Tennessee Life & Health Insurance License, Practice Exams

A '20-pay whole life' policy:

1. Provides level coverage for exactly twenty years, then terminates
2. Is paid up after twenty years of premiums but covers the insured for life ✓
3. Requires premium payments every year for the insured's entire lifetime
4. Builds no cash value at all because the premium period ends early

Why: Limited-pay whole life concentrates premiums into a set period (here 20 years) while coverage lasts for life.

A state Long-Term Care Partnership program allows a policyholder to:

1. Protect an amount of assets equal to the benefits the policy paid, if they later need Medicaid ✓
2. Buy long-term care coverage with no medical underwriting whatsoever, at any age the applicant chooses
3. Receive double benefits from both the insurer and the state at once
4. Avoid ever having to pay any long-term care premiums

Why: Partnership policies let insureds shelter assets equal to the LTC benefits paid when qualifying for Medicaid, encouraging private LTC coverage.

Survivorship (second-to-die) life insurance is most commonly used to:

1. Provide estate liquidity after the second insured dies ✓
2. Replace the income of a sole wage earner who has several young children at home
3. Cover a short-term business loan that must be fully repaid within five years
4. Fund a child's future college costs through the policy's accumulated cash value

Why: It pays at the second death and is widely used to fund estate taxes and costs.

Under T.C.A. § 56-6-111, a temporary producer license may be issued to the designee of a licensed producer in which situation?

1. The producer enters active service in the U.S. armed forces ✓
2. The producer takes an extended overseas vacation
3. The producer transfers to a different agency
4. The producer temporarily reduces working hours

Why: T.C.A. § 56-6-111(a)(3) authorizes a temporary license to the designee of a licensed producer entering active service in the armed forces of the United States — therefore that answer is correct.

An agent takes an application for new life insurance knowing the applicant will surrender an existing policy to help pay for it. Under TN Rule 0780-1-24, this is best described as a...?

1. twisting-only violation
2. free-look exchange
3. replacement transaction ✓
4. conditional binder

Why: TN Rule 0780-1-24 defines a replacement transaction as one where existing life insurance is or will be affected by the purchase of new coverage — therefore replacement transaction.

Under the uniform 'proof of loss' provision, written proof must generally be furnished within:

1. 90 days after the loss (or as soon as reasonably possible) ✓
2. 24 hours of the insured first noticing any symptom
3. 3 years from the date the policy was originally issued
4. 30 days before the loss is expected to occur

Why: Proof of loss is due within 90 days of the loss, or as soon as reasonably possible, but not later than one year except in cases of legal incapacity.

COBRA generally allows a qualified employee who loses group coverage due to a reduction in hours or termination to continue that coverage for:

1. Up to 18 months, by paying the premium themselves ✓
2. The rest of their life, at the original employee contribution rate
3. Only 30 days while they search for replacement coverage
4. Up to 10 years, fully subsidized by the former employer

Why: COBRA continuation is typically 18 months (29 or 36 in some cases); the individual pays up to 102% of the full premium.

Under T.C.A. § 56-61-116, an aggrieved person must file a request for external review within what period after receiving the notice of adverse or final adverse determination?

1. thirty (30) days
2. sixty (60) days
3. one (1) year
4. six (6) months ✓

Why: T.C.A. § 56-61-116(a) allows the person to file within six months after receipt of the notice of adverse or final adverse determination — therefore six (6) months.

A SEP (Simplified Employee Pension) plan is funded by:

1. Employer contributions made into each eligible employee's IRA ✓
2. Mandatory after-tax contributions from every employee's paycheck
3. A single lump sum the government deposits for low-income workers
4. Premiums paid into a variable life insurance policy

Why: Under a SEP, the employer contributes to a traditional IRA established for each eligible employee; contributions are discretionary and tax-deductible to the employer.

Under T.C.A. § 56-26-108, written notice of claim must be given to the insurer within...?

