Free and Premium Insurance Licensing Virginia-Life-Annuities-and-Health-Insurance Dumps Questions Answers

Detailed Answer in Step-by-Step Solution:

The coordination of benefits (COB) provision prevents overinsurance (B) by ensuring that total payments from multiple group plans don’t exceed 100% of covered expenses, avoiding duplication.

It doesn’t affect dependent coverage (A), probationary periods (C), or waiting periods (D), which are unrelated to claim payments.

The Virginia study guide describes COB as a mechanism to coordinate payments among multiple insurers, reducing overinsurance and ensuring fair claim distribution. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Group Health Insurance Provisions."

The fixed period settlement option in life insurance, per Virginia Code § 38.2-3115, pays the death benefit in equal installments over a set time (e.g., 10 years), determined by the policyowner or beneficiary if not restricted. Option B is true; a longer period spreads the principal and interest over more payments, reducing each installment (e.g., $100,000 over 20 years yields smaller payments than over 5 years). Option C is true; payments blend principal and interest earned on the remaining proceeds held by the insurer. Option D is true; Virginia law allows beneficiaries to choose settlement options unless the policyowner locks in a method (e.g., via a policy endorsement). Option A is false; the payment amount depends on the proceeds, interest rate, and period length—not the beneficiary’s age, which might influence a life income option instead. The study guide likely contrasts fixed period (time-based) with life annuity (age-based) options, using examples like $500 monthly for 10 years, making A the exception.

Renewable term insurance renews at the insured’s attained age, not the original issue age. Thus, at renewal after five years, the premium is based on age 40 rates.

Exact Extract (Virginia Life Insurance Study Guide): “Renewable term—premiums increase at renewal based on the insured’s attained age.”

References (Virginia Documents / Study Guide):

— Virginia Life Insurance Examination Outline, Term Insurance Features

Home health care insurance covers long-term physical therapy or nursing services provided at the insured's residence. This type of insurance helps pay for the costs associated with receiving medical care in the home, such as nursing services, physical therapy, or assistance with activities of daily living. Nursing home insurance, on the other hand, covers care provided in a facility, not at home.

Life insurance proceeds are generally exempt from income tax but may be included in the insured’s gross estate for estate tax purposes if they are payable to the estate or if the insured retained ownership rights. If the proceeds are paid directly to a named beneficiary, they usually bypass probate and are not part of the taxable estate.

Exact Extract (Virginia Life Insurance Study Guide): “Proceeds of life insurance are included in the insured’s gross estate if payable to the estate or if the insured retained incidents of ownership at death.”

References (Virginia Documents / Study Guide):

— Virginia Life & Annuities Insurance Examination Outline, Section 6.3 Federal estate tax treatment

Virginia law obligates agents to act as fiduciaries with premiums collected and to promptly remit payments to the insurer. Exact extract: “An agent who accepts funds from an applicant shall hold such funds in a fiduciary capacity and shall promptly remit them to the insurer.”

Insurers may consider objective risk-related factors such as age, gender, health, and occupation when underwriting disability insurance. Religion, however, is not an allowable underwriting factor. Exact extract: “Underwriting criteria may not unfairly discriminate based on race, color, creed, or religion.” This prohibition ensures fair treatment of all applicants while still allowing actuarial factors like age and occupation to determine risk.

Virginia Code § 38.2-3109 allows life insurance riders to extend coverage. A family term rider (option C) attaches to a primary policy (e.g., the breadwinner’s) and provides term insurance for all family members—spouse and children—under one supplement, often with a single premium. Option A (spouse term rider) covers only the spouse, not children. Option B (children’s term rider) insures only children, excluding the spouse. Option D (survivorship term rider) isn’t a standard term; “survivorship” typically refers to joint life policies paying at the second death, not family coverage. The study guide likely describes the family term rider as a cost-effective way to insure dependents, with examples showing level term benefits for each member, making C the accurate answer.

Virginia Code § 38.2-5208 allows LTC policy cancellation by the insurer for nonpayment of premium (option A) after a 31-day grace period and notice, a standard contract right. Option B (Medicaid eligibility) isn’t a cancellation cause; it may coordinate benefits, not terminate coverage. Option C (insurer insolvency) affects payment ability, not lawful cancellation grounds. Option D (nuisance claims) isn’t a legal basis; claims frequency doesn’t void coverage unless fraudulent (Virginia Code § 38.2-309). The study guide likely lists nonpayment as the primary insurer-initiated cancellation reason, with examples like missed payments triggering notice, making A the lawful cause.

Detailed Answer in Step-by-Step Solution:

HMOs limit members to a pre-negotiated network of providers (B), restricting choice to control costs.

Non-network care (A) may be covered in emergencies, not always fully out-of-pocket. Options C (waive re-enrollment) and D (individual coverage) are not HMO features.

The Virginia study guide describes HMOs as managed care plans with a restricted provider network, emphasizing cost control through limited choice. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Managed Care Plans."

Virginia Code § 38.2-3330 requires group life insurance policies to include a conversion provision, allowing an employee to convert group coverage to an individual policy without evidence of insurability, typically within 31 days after termination of employment or group eligibility. Option B (conversion) directly describes this right, ensuring continued protection. Option A (nonforfeiture) applies to cash value options (e.g., reduced paid-up insurance) in individual policies, not group-to-individual transitions. Option C (assignment) transfers policy ownership, unrelated to conversion. Option D (incontestability) limits the insurer’s ability to deny claims after a period (e.g., 2 years), not a conversion mechanism. The study guide likely highlights conversion as a key group life feature, with scenarios like an employee leaving a job and converting to a whole life policy, making B the precise answer.

Virginia adopts the Accident and Sickness advertising standards that define “advertisement” broadly (print, online, audiovisual, etc.), but specifically carve out employer announcements about available group coverage. Exact extract: “Advertisement means any printed, published, audio/visual, or descriptive literature used to solicit the public… including material on an insurer’s website.” “The term does not include general announcements by an employer to its employees that a plan of coverage is available.”

A deferred annuity is commonly used for contributions to an Individual Retirement Account (IRA). Deferred annuities allow the policyholder to contribute funds, which grow tax-deferred until retirement. These types of annuities are well-suited for retirement savings plans such as IRAs, where the income is not taxed until it is withdrawn. Other types of annuities, such as joint life, temporary, and survivorship, are not typically used for IRAs.

Virginia Code § 38.2-3115 governs life insurance settlement options. The interest-only option keeps proceeds with the insurer (option A, true), paying interest periodically to the beneficiary (option C, true, e.g., quarterly), and allows the principal to be withdrawn or redirected later (option D, true, e.g., switching to fixed period). Option B is false; the policyowner can select this option during the policy term, not just the beneficiary post-death—though beneficiaries may elect it if not pre-specified. The study guide likely explains this flexibility with examples—e.g., a $100,000 policy earning 3% interest paid monthly—noting both parties’ roles, making B the exception since it restricts choice to the beneficiary alone.

In long-term care (LTC) insurance, the elimination period, per Virginia Code § 38.2-5202, is the waiting period between the onset of a qualifying condition (e.g., confinement due to inability to perform ADLs) and the start of benefit payments. It’s akin to a deductible in days (e.g., 30, 60, or 90 days), during which the insured must cover costs. Option D correctly names this period. Option A (trial period) isn’t a standard LTC term. Option B (exclusion period) might confuse with pre-existing condition exclusions, but it’s not the waiting period for benefits. Option C (qualifying period) could imply eligibility determination, but “elimination period” is the precise industry term. The study guide likely defines this as a cost-sharing feature, with examples illustrating how longer periods reduce premiums, solidifying D as the answer.

