Tennessee Life: Laws and Rules Review

Question 1

The commissioner may hold hearings for any purpose within the scope of the insurance code deemed necessary, such as:

Answer 1

• Person engaging in unfair competition, or any unfair or deceptive act
• Person engaging in business of insurance without a license
• The best interest of the public would be served

Question 2

The Commissioner may _____ witnesses and examine them under oath. The Department will provide the person with a copy of the complaint within _____ days of issuance of the receipt of the complaint.

Answer 2

subpoena

30 days

Question 3

_____ days’ written notice of the Commissioner’s intent to take testimony is required, and the Commissioner must notify both parties within _____ days of completing an investigation

Answer 3

14 days

30 days

Question 4

Investigations must be completed within a _____ _____ period with annual tracking reporting to the Commissioner

Answer 4

two-year

Question 5

After the investigation, if the Commissioner determines that those involved are responsible, a fine can be given up to

Answer 5

$1,000 for each violation, not to exceed $100,000 for all violations

Question 6

If the violation was committed knowingly, the penalty can be up to

Answer 6

$25,000 per violation not to exceed $250,000 total

Question 7

A nonresident producer who moves from one state to another or a resident insurance producer who moves from Tennessee to another state must file a change of address within _____ days of the change of legal residence

Answer 7

30 days

Question 8

1. any officer or employee of an insurer who is on salary;
2. an individual who administers group insurance plans, annuities or health insurance plans where no commission is received;
3. any officer, director or employee who assists an insurance producer by providing technical advice or assistance not including the sale, solicitation or negotiation of insurance policies;
4. salaried employees of a creditor who enroll debtors under a group credit life or group credit health policy;
5. members of a fraternal benefit society who provide benefits in the case of death or disability resulting from accidents without receiving compensation for enrolling those members;
6. employees of auto rental companies who sell, solicit or negotiate optional insurance such as personal accident coverage, personal liability insurance or roadside assistance coverage for a term of up to ninety days in connection with an auto rental agreement.

Answer 8

Reasons you wouldn’t need a TN state producer license or limited insurance representative license.

Question 9

The Commissioner may issue a temporary insurance producer license for a maximum period of _____ days (or longer for good cause) without requiring an examination if the Commissioner deems that the temporary license is necessary for the servicing of an insurance business, such as:

Answer 9

180 days

• The designee of a licensed insurance producer entering active service in the armed forces
• To the surviving spouse or next of kin of a licensed insurance producer who dies or becomes disabled

Question 10

If the Commissioner decides to deny an application for a license, he must notify the applicant and give written notice that the application has been denied within _____ days.

Answer 10

30 days

Question 11

An insurance company that has qualified and received a _____ _____ _____ from the Insurance Department to sell insurance in this state.

• Also called an _____ _____ _____

Answer 11

Authorized insurer:

Certificate of Authority

admitted insurance company

Question 12

An insurance company that has been denied or not yet applied for a _____ _____ _____ and may not sell insurance in this state. Any producer that sells an insurance policy for an unauthorized insurer runs the risk of being responsible for unpaid claims.

• Also called a ________________

Answer 12

Unauthorized insurer:

Certificate of Authority

non-admitted company

Question 13

• Solicitation or inducement to purchase insurance
• Negotiations toward the sale of insurance
• Executing a contract of insurance
• Advising on coverages and claims

All of these actions are considered _____ _____.

Answer 13

Insurance Transactions

Question 14

A licensee may not transact insurance business in Tennessee until the licensee is ______ by an insurer.

Answer 14

appointed

Question 15

Insurers are responsible for submitting an appointment notice to the Commissioner within _____ days of an agent’s appointment or submission of _____ _____ _____. The insurer is also responsible for paying the agent’s ______ ______ fee.

Answer 15

15 days

first insurance application

appointment renewal

Question 16

• Upon receipt of the notice of appointment, the Commissioner will verify within a reasonable time not to exceed ______ days that the insurance producer is eligible for appointment
• If the producer is determined to be ineligible for appointment, the Commissioner notifies the insurer within _____ days of the determination

Answer 16

30 days

5 days

Question 17

An insurer that terminates an agent appointment must notify the Commissioner within _____ days of the date of termination.

Answer 17

30 days

Question 18

Resident producers must complete _____ hours of continuing education every ______ years to keep their license active. _____ of those hours must be in ethics.

Answer 18

24 hours

2 years

3

Question 19

A producer who allows his or her license to lapse may, within _____ months from the renewal date, reinstate the license without retaking the state licensing exam. However, a penalty of _____ the unpaid renewal fee will be required.

Answer 19

12 months

double

Question 20

Producers must report a change in address or name to the Insurance Commissioner within _____ days of the change.

