Tennessee Life and Health Insurance Exam Study Guide

C. 30

The Commissioner must provide a person subject to an investigation a copy of the complaint which initiated the investigation within _______ days of receiving the complaint.

A. 14

B. 21

C. 30

D. 31

C. Business entity

A corporation, association , partnership, limited liability company, limited liability partnership, or other legal entity is a :

A. Limited lines producer

B. Insurance producer

C. Business entity

D. Insurance broker

B. 18

An individual applying for an insurance license in Tennessee must be no younger than what age?

A. 16

B. 18

C. 21

D. 25

A. 5

The commissioner must notify an insurer within _____ days of determining that a producer is ineligible for appointment.

A. 5

B. 7

C. 10

D. 15

C. 30

Any change of address must be reported to the Commissioner within _____ days.

A. 10

B. 21

C. 30

D. 31

B. 20

Candidates for an insurance producer's license in Tennessee must complete how many hours or prelicensing education per line of authority?

A. 10

B. 20

C. 40

D. 80

B. 180

A temporary license issued to a representative of a licensed producer who dies or becomes disabled is valid for up to how many days?

A. 120

B. 180

C. 240

D. 360

C. 24

A license is valid for _____ months unless revoked or suspended.

A. 12

B. 18

C. 24

D. 36

A. 24

How many hours of Continuing Education must a licensed producer in Tennessee complete every 2 years?

A. 24

B. 36

C. 45

D. 60

D. 31

If the Commissioner denies a license application for failure to pay child support, the Commissioner must notify the applicant of such denial within ____ days.

A. 10

B. 15

C. 30

D. 31

B. Unfair discrimination

Charging different rates ti insureds of the same class or hazard company is considered which of the following unfair trade practices?

A. Boycotting

B. Unfair discrimination

C. Rebating

D. Defamation

D. Boycott, coercion and intimidation

If a bank will not grant a loan unless the borrower buys insurance from a specific company, the bank and insurer are guilty of which of the following unfair trade practices?

A. Defamation

B. Unfair discrimination

C. Rebating

D. Boycott, coercion and intimidation

C. Rebating

What unfair and prohibited practice involves the offer of a special premium or favor as an incentive to purchase insurance?

A. Coercion

B. Unfair discrimination

C. Rebating

D. Boycott, coercion and intimidation

A. Defamation

A producer tells an applicant for insurance that a competitor insurer is in dire financial straits, and may not be able to honor its claims obligations. Which unfair trade practice has the producer committed?

A. Defamation

B. Unfair discrimination

C. Rebating

D. Boycott, coercion and intimidation

D. Misrepresenting material facts or provisions relating to coverage at issue

It is an unfair claim settlement practice to knowingly:

A. Promptly settle claims

B. Pay claims without conducting a reasonable investigation

C. Provide an accurate explanation for claim details

D. Misrepresenting material facts or provisions relating to coverage at issue

C. Illegally replace a life policy

It is an unfair trade practice to:

A. File a material misstatement about a person's financial condition or business

B. Keep a complete record of all complaints received since an insurer's last examination date

C. Illegally replace a life policy

D. Filing with the Commissioner the policy and certificate for the sale of LTC insurance

B. $300,000

The Tennessee Life and Health Guaranty Association will pay up to how much in death benefits for one life?

A. $200,000

B. $300,000

C. $400,000

D. $500,000

B. Equivalent Level Death Benefit

The average annual guaranteed death benefit over the life of the policy is the definition of:

A. Cash dividend

B. Equivalent Level Death Benefit

C. Generic Name

D. Life Insurance Net Payment Cost Index

C. 20

For replacement life policies, the free look period must be at least _____ days.

A. 7

B. 10

C. 20

D. 30

D. 60

Death benefits must be paid within _____ days after the insurer receives the proof of death.

A. 30

B. 31

C. 45

D. 60

A. 2

The insurer is not liable of the insured, whether sane or insane, commits suicide within the first _____ years the policy is in force.

A. 2

B. 3

C. 4

D. 5

C. The Commissioner

Who must approve a Buyer's guide before use?