In individual health insurance underwriting, factors such as age, sex, and occupation can influence the decision to offer coverage, the premium rates, and any exclusions or limitations. However, religion is not a factor that can be considered, as it is prohibited by law to discriminate based on religious beliefs in the underwriting process. The inclusion of religion as a factor would be considered discriminatory.

Detailed Answer in Step-by-Step Solution:

A foreign insurer (A) is an insurance company operating in a state other than its state of domicile (where it is incorporated).

A domestic insurer (B) operates in its home state. An alien insurer (C) is domiciled outside the U.S. A captive insurer (D) insures its parent company, not based on location.

The Virginia study guide defines a foreign insurer as one licensed to do business in Virginia but incorporated in another state, per insurance regulatory terminology. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Insurance Company Types."

A certificate of insurance in a group health plan is evidence of the employee's insurance coverage. It provides a summary of the coverage, terms, and benefits the employee is entitled to under the group policy. It is not a contract between the employee and the insurer or between the employer and the insurer. The employer typically holds the master policy, while the certificate is issued to each employee covered under the plan.

A profit-sharing plan is an employer-sponsored qualified retirement plan in which the employer makes discretionary contributions based on company profits. Under Virginia exam standards and federal retirement plan rules covered in licensing materials, only the employer contributes to a traditional profit-sharing plan. Employees do not make direct salary deferral contributions as they would in a 401(k) plan. This makes option A correct.

The employer is not required to make a contribution every year, nor is the employer required to contribute a fixed amount. Contributions can vary year to year depending on business performance, which makes option D incorrect. Employers are allowed to offer other retirement plans alongside a profit-sharing plan, so option B is incorrect. Participation rules are typically defined by plan eligibility requirements rather than employee opt-out provisions, making option C inaccurate. Profit-sharing plans are attractive to employers because of flexibility in contributions and favorable tax treatment, while employees benefit from employer-funded retirement savings.

Detailed Answer in Step-by-Step Solution:

Endodontic services involve treatment of the tooth’s interior (pulp and roots), with root canals (C) being a primary example.

Crowns (A) and fillings (D) are restorative, not endodontic. Dentures (B) are prosthetic, unrelated to endodontics.

The Virginia study guide classifies root canals as an endodontic procedure, distinct from restorative or prosthetic dental services, per standard dental insurance definitions. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Dental Insurance."

Detailed Answer in Step-by-Step Solution:

If a health insurer requires a physical exam (e.g., for underwriting or claims), the insurer pays the cost (D), as it’s their condition for coverage or payment.

The premium payor (A), insured (B), or patient (C) aren’t responsible for insurer-mandated exams.

The Virginia study guide specifies that insurer-required exams, such as for contesting claims, are at the insurer’s expense, per the physical examination provision. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Health Insurance Policy Provisions."

Virginia Code § 38.2-3500 et seq. allows health insurance policies to include riders—supplemental agreements modifying coverage or terms (e.g., adding dental benefits or exclusions). Option D (rider) is the standard term. Option A (limit clause) isn’t a distinct attachment; limits are within the policy. Option B (attachment) is vague and not insurance-specific. Option C (insuring clause) is the core promise of coverage, not an alteration. The study guide likely defines riders with examples—e.g., a maternity rider increasing premiums—distinguishing them from policy staples, confirming D as the answer.

Insurance operates on the principle of risk transfer. The insured transfers the financial risk of loss to the insurer, which spreads the risk across a large group of policyholders.

Exact Extract (Virginia Insurance Fundamentals Study Guide): “Insurance is a mechanism of risk transfer, shifting the burden of loss from an individual to an insurer, which distributes the risk across many insureds.”

References (Virginia Documents / Study Guide):

— Virginia General Insurance Concepts, Risk Management Techniques

Detailed Answer in Step-by-Step Solution:

Medical expense insurance covers healthcare costs, while disability insurance replaces lost income, together protecting against medical costs and earning power loss (B).

Death benefits (A) are for life insurance. Dismemberment (C) is specific to AD&D. Rehabilitation (D) may be included but isn’t primary.

The Virginia study guide defines the core purpose of medical expense and disability insurance as mitigating financial loss from healthcare and income interruption. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Health Insurance Basics."

A single premium whole life insurance policy is a form of permanent life insurance in which the policyowner pays the entire premium in one lump sum at policy issuance. In exchange for this single payment, the policy provides lifetime protection and is immediately paid-up, meaning no additional premiums are required. The policy accumulates cash value and provides a guaranteed death benefit for the insured’s entire life. It does not provide coverage for a limited term, nor does it feature a decreasing face amount. While annuities provide income benefits, a single premium whole life policy remains primarily a life insurance contract. Therefore, the defining feature of this policy is that it provides protection for life as a paid-up policy.

A beneficiary designation by class identifies beneficiaries as a group rather than by individual names. Common class designations include children, grandchildren, or surviving spouse. “All children of the insured” is a classic example because it includes all individuals who meet that description at the time of the insured’s death, even if the number of children changes over time. A specified parent, a named shareholder, or the insured’s estate are not class designations. The estate is a legal entity, not a class of individuals, and naming a specific person does not constitute a class designation.

Insurable interest exists when an individual stands to suffer a financial loss or hardship if another person dies or is injured. Insurable interest is typically present when one is closely related to the person (e.g., spouse, parent, or child) or has a financial relationship with them (e.g., co-signing a mortgage). While maintaining a lasting friendship may suggest emotional interest, it does not typically meet the financial criteria for insurable interest unless there is a direct financial loss involved.

The waiver of premium rider allows the insured to stop paying premiums while disabled. After a specified waiting period (typically 90 days), premiums are waived for as long as the disability continues.

Exact Extract (Virginia Disability Study Guide): “Waiver of premium—after a period of total disability, future premiums are waived while benefits remain payable.”

References (Virginia Documents / Study Guide):

— Virginia Health Insurance Examination Outline, Disability Riders

Pre-existing conditions are defined as illnesses or conditions for which an insured received medical advice, diagnosis, or treatment prior to the effective date of coverage.

Exact Extract (Virginia Health Insurance Study Guide): “Pre-existing condition—any condition for which diagnosis, medical advice, or treatment was received prior to the policy’s effective date.”

References (Virginia Documents / Study Guide):

— Virginia Health Insurance Examination Outline, Policy Exclusions and Limitations

Virginia Code § 38.2-1826(C) requires licensees, including insurance agents, to report any felony conviction to the State Corporation Commission’s Bureau of Insurance within 30 calendar days of the final disposition (option C). “Final disposition” means the court’s conclusive ruling—e.g., sentencing after a guilty plea. This rule ensures the Bureau can assess the agent’s fitness to retain their license, protecting the public from untrustworthy practitioners. Option A (10 days) is too short and not specified in Virginia law for this purpose. Option B (20 days) lacks statutory support and falls between standard reporting periods. Option D (60 days) exceeds the mandated timeline, delaying oversight. The study guide likely highlights this 30-day deadline in a licensing compliance section, with examples—e.g., an agent convicted of fraud on June 1 must report by July 1—aligning with Virginia’s adoption of NAIC standards for licensee integrity (Virginia Code § 38.2-1800 et seq.), making C the precise requirement.

