State RegulationsTN specificDifficulty 3/5
Which of the following items in a Tennessee life illustration is a guaranteed element under Tenn. Comp. R. & Regs. 0780-1-40?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Tenn. Comp. R. & Regs. 0780-1-40 separates guaranteed elements — the values and benefits the insurer is contractually obligated to provide, such as the scheduled death benefit — from nonguaranteed elements such as dividends and current crediting rates. The Tennessee Department of Commerce & Insurance requires illustrations to keep the two categories clearly apart so the applicant can see what is promised and what is only projected.
Why the other options are wrong
- A) Projected dividends are nonguaranteed elements; the insurer may pay more or less than illustrated.
- B) A current crediting rate is adjustable and therefore nonguaranteed under the rule.
- D) A marketing dividend scale is a company practice rather than a contractual obligation, so it is nonguaranteed.
Memory hook
Contract = guaranteed; projection = nonguaranteed — the death benefit is the promise.