17 Free Tennessee Life & Health Practice Questions: Accident & Health Policy Types (2026)
How to Use This Set
Types of policies is Section I of the Tennessee Accident and Health exam and the largest block in it: 16 items out of the 50 scored general-knowledge questions. It spans disability and buy-sell coverage, hospital and medical expense plans, accidental death benefits, group health, managed care and tax-advantaged accounts.
Each question describes a person or business and asks which coverage or rule applies.
Practice Questions 1-6: Disability, HSAs and Hospital Coverage
Buy-sell funding, who may open an HSA, what hospital indemnity pays, how a double indemnity rider is applied, and catch-up contributions after age 55.
Question 1 (Chapter 4)
A law firm with three partners enters into a Disability Buy-Sell agreement. They purchase disability insurance to fund the agreement. If one partner becomes permanently disabled, how is the policy benefit typically structured?
- A) Monthly indemnity payments to the disabled partner for life
- B) Reimbursement of the firm's office rent and utilities
- C) A death benefit paid to the disabled partner's named beneficiary
- D) A lump sum payment to the business or non-disabled partners to purchase the disabled partner's interest
Show answer & explanation
Answer: D
Disability Buy-Sell (or Buyout) policies are specifically designed to provide the funds necessary for the remaining partners or the business entity to buy out the ownership interest of a totally and permanently disabled partner. These are often paid in a lump sum after a long elimination period (e.g., one or two years).
Question 2 (Chapter 4)
An individual wants to open a Health Savings Account (HSA) to save for future medical expenses. Which of the following is a requirement for eligibility?
- A) The individual must be covered by a High Deductible Health Plan (HDHP)
- B) The individual must be over age 65
- C) The individual must have no other form of income
- D) The individual must be enrolled in Medicaid
Show answer & explanation
Answer: A
To be eligible to contribute to an HSA, an individual must be covered by a qualified High Deductible Health Plan (HDHP) and cannot be covered by other non-HDHP health insurance (with some exceptions) or be enrolled in Medicare.
Question 3 (Chapter 4)
A 'Hospital Indemnity' policy is best described as a policy that:
- A) Reimburses the hospital for all surgical costs
- B) Covers only the first $500 of any hospital stay
- C) Is only available to those who do not have other health insurance
- D) Pays a fixed dollar amount for each day the insured is confined to a hospital
Show answer & explanation
Answer: D
Hospital Indemnity (or Hospital Fixed Indemnity) policies pay a specific daily, weekly, or monthly amount while the insured is hospitalized. The benefit is paid directly to the insured and is independent of the actual medical expenses incurred.
Question 4 (Chapter 4)
An insured has an Accidental Death and Dismemberment (AD&D) policy with a $50,000 Principal Sum and a 'Double Indemnity' rider. The insured dies in a car accident. How much will the beneficiary receive?
- A) $25,000
- B) $100,000
- C) $50,000
- D) $75,000
Show answer & explanation
Answer: B
The Principal Sum is the amount paid for accidental death. A Double Indemnity rider doubles that benefit if death occurs due to a specific type of accident (usually any accident). $50,000 x 2 = $100,000.
Question 5 (Chapter 4)
Under standard long-term care (LTC) insurance regulation, which of the following must typically be offered to an applicant at the time of purchase of an LTC policy?
- A) A return of premium rider
- B) A waiver of premium for disability
- C) Coverage for cosmetic surgery
- D) Inflation protection
Show answer & explanation
Answer: D
LTC insurance regulation (modeled on the NAIC Long-Term Care Insurance Model Act/Regulation that Tennessee and most states have adopted) requires that insurers offer inflation protection to LTC applicants, so the daily benefit can keep pace with rising care costs over time.
Question 6 (Chapter 4)
A 57-year-old individual has a High Deductible Health Plan (HDHP) and a Health Savings Account (HSA). Which of the following is TRUE regarding their HSA contributions?
- A) They are eligible to make additional 'catch-up' contributions.
- B) They cannot contribute because they are over age 55.
- C) Contributions are only tax-deductible if the individual is below the poverty line.
- D) They must stop contributing once they enroll in Medicare Part A.
Show answer & explanation
Answer: A
Individuals aged 55 and older are permitted by the IRS to make additional 'catch-up' contributions to their HSA each year until they enroll in Medicare.
Get the 25-question sample set by email
Want a full-exam practice set to study offline? Drop your email — we'll send 25 questions across every content area, each with the answer and explanation.
No spam. Just the questions and one optional follow-up.
Practice Questions 7-12: AD&D, COBRA, Group and Medical Expense Coverage
Loss of two limbs, COBRA after divorce, group plan rules, basic versus major medical, the birthday rule and the tax treatment of buy-sell benefits.