Qualified retirement plans are subject to federal participation standards to ensure broad employee access. Generally, employees age 21 or older must be allowed to participate after completing one year of service. One year of service typically means working at least 1,000 hours during a 12-month period. While some plans may impose longer vesting schedules for employer contributions, participation requirements are designed to prevent unreasonable exclusion of employees. The other options exceed the standard participation limit and are not consistent with general qualified plan rules. Therefore, one year of service is the correct minimum requirement.

Virginia Code § 38.2-5205 mandates that long-term care (LTC) policies define pre-existing conditions, typically as conditions for which medical advice or treatment was recommended or received within six months before the policy’s effective date. Option B (pre-existing condition) matches this definition exactly, as it identifies prior health issues that may affect coverage (e.g., exclusions or waiting periods). Option A (covered illness) is vague and implies a condition already insured, not necessarily pre-existing. Option C (long-term care condition) isn’t a standard term; LTC policies cover specific needs (e.g., ADLs), not a category tied to this timeframe. Option D (pre-determined risk) suggests underwriting factors, not a specific medical history definition. The study guide likely details this six-month lookback as a common LTC standard, with examples like a recent stroke diagnosis, emphasizing disclosure requirements and potential coverage limits, confirming B as the answer.

Rebating is an unfair trade practice where an agent offers a portion of their commission or any other inducement to encourage the insured to purchase a policy. This is considered illegal because it could mislead the buyer into making a purchase based on incentives rather than the suitability of the policy for their needs.

Virginia Code § 38.2-1833 defines an “appointment” as a formal authorization by an insurer for a licensed agent to act on its behalf in transacting insurance. An insured (option A) is the policyholder or beneficiary and has no role in representing the insurer. An employee of the insurer (option B) may work internally but isn’t automatically appointed to sell insurance unless they hold an agent’s license and an appointment, which isn’t implied here. A consultant (option C), under Virginia Code § 38.2-1837, advises on insurance but doesn’t transact it unless also licensed and appointed as an agent, making this a less direct fit. Only an agent (option D), licensed under Virginia Code § 38.2-1819 and appointed per § 38.2-1833, is required to hold an appointment to represent an insurer. The study guide emphasizes that appointments link licensed agents to specific insurers, solidifying D as the correct choice.

Automatic premium loans use policy cash value to keep coverage in force, and interest is charged on the borrowed amount. Exact extract: “The automatic premium loan uses policy values to pay overdue premiums; interest is charged on the loan balance.”

Detailed Answer in Step-by-Step Solution:

Disability income policies exclude benefits for intentional self-inflicted injuries (B) to prevent abuse or fraud.

Permanent injuries (A), sporting accidents (C), and falls (D) are typically covered unless specifically excluded by the policy.

The Virginia study guide states that disability income insurance excludes self-inflicted injuries as a standard provision to ensure coverage applies to unforeseen events. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Disability Income Insurance."

An accelerated benefit rider allows the policyholder to access a portion of the death benefit while they are still alive, typically in cases where the insured is diagnosed with a terminal illness and is expected to die within a certain period (usually six months). This rider provides financial assistance during the policyholder’s final stages of life, allowing them to cover medical expenses or other costs. It does not apply for minor surgeries or long-term rehabilitation.

If the total amount of an unpaid policy loan, plus accrued interest, exceeds the total cash value of the life insurance policy, the policy may terminate. This is because the insurer can only loan a portion of the cash value, and if the loan balance exceeds it, the policy will be in danger of lapsing.

The recurrent disability provision allows a relapse of the same disability within a specified time (usually 6 months) to be treated as a continuation of the prior disability, avoiding a new elimination period. Exact extract: “Recurrent disability is one which results from the same cause as a prior disability and occurs within a stated period; it is considered a continuation of the prior claim.”

Virginia life insurance law follows the principle of rate equity within underwriting classes. Insurers are permitted to classify applicants based on factors such as age, health, lifestyle, and risk characteristics, but once individuals are placed in the same underwriting class with equal life expectancy, they must be charged the same premium rate. This ensures fairness and prevents unfair discrimination.

Age alone is not sufficient because two individuals of the same age may have very different health profiles and mortality risks. Occupation and income may influence underwriting but do not independently mandate identical rates. Virginia regulations emphasize actuarial justification and prohibit unfair discrimination while allowing reasonable risk classification. Therefore, option A correctly reflects the legal standard.

Virginia requires an incontestability clause in life policies. After a policy has been in force for two years, it becomes incontestable except for nonpayment of premium.

Exact Extract (Virginia Law): “A life insurance policy shall be incontestable after it has been in force during the lifetime of the insured for two years, except for nonpayment of premiums.”

References (Virginia Documents / Study Guide):

— Code of Virginia §38.2-3107 (Incontestability clause requirement)

Detailed Answer in Step-by-Step Solution:

The proof of loss is a formal statement of a claim, and standard health insurance policies require it within 90 days of the loss (C), unless the policy specifies otherwise or state law extends it.

Options A (30 days) and B (60 days) are too short for most policies, while D (120 days) exceeds the typical requirement.

The Virginia study guide aligns with the NAIC model laws, stating that proof of loss must typically be filed within 90 days of the loss, though insurers may accept later submissions if not prejudicial. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Health Insurance Claims Provisions."

Virginia Code § 38.2-3330 mandates a conversion privilege in group term life policies, allowing insureds to convert to an individual policy without evidence of insurability within 31 days after losing group eligibility (e.g., employment termination). Option C matches this precisely. Option A is false; conversion is a legal requirement. Option B is incorrect; conversion applies post-eligibility, not during active membership while still insurable. Option D (five years) is arbitrary and unsupported by law. The study guide likely details this 31-day window with examples—e.g., an employee converting to whole life after layoffs—emphasizing its protective role, making C the correct timing.

Virginia Code § 38.2-3432.1, aligned with the Affordable Care Act (ACA), mandates guaranteed renewability for small employer health plans (1-50 employees in Virginia). Insurers can deny renewal for nonpayment of premiums (option A), insufficient participants (option B, e.g., falling below one eligible employee), or fraud (option D), per Virginia Code § 38.2-3407. However, option C—overuse of services (high claims)—a—is not a permissible reason for denial, as renewability cannot be based on claims experience or health status. The study guide emphasizes this protection under Virginia’s small group market rules, making C the exception.

Virginia Code § 38.2-3107 governs life insurance underwriting, where insurers assess risk using factors like gender (option A, affecting mortality rates), occupation (option C, e.g., hazardous jobs increase risk), and ability to pay premiums (option D, ensuring policy sustainability). Option B (religion) is not a permissible criterion; Virginia Code § 38.2-211 prohibits unfair discrimination in insurance based on religion, race, or other protected traits, reflecting federal and state anti-discrimination laws. The study guide likely explains underwriting with examples—e.g., higher premiums for a male firefighter—but flags religion as an illegal factor, with case studies of compliance, making B the exception.

If the amount of a policy loan plus accrued interest exceeds the life insurance policy’s cash value, the policy will generally lapse and become no longer in force. This occurs because the insurer cannot lend more than the available cash value, and the outstanding loan would exceed the policy’s value, leading to its termination.

Agents are fiduciaries, meaning they must handle clients’ premiums with the highest standard of care. Misuse or misappropriation of funds constitutes a violation of fiduciary duty.

Exact Extract (Virginia Agent Regulations): “Insurance producers act in a fiduciary capacity regarding premiums received from insureds and must promptly remit them to insurers.”