1. ten (10) days after the loss
2. ninety (90) days after the loss
3. twenty (20) days after the loss ✓
4. sixty (60) days after the loss

Why: T.C.A. § 56-26-108(5) requires written notice of claim within 20 days after the occurrence or commencement of loss, or as soon as reasonably possible — therefore twenty (20) days after the loss.

Under T.C.A. § 56-12-207, the association's obligations under a guaranteed, assumed, alternative, or reissued policy terminate if premiums are not paid within how many days after the required date (except for claims incurred or net cash surrender value due)?

1. Thirty-one (31) days ✓
2. Twenty (20) days
3. Ten (10) days
4. Sixty (60) days

Why: T.C.A. § 56-12-207(c) provides that nonpayment of premiums within thirty-one (31) days after the required date terminates the association's obligations under the policy — therefore 31 days is correct.

Under T.C.A. § 56-26-108, the required grace period for a monthly-premium individual A&H policy must be not less than...?

1. seven (7) days
2. thirty-one (31) days
3. ten (10) days ✓
4. twenty (20) days

Why: T.C.A. § 56-26-108(3) sets minimum grace periods of 7 days (weekly premium), 10 days (monthly premium), and 31 days (all others) — therefore ten (10) days.

Under T.C.A. § 56-26-108, the required 'Entire Contract' provision of an individual A&H policy states that no change is valid unless...?

1. approved by an executive officer of the insurer ✓
2. requested orally by the soliciting field agent alone
3. witnessed by two named policyholders
4. filed with the local county court clerk

Why: T.C.A. § 56-26-108(1) provides the policy is the entire contract and no change is valid until approved by an executive officer and endorsed; no agent may change it — therefore approved by an executive officer of the insurer.

Which type of life insurance provides lifelong coverage with a level premium and a guaranteed cash value?

1. Annually renewable term
2. Whole (ordinary) life ✓
3. Level term to age 65
4. Credit life

Why: Whole life is permanent coverage with a level premium and a guaranteed, tax-deferred cash value. Term provides only temporary coverage with no cash value.

An employee is injured on the job and needs medical care and wage replacement. The coverage that responds is:

1. Workers' compensation ✓
2. Medicare Part B
3. An individual disability income policy only
4. A Medicare Supplement policy

Why: Workers' compensation is the state-mandated, no-fault coverage for job-related injuries and occupational disease.

A producer licensed and in good standing in Georgia applies in Tennessee as a nonresident. Under T.C.A. § 56-6-108, Tennessee will issue the license only if Georgia:

1. Requires a separate reciprocity treaty first
2. Waives its own producer examination entirely
3. Awards licenses to Tennessee residents on the same basis ✓
4. Shares all disciplinary records with Tennessee

Why: T.C.A. § 56-6-108(a)(4) conditions nonresident licensure on the home state awarding producer licenses to Tennessee residents on the same basis — therefore reciprocity on the same basis is correct.

An insurer keeps the right to decline renewal of a Tennessee A&H policy. Under T.C.A. § 56-26-126, the policy face must carry wording meaning the coverage is...?

1. renewable only at the company's option ✓
2. guaranteed renewable to age sixty-five
3. cancellable by the insured party only
4. automatically renewed each policy year

Why: T.C.A. § 56-26-126 requires face wording ('RENEWABLE AT OPTION OF COMPANY' or equivalent) showing renewal is at the company's option — therefore renewable only at the company's option.

Medicare Part D provides coverage for:

1. Outpatient prescription drugs ✓
2. Inpatient hospital, skilled nursing facility, and hospice care
3. Routine dental, vision, and hearing-aid services for enrollees
4. Long-term custodial care provided in a nursing facility

Why: Part D covers outpatient prescription drugs, offered through private plans.

Under T.C.A. § 56-8-105, when a claimant requests claim forms, the insurer must provide them within how many calendar days?

