State RegulationsTN specificDifficulty 1/5
Under the general rules of Tenn. Comp. R. & Regs. 0780-1-40, on what must the nonguaranteed elements shown in a Tennessee life illustration be based?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Tenn. Comp. R. & Regs. 0780-1-40 requires nonguaranteed elements in an illustration to be supported by the insurer's actual recent historical experience, keeping the illustration self-supporting. The Tennessee Department of Commerce & Insurance adopted this discipline so that illustrated dividends and crediting rates rest on real performance rather than on a sales pitch.
Why the other options are wrong
- A) Optimism is not the standard; projections above actual experience are precisely what the rule forbids.
- C) Industry averages are not the benchmark; the rule looks to the insurer's own recent history.
- D) Applicant preferences cannot substitute for the rule's experience-based support requirement.
Memory hook
Illustrations must be self-supporting: no history, no hype.