References (Virginia Documents / Study Guide):

— Code of Virginia §38.2-1834 (Fiduciary responsibility of agents)

In Virginia, an insurance agent’s license remains active for 30 calendar days without an appointment. During this period, the agent may not transact insurance business until an appointment is in place.

Appointments link the agent to an insurer and authorize the agent to act on the insurer’s behalf. Virginia regulations require insurers to file appointments promptly, and failure to secure an appointment within the allowed timeframe may result in license inactivity.

This rule ensures regulatory oversight and consumer protection by confirming that agents operate only under authorized insurer relationships.

The Limited Payment Whole Life policy provides life insurance protection that extends to age 100, but the policyholder is only required to pay premiums for a shorter period, such as 10, 20, or 30 years, or even until a certain age (e.g., age 65). After that period, the insurance coverage continues, but no further premiums are required, and the insured continues to be covered for the rest of their life. This type of policy is designed to provide the benefit of lifetime coverage while reducing the duration of premium payments.

In contrast, Endowment policies typically provide coverage for a set period and pay out either at the end of that period or upon the death of the insured. Continuous Premium Whole Life requires premiums to be paid continuously, which does not reduce the payment period. Yearly Renewable Term is term insurance, not permanent life insurance, and coverage expires at the end of each term period.

Policy loans are not prohibited in universal life insurance. In fact, one of the key features of universal life insurance is the ability to take loans against the accumulated cash value. The other options are correct: a mortality charge is deducted from the policy’s cash value, the policy specifies how premiums are divided between expenses and savings, and withdrawals may be allowed but can be subject to surrender charges.

Detailed Answer in Step-by-Step Solution:

When age is misstated, the insurer adjusts the death benefit based on the premium paid versus what should have been paid.

Premium paid: $15 per $1,000 (understated age). Correct premium: $18 per $1,000 (actual age).

Ratio: $15/$18 = 5/6 of the intended coverage. Thus, the benefit is 15/18 of the face amount (A).

Option B (95%) is arbitrary. Option C (full amount) ignores the misstatement. Option D (nothing) applies only in fraud cases beyond the incontestability period, not specified here.

The Virginia study guide states that under the misstatement of age provision, the benefit is adjusted proportionally to the premium paid versus the correct premium, not denied entirely. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Life Insurance Policy Provisions."

Children’s riders provide coverage for all eligible children in the family under one flat premium. Additional children are automatically covered without an increase. Exact extract: “Children’s riders charge one level premium regardless of the number of children insured; coverage automatically includes children born or adopted after issue.”

When underwriting group health, insurers consider the group’s stability, demographics, and industry risk. Persistency (how long the employer has had coverage) is important for business retention but is not directly a health risk factor.

Exact Extract (Virginia Group Insurance Study Guide): “Underwriting group health considers stability, composition, and industry. Persistency of a contract relates to retention, not health risk.”

References (Virginia Documents / Study Guide):

— Virginia Health Insurance Examination Outline, Group Underwriting Factors

Detailed Answer in Step-by-Step Solution:

An immediate annuity (C) begins payments shortly after a single premium is paid, lacking an accumulation period (the phase where funds build up, typical in deferred annuities).

Option A (installments) applies to deferred annuities. Option B (lump sum) is not standard; annuities pay periodically. Option D (tax-deductible) is false; contributions are not deductible unless part of a qualified plan, not typical for immediate annuities.

The Virginia study guide defines an immediate annuity as one purchased with a single premium, with payments starting within one year, bypassing an accumulation phase. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Annuities."

Detailed Answer in Step-by-Step Solution:

The Virginia Bureau of Insurance has authority to request and review an agent’s business records (C) to ensure compliance with state laws, without requiring a court order (A) or NAIC approval (B).

Option D (no access) is false; regulatory oversight overrides privacy in this context.

The Virginia study guide confirms that the Bureau of Insurance can demand records as part of its regulatory powers under Virginia insurance law, ensuring market conduct compliance. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Insurance Regulation."

A deferred annuity would be appropriate for an individual, age 50, who wants to help pay for a grandchild's college expenses in fifteen years. With a deferred annuity, the individual can make contributions now, and the annuity will accumulate value over time. The annuity will begin making payments in the future (in this case, fifteen years) to help fund the grandchild’s college expenses. A survivorship annuity, immediate annuity, or pure life annuity would not be suitable for this purpose, as they either begin payments immediately or are focused on providing income for the lifetime of the annuitant.

Federal Age Discrimination in Employment Act (ADEA) requires equal benefits for older workers. Employers cannot deny the same group health coverage offered to younger employees. Exact extract: “Employees age 65 and older must be offered the same health benefits as those under 65.”

Detailed Answer in Step-by-Step Solution:

Group insurance (B) covers individuals based on their affiliation with an organization (e.g., employees of a company), not as individuals.

Contributory insurance (A) refers to group plans where employees pay part of the premium, but it’s not the defining feature.

Health insurance (C) is too broad, and COBRA (D) extends group coverage, not defines it.

The Virginia study guide defines group insurance as coverage tied to membership in an organization, such as an employer or association. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Group Insurance."

Virginia law requires insurers to provide each group member with a certificate that summarizes the group policy’s benefits and features, including coverage, exclusions, and how to file claims.

Exact Extract (Virginia Group Health Law): “Each individual insured under a group health policy shall be provided with a certificate summarizing the essential features of the insurance coverage.”

References (Virginia Documents / Study Guide):

— Code of Virginia §38.2-3521.2 (Certificates of coverage under group health policies)

Eligibility for long-term care benefits is based on inability to perform Activities of Daily Living (ADLs). Functional assessment measures this ability. Exact extract: “Functional assessments measure the insured’s ability to perform ADLs such as bathing, dressing, eating, continence, and transferring.”

Before an applicant is tested for HIV, they must sign a consent form that acknowledges their understanding of the test and the potential implications of the results. This is required by law to ensure that the test is done voluntarily and that the applicant is aware of their rights. The other options, such as paying for the test or providing evidence of insurability, are not required before HIV testing.

Under Virginia licensing standards and federal tax principles taught for the life insurance exam, life insurance death proceeds are generally exempt from federal income tax when paid to a beneficiary due to the insured’s death. This long-standing rule is a fundamental advantage of life insurance and is frequently tested.

The transfer-for-value rule applies only in limited situations when a life insurance policy is sold or transferred for consideration, which is not the general rule for death benefits. The cost recovery rule and interest-first rule apply to annuities, not life insurance death proceeds. Therefore, options B, C, and D are incorrect.

This tax-free treatment allows beneficiaries to receive the full face amount without reduction for income taxes, making life insurance an effective financial protection and estate planning tool. While estate taxes may apply in certain high-value estates, income tax treatment remains favorable in most cases.

Virginia requires that the Medicare Supplement Buyer’s Guide be delivered at the time of application. This ensures applicants have all necessary information before purchase decisions.

Exact Extract (Virginia Medicare Supplement Regulations): “An outline of coverage and buyer’s guide shall be provided to all applicants at the time of application.”

References (Virginia Documents / Study Guide):

— Virginia Administrative Code 14VAC5-170-150 (Disclosure requirements for Medicare Supplement policies)

A mutual insurance company is owned by its policyholders rather than shareholders. When the company’s operating results are favorable, dividends may be declared and paid to policyholders as a return of excess premium.

