State RegulationsTX specificDifficulty 3/5
A Texas Medicare supplement issuer seeks to cancel a policy because of an answer the insured gave on the application. Under 28 TAC 3.3306(b)(1)(E)(ii), the issuer's action is proper only if the answer was what?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under 28 TAC 3.3306(b)(1)(E)(ii), cancellation of a Medicare supplement policy is confined to nonpayment of premium and material misrepresentation. That means the issuer must show the application answer was not merely wrong but material to the risk it accepted. An innocent or immaterial inaccuracy will not support cancellation, so a Texas agent should expect the insurer to carry the burden of demonstrating materiality before a contested cancellation stands.
Why the other options are wrong
- A) Immaterial inaccuracy is not enough. The rule requires materiality, so a careless but harmless answer does not give the issuer a cancellation ground.
- C) Who physically wrote the answer does not determine whether cancellation is proper. The question is whether the information supplied was materially false.
- D) Whether the answer was given before Part B enrollment is irrelevant. The timing of the answer does not substitute for the materiality requirement.
Memory hook
To cancel for an application error, the error must be material.