A. The Insurer

B. The Insured

C. The Commissioner

D. The Annuitant

C. A life insurance cost index reflecting dividends or an equivalent level Annual Dividend must disclose that it is based on the insurer's current dividend scale and is not guaranteed.

Which of the following is true regarding general Life Insurance rules?

A. Each insurer must maintain a file of all documents for a period of 5 years from the date of its last authorized use

B. A reference to policy dividends can disclose that dividends are guaranteed

C. A life insurance cost index reflecting dividends or an equivalent level Annual Dividend must disclose that it is based on the insurer's current dividend scale and is not guaranteed.

D. A comparison of 2 or more life policies must not adjust for interest appropriately

B. 25

Replacement is a transaction in which new life insurance is to be purchased and the agent knows that existing life insurance will be pledged as collateral or subjected to borrowing for over _____% of the policy loan value.

A. 20

B. 25

C. 30

D. 35

A. 3

A party may not take legal action to recover against an insurer more than how many years after a Proof of Loss is required to be provided?

A. 3

B. 5

C. 7

D. 9

D. 31

Newborn coverage begins at birth and will continue for at least how many days?

A. 7

B. 14

C. 21

D.31

B. A person whose Medicare Supplement benefits under an employee welfare benefit plan area still in effect

Which of the following is not eligible for a Medicare Supplement Policy?

A. A person whose enrollment ceases under circumstances that permit cessation of the individual's right to elect coverage.

B. A person whose Medicare Supplement benefits under an employee welfare benefit plan area still in effect.

C. A person enrolled under a Medicare+ Choice plan if the coverage is terminated or discontinued, or the organization providing coverage is terminated.

D. A person whose enrollment under a Medicare Supplement policy terminates, and whose subsequent coverage under a Medicare+Choice policy terminates within 12 months of enrollment.

B. Have a 30-day free look period.

A Medicare Supplement policy must:

A. Use a different basis for indemnification against losses from sickness and losses from accidents.

B. Have a 30-day free look period.

C. Terminate a spouse's coverage solely because the insured's coverage is terminated, except for nonpayment of premium.

D. Exclude or limit coverage for a preexisting condition for more than 6 months.

C. 8

Before being allowed to solicit, negotiate, or sell LTC insurance, a producer must complete an initial training of how many hours?

A. 3

B. 6

C. 8

D. 12

C.6

An aggrieved person may request an external review within how many months of receiving a health insurer's adverse determination?

A. 12

B. 9

C.6

D. 3

C. Enrolled in Medicaid

Under the ACA, a catastrophic plan may be purchased by any of the following, except an individual:

A. With a hardship

B. Unable to afford other coverage

C. Enrolled in Medicaid

D. Under the age of 30

D. Premiums

Which of the following is not included in a Summary of Benefits and Coverage?

A. Covered Benefits

B. Dedcutibles, Copayments, and Coinsurance

C. Limitations

D. Premiums

Conditional

Both parties must perform certain duties and follow rules of conduct to make the contract enforceable.

Unilateral

Only one part is legally bound to the contractual obligations after the premium is paid to the insurer

Contract of Adhesion

One party (insurer) prepares the contract and it is not negotiable.

Principal of Indemnity

The insured is to be restored to their original financial position that they enjoyed prior to their loss.

Representation

A statement made on the applicant that is believed to be true to one's knowledge.

Misrepresentation

A false statement on the application that renders the contract void if material to acceptance of the ris

Warranty

A statement that is guaranteed to be true and coverage mat hinge on the truthfulness of that statement.

Concealment

When an applicant fails to make known material a fact.

Fraud

intentional misrepresentation, deceit, or concealment of material facts known by a person with the intention of causing injury to another

Standard Risk

The average risk based on the mortality table standards.

Preferred Risk

A lower than average risk based on extremely good health.

Substandard Risk

A higher than average risk based on underwriting standards.

Refused/ Declined

The refusal to issue coverage.