These dividends are not guaranteed and are not considered taxable income in most cases, as they are treated as a refund of premium. Shareholders receive dividends only in stock insurance companies. Beneficiaries receive death benefits, and producers receive commissions, not dividends.

Virginia exam content highlights ownership structure as the key distinction between mutual and stock insurers, making option A correct.

The 10-day free look provision in individual health insurance policies allows the insured to review their policy after purchase. If they are unsatisfied with the policy, they can cancel it within 10 days and receive a full refund of premiums. This provision is distinct from a grace period (which allows for late payment) and does not apply only when no premium has been paid. A surrender charge typically applies to cash-value policies, not health insurance.

Virginia Code § 38.2-3407 et seq. covers health services, where ambulatory care centers (e.g., outpatient clinics) specialize in same-day procedures like outpatient surgical procedures (option C—e.g., cataract surgery). Option A (physical therapy) may occur there but isn’t the primary use; therapy clinics differ. Option B (wellness centers) focuses on prevention, not procedures. Option D (overnight accommodations) contradicts “ambulatory,” meaning walk-in/walk-out care. The study guide likely defines this in a health facilities section, with examples like knee arthroscopy, making C the most frequent use.

Detailed Answer in Step-by-Step Solution:

A 30-year decreasing term policy (B) reduces its death benefit over time, matching the declining balance of a 30-year mortgage, making it ideal for this purpose.

30-payment whole life (A) is permanent with level benefits. 30-year level term (C) maintains a constant benefit. 30-year endowment (D) builds cash value and pays out at maturity, not tied to a mortgage.

The Virginia study guide describes decreasing term insurance as tailored for obligations like mortgages, with the benefit decreasing as the debt is paid off. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Types of Life Insurance."

The Bureau of Insurance has the authority to examine a licensee's books and records to determine if unfair trade practices have been violated. This regulatory body ensures compliance with state insurance laws and regulations, and it has the power to investigate potential violations within the industry. The National Association of Insurance Commissioners (NAIC) provides model laws but does not have regulatory power over individual insurers.

In insurance contract law, an offer must be a clear and definite proposal that, if accepted, results in a binding contract. In life and health insurance, the applicant typically makes the offer by submitting an application. When a premium is paid with the application, it may strengthen the intent to offer, although coverage does not begin unless the insurer accepts the risk or issues a conditional receipt. An offer can also be terminated through a counteroffer. For example, if an insurer issues a policy with different terms than those requested, the insurer has made a counteroffer, which must be accepted by the applicant before a contract is formed. Advertising, however, is generally considered an invitation to apply rather than an offer or a temporary contract of insurance. A binder represents temporary insurance coverage and requires intent by the insurer or authorized agent to provide immediate coverage. Advertising lacks this intent and does not establish coverage. Therefore, advertising may not be considered a binder, making that statement incorrect under insurance contract principles.

A self-employed individual can use an annuity to fund an IRA, SEP, or Keogh plan, but not a tax-sheltered annuity (TSA). A TSA is a type of retirement plan typically offered to employees of public schools, colleges, and certain nonprofit organizations (i.e., 403(b) plans), not for self-employed individuals.

Detailed Answer in Step-by-Step Solution:

The incontestability provision in LTC policies typically limits the insurer’s ability to contest coverage based on misrepresentations to two years (B) from issuance, unless fraud is proven (which may extend this in some states).

Option A (six months) is too short. Option C (entire duration) applies only to fraud in some cases, not standard misrepresentations. Option D (prohibited) is incorrect due to the contestable period.

The Virginia study guide, aligned with NAIC standards, notes a two-year contestable period for health-related policies like LTC, after which misrepresentations cannot be challenged absent fraud. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Incontestability."

A captive agent represents only one insurance company under a contractual agreement. The agent sells only that insurer’s products and acts as its exclusive representative.

Independent agents represent multiple insurers, brokers represent clients rather than insurers, and “free agent” is not a recognized licensing category. Virginia licensing materials clearly distinguish captive agents from other distribution roles, making option A correct.

Premiums for Medicare supplement plans are typically determined using the attained age rating, community rating, or issue age rating methods. Attained age rating adjusts premiums based on the insured's current age, community rating charges all policyholders the same premium, regardless of age, and issue age rating bases premiums on the age at which the policyholder first purchases the policy. Experience rating, however, is not used for Medicare supplement plans, as it is more commonly applied to group insurance policies based on the claims history of a group.

Detailed Answer in Step-by-Step Solution:

The policyowner (A) has the right to designate the beneficiary, as they control the policy’s terms and ownership rights.

The insurer (B) issues the policy, the beneficiary (C) receives proceeds, and the agent (D) facilitates but doesn’t decide.

The Virginia study guide confirms that the policyowner selects the beneficiary, exercising a fundamental ownership right, unless assigned otherwise. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Beneficiary Designations."

Single premium whole life insurance is funded with one lump-sum premium that immediately creates both cash value and nonforfeiture value. Because the entire premium is paid upfront, a significant portion is allocated to the policy reserve, making options A, B, and C correct.

Whole life insurance has fixed premiums by definition. Once the single premium is paid, no additional premiums are required, regardless of inflation or economic conditions. Therefore, option D is incorrect and is the correct “EXCEPT” answer.

Virginia exam materials emphasize that whole life policies provide guaranteed premiums, guaranteed death benefits, and guaranteed cash value growth, which distinguishes them from flexible or adjustable policies.

Straight whole life insurance provides permanent protection until death or policy maturity (typically age 100 or 120). It does not end at age 65.

Exact Extract (Virginia Life Insurance Study Guide): “Straight whole life insurance—permanent protection, level premiums payable for life, with guaranteed cash values, nonforfeiture options, and face amount payable at maturity.”

References (Virginia Documents / Study Guide):

— Virginia Life & Annuities Insurance Examination Outline, Whole Life Insurance

Independent agents are not employees of any single insurer. They work independently, representing multiple insurance companies and are responsible for their own expenses. They earn compensation based on commissions from sales, and they typically own the renewal business, meaning they retain the commissions from renewing policies.

Indemnity dental insurance plans generally cover treatments directly related to dental health, such as fillings, root canal treatments, extractions, and certain preventive treatments like fluoride treatments for children under 16. However, dietary counseling and instructions are typically not covered under indemnity dental plans as they fall outside the scope of dental treatment.

Detailed Answer in Step-by-Step Solution:

Medicare Part D (C) specifically covers prescription drug costs for enrollees.

Medical expenses (A) are under Part B, hospital costs (B) under Part A, and dental (D) is generally not covered by Medicare unless supplemental.

The Virginia study guide states that Medicare Part D, introduced in 2006, provides prescription drug coverage through private plans, distinct from Parts A and B. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Medicare."

Noncancelable policies guarantee both renewability and level premiums. The insurer cannot raise rates or cancel coverage as long as premiums are paid. Exact extract: “A noncancelable policy may not be canceled nor may premiums be increased by the insurer beyond what is stated in the contract.” This makes noncancelable coverage the most consumer-friendly disability policy type.

Virginia Code § 38.2-3207 allows participating life policies to offer dividend options: option A (reduce premium), option B (buy paid-up additions increasing coverage), and option C (accumulate with interest) are standard, reflecting insurer profits shared with policyowners. Option D (receiving the entire cash value) isn’t a dividend option; it’s a surrender or nonforfeiture action, terminating the policy, not distributing profits. The study guide likely lists these options with examples—e.g., $100 dividend reducing a $500 premium (A)—contrasting them with cash value withdrawal, making D the exception.