Answer 20

30 days

Question 21

It is illegal to offer a prospective client something of value that is not specified in a contract to induce the purchase of an insurance policy. This practice is known as:

Answer 21

Rebating

Question 22

The purpose of the Guaranty Association is to avoid

Answer 22

excessive delay in payment and to avoid loss to policyholders and claimants due to the insolvency of an insurer.

Question 23

The Guarantee Association shall in no event be liable for more per person than the following:

Answer 23

(1) $300,000 in life insurance death benefits for any one life but not more than $100,000 in net cash surrender and net cash withdrawal values for life insurance;

(2) $250,000 in present value annuity benefits including net cash surrender or withdrawal values;

(3) $500,000 in basic hospital, medical or surgical insurance benefits;

(4) $300,000 in disability income benefits;

(5) $300,000 in long-term care benefits; and

(6) $100,000 for health insurance plans other than medical, disability or long-term care insurance.

Question 24

A provision that the policy terms shall be _____ after it has been in force for a period of _____ years from its date of issue (unless the purpose for taking out the coverage was fraud).

Answer 24

incontestable (incontestable period provision)

2 years

Question 25

For participating policies, each policy must participate annually in the divisible surplus of the company no later than the end of the _____ policy year.

Answer 25

third policy year

Question 26

A table that shows loan values and available options under each policy for at least the first 20 years of the policy.

Answer 26

Loan Values and Options Table

Question 27

Loans must be made available to the policyowner after the _____ year in any amount up to the ______________.

Answer 27

3rd year

full cash surrender value of the policy.

Question 28

A lapsed policy may be reinstated within _____ from the due date upon evidence of insurability and all back premiums are paid with interest.

Answer 28

3 years

Question 29

Upon receipt of due proof of death, or within no more than _____ time, settlement shall be made by the insurer.

Answer 29

2 months

Question 30

Based on what law must insurers provide a table showing the cash surrender nonforfeiture values and options in the event of the default of premium payments for at least the first 20 years of a cash value policy.

Answer 30

Nonforfeiture Law

Question 31

Companies may defer loan transactions for up to _____ from loan application

Answer 31

6 months

Question 32

In Tennessee, all statements are representations and not warranties in

Answer 32

the absence of fraud.

Question 32

In Tennessee, all statements are representations and not warranties in

Answer 32

the absence of fraud.

Question 33

Under Tennessee law the _____ of life insurance contracts with a new contract requires the producer to give the applicant a written comparison and summary statement at the request of the _____ and to follow instructions regarding replacement as obtained from the appointing insurer.

Answer 33

replacement

policyholder

Question 34

_____ means any transaction in which new life insurance or a new annuity is purchased and, as a result, the existing life insurance or annuities will be any of the following:

• Lapsed, forfeited, surrendered, or otherwise terminated
• Reissued with any reduction in cash value
• Converted to reduced paid-up insurance, continued as extended term insurance or otherwise reduced in value by the use of nonforfeiture benefits or other policy values
• Amended so as to affect either a reduction in benefits or in the term for which coverage would otherwise remain in force or for which benefits would be paid
• Reissued with a reduction in cash value
• Used in a financed purchase
• Subject to a policy loan exceeding 25% of the total cash value

Answer 34

Replacement

Question 35

• Group life insurance
• Credit life insurance
• Policies distributed on a mass merchandise basis
• Policies issued in connection with a pension, profit sharing, individual retirement account, or other benefit plan qualifying for tax deductibility of premiums
• Situations where total existing coverage to be replaced represents less than $500 in cash value and less than $5,000 in face amount.

Answer 35

Replacement regulations do not apply to any of these cases.

Question 36

• Present to the applicant a ______ _____ _____ that is signed by both the applicant and the producer. A copy must be left with the applicant.
• Obtain a list of all existing life insurance and/or annuity policies to be replaced including policy numbers and the names of all companies being replaced.
• Leave the applicant with the original or a copy of written or printed communications used for presentation to the applicant.
• Submit to the replacing insurance company a copy of the _____ _____ with the application.
• Tennessee producers licensed for fewer than _____ days may not take applications for replacement policies until _____ days after mailing a notice of intention to replace existing insurance to the replacing insurer

These are all:

Answer 36

Notice Regarding Replacement

Replacement Notice

120 days

10 days

Duties of the Producer when helping an applicant with a policy replacement.

Question 37

An insurance producer who engages in the sale of _____ products shall complete a _____ _____ credit training course approved by the Department of Commerce and Insurance. The minimum length of the training required shall be sufficient to qualify for at least _____ _____ credits, but may be longer.

Answer 37

annuity

one-time four credit

four CE credits

Question 38

Insurers, general agents, independent agencies and insurance producers shall maintain or be able to make available to the Commissioner records of the information collected from the consumer and other information used in making the recommendations that were the basis for insurance transactions for _____ years after the insurance transaction is completed by the insurer. An insurer is permitted, but shall not be required, to maintain documentation on behalf of an _____ _____.

Answer 38

five years

insurance producer