Expected Mortality, Interest, and Expenses

In establishing the rates to charge premium payers on life insurance, a company will use:

Liquidity

Provides immediate funds to pay for final expenses

Viatical Settlements

Policy can be sold if insured is terminally ill and needs access to death benefit early

Group

Master policy issued to plan sponsor and typically written as annual renewable term. Makes up 40% of all insurance

Individual

Coverage on one named insured, may be of any classification or type, and the policy owner receives a policy and maintains control

Permanent

Premium higher than term when other factors equal, protection continues to age 100 or until surrendered, and provides cash accumulation

Term

Lowest premium outlay, temporary coverage for short term need , no cash value, and the benefit can be level, increasing or decreasing

Participating

Issued by mutual insurers; dividends considered return of excess premium and are not guaranteed; and policy owner has dividend options to choose from

Non-participating

Issued by stock insurers and do not pay policy dividends

Fixed

Specified amount of coverage, benefits and premium with no inflation protection. Cash value growth has a guarantee

Variable

Uses separate account to invest a portion of premiums; may help protect against inflation; and an Insurance license and FINRA registration required in order to sell

Endow

The maturity date at which the cash value equals the face amount

Face amount

The amount of protection stated in a policy that is payable upon death of the insured; may also be called the limit of liability

Cash value

An accumulated value in whole life policies that is available for policy loans and at surrender

Rider

Added benefit attached to the policy for a small additional premium

1. Temporary

2. No cash/loan value

3. Pure protection

4. Low initial premium

What are the characteristics of a term policy?

B. A death benefit is payable but there is no cash value

Which of the following best describes a term insurance policy?

a) A death benefit is not payable but cash value is generated

b) A death benefit is payable but there is no cash value

c) Premiums based on $1,000 of insurance are higher overall than other types of policies

d) A living insured receives the funds

Level

_________ Term - Both the premium and face amount remain level for the term of the contract

Decreasing

_________Term - The face amount will decrease, but the premium remains level

Increasing

_________Term - The face value increases over time to keep pace with inflation

C. Level term policy

Jacob owns a policy that pays a $100,000 death benefit only if he dies within the 20-year policy period. If Jacob dies anytime within the 20-year policy period, Wanda, his beneficiary, will receive the $100,000 death benefit and the premium that Jacob will pay for this policy will be the same throughout the 20-year policy period. Jacob owns a:

a) Limited payment whole life b) Endowment

c) Level term Policy

d) Annuity

Re-entry term

Upon renewal, the insured is able to qualify for a lower premium classification based on

evidence of insurability

Annual Renewable Term

Automatically renews each year with no insurability at attained age. Premiums increase upon renewal

Renewable term

No evidence of insurability, based upon attained age

Convertible Term

Into permanent insurance. No evidence of insurability, based upon attained or issue age

D. Monica will not have to prove insurability, and the renewal premium will be based on her attained age

Monica wants to renew her $50,000 Renewable Level Term life insurance policy, which of the following is true?

a) Monica will have to prove insurability, and the renewal premium will be based upon her age at the time the policy was issued

b) Monica will not have to prove insurability, and the renewal premium will be based upon her age at the time the policy was issued

c) Monica will have to prove insurability, and the renewal premium will be based on her attained age

d) Monica will not have to prove insurability, and the renewal premium will be based on her attained age

1. Ordinary Whole Life

2. Permanent protection, age 100

3. Builds cash, loan, non-forfeiture values

4. Cash Value = Face Value at maturity

5. Level premium and face amount

6. Owner may borrow from cash value

7. Settlement options available upon death or maturity

8. The shorter the premium paying period the higher the premium

9. Riders may be added

Characteristics of Whole Life

Straight

_________- Fixed premium payments to age 100

Limited Pay

_________ - Fixed premium payments for a limited period of time; premiums are higher than straight life

Single Premium

_________ - One lump sum payment at the start of the policy

1. Adjustable premium can be increased or decreased

2. Adjustable benefit can be increased with insurability

3. Adjustable time period of coverage

4. Adjustable cash value growth

Adjustable Life

1. Adjustable face amount - with insurability

2. Flexible premiums

3. Cash value earns interest at current rate with a guaranteed minimum (general account)

4. Monthly mortality charges are deducted (annual renewable term)

5. May borrow or withdraw cash without terminating contract

6. Two death benefit options: Option A - Level benefit; Option B - Increasing benefit

Universal Life

D. Any borrowing or partial withdrawal from the cash value account has the effect of terminating the policy

All of the following are true of a Universal Life policy, EXCEPT:

a) Adjustments to the face amount may be requested by the policyowner to reflect changes in need

b) It adjusts to interest rate changes and allows the owner to make additional contributions that will increase the cash value or skip some premiums if the owner desires to do so

c) The death benefit is in the form of one year renewable term, while the cash value account earns interest at the current rate

d) Any borrowing or partial withdrawal from the cash value account has the effect of terminating the policy

