TN Life & Health Exam Flashcards

Q: Does Tennessee require pre-licensing education for a life and health license?

No. Tennessee does not require mandatory pre-licensing education for life and health insurance producers; candidates may self-study and register directly for the exam through Pearson VUE. After licensing, producers must complete 24 hours of continuing education every two years, including 3 hours of ethics, before each renewal.

Q: How many questions are on the Tennessee Life & Health exam?

The Tennessee Life & Health licensing exam has 150 questions total (120 scored plus pretest items) with a 2.5-hour time limit and a 70% passing score administered through Pearson VUE. The exam fee is $49. Tennessee TDCI does not publish first-time pass rates.

Q: What are Tennessee's key life policy provision requirements?

Tennessee requires a minimum 10-day free-look period, a minimum 30-day grace period, a 2-year incontestability period, and a 2-year suicide clause limiting payout to a premium refund if suicide occurs within the first two years. Cash surrender value must be available after three years of premium payments.

Q: What does the Tennessee Life & Health Insurance Guaranty Association cover?

The Tennessee Life & Health Insurance Guaranty Association (TNLIGA) protects policyholders when a member insurer becomes insolvent, generally providing up to $300,000 in life insurance death benefit protection per insured plus statutory limits for annuity and health obligations. It is funded by assessments on member insurers and may not be used as a sales inducement.

Q: Is Tennessee residency required to hold an insurance producer license?

No. Tennessee does not require producer license applicants to be state residents; non-residents can obtain a Tennessee license through NIPR reciprocity if they hold a valid license in good standing in their home state. Resident applicants must be at least 18, pass the exam, complete fingerprinting and a background check, and pay the required fees.

Question 1

Tennessee Department of Commerce and Insurance (TDCI)

Accepted Answer

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.

Question 2

Tennessee Commissioner of Commerce and Insurance

Accepted Answer

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

Question 3

Tennessee Insurance Code (Title 56)

Accepted Answer

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.

Question 4

Tennessee Pre-Licensing Education

Accepted Answer

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.

Question 5

Tennessee Producer CE Requirement

Accepted Answer

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.

Question 6

Tennessee Non-Resident Licensing

Accepted Answer

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.

Question 7

Tennessee License Reinstatement & Retake

Accepted Answer

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.

Question 8

Tennessee Life Insurance Free-Look Period

Accepted Answer

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.

Question 9

Tennessee Life Insurance Grace Period

Accepted Answer

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.

Question 10

Incontestability Clause (Tennessee)

Accepted Answer

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.

Question 11

Suicide Clause (Tennessee)

Accepted Answer

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.

Question 12

Tennessee Lapse Notice Requirement

Accepted Answer

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.

Question 13

Cash Surrender Value Availability (Tennessee)

Accepted Answer

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

Question 14

Tennessee Policy Illustration Rule

Accepted Answer

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

Question 15

Creditor Protection of Life Proceeds (Tennessee)

Accepted Answer

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

Question 16

Tennessee Replacement Notice

Accepted Answer

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.

Question 17

Tennessee Annuity Suitability Rule

Accepted Answer

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.

Question 18

Purpose of Replacement Regulation

Accepted Answer

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.

Question 19

Term Life Insurance

Accepted Answer

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.

Question 20

Whole Life Insurance

Accepted Answer

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.

Question 21

Universal Life Insurance

Accepted Answer

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).

Question 22

Variable Life Insurance

Accepted Answer

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.

Question 23

Nonforfeiture Options

Accepted Answer

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.

Question 24

Dividend Options

Accepted Answer

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.

Question 25

Settlement Options

Accepted Answer

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.

Question 26

Riders: Waiver of Premium & Accelerated Death Benefit

Accepted Answer

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.

Question 27

Beneficiary Designations

Accepted Answer

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.

Question 28

Fixed vs. Variable vs. Indexed Annuity

Accepted Answer

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.

Question 29

Accumulation vs. Payout Phase

Accepted Answer

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

Question 30

Annuity Taxation (Non-Qualified)

Accepted Answer

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.

Question 31

Surrender Charge

Accepted Answer

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.

Question 32

Disability Income Insurance

Accepted Answer

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.

Question 33

Elimination Period

Accepted Answer

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.

Question 34

Major Medical / Managed Care

Accepted Answer

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.

Question 35

Long-Term Care (LTC) Insurance

Accepted Answer

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.

Question 36

Medicare Parts A, B, C, D

Accepted Answer

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.

Question 37

Medicare Supplement (Medigap) Open Enrollment

Accepted Answer

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.

Question 38

Health Policy Renewability

Accepted Answer

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

Question 39

Group Insurance & Conversion

Accepted Answer

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.

Question 40

COBRA & HIPAA

Accepted Answer

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.

Question 41

Tennessee Life & Health Insurance Guaranty Association (TNLIGA)

Accepted Answer

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.

Question 42

Guaranty Association Advertising Restriction

Accepted Answer

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.

Question 43

Tennessee Unfair Trade Practices

Accepted Answer

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

Question 44

Twisting vs. Churning

Accepted Answer

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.

Question 45

Rebating

Accepted Answer

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.

Question 46

Fiduciary Duty / Premium Trust

Accepted Answer

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.

Question 47

Insurable Interest (Life)

Accepted Answer

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.

Question 48

Representation, Warranty & Concealment

Accepted Answer

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

Question 49

Contract Characteristics

Accepted Answer

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.

Question 50

Risk, Peril & Hazard

Accepted Answer

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).

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