Question 7 (Chapter 4)
An insured in Memphis has an Accidental Death and Dismemberment (AD&D) policy with a Principal Sum of $200,000. While working, the insured suffers a severe accident resulting in the loss of both hands. What amount is the insurer most likely required to pay?
- A) The Capital Sum, which is typically $100,000 (50% of the Principal Sum).
- B) Nothing, because the insured did not die.
- C) A monthly disability income benefit rather than a lump sum.
- D) The Principal Sum of $200,000.
Show answer & explanation
Answer: D
In AD&D policies, the Principal Sum is paid for accidental death or the loss of two primary parts (both hands, both feet, or sight in both eyes). The loss of a single part usually results in the payment of the Capital Sum (typically 50%). Since this insured lost both hands, the full Principal Sum is payable.
Question 8 (Chapter 4)
A Tennessee resident is covered under her spouse's group health plan. The couple gets divorced. Under COBRA, how long can the former spouse continue coverage under the group plan, provided she pays the full premium?
- A) 18 months
- B) 24 months
- C) 36 months
- D) Indefinitely, until she remarries.
Show answer & explanation
Answer: C
COBRA provides 18 months of coverage for termination of employment or reduction in hours. However, for 'qualifying events' such as divorce, death of the employee, or a child losing dependent status, the period of continued coverage is 36 months.
Question 9 (Chapter 4)
A company in Clarksville provides a 'non-contributory' group health insurance plan. According to Tennessee and general insurance standards, what percentage of eligible employees must be enrolled in the plan?
- A) 50%
- B) 75%
- C) 100%
- D) Enrolment is optional for the employer.
Show answer & explanation
Answer: C
In a non-contributory plan, the employer pays 100% of the premium. To prevent adverse selection, insurers require that 100% of all eligible employees participate. If the plan were 'contributory' (employees pay part of the premium), the requirement is typically 75%.
Question 10 (Chapter 4)
A consumer in Memphis is comparing a 'Basic Hospital Expense' policy with a 'Major Medical' policy. What is a primary characteristic of the Basic Hospital Expense policy that differentiates it from Major Medical?
- A) It has much higher policy limits, often reaching $1,000,000 or more.
- B) It requires the insured to pay a 20% coinsurance on all hospital room and board charges.
- C) It provides 'first-dollar' coverage, meaning there is typically no deductible for the insured to pay.
- D) It covers all outpatient prescription drugs and routine office visits.
Show answer & explanation
Answer: C
Basic Medical Expense policies (Hospital, Medical, or Surgical) are characterized by 'first-dollar' coverage, meaning they pay from the first dollar of expense without a deductible. However, they have much lower benefit limits than Major Medical policies (Option A) and usually do not include coinsurance (Option B).
Question 11 (Chapter 4)
A child in Clarksville is covered as a dependent under both parents' group health insurance plans. The father's birthday is March 12, and the mother's birthday is October 2. According to the 'Birthday Rule' used in Coordination of Benefits (COB), which plan is primary?
- A) The mother's plan, because she is the female parent.
- B) The plan of the parent who has been employed longer.
- C) The father's plan, because his birthday occurs earlier in the calendar year.
- D) Both plans pay 50% of every claim simultaneously.
Show answer & explanation
Answer: C
The 'Birthday Rule' states that the primary plan for a dependent child is the plan of the parent whose birthday (month and day) falls earlier in the calendar year. Since March comes before October, the father's plan is primary.
Question 12 (Chapter 4)
The three partners of a Nashville architectural firm enter into a Disability Buy-Sell agreement funded by individual disability insurance policies. The business pays the premiums for these policies. If one partner becomes totally and permanently disabled, how are the policy benefits treated for federal income tax purposes?
- A) The benefits are received 100% tax-free by the business or the non-disabled partners.
- B) The benefits are taxed as ordinary income to the disabled partner.
- C) The benefits are taxed as capital gains to the business.
- D) Only the portion of the benefit exceeding the total premiums paid is taxable.
Show answer & explanation
Answer: A
In a Disability Buy-Sell agreement, premiums are not tax-deductible to the business, but the benefits are received tax-free. This ensures the full face amount is available to fund the buyout of the disabled partner's interest.
Practice Questions 13-17: Managed Care, Business Coverage and Accounts
The HMO gatekeeper, business overhead expense, the accidental means definition, replacing a Medicare supplement, and HRA versus HSA.
Question 13 (Chapter 4)
A member of a Health Maintenance Organization (HMO) in Tennessee is required to see a specific physician to coordinate all of their medical care and provide referrals to specialists. This physician is known as the:
- A) Gatekeeper
- B) Medical Coordinator
- C) Specialist Liaison
- D) Admitting Physician
Show answer & explanation
Answer: A
The Primary Care Physician (PCP) in an HMO acts as a 'gatekeeper,' controlling access to specialists and more expensive procedures to manage costs and care quality.
