Tennessee Life Producer Practice Exam

What is the primary purpose of the Tennessee Insurance Guaranty Association?

1. To provide life insurance policies

2. To protect policyowners in case of insurer insolvency

3. To regulate insurance premiums

4. To offer investment advice

The correct answer is: To protect policyowners in case of insurer insolvency

The primary purpose of the Tennessee Insurance Guaranty Association is to protect policyowners in the event that their insurance company becomes insolvent. This association acts as a safety net for policyholders, ensuring that they receive benefits even if the insurer is unable to fulfill its contractual obligations due to financial failure. By covering claims and obligations, the association helps maintain consumer confidence in the insurance market, ensuring that policyholders do not suffer a total loss of benefits they are entitled to under their policies. Other options, such as providing life insurance policies, regulating insurance premiums, or offering investment advice, do not align with the main function of the organization, which is specifically focused on safeguarding policyholders from the risk of insurer insolvency rather than engaging in activities related to the direct provision of insurance or financial consultation.