These twenty questions come from five sections of the official Tennessee outline. Answer each one in your head first, then reveal the correct choice and the reason behind it.
Question 1 of 20
Types of Policies
An insurer offers a policy insuring two spouses under one contract that pays the death benefit only when the second insured dies. What is this called?
- A. Joint life (first-to-die) policy
- B. Survivorship (second-to-die) policy
- C. Family income policy
- D. Juvenile life policy
+Reveal answer
Answer: B. Survivorship (second-to-die) policy
A survivorship or second-to-die policy pays only after both insureds have died, often used for estate planning. A joint life first-to-die policy pays when the first of the two dies. A family income policy provides income to survivors for a period. A juvenile policy insures a child. Only second-to-die pays on the second death.
Life - General Knowledge > Types of Policies
Question 2 of 20
Policy Riders
What does the waiver of premium rider do for a policyowner?
- A. It refunds all premiums paid if the insured survives the term
- B. It keeps the policy in force without premium payments if the insured becomes totally disabled
- C. It doubles the death benefit if death is accidental
- D. It lets the owner skip premiums whenever money is tight
+Reveal answer
Answer: B. It keeps the policy in force without premium payments if the insured becomes totally disabled
The waiver of premium rider keeps coverage in force while the insured is totally disabled, with the insurer paying the premiums. It is not a refund of premiums, so the first choice is wrong. Doubling the benefit for accidental death describes the accidental death rider, not waiver of premium. It cannot be used at will just because premiums are hard to pay; disability must be established.
Life General Knowledge > Policy Riders, Provisions, Options, and Exclusions
Question 3 of 20
Completing the Application
Who is required to sign a life insurance application when the proposed insured is a different person than the applicant?
- A. Only the producer
- B. The applicant, the proposed insured, and the producer
- C. Only the beneficiary
- D. Only the insurer's underwriter
+Reveal answer
Answer: B. The applicant, the proposed insured, and the producer
When the applicant (owner) and the proposed insured are different people, the application must be signed by the applicant, the proposed insured, and the producer taking the application. The producer alone cannot sign for the parties. The beneficiary has no duty to sign the application. The underwriter reviews but does not sign the application itself.
Life General Knowledge outline: Completing the Application (required signatures)
Question 4 of 20
Tennessee Laws and Departmental Rules Common to Life
When an insurer terminates a producer's appointment in Tennessee, what is the insurer generally required to do?
- A. Notify the Commissioner of the termination
- B. Notify only the producer's former clients
- C. Refund the producer's unearned commissions
- D. Request that the producer surrender the license
+Reveal answer
Answer: A. Notify the Commissioner of the termination
Insurers must notify the Commissioner when an appointment is terminated. Notifying former clients is not the required action. Commission refunds are a contract matter, not a termination requirement. The producer keeps the license; termination ends the appointment, not the license itself.
Tenn. Code Ann. 56-6-116 (notification of termination)
Question 5 of 20
Tennessee Laws and Departmental Rules Pertinent to Life Insurance Only
When a producer in Tennessee is involved in a transaction that replaces an existing life insurance policy, what document must the applicant generally receive?
- A. A written notice regarding replacement
- B. A copy of the insurer's annual financial statement
- C. A guaranty association coverage certificate
- D. A signed statement from the prior producer
+Reveal answer
Answer: A. A written notice regarding replacement
Replacement rules require the applicant be given a written notice about replacement that explains the consequences of replacing coverage. The insurer's financial statement, a guaranty association certificate, and a statement from the prior producer are not the required replacement disclosure document.
Tenn. Comp. R. & Regs. governing replacement of life insurance
Question 6 of 20
Types of Policies
Linda purchases a policy that pays a set benefit if she is alive on a stated maturity date, or pays her beneficiary if she dies before that date. What type of policy is this?
- A. Endowment policy
- B. Term policy
- C. Annuity
- D. Adjustable life policy
+Reveal answer
Answer: A. Endowment policy
An endowment pays the face amount either at a maturity date if the insured lives or to a beneficiary if the insured dies first. Term pays only on death within the period and has no living payout. An annuity pays income and is not primarily death protection. Adjustable life lets you change premium and benefit but does not have this maturity payout design. The endowment matches both payout triggers.
Life - General Knowledge > Types of Policies
Question 7 of 20
Policy Riders
How does a policy loan provision differ from the accelerated death benefit rider?
- A. A policy loan borrows against cash value and is repaid with interest, while accelerated benefits pay part of the death benefit early due to illness
- B. A policy loan pays the beneficiary early, while accelerated benefits must be repaid
- C. Both require the insured to be terminally ill
- D. A policy loan increases the face amount, while accelerated benefits reduce premiums
+Reveal answer
Answer: A. A policy loan borrows against cash value and is repaid with interest, while accelerated benefits pay part of the death benefit early due to illness
A policy loan lets the owner borrow against accumulated cash value and charges interest, with unpaid balances reducing the death benefit. The accelerated death benefit rider pays part of the death benefit early because of a qualifying illness. Accelerated benefits are not loans that must be repaid, and loans do not require illness. Neither increases the face amount, so the last choice is wrong.