An agent's license will not be revoked unless the agent has been afforded the right to a hearing on the charges. This ensures due process and that the agent is given an opportunity to present their case before any disciplinary action is taken. Revoking a license is a serious matter, and the law requires a fair hearing process to protect the agent's rights before taking such steps.

The concept of "reasonable expectations" states that the insured is entitled to the coverage under a policy that a sensible and prudent buyer would expect it to provide. This means that the insurer must honor the expectations of the insured based on the policy's terms, even if the wording is unclear or ambiguous, as long as those expectations are reasonable.

In a deferred annuity, benefit payments to the annuitant typically begin when the contract matures. Maturity occurs at a specified time, such as the annuitant’s retirement age or another defined period. The annuity may then begin making periodic payments to the annuitant or a beneficiary, depending on the terms of the contract.

When determining the amount of life insurance needed, insurers and agents focus on factors affecting survivors, not the insured. The number and ages of dependents, as well as the family’s standard of living, directly influence how much income replacement and financial support will be needed after death.

Self-maintenance costs refer to expenses incurred by the insured while alive and do not affect survivor needs after death. Therefore, option D is the correct exception. Virginia exam materials stress survivor income needs, education costs, debts, and lifestyle preservation when evaluating death benefit amounts.

Universal life insurance provides flexible premiums, adjustable death benefits, and transparent monthly deductions for mortality and expenses. Death benefits paid to beneficiaries are generally income-tax free, making option C incorrect.

Mortality charges and expense charges are deducted monthly from the cash value, and policy loans reduce the cash value, which can affect interest credited. These features align with Virginia exam standards.

Because death benefits are not taxed as ordinary income, option C is the correct EXCEPT answer.

Virginia law treats a licensed agent as the agent of the insurer that issued the insurance sold, solicited, or negotiated by that agent in controversies between the insured (or beneficiary) and the insurer. This statutory framework reflects the principle that, when the agent is acting within the scope of authority granted by the insurer (the “agency contract” authority), the insurer is responsible to the consumer for those acts in the transaction. That is why option A is the best answer among the choices presented.

The other options are inconsistent with Virginia’s allocation of responsibility. The insurer is not automatically “exempt” simply because an agent makes a misrepresentation; misrepresentations can create insurer responsibility in disputes with insureds, and the law’s default is that the agent is the insurer’s agent in such controversies. Nor does the insurer “transfer all liability” to the agent—agency status means the insurer can be bound by and accountable for authorized acts. Finally, limiting responsibility to “express authority only” is too narrow: agency authority in practice includes the authority actually granted and recognized in the insurer-agent relationship in the sale/solicitation/negotiation context addressed by Virginia statute. The statute’s consumer-protection focus is to prevent insurers from avoiding responsibility when their agents act on their behalf in insurance transactions.

When an HIV test is requested by a health insurer, the applicant must sign the consent form. This ensures that the insured is aware of the test and agrees to its administration. The insurance agent, physician, or medical laboratory technician are not required to sign the consent, though they may be involved in administering or facilitating the test.

Most medical expense policies exclude elective cosmetic procedures unless medically necessary. Exact extract: “Policies may exclude benefits for cosmetic surgery unless required to correct accidental injury or congenital defect.”

A decreasing term policy provides a declining death benefit over the policy term, while premiums remain level. These policies are often used for mortgage protection, as the insurance amount reduces in line with the declining loan balance.

Exact Extract (Virginia Life Insurance Study Guide): “Decreasing term insurance—provides a level premium and a decreasing face amount throughout the term of coverage, often used for debt protection.”

References (Virginia Documents / Study Guide):

— Virginia Life & Annuities Examination Outline, Term Insurance

An immediate annuity is commonly used to structure the payment of liability insurance settlements, lottery winnings, and other large sums. This type of annuity allows the beneficiary to receive a series of periodic payments starting immediately after the lump sum is invested. Immediate annuities are often used to provide a steady stream of income for individuals who receive large sums of money but want to ensure that the funds last over time.

If the insured fails to repay the full value of loans taken against a life insurance policy, the death benefit is reduced by the outstanding loan balance plus any accrued interest. The insurer can use the loan to pay the policy’s death benefit or any other obligations, but the policy does not become void unless the loan balance exceeds the cash value.

Detailed Answer in Step-by-Step Solution:

In Virginia, unintentional violations by an agent can result in fines, with a maximum aggregate penalty of $10,000 (C) for similar violations, as set by state insurance regulations.

Options A, B, and D deviate from this standard cap for unintentional acts.

The Virginia study guide, aligned with Virginia Code, specifies a $10,000 maximum aggregate penalty for unintentional violations, with higher penalties possible for willful acts. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Penalties and Enforcement."

The insuring clause in a health insurance policy is a key provision that outlines the general terms of the coverage provided by the insurer. It typically includes a broad description of what the policy covers and the conditions under which benefits will be paid. It does not contain a list of specific hospitals, nor does it detail how premiums are determined or act as part of the application.

Consideration in health insurance is the combination of the initial premium payment and the application submitted by the insured. Exact extract: “The consideration clause states that the policy is issued in exchange for the application and payment of the first premium.” This reflects the legal exchange of value between the insured and the insurer.

Virginia Code § 38.2-3100 et seq. governs annuities. A joint life annuity (option C) pays income until the first of two annuitants dies, then ceases—ideal for temporary dual coverage. Option A (joint and survivor annuity) continues payments until the last survivor dies, not stopping at the first death. Option B (temporary annuity) pays for a fixed term (e.g., 10 years), regardless of death, and isn’t tied to two lives. Option D (single life annuity) covers one person until their death, not two. The study guide likely defines these with examples—e.g., a couple receiving $1,000 monthly until one dies (joint life) versus until both die (joint and survivor)—highlighting C’s “first death” cutoff, making it the correct answer.

Detailed Answer in Step-by-Step Solution:

A viatical settlement involves a terminally ill policyowner selling their life insurance policy for a lump sum. The policyowner in this transaction is called the viator (C).

The viatical settlement provider (A) is the entity purchasing the policy.

The viatical settlement broker (B) facilitates the transaction.

"Viatee" (D) is not a recognized term in this context.

The Virginia study guide defines the viator as the insured policyowner who sells their policy in a viatical settlement, typically due to a terminal illness. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Viatical Settlements."

The cash value of a permanent life insurance policy may be used as a source of supplemental income for the insured during the policyowner’s lifetime. Cash value accumulates on a tax-deferred basis and may be accessed through policy loans or withdrawals, depending on the type of policy. These funds can be used for retirement income, emergencies, or other financial needs. The death benefit is paid to beneficiaries upon the insured’s death and is not available as income to the insured. A waiver of premium rider simply waives future premium payments in the event of qualifying disability and does not provide income. An automatic premium loan uses cash value to pay premiums and does not provide discretionary income to the insured. Therefore, cash value is the correct benefit that may be used as supplemental income.

Medicare Part A Hospital Insurance is available regardless of age to individuals who have received Social Security disability benefits for at least 24 months. This is a key provision that allows individuals who are disabled and have been receiving Social Security Disability Insurance (SSDI) for two years to qualify for Medicare Part A.

