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Questions and Answers

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

  • Adjustments to the face amount may be requested by the policyowner to reflect changes in need
  • Any borrowing or partial withdrawal from the cash value account has the effect of terminating the policy (correct)
  • 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
  • The death benefit is in the form of one year renewable term, while the cash value account earns interest at the current rate

    • What type of life insurance product is characterized by fixed premiums and variable cash and face values?

    Variable Life

    What is Variable Universal Life (VUL)?

    Combination of Variable and Universal Life

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

    <p>Variable Universal and Variable</p> Signup and view all the answers

    What is a Juvenile policy?

    <p>Written on life of a minor, protects future insurability</p> Signup and view all the answers

    What is Joint Life Insurance?

    <p>Covers two or more lives, death benefit paid upon first death</p> Signup and view all the answers

    What is Joint Survivorship Life (Last to Die)?

    <p>Written on two or more lives, death benefit paid at last insured's death</p> Signup and view all the answers

    What type of policy is designed to help cover federal estate taxes by paying upon the death of whichever insured is the last to die?

    <p>Joint Survivorship Life Policy</p> Signup and view all the answers

    What does Waiver of Premium provide?

    <p>Total disability, waive premiums</p> Signup and view all the answers

    What is the main benefit of Waiver of Payor's Premium?

    <p>Premium waived if the premium payor becomes disabled or dies</p> Signup and view all the answers

    What does the Waiver of Premium/Disability Income rider provide?

    <p>Premiums waived, insured receives a monthly income</p> Signup and view all the answers

    What is a Child Rider?

    <p>Covers one or more children, may convert without proof of insurability</p> Signup and view all the answers

    What is Accidental Death (Double Indemnity)?

    <p>Double the face if death was accidental</p> Signup and view all the answers

    What does the Guaranteed Insurability feature allow?

    <p>Purchase additional amounts without proof of insurability</p> Signup and view all the answers

    How does the Return of Premium rider work?

    <p>If the insured dies within the term, benefits are face amount plus premiums</p> Signup and view all the answers

    What is the Cost of Living (COL) rider?

    <p>Increasing term that increases with the Consumer Price Index</p> Signup and view all the answers

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

    <p>Increasing Term</p> Signup and view all the answers

    What does Living Need (Accelerated Benefit) provide?

    <p>Allows early payment of a portion of the face if insured becomes terminally ill</p> Signup and view all the answers

    Who is the viator in a viatical settlement contract?

    <p>Owner of the life insurance contract who enters into a viatical settlement contract</p> Signup and view all the answers

    What is a Viatical Settlement Contract?

    <p>Written agreement between provider and viator</p> Signup and view all the answers

    Study Notes

    Tennessee Life and Health Insurance Exam Key Points

    • An investigation complaint copy must be provided within 30 days by the Commissioner.
    • A business entity includes corporations, partnerships, and limited liability companies.
    • Minimum age requirement for an insurance license in Tennessee is 18 years.
    • Insurers are to be notified within 5 days if a producer is deemed ineligible for appointment.
    • Address changes must be reported to the Commissioner within 30 days.
    • Tennessee requires 20 hours of prelicensing education for insurance producer candidates per line of authority.

    Licensing and Continuing Education

    • Temporary licenses for representatives of deceased or disabled producers are valid for up to 180 days.
    • Insurance licenses are valid for 24 months unless revoked or suspended.
    • Licensed producers must complete 24 hours of Continuing Education every 2 years.
    • Denials of license applications for child support failure must be communicated within 31 days.

    Unfair Trade Practices

    • Charging different rates to those in the same risk class is deemed unfair discrimination.
    • Banks that condition loans on insurance purchases from specific companies engage in boycotting and coercion.
    • Offering special premiums to incentivize purchase is classified as rebating.
    • Defamation occurs when misrepresenting a competitor's financial state to an applicant.

    Claims and Policy Conditions

    • It's considered unfair to misrepresent facts related to a coverage claim.
    • Replacement of life policies is legally challenged if done improperly.
    • The Tennessee Life and Health Guaranty Association guarantees up to $300,000 in death benefits for one life.
    • The term "Equivalent Level Death Benefit" refers to an average guaranteed death benefit.