Life General Knowledge > Policy Riders, Provisions, Options, and Exclusions
Question 8 of 20
Completing the Application
What is the main purpose of the underwriting process for a life insurance application?
- A. To classify the applicant's risk and determine the proper premium
- B. To pay claims quickly after death
- C. To replace an existing policy
- D. To register the producer's appointment
+Reveal answer
Answer: A. To classify the applicant's risk and determine the proper premium
Underwriting is the process of reviewing an applicant's information to classify the risk and set an appropriate premium or decide whether to accept the risk. Paying claims is a separate claims function. Replacing a policy is a marketing transaction, not underwriting. Registering an appointment concerns the producer's authority, not the applicant's risk.
Life General Knowledge outline: Underwriting (purpose and risk classification)
Question 9 of 20
Tennessee Laws and Departmental Rules Common to Life
During a policy's grace period on a life insurance contract, what happens if the insured dies before the overdue premium is paid?
- A. The policy pays the death benefit, less the unpaid premium
- B. The policy is void and pays nothing
- C. Only the cash value is paid
- D. The beneficiary must pay the premium before any claim is honored
+Reveal answer
Answer: A. The policy pays the death benefit, less the unpaid premium
Coverage stays in force during the grace period, so a death during that time is payable with the overdue premium deducted from the benefit. The policy is not void during the grace period. It pays the full death benefit, not just cash value. The beneficiary is not required to pay premiums; the insurer simply subtracts what is owed.
Tenn. Code Ann. 56-7 (grace period, standard policy provision)
Question 10 of 20
Tennessee Laws and Departmental Rules Pertinent to Life Insurance Only
Which activity by a Tennessee producer is an unfair trade practice known as twisting?
- A. Recommending a policy with a higher premium than the applicant wanted
- B. Using misleading comparisons to persuade a policyowner to replace a policy
- C. Selling a policy from more than one insurer
- D. Charging the standard premium filed with the state
+Reveal answer
Answer: B. Using misleading comparisons to persuade a policyowner to replace a policy
Twisting is using misrepresentation or misleading comparisons to convince a policyowner to lapse or replace a policy to their disadvantage. Recommending a costlier policy, representing several insurers, and charging filed premiums are not by themselves prohibited acts.
Tenn. Code Ann. unfair trade practices (twisting)
Question 11 of 20
Types of Policies
What is the main difference between a decreasing term policy and a level term policy?
- A. Decreasing term has a death benefit that reduces over time while level term keeps a constant benefit
- B. Decreasing term builds cash value while level term does not
- C. Level term is permanent while decreasing term is temporary
- D. Level term has a benefit that reduces over time while decreasing term stays constant
+Reveal answer
Answer: A. Decreasing term has a death benefit that reduces over time while level term keeps a constant benefit
In decreasing term the death benefit shrinks over the term, often to match a mortgage balance, while level term keeps the same benefit throughout. Neither term type builds meaningful cash value, so that is wrong. Both are temporary, so calling level term permanent is wrong. The last option reverses the correct definitions.
Life - General Knowledge > Types of Policies
Question 12 of 20
Policy Riders
The grace period provision in a life policy means that if a premium is not paid on the due date, the policy will do what?
- A. Lapse immediately with no coverage
- B. Remain in force for a limited time so the premium can still be paid
- C. Automatically convert to term insurance
- D. Pay out the cash value to the owner
+Reveal answer
Answer: B. Remain in force for a limited time so the premium can still be paid
The grace period keeps the policy in force for a set time after the due date, allowing the owner to pay without losing coverage. Immediate lapse is exactly what the grace period prevents. Automatic conversion to term is a nonforfeiture option, not the grace period. Paying out cash value is a surrender, not what happens during grace.
Life General Knowledge > Policy Riders, Provisions, Options, and Exclusions
Question 13 of 20
Completing the Application
Under Tennessee's free look provision, when does the free look period begin?
- A. When the application is signed
- B. When the policy is delivered to the owner
- C. When the insurer approves the application
- D. When the first premium is mailed
+Reveal answer
Answer: B. When the policy is delivered to the owner
The free look period begins when the policy is delivered to the policyowner, giving them a set number of days to examine it and return it for a full premium refund. It does not start at application signing, at insurer approval, or when premium is mailed, because the owner needs the actual policy in hand to review it.
Tenn. free look requirement (concept tested; exact day count not stated to avoid error)
Question 14 of 20
Tennessee Laws and Departmental Rules Common to Life
After Diane sells her first life insurance policy for an insurer, what must occur for her to be authorized to represent that insurer?