Question 14 (Chapter 4)
A small business owner in Franklin, TN, has a Business Overhead Expense (BOE) policy. If the owner becomes disabled, which of the following would NOT be a covered expense under this policy?
- A) The rent for the business office.
- B) The owner's personal salary.
- C) Employee wages.
- D) Utility bills for the business location.
Show answer & explanation
Answer: B
Business Overhead Expense (BOE) insurance is designed to keep the business running by covering actual expenses like rent and staff salaries; it specifically excludes the owner's salary or profits.
Question 15 (Chapter 4)
An insured in Kingsport has an Accidental Death and Dismemberment (AD&D) policy that utilizes the 'Accidental Means' definition of an accident. The insured intentionally jumps from a high ledge, thinking he will land safely, but instead breaks both legs. How will the policy most likely respond?
- A) It will pay the full capital sum because the injury was unintended.
- B) It will deny the claim because the cause of the injury (the jump) was intentional.
- C) It will pay 50% of the benefit under the 'comparative negligence' rule.
- D) It will pay the medical expenses but not the dismemberment benefit.
Show answer & explanation
Answer: B
Under the strict 'Accidental Means' definition, both the cause and the result of the accident must be unintended. Since the insured intended to jump (the cause), the claim would be denied. This is narrower than the 'Accidental Bodily Injury' (or 'Result') definition, which only requires the resulting injury to be unintended.
Question 16 (Chapter 4)
An agent is helping a client replace an existing Medicare Supplement policy with a new one. Under standard replacement-practice rules, what must the agent provide to the applicant?
- A) A waiver of all future premium increases.
- B) A 'Notice Regarding Replacement' signed by both the applicant and the agent.
- C) A certificate of 'Good Health' from a licensed physician.
- D) A 60-day free-look period instead of the standard 30 days.
Show answer & explanation
Answer: B
When replacing a Medicare Supplement policy, the agent must provide a 'Notice Regarding Replacement' to the applicant. This form ensures the applicant understands they are replacing coverage and alerts them to potential issues like new waiting periods or loss of benefits.
Question 17 (Chapter 4)
Which of the following is a primary difference between a Health Reimbursement Account (HRA) and a Health Savings Account (HSA)?
- A) HRAs are owned by the employee, while HSAs are owned by the employer.
- B) HSAs allow for employee contributions, while HRAs are funded solely by the employer.
- C) HRAs require a High Deductible Health Plan, while HSAs do not.
- D) HSA funds are lost at the end of the year, while HRA funds always roll over.
Show answer & explanation
Answer: B
HRAs are employer-funded and employer-owned plans. HSAs are owned by the individual and can be funded by the employer, the employee, or both. HSAs require an HDHP, whereas HRAs have more flexibility in the health plans they pair with.
The Mistakes That Cost Marks
Skipping the definition of accident. Under the accidental means definition both the cause and the result must be unintended; the accidental bodily injury definition looks only at the result.
Forgetting that the principal sum covers two losses. Accidental death or the loss of two limbs pays the principal sum; a double indemnity rider doubles the accidental death benefit.
Giving COBRA the wrong clock. Divorce, death of the employee or a child losing dependent status brings 36 months, not 18.
Reading the birthday rule by gender or age. The parent whose birthday falls earlier in the calendar year has the primary plan.
Thinking an HSA needs no HDHP. An HSA requires a qualifying high deductible health plan; an HRA is employer-funded and more flexible.
Insuring the owner's salary under BOE. Business overhead expense pays the business's ongoing expenses, not the owner's own income.
Confusing basic and major medical. Basic hospital expense coverage is first-dollar with low limits; major medical has a deductible, coinsurance and high limits.
Your Next Step
Run the full set once without looking at the answers, then reread the explanations for every miss. When the pattern is clear, try the free course preview and the rest of the free Tennessee Life & Health practice questions.
Free: 25 Tennessee L&H practice questions
Liked this article? Get 25 exam-style questions emailed to you — with full answer explanations, no credit card. Closest thing to studying offline.
No spam. Just the questions and one optional follow-up.
Study this topic with LanePrep
Listen to these audio chapters on your commute — no screen required.
Related Articles
How to Pass the Tennessee Life & Health Exam on the First Try (2026)
10 min read
$130–160 + Fingerprints: Tennessee Life & Health License Cost 2026
9 min read
25 Free Tennessee Life & Health Exam Practice Questions (2026)
25 min read
Is the Tennessee Life & Health Exam Hard? Pass Rates and Difficulty (2026)
5 min read
17 Free Tennessee Life & Health Practice Questions: Life Policy Riders, Provisions and Options (2026)
12 min read
17 Free Tennessee Life & Health Practice Questions: Life Applications, Underwriting and Retirement Concepts (2026)
12 min read
17 Free Tennessee Life & Health Practice Questions: Accident & Health Provisions and Social Insurance (2026)
12 min read