Life Insurance Basics
25%of exam
Life Policies + Annuities
20%of exam
Annuities + Taxation
12%of exam
Annuity PhasesPayout OptionsLife TaxAnnuity TaxMECQualified Plans
Health Insurance
25%of exam
Managed CareCDHP AccountsDisability IncomeLong-Term CareMedicareGroup Health
Tennessee Law
25%of exam
TDCI LicensingCE RulesTN ProvisionsReplacementUnfair PracticesGuaranty Association
Quick Facts
- Exam
- TN Life, Accident & Health
- Items
- ~150 (general + state)
- Time
- 2 hr 30 min
- Pass
- 70% each section
- Fee
- $59 center / $49 OnVUE
- Vendor
- Pearson VUE
- Regulator
- TDCI (Title 56)
- Pre-license
- Not mandated
TN Life Time Limits
10 free look | 31 grace | 2yr contest
Free look: 10 daysGrace: 31 daysIncontestability: 2 yearsSuicide: 2 years
Term vs Whole Life
Term
- Temporary
- No cash value
- Lowest premium
Whole life
- Permanent
- Guaranteed cash value
- Level premium
Pure protection vs permanent
Life Product Picker
- Temporary need, low cost→Term life(No cash value)
- Mortgage protection→Decreasing term(Face declines)
- Lifetime, fixed premium→Whole life(Guaranteed cash value)
- Flexible premium→Universal life(Adjustable death benefit)
- Market growth potential→Variable life(Securities license)
- Fund children's education→Endowment(Pays at maturity)
- Two lives, estate→Survivorship(Pays second death)
Insurance Principles
- Pure risk
- Loss or no loss
- Speculative risk
- Not insurable
- Adverse selection
- Bad risks seek coverage
- Law of large numbers
- Predicts losses
- Insurable interest
- Required at application
- Indemnity
- Restore, no profit
- Reinsurance
- Insurer's insurance
Contract Characteristics
- Aleatory
- Unequal value exchange
- Adhesion
- Take it or leave
- Unilateral
- Only insurer promises
- Conditional
- Conditions must be met
- Utmost good faith
- Honest disclosure both sides
- Representation
- Believed-true statement
- Warranty
- Guaranteed-true statement
- Concealment
- Hiding material fact
Life Policy Types
- Term
- Temporary, no cash value
- Whole life
- Permanent, fixed premium
- Universal life
- Flexible premium, adjustable
- Variable life
- Subaccounts, securities license
- VUL
- Flexible plus subaccounts
- Endowment
- Pays at maturity
- Decreasing term
- Mortgage protection
- Return of premium
- Refunds paid premiums
Standard Life Provisions
- Free look
- Return for refundTN 10 days
- Grace period
- Late premium, stays activeTN 31 days
- Incontestability
- No contest after 2 years
- Suicide clause
- Excluded first 2 years
- Reinstatement
- Restore lapsed policy
- Misstatement of age
- Benefit adjusted, not voided
- Entire contract
- Policy plus application
- Automatic premium loan
- Cash value pays premium
Nonforfeiture Options
Cash | Reduced paid-up | Extended term
Cash: surrender valueReduced paid-up: smaller policyExtended term: same face
Common Life Riders
- Waiver of premium
- Disability waives premium
- Accidental death
- Pays multiple of face
- Guaranteed insurability
- Buy more, no exam
- Accelerated benefit
- Terminal illness advance
- Term rider
- Adds temporary coverage
- Child rider
- Covers all children
- Return of premium
- Refunds at term end
- Payor benefit
- Juvenile, payer dies
Nonforfeiture + Dividends
- Cash surrender
- Take cash, end policy
- Reduced paid-up
- Smaller paid policy
- Extended term
- Same face, limited time
- Cash dividend
- Check to owner
- Reduce premium
- Lowers next payment
- Paid-up additions
- Buys more coverage
- Accumulate at interest
- Left with insurer
- Dividends
- Return of premium, untaxed
Settlement Options
- Lump sum
- Full amount, tax-free
- Interest only
- Insurer holds principal
- Fixed period
- Set years, varying amount
- Fixed amount
- Set amount, varying time
- Life income
- Paid for lifetime
- Life with period certain
- Guaranteed minimum payout
- Joint and survivor
- Pays two lives
Annuity Classification
- Immediate
- Payout within one year
- Deferred
- Accumulation then payout
- Fixed
- Guaranteed minimum rate
- Variable
- Subaccounts, securities license
- Indexed
- Tied to market index
- Single premium
- One lump deposit
- Flexible premium
- Varying deposits
- Accumulation phase
