State RegulationsTN specificDifficulty 2/5
A Tennessee producer wishes to charge a separate fee in connection with an individual major medical policy. Under Tennessee law, when is such a fee permitted?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
T.C.A. § 56-6-125(b) addresses producer charges in connection with individual major medical policies: a fee may be charged only where no commission is being paid for the policy. The rule prevents a producer from stacking a service fee on top of commission, and it is enforced by the Tennessee Department of Commerce & Insurance as part of the producer-level trade-practice provisions.
Why the other options are wrong
- A) Disclosure alone does not authorize the fee; the statutory condition is that no commission is paid for the policy.
- B) The rule does not turn on the policy year; it turns on whether a commission is being paid for the coverage.
- D) Comparing the fee to a commission rate is not the test — if a commission is paid, a separate fee is not permitted under T.C.A. § 56-6-125(b).
Memory hook
Fee or commission, never both — that is the major-medical rule.