State RegulationsTN specificDifficulty 1/5
A Tennessee life insurer becomes insolvent. Under T.C.A. § 56-12-204, what is the maximum death benefit the Tennessee Life and Health Insurance Guaranty Association is obligated to provide for the covered life insurance policies of one person?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
T.C.A. § 56-12-204(c) caps the Tennessee Life and Health Insurance Guaranty Association's obligation for life insurance death benefits at $300,000 per insured life, whatever the face amount of the policies actually issued. The guaranty association steps in when a member insurer fails, but its protection is a statutory floor rather than full coverage, so policyowners with large policies absorb the excess above the cap and should weigh insurer strength when buying substantial coverage.
Why the other options are wrong
- A) $100,000 is the guaranty association's cap for life insurance net cash surrender and withdrawal values, not for death benefits.
- C) $500,000 is the cap for basic hospital, medical, surgical, and major medical coverage on post-2010 insolvencies, not the life death benefit figure.
- D) $250,000 is the cap for the present value of annuity benefits, a different product category from life death benefits.
Memory hook
Life pays at death to $300,000 — the death benefit cap matches the aggregate.