- Money grows tax-deferred
Annuity Tax Order
LIFO out | gains ordinary income
Gains taxed firstOrdinary income ratePre-59½: 10% penalty
MEC vs Non-MEC
MEC
- Fails 7-pay
- LIFO taxed
- Pre-59½ penalty
Non-MEC
- Passes 7-pay
- FIFO basis first
- Tax-favored loans
Overfunded loses tax breaks
Annuity Payout Picker
- Maximum lifetime income→Straight life(No refund)
- Guarantee minimum years→Life period certain(Beneficiary protected)
- Return remaining principal→Life refund(Cash or installment)
- Cover a spouse→Joint and survivor(Two lives)
- Fixed years only→Period certain(Not life contingent)
- Immediate income→SPIA(Single premium)
Annuity Payout Options
- Straight life
- Highest income, no refund
- Life with period certain
- Guaranteed minimum years
- Life refund
- Balance to beneficiary
- Joint and survivor
- Two annuitants
- Period certain
- Fixed years only
- Annuitization
- Convert to income
- Exclusion ratio
- Tax-free principal portion
Qualified vs Nonqualified
Qualified
- Pre-tax dollars
- All distributions taxed
- RMDs apply
Nonqualified
- After-tax dollars
- Only gains taxed
- No RMDs
Funding source drives tax
Life + Annuity Taxation
- Death benefit
- Income tax-free
- Cash value growth
- Tax-deferred inside
- MEC
- Fails 7-pay test
- MEC distribution
- LIFO, taxed first
- 1035 exchange
- Tax-free policy swap
- Annuity gains
- Taxed as ordinary income
- Annuity LIFO
- Gains withdrawn first
- Premature penalty
- 10% before 59½
Qualified Plans + IRAs
- Qualified
- Pre-tax, IRS approved
- Nonqualified
- After-tax contributions
- Traditional IRA
- Deductible, taxed later
- Roth IRA
- After-tax, tax-free out
- 401(k)
- Employer salary deferral
- RMD age
- Begins age 73
- 412 / SEP / SIMPLE
- Small employer plans
Disability Definitions
Own occ easier | any occ stricter
Own occ: your jobAny occ: any jobResidual: partial loss
HMO vs PPO
HMO
- PCP gatekeeper
- Referrals required
- In-network only
PPO
- No referral
- Out-of-network allowed
- Higher cost
Control vs flexibility
Health Plan Picker
- Any provider freedom→Indemnity(Highest cost)
- Lowest cost, gatekeeper→HMO(PCP referral)
- Flexibility, no referral→PPO(Network discount)
- HMO plus out-of-network→POS(Hybrid)
- Tax-advantaged savings→HSA + HDHP(Portable)
- Employer funds only→HRA(Not portable)
- Lost group coverage→COBRA(18 months)
Health Plan Types
- Indemnity
- Fee-for-service, any provider
- HMO
- Network, PCP gatekeeper
- PPO
- Network, no referral
- POS
- HMO with out-of-network
- EPO
- Network only, no referral
- Copay
- Flat fee per service
- Coinsurance
- Shared percentage
- Stop-loss
- Out-of-pocket maximum
Cancelable vs Renewable
Cancelable
- Insurer ends anytime
- Rate changes
- Least secure
Guaranteed renewable
- Must renew
- Class rate change
- Insured controls
Insurer power vs insured
Consumer-Directed Accounts
- HSA
- Needs HDHP, portable
- HRA
- Employer funded only
- FSA
- Use it or lose
- HDHP
- High deductible plan
- MSA
- Archer, self-employed
- HSA triple tax
- In, grow, out free
Medicare vs Medicaid
Medicare
- Age 65 or disabled
- Federal program
- Not income-based
Medicaid
- Low income
- State + federal
- TennCare in TN
Age vs financial need
Disability + LTC
- Elimination period
- Waiting before benefits
- Own occupation
- Can't do your job
- Any occupation
- Can't do any job
- Residual benefit
- Partial disability income
- Benefit period
- How long paid
- LTC ADLs
- Triggers benefits
- LTC free look
- 30 days in TN
- Partnership LTC
- Medicaid asset protection
Medicare + Government
- Part A
- Hospital, mostly premium-free
- Part B
- Doctor, monthly premium
- Part C
- Medicare Advantage
- Part D
- Prescription drugs
- Medigap
- Standardized A-N plans
- Medicaid
- TennCare in Tennessee
- Medigap open enroll
- 6 months at 65
- Plans C and F
- Pre-2020 eligibles only
Group + Federal Rules
- COBRA
- 18 months continuation
- COBRA disability
- 29-month extension
- HIPAA
- Portability, privacy
- ACA EHB
- Ten essential benefits
- Guaranteed issue
- No health denial
- Noncontributory
- Employer pays all
- Conversion
- Group to individual
TN Guaranty Limits
Life 300 | Annuity 250 | Health 500
