurance amounts and 100 percent of all Part A eligible expenses for hospitalization not covered by Medicare; an outpatient prescription drug benefit must not be included for sale or issuance in a Medicare supplement policy or certificate issued on or after 1 January 2006; and the preventive medical care benefit reimburses actual charges up to 100 percent of the Medicare-approved amount for each service to a maximum of $120 annually. ✓
2. All three are right: the extended basic plan covers 80 percent of the Part A deductible as the counterpart of the 80 percent it pays on usual and customary expenses, the drug prohibition applies only to the basic plan, and the $120 cap is as described.
3. Only the first fails: the deductible must be covered in full as described, but an extended basic plan may still include an outpatient prescription drug benefit because it is the richer of the two categories and is certified as a qualified plan, and the $120 figure is correct.
4. The first and third fail and the second is right: the bar on an outpatient prescription drug benefit in a policy issued next year is as described, but an extended basic plan covers the Part A inpatient hospital deductible only for a newly eligible individual, and the preventive medical care benefit is paid at 100 percent up to $120 per service rather than annually, the annual figure in the section describing the point at which the issuer may require the attending physician to certify that further screening is medically appropriate rather than a ceiling on what is payable in the year, an annual cap of that size being far too small to cover the examination the clause itself describes.

Why: Minn. Stat. 62A.315, paragraph (a) sets nine requirements for the EXTENDED BASIC plan, which must have a level of coverage certifying it as a qualified plan under section 62E.07. Clause (1): coverage for ALL of the Medicare Part A inpatient hospital deductible AND coinsurance amounts, and 100 percent of all Part A eligible expenses for hospitalization not covered by Medicare - the whole deductible, not a share of it. Clause (3) covers the Part B coinsurance or co-payment regardless of hospital confinement AND the Part B deductible amount. Clause (4) covers 80 percent of the usual and customary hospital and medical expenses and supplies described in section 62E.06, subd. 1, including those incurred in a foreign country, and prescription drug expenses not covered by Medicare - and then adds the sentence that answers the second proposal: AN OUTPATIENT PRESCRIPTION DRUG BENEFIT MUST NOT BE INCLUDED for sale or issuance in a Medicare supplement policy or certificate ISSUED ON OR AFTER 1 JANUARY 2006. Clause (7) is the preventive medical care benefit - an annual clinical preventive medical history and physical examination, and preventive screening tests or services whose selection and frequency the attending physician determines to be medically appropriate - reimbursed at actual charges up to 100 percent of the Medicare-approved amount for each service, TO A MAXIMUM OF $120 ANNUALLY, and never for a procedure Medicare covers. Paragraph (b) carries the limit that runs through the whole run of plan sections: the plan must not provide coverage for 100 percent or any portion of the Medicare Part B deductible TO A NEWLY ELIGIBLE INDIVIDUAL.

An insurer selling burial expense benefits names a particular funeral establishment in its policy as the recipient of the benefits, leaving the family with no practical choice of provider. An employee of that establishment takes a commission on the sale. The contract is a preneed funeral insurance contract with a face amount of $12,000.

1. Both are prohibited: the designation for the reason given, and the commission because the exception for a preneed funeral insurance contract permits the sale itself but not the payment of any fee or commission to a person connected with the establishment, the purpose of the section being to sever the financial link between the sale of the insurance and the provision of the goods and services it will eventually pay for; and the $20,000 figure is a ceiling on the face amount an establishment may lawfully arrange rather than a threshold for a commission, so a contract written above it is void as to both.
2. Both are prohibited, the insurer's naming of a particular establishment as recipient of the burial expense benefits and the commission alike, the preneed exception being unavailable here because the face amount exceeds the statutory ceiling: the limit on a preneed funeral insurance contract on which a commission may be taken is $10,000, and a contract written above that figure falls back into the general prohibition, so the establishment's employee may take nothing on this sale whatever the position on the designation.
3. Neither is prohibited: the section bars only a designation that leaves the family with no provider at all, and a family directed to a named establishment still receives the services the policy promised; and the commission is permitted because the seller is an employee rather than an owner or director, the section reaching those with a direct equity interest in the establishment and not the staff who work in it.
4. The designation is prohibited and the commission is not: no insurer, agent or other person providing benefits for funeral or burial expense may designate, endorse or otherwise promote a particular mortician, funeral director, establishment, cemetery or other party as the beneficiary or recipient so as to deprive the persons with legal authority to control disposition of the remains of the right to choose the services and supplies; but an owner, director or employee of a funeral establishment may take a fee or commission on the sale of a preneed funeral insurance contract whose face amount does not exceed $20,000. ✓

Why: Minn. Stat. 72A.325 forbids an insurance company, agent or other person providing insurance or other benefits for funeral or burial expense to "designate, endorse, or otherwise promote any particular mortician, funeral director, funeral establishment, cemetery, or any other party offering funeral or burial services or supplies, as the beneficiary or recipient of the benefits, SO AS TO DEPRIVE the persons with legal authority to control the disposition of the remains of the deceased policyholder under section 149A.80, subdivision 2, of the RIGHT TO SELECT the funeral or burial services and supplies of their choice." The vice is the deprivation of choice, not the absence of any provider, which is the "NO provider at all" answer's misreading. The section then provides that no "owner, director, or employee of a funeral establishment, or entity having a direct equity interest in a funeral establishment, shall receive any fee, commission, or other reimbursement on any insurance sale facilitated through the funeral establishment, EXCEPT the sale of a PRENEED FUNERAL INSURANCE CONTRACT with a face amount NOT TO EXCEED $20,000." Employees are named alongside owners and directors, which is the "NO provider at all" answer's second error; the exception covers the commission and not merely the sale, which is the "but not the payment of any fee" answer's; and the ceiling is $20,000, not $10,000. A preneed funeral insurance contract is defined as an agreement by or for an individual before that individual's death relating to the purchase or provision of specific funeral or cemetery merchandise or services. The section closes by stating that nothing in it waives or excepts the licensing requirements of Minn. Stat. ch. 60K.