Free TN Life & Health Exam Flashcards

The state agency that regulates the insurance industry in Tennessee — company and producer licensing, consumer protection, and enforcement under Title 56 of the Tennessee Code.

Appointed by the Governor (not elected) and serving at the Governor's pleasure. The Commissioner oversees TDCI operations, rulemaking, and disciplinary actions.

Title 56 of the Tennessee Code Annotated is the statutory framework for insurance in Tennessee, covering producer licensing, policy provisions, unfair trade practices, and the guaranty association.

Tennessee does NOT require mandatory pre-licensing education. Candidates may self-study and register directly with Pearson VUE — one of the more accessible states for new producers.

24 hours of continuing education every two years, including at least 3 hours of ethics, completed before the license renewal date. Licenses are valid for 2 years.

Residency is not required. A non-resident producer who holds a valid home-state license in good standing can obtain a Tennessee license through NIPR reciprocity without taking the TN exam.

A lapsed Tennessee license can be reinstated within 12 months by completing outstanding CE and paying fees; after 12 months the exam must be retaken. Failed exams can be retaken after 24 hours.

A minimum 10-day free-look period. The owner may return the policy during this window for a full refund of premiums paid, with no questions asked.

A minimum 30-day grace period for premium payment. The policy remains in force during the grace period; if death occurs during it, the overdue premium is deducted from the proceeds.

Limits the contestable period to 2 years. After the policy has been in force for 2 years during the insured's lifetime, the insurer cannot contest it except for non-payment of premium.

A 2-year suicide clause: if the insured dies by suicide within the first 2 years, the insurer's liability is limited to a refund of premiums paid. After 2 years, the full death benefit is payable.

Tennessee requires an insurer to notify the policyowner at least 15 days before a policy lapses for non-payment, giving the owner time to pay and avoid lapse.

Tennessee requires cash surrender value to be available after 3 years of premium payments, consistent with the Standard Nonforfeiture Law for permanent policies.

Following NAIC model regulations, Tennessee requires life insurance illustrations to show BOTH guaranteed and non-guaranteed values so consumers see the full performance range.

Tennessee law protects life insurance proceeds from creditors up to $300,000 when payable to a beneficiary other than the insured's estate.

When replacing an existing life or annuity policy, the producer must give the applicant a notice regarding replacement explaining the potential disadvantages of replacing existing coverage and provide a comparison of old vs. new.

Producers must have reasonable grounds to believe an annuity recommendation is suitable based on the consumer's financial situation, needs, and objectives — with added protections for senior consumers.

Protects the consumer from losing benefits when switching policies (new contestability and suicide periods, surrender charges) and gives the existing insurer a chance to conserve the policy.

Pure death-benefit protection for a set period with no cash value and the lowest initial premium. Coverage ends if the term expires without renewal or conversion.

Permanent coverage with a level premium, guaranteed cash value, and a guaranteed death benefit. Cash value grows tax-deferred and can be borrowed via a policy loan.

Flexible-premium permanent insurance separating cost of insurance, expenses, and an interest-crediting cash account. Death benefit Option A is level; Option B is increasing (face plus cash value).

Permanent life insurance with cash value invested in separate-account subaccounts chosen by the owner. Performance affects cash value and potentially the death benefit; a securities license is required to sell it.

Cash surrender value, reduced paid-up insurance, and extended term insurance. Reduced paid-up provides lifetime coverage at a lower face; extended term keeps the full face for a limited time.

On participating policies: cash, reduce premium, accumulate at interest, paid-up additions, and one-year term. Dividends are a return of overpaid premium and generally not taxable.

How death proceeds are paid: lump sum, interest only, fixed period, fixed amount, and life income (with or without period certain). Life income guarantees payments for the payee's life.

Waiver of premium keeps a policy in force without premiums during total disability (after a waiting period). Accelerated death benefit advances part of the face amount for a terminal/chronic illness.

