MN Life & Health cheat sheet

Three parties: the owner holds every contractual right, the insured is the person whose life is measured, and the beneficiary receives proceeds; one person may hold more than one role.

Insurable interest must exist at the time of application, not at death; its absence makes the contract unenforceable rather than merely reducing the benefit.

Term insurance provides pure death protection with no cash value; renewable and convertible features extend or replace coverage without new underwriting.

Whole life charges a level premium for life, builds guaranteed cash value, and pays a guaranteed face amount while premiums are paid.

Universal life separates the death benefit from the cash account: Option A pays a level face amount (amount at risk shrinks as cash value grows), Option B pays face plus account value.

Variable life and variable annuities place cash value in a separate account tied to subaccounts; soliciting them requires a life license plus FINRA registration.

A modified endowment contract fails the 7-pay test, so loans and withdrawals are taxed gains-first and may carry a 10% penalty before age 59½.

Amount at risk equals the death benefit minus cash value; it is the insurer's net liability and the basis for mortality charges in universal life.

Face amount is set by a needs analysis (income replacement, debts, education, final expenses) or by the human life value approach (present value of future earnings).

Incontestability: after two years in force, the insurer cannot rescind the policy for misrepresentation on the application; nonpayment and certain fraud claims are exceptions.

Suicide clause: death by suicide within the first two years (one in some states) returns premiums paid instead of the face amount.

Grace period: usually 30 or 31 days after the due date; coverage continues, and an automatic premium loan or cash value may cover the shortfall.

Reinstatement: generally allowed within three years on proof of insurability plus payment of overdue premiums with interest; a new contestability and suicide period typically restart.

Misstatement of age or sex: the death benefit is adjusted to whatever amount the premium actually paid would have purchased at the correct age or sex.

Nonforfeiture options for a lapsed cash-value policy: cash surrender, reduced paid-up insurance, or extended term insurance for the full face amount.

Policy loans accrue interest and reduce both cash value and death benefit if unpaid; the insurer cannot force repayment while the policy stays in force.

Assignment may be absolute (all ownership rights transferred) or collateral (rights pledged as security, limited to the debt).

Minnesota requires a free-look period of at least 10 days on a delivered life policy, during which the owner may return it for a full refund.

Waiver of premium: after total disability lasting a waiting period (commonly six months), premiums are waived and often refunded back to the start of disability.

Accidental death and dismemberment: pays an extra amount (double indemnity) or a scheduled sum for loss of limb or sight; death must result from accident within a stated period, usually 90 or 180 days.

Guaranteed insurability: permits purchase of additional coverage on stated option dates or life events without new evidence of insurability.

Other-insured and child term riders add level term coverage on family members, usually convertible to permanent coverage at a set age.

Accelerated death benefit: advances a portion of the face amount for terminal illness (often a 12-month prognosis) or chronic illness; the advance plus charges reduces the final death benefit.

Long-term care riders pay for chronic care by drawing down or accelerating the death benefit, sometimes with an extension of benefits.

Return of premium riders refund premiums if the insured survives the term; they raise the premium substantially.

Cost-of-living riders increase the face amount with a stated index, requiring premium adjustment or a guaranteed-insurability feature.

Two phases: accumulation (premiums build value) and annuitization (the insurer converts value into periodic income); an immediate annuity begins income within one payment period.

Fixed annuities guarantee a minimum interest rate; indexed annuities credit index-linked interest subject to a cap, participation rate, and floor, usually 0%.

Variable annuities invest in separate-account subaccounts, shift investment risk to the owner, and require both a life license and FINRA registration.

Nonqualified withdrawals before annuitization are taxed last-in, first-out: taxable gain comes out first, and a 10% penalty applies before age 59½.

The exclusion ratio equals investment in the contract divided by expected return; that fraction of each annuitized payment is a tax-free return of basis.

Settlement options from most to least generous: life only, life with period certain, installment refund, joint and survivor; adding guarantees lowers each payment.

Surrender charges typically grade down over 5–10 years, and fixed contracts may apply a market value adjustment if surrendered early.

SECURE 2.0 sets required minimum distribution ages at 73 for those born 1951–1959 and 75 for those born 1960 or later.

Suitability review considers income need, liquidity need, risk tolerance, and surrender exposure, particularly for seniors replacing existing contracts.

Cost-sharing chain: deductible first, then coinsurance (a percentage of covered charges), with copays for specific services, all limited by the out-of-pocket maximum.

ACA metal tiers reflect actuarial value: Bronze 60%, Silver 70%, Gold 80%, Platinum 90%; Silver plans also offer cost-sharing reductions at lower incomes.