Life death: $300kAnnuity PV: $250kHealth: $500kSurplus lines: none
Twisting vs Churning
Twisting
- Misrepresent to replace
- Different insurer
- Deceptive comparison
Churning
- Same insurer
- Repeated replacement
- Commission driven
Both harm replacement client
TN Rule Picker
- Insurer becomes insolvent→Guaranty Association(Up to limits)
- Existing policy terminated→Replacement notice(Written disclosure)
- Recommend an annuity→Suitability analysis(Document basis)
- Renew the license→24 CE hours(3 ethics)
- First-time applicant→Fingerprinting(IdentoGO)
- Sell LTC policy→8-hour training(Then 4/24mo)
TN Licensing + Regulator
- TDCI
- Regulates Tennessee insurance
- Commissioner
- Appointed by Governor
- Title 56
- Tennessee Insurance Code
- Pearson VUE
- Administers state exam
- Fingerprinting
- IdentoGO, first-time applicants
- Apply via NIPR
- $50 filing fee
- Age requirement
- At least 18
- Retake
- 10 then 30 days
TN CE Rule
24 hours | 3 ethics | 2 years
Total: 24 hoursEthics: 3 hoursBirth-month renewal1994: exempt
TN Continuing Education
- Total CE
- 24 hours biennially
- Ethics
- 3 hours required
- Renewal
- Last day birth month
- Non-type specific
- Any approved subject counts
- 1994 exemption
- Continuously licensed exempt
- Carryover
- 12 hours maximum
- LTC training
- 8 hr, then 4/24mo
- Annuity training
- One-time 4-hour course
TN Required Provisions
- Free look life
- 10 days
- Free look LTC
- 30 days
- Grace period
- 31 days
- Incontestability
- 2 years
- Suicide clause
- 2 years
- Medigap open enroll
- 6 months
- LTC pre-existing
- 6-month look-back
- Replacement contestability
- New 2-year period
TN Prohibited Practices
- Misrepresentation
- False policy statements
- Rebating
- Unfiled premium inducement
- Twisting
- Misrepresent to replace
- Churning
- Excessive replacement, commissions
- Defamation
- False insurer statements
- Unfair discrimination
- Same class, different rate
- Coercion
- Force a purchase
- Commingling
- Mixing premium funds
TN Guaranty Limits
- Life death benefit
- $300,000 per life
- Cash surrender value
- $100,000 per policy
- Annuity present value
- $250,000 per contract
- Health benefits
- $500,000 per individual
- Disability income
- $300,000 per individual
- Long-term care
- $300,000 per individual
- Surplus lines
- Not covered
- Sales inducement
- Prohibited use
Common Traps
Representation vs warranty
Representation believed true ≠ Warranty guaranteed true
Term vs whole life
Term no cash value ≠ Whole builds cash value
MEC distribution order
MEC is LIFO ≠ Non-MEC is FIFO
Own vs any occupation
Own occ pays easier ≠ Any occ pays stricter
Medicare vs Medicaid
Medicare by age ≠ Medicaid by income
Twisting vs churning
Twisting between insurers ≠ Churning same insurer
Commissioner selection
TN appointed by Governor ≠ Not elected by voters
Guaranty as a pitch
Coverage exists ≠ Sales use prohibited
Last Minute
- 1.Pass 70% on each section
- 2.TN life free look 10 days
- 3.Grace 31 days; contest 2 years
- 4.Guaranty life $300k, annuity $250k
- 5.Health guaranty $500k; surplus none
- 6.Commissioner appointed, not elected
- 7.CE 24 hours, 3 ethics, biennial
- 8.1994 licensees exempt from CE
- 9.MEC = LIFO; annuity gains LIFO
- 10.Death benefit income tax-free
- 11.Twisting between insurers; churning same
- 12.Medicare age; Medicaid income (TennCare)
Study guide on MometrixSame family resources
Explore More Life & Health Insurance
Continue into nearby exams from the same family. Each card keeps practice questions, study guides, flashcards, videos, and articles in one place.
More From This Family
Videos and articles for deeper review.
VideoFREE Tennessee Life & Health Insurance Exam Guide 2026: TDCI Exam PrepThis examVideo100+ FREE Life Insurance Sales Roleplay Drills (2026)Video7 Proven Study Methods for Certification Exams (2026)VideoAccelerated Death Benefit ExplainedArticle100+ FREE Life Insurance Sales Roleplay Drills (2026)12 min readArticle7 Proven Study Methods for Certification Exams (2026)14 min readArticleAlabama Life & Health Insurance Exam Guide 202610 min readArticleAlabama Medicare Supplement (Medigap) Insurance Plans 2026: Costs, Enrollment & Best Plans14 min read