Which of the following is NOT protected by the Tennessee Life and Health Insurance Guaranty Association under the guaranty-association notice form?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The Tennessee Life and Health Insurance Guaranty Association's notice form, issued under the authority of T.C.A. § 56-12-204, lists what the association does not cover: among other items, unguaranteed portions of variable contracts sold by prospectus, dividends, yields above an average rate, policies of HMOs and fraternal benefit societies, unallocated annuity contracts, self-funded employer plans, and reinsurance without an assumption certificate. Investment risk the owner chose through a prospectus-sold variable product stays with the owner; the association protects the guaranteed elements of traditional contracts up to the statutory caps.
Why the other options are wrong
- B) Basic hospital and medical coverage is protected, up to the statutory cap that applies to the insolvency date.
- C) Individual life insurance is the core protected product, with death benefits and cash values protected to their respective caps.
- D) Individual annuities are protected up to the cap on the present value of benefits under T.C.A. § 56-12-204.
Memory hook
Unguaranteed variable pieces ride on the owner: no prospectus rescues from the guaranty fund.