- A. She must be appointed by the insurer
- B. She must pay a renewal fee to the insurer
- C. She must complete a second license exam
- D. She must register the sale with the guaranty association
+Reveal answer
Answer: A. She must be appointed by the insurer
An appointment is the insurer's authorization for a producer to represent it; a producer must be appointed by each insurer she represents. Renewal fees relate to license renewal, not authorization to represent an insurer. A second exam is not required to represent an additional insurer. The guaranty association protects policyholders of insolvent insurers and has no role in authorizing sales.
Tenn. Code Ann. 56-6-115 (appointments)
Question 15 of 20
Tennessee Laws and Departmental Rules Pertinent to Life Insurance Only
What does a grace period in a Tennessee life insurance policy provide?
- A. Extra time to file a death claim after the insured dies
- B. A period after the premium due date during which the policy stays in force even if unpaid
- C. A time during which the insurer cannot contest the policy
- D. A period to return the policy for a full refund
+Reveal answer
Answer: B. A period after the premium due date during which the policy stays in force even if unpaid
The grace period gives the policyowner additional time after the premium due date to pay before the policy lapses, and coverage continues during that time. It is not about filing claims, not the incontestable period, and not the free look.
Tennessee grace period requirement for life insurance policies
Question 16 of 20
Types of Policies
Which type of life insurance provides protection for a specific period of time and pays a benefit only if the insured dies during that period?
- A. Whole life insurance
- B. Term life insurance
- C. Universal life insurance
- D. Variable life insurance
+Reveal answer
Answer: B. Term life insurance
Term life covers a set period, such as 10 or 20 years, and pays only if death occurs during that term. Whole life is permanent and lasts the insured's whole life. Universal life is permanent with flexible premiums. Variable life is permanent with investment sub-accounts. Only term is pure temporary coverage.
Life - General Knowledge > Types of Policies
Question 17 of 20
Policy Riders
James dies in a car accident and his policy pays twice the face amount because of a rider. Which rider caused this?
- A. Guaranteed insurability rider
- B. Accidental death benefit rider
- C. Payor benefit rider
- D. Term rider
+Reveal answer
Answer: B. Accidental death benefit rider
The accidental death benefit rider, sometimes called double indemnity, pays an extra amount when death results from an accident. Guaranteed insurability allows buying more coverage, not extra payout at death. The payor benefit rider waives premiums if the person paying premiums dies or is disabled, common on juvenile policies. A term rider simply adds level term coverage, not a multiple for accidental death.
Life General Knowledge > Policy Riders, Provisions, Options, and Exclusions
Question 18 of 20
Completing the Application
James wrote down the wrong birth date on David's application; how should the producer correct this before submitting it?
- A. Erase the entry and write the correct date
- B. Draw a line through it, enter the correct date, and have the applicant initial the change
- C. Submit it as is and call the insurer later
- D. Complete a brand new application without telling David
+Reveal answer
Answer: B. Draw a line through it, enter the correct date, and have the applicant initial the change
Corrections on an application should be made by crossing out the error, writing the correct information, and having the applicant initial the change so the record is accurate and honest. Erasing hides changes and looks like alteration. Submitting known wrong information is a misrepresentation. Filling out a new application without the applicant's knowledge risks fraud and an unsigned or falsified form.
Life General Knowledge outline: Completing the Application (correcting errors)
Question 19 of 20
Tennessee Laws and Departmental Rules Common to Life
What is the primary role of the Tennessee Life and Health Insurance Guaranty Association?
- A. To protect policyholders when a member insurer becomes insolvent
- B. To license and appoint insurance producers
- C. To set the premium rates insurers may charge
- D. To provide free legal advice to consumers
+Reveal answer
Answer: A. To protect policyholders when a member insurer becomes insolvent
The guaranty association steps in to protect covered policyholders when a member insurer is unable to meet its obligations due to insolvency. Licensing and appointment are handled by the Commissioner, not the association. Rate setting is not the association's function. It does not give legal advice to the public.
Tenn. Code Ann. 56-12 (Life and Health Insurance Guaranty Association Act)
Question 20 of 20
Tennessee Laws and Departmental Rules Pertinent to Life Insurance Only
What protection does the Tennessee Life and Health Insurance Guaranty Association provide?
- A. It guarantees investment returns on all life policies
- B. It pays covered claims up to statutory limits when a member insurer becomes insolvent
- C. It reimburses producers for lost commissions
- D. It insures policies sold by unlicensed agents
+Reveal answer
Answer: B. It pays covered claims up to statutory limits when a member insurer becomes insolvent
The guaranty association steps in to pay covered claims up to legal limits when a member insurer becomes insolvent, protecting policyowners. It does not guarantee investment gains, does not reimburse producer commissions, and does not cover business placed with unlicensed agents.
Tenn. Code Ann. Life and Health Insurance Guaranty Association Act (coverage limits set by statute)