Tennessee Insurance Practice Exam 2026 – All-in-One Resource for Exam Success!

A non-participating insurance policy is designed in such a way that it does not allow policyholders to share in the profits of the insurance company. In this type of policy, the insurer retains all the profits, which means that policyholders receive no dividends or additional benefits related to the company's profit performance. Non-participating policies typically offer a fixed premium and specified benefits, which makes them predictable for the insured.

In contrast, participating policies do allow policyholders to receive dividends, derived from the insurer's profits, making their benefits variable based on the company's financial performance. Universal and variable policies can also offer different forms of benefits but are generally structured more around cash value accumulation and investment opportunities rather than profit sharing with policyholders. Therefore, the distinguishing feature of a non-participating policy is its lack of profit-sharing, which is why it is the correct answer.