ACA market rules: guaranteed issue, no pre-existing condition exclusions, no annual or lifetime dollar limits on essential health benefits, preventive care without cost sharing, and dependent coverage to age 26.

Network models: HMO uses a primary care gatekeeper and no non-emergency out-of-network coverage; PPO pays partial out-of-network benefits without referrals; POS blends both; EPO excludes out-of-network care with no gatekeeper.

Medicare parts: A hospital, B medical, C Medicare Advantage (replacing A and B delivery), D prescription drug; Medicaid is separate and income-tested.

Coordination of benefits: the plan covering the patient as employee is primary over a dependent plan, and the birthday rule makes the parent whose birthday falls earlier in the year primary for children.

COBRA continuation generally runs 18 months after termination or reduced hours, 29 months for disability, and 36 months for death, divorce, or Medicare eligibility; election is 60 days.

Self-funded employer plans under ERISA generally preempt state insurance mandates and are regulated federally, unlike fully insured group plans.

Health savings accounts require a qualifying high-deductible plan and provide tax-deductible contributions, tax-deferred growth, and tax-free qualified withdrawals.

Own-occupation definition pays when the insured cannot perform their own occupation, even if working elsewhere; any-occupation pays only when unable to work in any reasonable occupation.

Benefits typically replace 50–70% of earned income; insurers cap issue amounts to preserve work incentive.

Elimination period is the waiting period before benefits begin (commonly 30–180 days); lengthening it lowers premium, as does shortening the benefit period.

Benefit period options run from one or two years to age 65 or lifetime; a longer benefit period raises cost.

Residual or partial disability benefits pay in proportion to lost income when the insured returns to work at reduced hours or pay.

Recurrent disability provisions treat a relapse from the same cause within a stated period (often six months) as a continuation of the prior claim, without a new elimination period.

Benefits are income-tax free only when the insured paid premiums with after-tax dollars; employer-paid premiums make benefits taxable.

LTC benefit triggers: inability to perform 2 of 6 activities of daily living (bathing, dressing, eating, toileting, transferring, continence) or severe cognitive impairment, expected to last at least 90 days.

Tax-qualified LTC policies make benefits tax-free, allow age-based premium deductions, and partnership policies provide Medicaid asset protection equal to benefits paid.

Required uniform provisions include the insuring clause, entire contract, grace period, reinstatement, claim procedures, physical exam at the insurer's expense, and legal action limits (no suit before 60 days, none after 3 years).

Typical claim timelines: notice of claim within about 20 days, claim forms furnished within 15 days, proof of loss within 90 days of loss, and payment shortly after proof is received.

Grace period is commonly 7 days for individual and 31 days for group coverage; coverage remains in force during that window.

Reinstatement of a lapsed individual policy generally requires payment of overdue premiums and may require evidence of insurability; the reinstated policy is contestable again.

Renewability categories: cancellable (insurer may end any time), optionally renewable, conditionally renewable, guaranteed renewable (premiums may rise only by class), and noncancellable.

Managed care controls include pre-certification, concurrent review of hospital stays, retrospective review, case management, and incentive-based provider networks.

Denied claims follow internal appeal, then external independent review for medical-necessity disputes; ERISA plans have their own federal appeal rules.

HIPAA guarantees portability through creditable coverage, limits pre-existing condition look-backs in non-ACA markets, and protects privacy of health information.

Coordination of benefits and nonduplication rules prevent payments exceeding actual covered expense when a member has two plans.

The Minnesota Department of Commerce regulates insurance; the commissioner is appointed by the governor and may issue orders, hold hearings, fine, suspend, or revoke licenses.

A producer must hold a current Minnesota license and be appointed by the insurer before soliciting, negotiating, or selling that insurer's products.

Minnesota requires 24 hours of approved continuing education every two years, including an ethics component, to renew a producer license.

Premium funds held on behalf of an insurer are fiduciary funds: they must be kept separate from personal funds, not commingled, and remitted promptly.

Unfair trade practices include misrepresentation, twisting, rebating, false advertising, defamation, boycott or coercion, and unfair discrimination among similar risks.

The Minnesota Life and Health Insurance Guaranty Association pays covered claims up to statutory caps, such as $300,000 in life death benefits and $100,000 in net cash surrender value.

Life and annuity replacements require delivery of a replacement notice comparing old and new contracts; Minnesota allows a 10-day free look on a delivered life policy.

Producers must notify the Department of Commerce of a change of name or address and report certain administrative actions and criminal convictions.

Insurers and producers must safeguard consumer nonpublic personal information under state and federal privacy rules and may share it only with permitted disclosures.