Common life insurance nonforfeiture options include extended term insurance, reduced paid-up insurance, and cash surrender value. These options allow policyholders to access some of the policy’s value if they decide to stop paying premiums or surrender the policy. A life income annuity is not a nonforfeiture option; rather, it is a type of annuity that provides periodic payments for the annuitant's lifetime.

Detailed Answer in Step-by-Step Solution:

The conversion privilege in term insurance allows conversion to a permanent policy (e.g., whole life) at the insured’s current (attained) age without proving insurability (B), typically before the term expires.

Option A (another term policy) is not standard. Option C (annuity with insurability) is incorrect; conversion is to life insurance. Option D (issue age rates) doesn’t apply; rates adjust to attained age.

The Virginia study guide explains that the conversion privilege ensures continued coverage by allowing term policies to convert to permanent ones without medical exams, based on attained age. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Term Insurance Features."

Universal life insurance is a type of permanent life insurance that provides flexible premiums, adjustable death benefits, and a cash value component. One distinguishing feature of universal life is that it allows policyowners to access cash value through both policy loans and partial withdrawals. Withdrawals permanently reduce the cash value and may also reduce the death benefit, while policy loans accrue interest and must be repaid to avoid reducing benefits. Whole life insurance generally allows policy loans but not partial withdrawals of cash value. Term life insurance does not accumulate cash value and therefore does not allow loans or withdrawals. While “permanent life” is a broad category, universal life is the specific policy type that permits both loans and withdrawals, making it the correct answer.

In Virginia, an insurance agent’s license is governed by the State Corporation Commission’s Bureau of Insurance under Title 38.2 of the Virginia Code. According to Virginia Code § 38.2-1819, once issued, the license authorizes the agent to transact insurance business on behalf of appointed insurers until it is terminated, suspended, or revoked by the Bureau. The license fee is paid to the Bureau of Insurance, not the insurance company (Virginia Code § 38.2-1818), making option A incorrect. Virginia Code § 38.2-1822 specifies that licenses are renewed biennially (every two years), not annually, rendering option C false. Finally, Virginia Code § 38.2-1833 clarifies that an agent needs only one license but must secure an appointment for each insurer they represent, not a separate license per insurer, making option D incorrect. Option B is the only statement consistent with Virginia law, reflecting the license’s ongoing authority unless altered by regulatory action.

Under required uniform provisions, once an insurer receives notice of claim, it must provide claim forms to the insured within a specified period (usually 15 days). If forms are not provided, the claimant may submit proof of loss in any reasonable written form.

Exact Extract (Virginia Uniform Policy Provisions): “Upon receipt of notice of claim, the insurer shall furnish the claimant forms for filing proof of loss.”

References (Virginia Documents / Study Guide):

— Code of Virginia §38.2-3514 (Uniform accident and sickness provisions – Notice and claim forms)

Detailed Answer in Step-by-Step Solution:

If an IRA owner dies before distributions, the surviving spouse beneficiary can roll the IRA into their own IRA (B), treating it as their own and delaying distributions until their required beginning date.

Option A (forfeited) is false; assets pass to the beneficiary. Options C and D apply to non-spouse beneficiaries under older rules, not spousal rollovers.

The Virginia study guide, per IRS rules, allows a surviving spouse to roll an inherited IRA into their own, avoiding immediate taxation or forced distributions. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Retirement Plans."

Virginia Code § 38.2-3205 governs policy loans in life insurance. When an insured borrows against the policy’s cash value and fails to repay the loan (principal plus interest), the outstanding amount is deducted from the death benefit upon the insured’s death. Option C correctly states this reduction. Option A is false; premiums are fixed unless the policy is adjustable, and loans don’t alter them. Option B is incorrect; dividends depend on insurer performance and policy terms, not loan repayment, though they might be applied to reduce the loan if elected. Option D is wrong; immediate lapse occurs only if the loan exceeds the cash value and premiums aren’t paid, not simply from non-repayment. The study guide likely stresses that the death benefit is the primary adjustment mechanism, ensuring the insurer recovers the loan while honoring the policy, making C the accurate choice.

The Virginia Life, Accident and Sickness Insurance Guaranty Association exists to protect policyholders, insureds, and beneficiaries when a licensed insurer becomes insolvent. Insolvency occurs when an insurer is unable to meet its financial obligations. In such cases, the guaranty association may provide coverage benefits up to statutory limits to ensure consumers do not lose all protection. The association does not protect against normal business events such as mergers, demutualization, or the sale of company assets. Its sole purpose is to provide a safety net in the event of insurer failure. This protection helps maintain public confidence in the insurance system.

Rebating occurs when an agent gives part of their commission, money, or anything of value to induce a customer to purchase insurance. This practice is prohibited under Virginia’s Unfair Trade Practices Act.

Exact Extract (Virginia Unfair Trade Practices Law): “Rebating includes paying, allowing, or giving any rebate of premium, commission, or other valuable consideration as an inducement to the purchase of insurance.”

References (Virginia Documents / Study Guide):

— Code of Virginia §38.2-509 (Rebates and inducements prohibited)

Under federal law, an insurance agent may face imprisonment for embezzling money from an insurance company. This is a serious offense that involves misappropriating or stealing funds entrusted to the agent. Other options, such as selling insurance with a nonresident license or inducing a client to sign an application, may result in administrative penalties or fines, but embezzlement can lead to criminal prosecution and prison time.

The needs approach calculates the amount of life insurance a client should have by analyzing family financial obligations—such as income replacement, education costs, debts, and funeral expenses. This approach ensures sufficient coverage to meet survivors’ future needs.

Exact Extract (Virginia Life Insurance Study Guide): “The needs approach considers the financial needs of survivors to determine the appropriate amount of life insurance coverage, including income, debt repayment, education funding, and final expenses.”

References (Virginia Documents / Study Guide):

— Virginia Life & Annuities Insurance Examination Outline, Section 2.1 Needs approach

The agent’s report includes observations on the applicant’s financial status, character, and other relevant factors, but the applicant’s signature belongs on the application form, not the agent’s report.

Exact Extract (Virginia Health Insurance Study Guide): “The agent’s report is confidential and includes information on financial condition and character. It does not contain the applicant’s signature.”

References (Virginia Documents / Study Guide):

— Virginia Health Insurance Examination Outline, Field Underwriting

The notice of claim provision states that notice may be given to the insurer or its authorized agent. Legally, providing notice to an authorized agent constitutes notice to the insurer itself.

Exact Extract (Virginia Uniform Policy Provisions): “Notice of claim may be given to the insurer or to any authorized agent of the insurer.”

References (Virginia Documents / Study Guide):

— Code of Virginia §38.2-3514 (Uniform accident and sickness provisions – Notice of claim)

Virginia Code § 38.2-3502 mandates a “free look” period (typically 10 days) for individual health insurance, allowing the insured to review the policy and cancel it with a full premium refund (option D) if returned within that time. Option A (try without paying) is false; premiums are paid upfront, refundable only upon cancellation. Option B (compare policies) is a practical use but not the legal purpose; the provision ensures cancellation rights, not comparison. Option C (change coverage) isn’t allowed; modifications require underwriting, not free-look terms. The study guide likely details this consumer protection with examples—e.g., returning a policy on day 9 for a refund—making D the precise right.

When an insured is covered under more than one group health plan, the primary plan pays first. The secondary plan pays remaining eligible expenses after the primary plan has paid.

Exact Extract (Virginia Group Health Insurance Study Guide): “The primary plan is responsible for paying benefits first under coordination of benefits. The secondary plan covers remaining eligible expenses.”

