Free Tennessee Life practice questions

Answer: A. A nonforfeiture provision the commissioner considers equitable to the insured persons and the policyholder

Tennessee requires a group life policy on any plan other than term to include nonforfeiture terms that the commissioner judges equitable to the insured persons and to the policyholder. The statute expressly says group policies need not carry the same nonforfeiture provisions required for individual life policies, so the option demanding identical individual-policy provisions is wrong. The option saying no nonforfeiture provision is needed is wrong because the requirement applies directly to non-term group plans. The test the statute sets is the commissioner's opinion, not a vote of the covered employees.

Answer: B. The total premium rate the policyholder pays for the whole group

Tennessee requires the insurer to issue to the policyholder, for delivery to each insured person, an individual certificate stating the insurance protection the person is entitled to, who receives the benefits, and the rights and conditions the section grants under subdivisions (a)(3)(H) through (J), which concern obtaining an individual policy. The provision lists no statement of the group's premium rate among the certificate's required contents, so that is the exception.

Answer: D. The applicant's signed statement on whether the proposed insurance will replace existing coverage

The section of the replacement rule that applies to all insurers imposes two duties: each insurer must inform its field representatives or other compliance personnel of the rule's requirements, and it must require, with or as part of every completed life application, the applicant's signed statement on whether the proposed coverage will replace existing life insurance. A Policy Summary on the applicant's existing coverage, a cash-value confirmation from the existing insurer, and a five-year history of past policies are not among the duties this section places on every insurer.

Answer: B. No, because her coverage has been in force for two years during her lifetime before the contest

Tennessee's required incontestable provision bars use of an insured person's statement about insurability once that person's coverage has been in force for two years during the person's lifetime before the contest, and even within that period the statement can be used only if it appears in a written instrument the person signed. Her coverage has run three years while she is alive, so the signed form can no longer be used against her. A signed statement is usable only within the two-year window, not at any time. The period runs from the coverage being in force, not from the filing of a claim. Nor does this provision bar such statements from every contest; its limits are the two-year period and the signed-writing requirement.

Answer: A. It may not refuse, limit, or decline to continue her coverage because of those past trips.

Tennessee's unfair trade practices law treats it as unfair discrimination to refuse life insurance, refuse to continue it, or limit the amount, extent, or kind of coverage because of an individual's past lawful travel. Limiting the face amount is itself one of the prohibited actions, so issuing a smaller policy is not a permitted middle ground. The federal health warning exemption in the statute applies to future travel plans, not to trips already taken. The statute contains no two-year window for past travel.

Answer: B. $60,000

Tennessee requires a group life policy to let a person whose coverage ends with employment obtain an individual policy without evidence of insurability. The amount of that individual policy is capped at the group coverage that ceased, reduced by any group life insurance the person is or becomes eligible for within 31 days after the termination. Here that is $100,000 minus $40,000, or $60,000. The $100,000 figure ignores the required reduction for the new group coverage. The $40,000 figure is the new employer's group amount, not the conversion amount. The $140,000 figure adds the two amounts when the statute subtracts one from the other.

Answer: D. As representations, not warranties, with the policyholder's application attached

Tennessee requires the group life policy to state that all statements by the policyholder or by insured persons are deemed representations and not warranties, and that a copy of any policyholder application is attached to the policy when issued. The option treating the statements as warranties states the opposite of the statute. The provision does not make the statements conditions precedent to a claim, and it does not require them to be repeated at renewal. The same provision also allows an insured person's statement to be used in a contest only if a copy has been furnished to that person or to the beneficiary.

Answer: A. Ten days after mailing notice of the intended replacement to the replacing insurer by certified or registered mail

Under the agent-duties section of the replacement rule, an agent licensed for less than 120 days may take a replacement application only after 10 days have passed since the agent mailed the replacing insurer, by certified or registered mail, notice of the intent to replace, the names of the existing insurers and the policy numbers involved. Taking the application immediately skips that waiting period; the signed Notice Regarding Replacement is a separate duty, not a substitute for it. The rule sets a 10-day wait after notice rather than a bar until the agent reaches 120 days of licensure. The notice goes to the replacing insurer by certified or registered mail, not to the existing insurer by first-class mail, and the wait is 10 days, not 30.

Answer: B. When it is done in a way that violates the commissioner's replacement rules.

The statute defines an unfair replacement transaction practice as replacing a life insurance policy or an annuity contract contrary to the rules the commissioner has promulgated under the unfair trade practices part. The test is compliance with those rules. The statute sets no two-year window, does not make a change of insurer unfair by itself, and does not make a replacement unfair merely because one producer handled both policies.

Answer: B. 25 percent

Tennessee's replacement rule defines a replacement transaction to include a sale of new life insurance where the agent or insurer knows, or should know, that existing coverage will be pledged as collateral or borrowed against, in one loan or a series of loans, for a total above 25 percent of the loan value stated in the policy. Ten percent is below that threshold. Fifty percent and 75 percent are amounts the rule would also reach, but the line the rule draws is 25 percent, so borrowing qualifies as soon as it passes 25 percent.