Virginia Insurance Virginia-Life-Annuities-and-Health-Insurance Actual Questions

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.