A Tennessee resident owns several separate nongroup life insurance policies, each with a large death benefit, all issued by an insurer that later becomes insolvent. Under T.C.A. § 56-12-204, the guaranty association's coverage for the benefits under multiple nongroup life insurance policies owned by this person is capped at:

Why B is correct

T.C.A. § 56-12-204(c) provides a special cap for multiple nongroup life insurance policies owned by the same person: aggregate protection of $5,000,000. Without this provision, the $300,000 per-life aggregate would leave a large estate exposed after the first cap was exhausted; the multi-policy ceiling instead sets the outer boundary far higher while still capping the association's total obligation. The cap protects the owner's combined holdings across all nongroup life policies with the failed insurer, not each contract separately.

Why the other options are wrong

• A) The statute sets an aggregate ceiling for one owner's multiple nongroup life policies; per-policy protection without an overall limit is not how the provision works.
• C) Each of the owner's nongroup life policies shares the multi-policy protection; coverage does not vanish after the first contract.
• D) $500,000 is the special cap for basic hospital, medical, surgical, and major medical coverage, far below the multi-policy life figure.

Memory hook

Many life policies, one owner: the multi-policy ceiling is $5,000,000.