    Policy Features and Structures

    • Replacement life policies must provide a minimum 20-day free look period.
    • Death benefits must be paid within 60 days after proof of death is received.
    • Insurance does not cover suicides within the first 2 years of policy enforcement.
    • The approval of a Buyer's Guide is mandatory by the Commissioner before use in sales.

    Medicare and Health Coverage

    • Medicare Supplement Policies are not available to individuals whose benefits are still in effect under an employee welfare benefit plan.
    • Medicare Supplement policies are mandated to provide a 30-day free look period.
    • Producers must undergo 8 hours of training before selling long-term care (LTC) insurance.
    • An external review of a health insurer's adverse determination can be requested within 6 months.

    Life Insurance Product Features

    • Term life insurance features include no cash value, pure protection, and low initial premiums.
    • Whole life insurance characteristics include permanent coverage and cash value accumulation.
    • The level term policy maintains fixed premiums and benefits throughout the covered term.
    • Universal life policies are flexible with adjustable premiums and benefits.

    Varieties of Life Insurance

    • Variable life insurance requires both life insurance and FINRA registration to sell due to investment risks.
    • Joint life insurance pays benefits upon the first death among multiple insured individuals.
    • The "Jumping Juvenile" policy automatically increases coverage at certain ages to protect future insurability.
    • The Joint Survivorship life policy is designed to cover estate taxes and pays at the last insured's death.

    General Concepts in Insurance

    • Liquidity refers to the immediate availability of funds for final expenses.
    • Fraud is defined as intentional misrepresentation or concealment for harm.
    • A warranty is a guaranteed truthful statement affecting coverage.
    • Concealment involves failing to disclose material facts during policy applications.### Life Insurance Policies and Riders
    • Policy Types:
      • Modified Whole Life Policy
      • Joint Life Policy
      • Graded Premium Policy
      • Joint Survivorship Life Policy

    Waiver of Premium

    • Applies to total disability; premiums are waived while cash value and dividends continue accumulating.

    Waiver of Payors Premium (Payor Benefit)

    • Premiums waived if the premium payor becomes disabled or dies.
    • In juvenile policies, waiver cancellation occurs at age 21 to 25.
    • The payor must qualify for the rider to activate this benefit.

    Waiver of Premium/Disability Income

    • Waives premiums while providing the insured with a monthly income during disability.

    Waiver of Cost of Insurance

    • Eliminates the monthly cost and expenses associated with Universal Life policies.

    Waiver of Premium/Disability Income Rider Example

    • Timothy, the insured/owner of a whole life policy, seeks a rider to ensure premiums are paid and to replace lost income due to disability. Suitable options:
      • Waiver of Payor Premium Rider
      • Waiver of Premium Rider
      • Waiver of Premium/Disability Income Rider (best fit)
      • Guaranteed Insurability Rider

    Child Rider

    • Covers one or more children under the policy.
    • Children can convert the policy to their own at age 21 or 25 without needing proof of insurability.

    Accidental Death (Double Indemnity)

    • Policy pays double the face amount for accidental deaths.
    • No additional values are added to the base policy.

    Guaranteed Insurability

    • Allows the purchase of additional coverage amounts without proving insurability.

    Return of Premium

    • If the insured dies within the term, benefits consist of the face amount plus premiums paid.
    • An increasing term rider can total premiums paid.

    Return of Cash Value

    • A term rider equates to cash value; benefits include the face amount plus cash value if insured dies during the term.

    Cost of Living (COL)

    • An increasing term rider that adjusts annually according to the Consumer Price Index without requiring evidence of insurability.

    Increasing Term

    • The Return of Premium Rider and the Cost of Living Rider utilize increasing term insurance to achieve their objectives.

    Living Need (Accelerated Benefit)

    • Allows for early payment of a portion of the face amount if the insured is terminally ill.
    • Benefits may include coverage for nursing home care or dread diseases.

    Viator

    • The owner of the life insurance contract who enters into a viatical settlement, generally when having less than two years to live.

    Viatical Settlement Contract

    • A written agreement between the provider and the viator, detailing the terms of the agreement regarding the life insurance policy.

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