State RegulationsTN specificDifficulty 2/5
A client asks whether the federally tax-qualified long-term care contract her agent recommended can be nonrenewed by the insurer at will. Under Tennessee's Long-Term Care Insurance Act, how is a qualified long-term care contract characterized?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
T.C.A. § 56-42-103(7) defines a qualified long-term care contract by reference to the federal tax-qualified standard and characterizes it as guaranteed renewable. A Tennessee policyowner holding a qualified long-term care contract therefore has a renewal guarantee the insurer cannot withdraw at will, and the Tennessee Department of Commerce & Insurance enforces the state's long-term care standards.
Why the other options are wrong
- A) Discretionary nonrenewal at each anniversary contradicts the guaranteed-renewable characterization in T.C.A. § 56-42-103(7).
- B) Renewal does not depend on yearly Commissioner approval; the renewal guarantee is built into the contract's qualified status.
- C) A qualified long-term care contract is not necessarily single premium, and qualified status carries a renewal guarantee rather than a no-renewal rule.
Memory hook
Qualified LTC means guaranteed renewable, always.