Tennessee Life Study Guide

Almost everything Tennessee has to say about life insurance policy provisions lives in one statute — T.C.A. §56-7-2307 — and the exam mines it hard. The numbers themselves are unremarkable. What is remarkable is the wording Tennessee chose, because in three places it differs from the national paraphrase you will have memorised, and each difference is a question waiting to be asked.

The grace period is “after the first year”

Every outline in the country will tell you Tennessee gives a one-month grace period, and that is correct. What almost none of them tell you is the scope. The statute requires a provision for “a grace of one (1) month for the payment of every premium after the first year,” which the same clause adds “may be subject to an interest charge.” Not after the first premium — after the first year. If the insured dies during the month of grace, the overdue premium is deducted in settlement.

Incontestability is a ceiling, not a term

Tennessee does not say a life policy is incontestable after two years. It requires a provision making the policy incontestable “after it has been in force during the lifetime of the insured for a specified period, not more than two (2) years from its date.” That is a maximum the insurer may not exceed — a carrier is free to write a shorter contestable period, and some do. Read a stem carefully: “every Tennessee life policy is contestable for exactly two years” is false as written.

The clause also carries two exceptions worth memorising: nonpayment of premiums, and violations of policy conditions relating to naval and military service in time of war.

Reinstatement — three years, conditional, and no statutory interest cap

A lapsed Tennessee policy may be reinstated within three (3) years from the default, on evidence of insurability satisfactory to the company and payment of arrears of premiums, with interest. Read the conditions attached: the provision operates where the policy value was applied to purchase other insurance, that insurance is still in force, and the original policy has not been surrendered and cancelled. It is not an unconditional right.

Notice also what is missing: a number. Pennsylvania caps reinstatement interest at 8%; other states pick 6%. Tennessee says only “with interest” and names no rate at all. If an answer choice offers you a specific statutory Tennessee percentage, it is manufactured.

The six-month lapse notice nobody teaches

A Tennessee-only provision sits right beside the grace period and appears in almost no national outline. Under §56-7-2303, no company may declare a life policy forfeited or lapsed within six months after default in payment of a premium unless a written or printed notice — of the amount due, where to pay it and to whom — has been mailed before the beginning of the period of grace. Group, industrial and monthly-premium policies are excluded.

So a Tennessee lapse is not automatic on the day the grace period ends. The insurer carries a notice duty that runs ahead of it.

Misstatement of age adjusts the benefit

If the insured’s age was understated, “the amount payable under the policy shall be that which the premium would have purchased at the correct age.” The contract is not void and the claim is not denied — the death benefit is simply recalculated to what the money actually bought. Candidates who expect rescission get this one wrong every time.

Annuities sit inside the Life line

Tennessee’s Life line of authority covers life insurance and annuities — fixed and indexed annuities need no separate licence. What they do need is a one-time four-credit best-interest training under Tenn. Comp. R. & Regs. 0780-01-86-.07, since Tennessee adopted the NAIC annuity model — amended effective 17 April 2023 — with its obligations of care, disclosure, conflict of interest and documentation.

Variable products are the exception, and the reason is that they are not really insurance questions at all. Variable life and variable annuities are securities: selling them requires the Tennessee Life line plus a variable contracts qualification plus FINRA registration — a Series 6 or 7 with a Series 63, and a CRD number.

Free look: the number you remember is a health rule

This is where Tennessee catches people out, and it does so by absence. Tennessee’s statutes fix no general free look for a new individual life policy or annuity. The familiar “ten days” is §56-26-129, which applies to “every individual accident and health policy or contract” — a health provision, not a life one.

What the life side does have are two specific windows:

• Replacement — 20 days. Rule 0780-01-24-.07(4): the applicant has “a right to an unconditional refund of all premiums paid, which right may be exercised within a period of twenty days commencing from the date of delivery of the policy.”
• Long-term care — 30 days from delivery, under §56-42-105(f)(1). LTC also carries its own producer training: a one-time eight-hour course under §56-42-109(a)(1), plus ongoing training every 24 months by rule.

Guaranty protection, in one line

If the insurer fails, the Tennessee Life and Health Insurance Guaranty Association covers up to $300,000 in death benefits per insured life but only $100,000 in net cash surrender and withdrawal values. Two numbers, one product — and using the association’s existence to sell a policy is prohibited outright by §56-12-218.