Free Minnesota Life & Health practice questions

Answer: A. When the application is made, in type no smaller than 12-point

Minnesota bars delivery of an individual Medicare supplement plan unless an outline of coverage, printed in type no smaller than 12-point, is delivered to the applicant at the time the application is made. That rules out the 10-point and 14-point choices and the 30-days-after-issue timing. Delivery-time timing describes a different document: when a policy is issued on a basis that would require revising the outline, a substitute outline must accompany the policy when it is delivered. The question asks about the initial outline, which comes with the application.

Answer: C. Dana is personally liable for all premiums paid, earned and unearned, and for any loss the policy would have covered.

Minnesota makes any person who participates in selling a policy for a company that is required to be, but is not, authorized in the state (outside the surplus lines provisions) personally liable for all premiums paid by the insured, whether earned or unearned, and the insured may recover them. That person is also personally liable for a loss that the policy covered or would have covered had it been issued. The rule applies whether or not the person holds a producer license, so being unlicensed is no defense. Liability reaches earned as well as unearned premium, and a covered loss is not left with the insured.

Answer: D. It is prohibited, because forfeiture is barred while total debt stays below the loan value.

Minn. Stat. Sec. 61A.07(1) bars a life policy from providing for forfeiture for failure to repay a policy loan or pay its interest while the total indebtedness is less than the loan value. Here the $8,000 debt is below the $12,000 loan value, so a provision allowing immediate forfeiture for missed interest is prohibited. Neither a notice period nor an extended term election makes the provision valid, because the bar applies whenever indebtedness is under the loan value. Separately, any forfeiture provision must allow at least one month after notice is mailed to the insured and to any assignee whose assignment is on file with the company, which is longer than 10 days.

Answer: C. It must be agreed to by both parties in writing, but need not be attached to the policy

Minnesota lets the parties to a life policy agree in writing, at any time, to extend the time to pay a second or later premium, with the policy lapsing as of the agreed date if the agreed amount is not paid then. The statute says the agreement does not have to be attached to or made part of the policy, so the view that attachment is required is wrong. The extension also cannot impair any right the insured has under the policy to extended or paid-up insurance. An oral grant by the agent does not meet the requirement of a mutual written agreement, and a missed payment under the agreement lapses the policy rather than continuing it.

Answer: A. Individual and group policies, and nonprofit service plan subscriber contracts, issued or renewed after August 1, 1976

The section's application clause reaches individual or group policies and subscriber contracts that pay for care in Minnesota and are issued or renewed after August 1, 1976, whether written by an accident and health insurer regulated under chapter 62A or by a nonprofit health service plan corporation regulated under chapter 62C. Individual policies are covered along with group policies, a renewal after that date counts the same as a new issue, and nonprofit service plan contracts are expressly included.

Answer: B. Until all fines imposed are paid and for one year afterward

Minn. Stat. Sec. 72A.02 makes a willful violation a misdemeanor for a first offense and a gross misdemeanor for each later offense. It then adds a disqualification: the company may not do insurance business in Minnesota until every fine imposed has been paid, and then for one more year. Paying the fines does not end the disqualification by itself, so the option with no added waiting period is wrong. The section sets no 90-day period and no three-year period measured from the first offense.

Answer: A. Only the violation itself; a general business practice need not be shown

Minn. Stat. Sec. 72A.201, subd. 1 lets the commissioner seek administrative remedies, including fines, under sections 72A.22 to 72A.25 for a violation of section 72A.201 or its rules, or of section 72A.20, subdivision 12, and states that the commissioner need not show a general business practice in taking that action. Frequency of the violation is therefore something the commissioner is spared from proving, and the subdivision requires neither a prior court judgment nor a loss above policy limits.

Answer: D. Suspend the producer's authority to transact insurance for at least three months

Minn. Stat. Sec. 72A.07 makes a violation of sections 60K.30 to 60K.56 a misdemeanor and directs that, when an agent is convicted of such a violation, the commissioner shall suspend the agent's authority to transact insurance business in the state for no less than three months. The suspension follows the conviction, so a warning is wrong, and the section sets a minimum suspension rather than a permanent revocation. The section assigns that action to the commissioner, not to the appointing insurer.

Answer: A. The insurer, at all times, and never the insured

Minnesota's appointment statute provides that a person performing acts that require a producer license is always the agent of the insurer and not of the insured. The rule does not shift with the stage of the sale, such as application versus delivery, and it does not depend on who pays the producer's commission. Treating the producer as the insured's agent, in whole or in part, contradicts the statute.

Answer: A. In writing, at the time she first makes personal contact with the homeowner.

An in-person sales contact with a buyer who does not know the producer and did not start the contact, made away from the producer's place of business, is a personal solicitation. Before such a solicitation, the producer must clearly and expressly disclose, in writing and at the time of initial personal contact, who is making the contact, the producer, agency, or insurer represented, and the fact that it is in the business of selling insurance. Written form is excused only when the initial contact is by telephone, which this was not. Waiting until the homeowner shows interest, until an application is signed, or until days later misses the required timing.