Primary vs. contingent; revocable (changeable) vs. irrevocable (consent required to change). Per stirpes pays a deceased beneficiary's share to their heirs; per capita splits among surviving beneficiaries.

Fixed: guaranteed minimum rate, insurer bears risk. Variable: separate-account subaccounts, owner bears market risk (securities product). Indexed: interest tied to a market index with a floor and cap.

Accumulation: contributions grow tax-deferred. Payout/annuitization: the contract converts to income — life, life with period certain, joint and survivor, or fixed period/amount.

Tax-deferred growth; pre-annuitization withdrawals taxed LIFO (earnings first as ordinary income) with a 10% IRS penalty before 59½. Annuitized payments use the exclusion ratio.

A declining penalty for withdrawing more than the contract's free-withdrawal amount during the surrender period. A key suitability concern when replacing an annuity still in surrender.

Replaces a portion of earned income when the insured cannot work due to sickness or injury. Key terms: elimination period, benefit period, and own-occupation vs. any-occupation definition.

The waiting period after a disability begins before benefits are payable (e.g., 30/60/90 days). It functions as a time deductible; a longer period lowers the premium.

HMO: must use network providers, requires a PCP gatekeeper, lowest cost. PPO: in- and out-of-network, no referral needed. POS: blends HMO and PPO features with a PCP and out-of-network option.

Covers custodial and skilled care in nursing homes, assisted living, and at home when the insured cannot perform activities of daily living (ADLs). Typically guaranteed renewable with inflation-protection offers.

A: hospital. B: medical/outpatient. C: Medicare Advantage (private plan replacing A/B). D: prescription drugs. Medigap supplements Original Medicare and cannot be combined with Medicare Advantage.

A 6-month guaranteed-issue window beginning when the person is 65+ and enrolled in Medicare Part B. During it the insurer must accept the applicant without medical underwriting.

Noncancelable: rates and renewal both guaranteed. Guaranteed renewable: must renew, rates may change by class. Conditionally renewable / optionally renewable provide progressively less protection.

Group coverage uses one master contract; individuals get certificates and usually no individual underwriting. A terminating member can typically convert to an individual policy within 31 days without proof of insurability.

COBRA (20+ employees) lets a qualified beneficiary continue group health coverage up to 18/29/36 months after a qualifying event. HIPAA protects portability and the privacy of protected health information.

Pays covered obligations when a member insurer becomes insolvent — generally up to $300,000 life death benefit per insured, plus statutory annuity and health limits. Funded by assessments on member insurers.

Producers and insurers may not use the existence of the guaranty association in advertising or as an inducement to buy. Carrier solvency, not the guaranty fund, should drive recommendations.

Prohibits misrepresentation of policy terms, false advertising, defamation, boycott/coercion, unfair discrimination, unlawful rebating, twisting, and unfair claims settlement practices.

Twisting: inducing replacement of a policy through misrepresentation. Churning: replacing using the values of an existing policy with the same insurer when not in the client's best interest. Both prohibited.

Offering any inducement (cash, gift, or value) not specified in the policy to persuade a purchase, or treating insureds in the same class unequally. A prohibited unfair practice in Tennessee.

Premiums a producer collects belong to the insurer or insured and must be held and remitted in trust. Misappropriating or commingling premium funds is a serious license-action offense.

Must exist at the time of application (not at death, unlike property insurance). A person has unlimited insurable interest in their own life; others need a financial or close-family relationship.

Representation: believed-true to best knowledge. Warranty: guaranteed literally true. Concealment: intentionally withholding a material fact. Material misstatements can void coverage within contestability.

Adhesion: insurer drafts it; ambiguity favors the insured. Aleatory: unequal value depending on chance. Unilateral: only the insurer makes an enforceable promise. Conditional: payment depends on met conditions.

Risk: uncertainty of loss (insurance handles pure, not speculative, risk). Peril: the cause of loss (fire, illness). Hazard: a condition increasing the chance/severity of loss (physical, moral, morale).