1. Ten (10) calendar days
2. Fifteen (15) calendar days ✓
3. Twenty (20) calendar days
4. Thirty (30) calendar days

Why: T.C.A. § 56-8-105(13) requires providing necessary claim forms within fifteen (15) calendar days of a request, with reasonable explanations — therefore fifteen calendar days.

Under T.C.A. § 56-42-103, 'long-term care insurance' means a policy or rider designed to provide coverage for not less than how long for each covered person?

1. Thirty (30) days
2. Six (6) consecutive months
3. Twelve (12) consecutive months ✓
4. Twenty-four (24) consecutive months

Why: T.C.A. § 56-42-103(5) defines 'long-term care insurance' as coverage for not less than twelve (12) consecutive months for each covered person for necessary care in a setting other than an acute care hospital unit — therefore 12 consecutive months is correct.

Long-term care policies are generally required to be:

1. Guaranteed renewable ✓
2. Cancelable by the insurer at any time
3. Renewable only with new medical evidence each year
4. Convertible into a life insurance policy on demand

Why: LTC policies must be at least guaranteed renewable: the insurer must renew, though it may adjust premiums on a class basis.

Long-term care policies commonly cover care in settings other than nursing homes, including:

1. Home health care, adult day care, and assisted living ✓
2. Only acute-care hospitals and emergency rooms
3. Exclusively the insured's own private residence
4. Just short-term rehabilitation after a surgery

Why: Modern LTC policies cover a range of settings — home health, adult day care, assisted living, and respite care — not only nursing homes.

Under a universal life policy's Option A (Option 1), the death benefit is:

1. Level, while the cash value grows inside it ✓
2. Equal to the face amount plus the entire accumulated cash value at all times
3. Reduced each year by the amount of interest the policy earns
4. Tied directly to the performance of a chosen stock-market index

Why: Option A keeps a level death benefit (cash value accumulates within it); Option B pays the face amount plus the cash value, so it increases.

A purchaser returns her new individual A&H policy under the free-look notice. Under T.C.A. § 56-26-129, the policy is then treated as...?

1. paid up for its first policy term
2. converted to a term contract
3. void from the beginning ✓
4. assigned back to the insurer

Why: T.C.A. § 56-26-129 provides that a policy returned under the free-look is void from the beginning, as if no policy had been issued, with the premium refunded — therefore void from the beginning.

Under T.C.A. § 56-12-203, an 'impaired insurer' is a member insurer that (after July 1, 1989) is not insolvent but is placed under which type of court order?

1. An order of rehabilitation or conservation ✓
2. An order of liquidation with a finding of insolvency
3. An order of supervision by the NAIC
4. A cease and desist order

Why: T.C.A. § 56-12-203(8) defines 'impaired insurer' as a member insurer that is not insolvent and is placed under an order of rehabilitation or conservation by a court of competent jurisdiction — therefore rehabilitation or conservation is correct.

A dependent child on a Tennessee medical expense policy reaches the limiting age but is incapable of self-sustaining employment due to disability and chiefly dependent on the insured. Under T.C.A. § 56-7-2302, to keep coverage, proof of incapacity must be furnished within...?

1. thirty-one (31) days of reaching the limiting age ✓
2. ninety (90) days of reaching the limiting age
3. ten (10) days of reaching the limiting age
4. one (1) year of reaching the limiting age

Why: T.C.A. § 56-7-2302(b) continues coverage of a disabled, chiefly dependent child if proof is furnished within 31 days of attaining the limiting age — therefore thirty-one (31) days of reaching the limiting age.

Under a Section 162 executive bonus plan, the employer:

1. Pays a bonus equal to the premium, which the employee owns and is taxed on ✓
2. Owns the policy and keeps all of the cash value for corporate purposes
3. Borrows against the executive's personal policy to fund operations
4. Defers the executive's salary into a nonqualified retirement account

Why: The employer pays a deductible bonus equal to the premium; the employee owns the policy and reports the bonus as taxable income.