Fixed premium

Variable cash and face values

No guarantee of minimum cash value (separate account)

FINRA registration required Owner assumes investment risk

Guaranteed minimum face value (general account) Prospectus must be provided

Variable life

1. Combination of Variable and Universal

2. Flexible premiums and death benefits

3. Separate accounts show actual investment participation

4. Prospectus given to owner

5. FINRA registration and insurance license required

Variable Universal Life (VUL)

C. Variable Universal and Variable

Which combination of life insurance products requires both a life and securities license to sell?

a) Adjustable and Universal

b) Universal and Fixed

c) Variable Universal and Variable

d) Fixed and Adjustable

1. Written on life of minor

2. Protect future insurability

3. "Jumping Juvenile" automatically increases in face amount at a specified age (usually age 21 or 25)

Juvenile

1. Covers two or more lives

2. Death benefit paid upon first death

3. Premiums based upon joint age

4. Written on a Whole Life Policy

Joint Life (first to die)

1. Written on two or more lives

2. Death benefit paid at last insured's death

3. Written on Whole Life policy

4. Used to cover estate taxes

5. Rates lower than purchasing two separate policies

Joint survivorship life (Last to Die)

D. Joint Survivorship Life Policy

Bill and Janet are both insured under a whole life policy that is designed to help cover federal estate taxes by paying upon the death of whichever of them is the last to die. The policy is a:

a) Modified Whole Life Policy

b) Joint Life Policy

c) Graded Premium Policy

d) Joint Survivorship Life Policy

◦ Total disability, waive premiums

◦ Cash value, dividends and protection continue

as usual

Waiver of Premium

◦ Premium waived if the premium payor becomes disabled or dies

◦ When added to juvenile policy, waiver is cancelled at age 21 to 25

◦ Payor must qualify for the rider

Wavier of Payors Premium (Payor Benefti)

◦ Premiums waived

◦ Insured receives a monthly income

Waiver of premium/disability income

◦ Waives deduction of monthly cost and expenses associated with Universal Life

Waiver of Cost of Insurance

C. Waiver of Premium/Disability income rider

Timothy is the insured/owner of a whole life policy and is concerned that in the event of disability the premiums of the policy would not only be met to keep the policy from lapsing, but that he also might replace some of his lost income due to the disability. Which rider would accomplish Tim's objective?

a) Waiver of Payor Premium Rider

b) Waiver of Premium Rider

c) Waiver of Premium/Disability Income Rider

d) Guaranteed Insurability Rider

◦ Covers one or more children

◦ At age 21 or 25 may convert without proof of insurability

Child Rider

◦ Double the face if death was accidental

◦ Does not add additional values to the base policy

Accidental Death (Double Indemnity)

Guaranteed Insurability

◦ Purchase additional amounts without proof of insurability

◦ If the insured dies within the term, benefits are face amount plus premiums

◦ Increasing term rider equals total premiums

Return of Premium

◦ Term rider equals cash value

◦ If die within term, benefits are face amount plus cash value

Return of cash value

◦ Increasing term that increases with the Consumer Price Index

◦ Adjustments are made annually with no evidence of insurability

Cost of Living (COL)

A. Increasing Term

The Return of Premium Rider and the Cost of Living Rider use which type of term insurance to accomplish their objective?

a) Increasing Term

b) Decreasing Term

c) Level Term

d) Re-Entry Term

◦ Allows early payment of a portion of the face if insured becomes terminally ill

◦ Could include nursing home and dread disease benefits

Living Need (Accelerated Benefit)

Viator

Owner of the life insurance contract who enters into a viatical settlement contract - less than two

years to live

Viatical Settlement Contract

Written agreement between provider and viator and establishes the terms of the agreement