References (Virginia Documents / Study Guide):

— Virginia Health Insurance Examination Outline, Coordination of Benefits

A 10% penalty tax applies to "premature" distributions of gains from a modified endowment contract (MEC) before the policyholder reaches the age of 59½. This penalty is applied in addition to regular income taxes on the distribution. The MEC rules were established to prevent the use of life insurance policies as tax shelters.

Under the Consolidated Omnibus Budget Reconciliation Act (COBRA), a surviving spouse may continue health coverage after the death of the covered employee. The surviving spouse can be charged up to 102% of the cost of the coverage, which includes the full premium cost (what the employer was paying plus the employee’s portion), with a 2% administrative fee. This ensures the spouse can continue to receive the same benefits as before the employee’s death.

A joint and survivor annuity is designed to provide income for two people, typically spouses, and payments continue until both annuitants have died. This feature makes it especially suitable for retirement planning when ongoing income is needed for a surviving spouse.

When the first annuitant dies, payments continue to the survivor, often at the same or a reduced level depending on the contract terms. Only after the second annuitant’s death do payments cease. Therefore, option A is correct.

Options B, C, and D incorrectly describe other annuity structures. Beneficiaries are generally relevant only if a refund or period-certain option applies. Joint and survivor annuities are a core topic in Virginia annuity education because of their longevity risk protection.

For an insurance policy to be legally binding, four essential elements must exist: (1) offer and acceptance, (2) consideration, (3) competent parties, and (4) legal purpose. Consideration refers to the exchange of value: the applicant’s premium and representations in the application, and the insurer’s promise to pay benefits. Exact extract: “Consideration is the value each party gives to the other: the insured provides premiums and truthful statements, while the insurer provides the promise of benefits.” Without consideration, a contract cannot be enforced.

The doctrine of reasonable expectations holds that insurance contracts will be interpreted as a reasonable person would expect, even if fine print suggests otherwise. Exact extract: “Under the principle of reasonable expectations, coverage is interpreted in line with what a prudent policyholder would believe was provided.” This prevents insurers from denying claims based on obscure or technical language.

Group term insurance can typically be converted to a permanent individual life insurance policy without the need for a medical exam or evidence of insurability. This option is especially valuable when an employee leaves a company or the group plan ends, as it allows them to retain coverage without having to go through underwriting.

The accelerated death benefit rider allows the policyholder to access a portion of the death benefit while they are still alive, typically due to a terminal illness or other qualifying event. Since the insurer pays part of the death benefit early, it reduces the remaining amount that will be paid to the beneficiary upon the policyholder’s death.

A stock insurance company is owned by its shareholders, who invest capital into the company and receive dividends based on the company’s profits. This contrasts with mutual insurance companies, which are owned by the policyholders. Shareholders typically vote on corporate matters, such as electing the board of directors.

Virginia requires life insurance policies to include an incontestability provision stating that, after the policy has been in force during the insured’s lifetime for two years from the date of issue, the insurer cannot contest the policy’s validity (with the key exception of nonpayment of premiums). This is exactly what the question describes: a clause that limits the insurer’s ability to challenge the policy after a defined time period, providing stability and protection to policyowners and beneficiaries.

The other clauses serve different purposes. The entire contract clause identifies what documents make up the contract (typically the policy and attached application), but it does not bar contestability after a time period. Guaranteed renewable and noncancelable are health insurance concepts that address renewal rights and premium stability, not the life policy’s contestability window. The incontestability clause is also closely tied to representations/misrepresentations and underwriting: the insurer has a limited time to investigate and rescind for material misstatements, after which the policy becomes “incontestable” under Virginia statute (again, except for premium nonpayment and certain limited exceptions allowed by law).

Virginia Code § 38.2-1809 mandates that licensees maintain specific records for regulatory oversight and consumer protection. Option A (accounting records of premium payments) is required to track funds received and remitted, ensuring financial accountability (e.g., premiums collected for a $1,000 policy). Option B (files of insurance applications on current policies) must be kept as part of the contract and for audit purposes, per § 38.2-1810. Option C (policy renewal notices) is required to document communication with policyholders about ongoing coverage, ensuring transparency. Option D (premium quotations of unissued policies) is not mandated; while agents may provide quotes (e.g., $500 annually for a term policy), these are preliminary offers, not binding until a policy is issued, and Virginia law doesn’t require retaining them unless they result in a transaction. The study guide likely details recordkeeping in a compliance chapter, contrasting required records (A, B, C) with optional ones like quotes (D), using examples—e.g., keeping a paid policy’s file but not a rejected quote—making D the item not required. This reflects Virginia’s focus on executed contracts over prospective ones.

A restorative dental procedure refers to treatments that restore the function and integrity of a tooth, typically after damage or decay. A filling is a common restorative procedure, where the dentist repairs a cavity. An extraction removes a tooth, while a root canal treats infection within the tooth, and fitting dentures replaces missing teeth, all of which are not categorized as restorative procedures but are considered reparative or replacement treatments.

Virginia Code § 38.2-4306 mandates HMO benefits, focusing on comprehensive care. Option A (wellness programs) is common, promoting prevention (e.g., smoking cessation). Option C (24-hour emergency care) is required, ensuring access via PCP coordination or direct ER services. Option D (outpatient services) is standard, covering clinic visits. Option B (discounts on local health spa memberships) isn’t a typical HMO feature; while some plans offer wellness incentives, spa discounts are ancillary, not a core benefit under Virginia law or NAIC HMO models. The study guide likely lists HMO staples (A, C, D) with examples—e.g., annual checkups (D)—contrasting them with optional perks like B, making it the exception.

An unfair claims settlement practice occurs when insurers do not properly or promptly investigate and settle legitimate claims. This is a key element of unfair practices, as insurers are required by law to act in good faith when handling claims. Failing to promptly investigate or settle legitimate claims is considered unethical and unfair, as it delays rightful compensation and causes unnecessary hardship for policyholders.

The other options may describe improper actions, but failing to promptly investigate and settle claims is more directly tied to unfair practices under the insurance regulations.

Medicare Part B covers physician services, outpatient hospital treatment, preventive services, and certain medical supplies. Inpatient hospital services fall under Part A.

Exact Extract (Virginia Medicare Study Guide): “Part B—covers outpatient hospital services, physician services, and preventive care. Part A covers inpatient hospitalization.”

References (Virginia Documents / Study Guide):

— Virginia Health Insurance Examination Outline, Medicare Part A and B Benefits

A joint life annuity pays benefits to two annuitants during their lifetimes, but terminates entirely upon the first death. Exact extract: “Joint life annuities provide income until the death of the first annuitant; no further payments are made thereafter.”

The primary purpose of credit life insurance is to pay off the outstanding debt of a borrower in the event of their death. This ensures that the borrower’s family or estate is not burdened with the debt after their passing. It does not cover illness, act as a savings vehicle, or directly increase financing ability.

Whole life insurance provides permanent coverage, builds guaranteed cash value, and allows for policy loans. However, it has a higher initial premium cost compared to term life insurance. Therefore, the statement that whole life has lower initial costs is incorrect.

Exact Extract (Virginia Life Insurance Study Guide): “Whole life insurance provides long-term protection, guaranteed cash values, and policy loans. Premiums are higher than term insurance for equivalent coverage.”

References (Virginia Documents / Study Guide):

— Virginia Life & Annuities Insurance Examination Outline, Whole Life Characteristics