Virginia Life: Life Insurance Policies (AB)
Accumulate – To build up
Attained Age – The insured’s age at the time the policy is renewed or replaced
Cash Value – A policy’s savings element or living benefit
Deferred – Withheld or postponed until a specified time or event in the future
Endow – To have the cash value of a whole life policy reach the contractual face amount
Face amount – the amount of benefit stated in the life insurance policy
Fixed Life Insurance products – contracts that offer guaranteed minimum or fixed
benefits
Lapse – Policy termination due to nonpayment of premium
Level premium – the premium that does not change throughout the life of a policy
Nonforfeiture values – benefits in a life insurance policy that the policyowner cannot lose
even if the policy is surrendered or lapses
Policy Maturity – In life policies, the time when the face value is paid out
Securities – Financial instruments that may trade for value (for example, stocks, bonds,
options)
Variable Life insurance Products – Contracts in which the cash values accumulate
based upon a specific portfolio of stocks without guarantees of performance
Term Insurance (Pure insurance) – Temporary protection because it only provides
coverage for a specific period of time.
Term – _ policies provide the greatest amount of coverage for the lowest premium as compared to any other form of protection Age – There is usually a maximum above which coverage will not be offered or at
which coverage cannot be renewed
Pure Death Protection – Term insurance provides what is known as _
Final exam-Virginia life and Health full
exam update
Insurable inter in one’s own life is legally considered as – Generally unlimited
Where dose the primary funding for medical part A come from? – Federal payroll and
self employment taxes
What would be a valid reason for naming a trust as the beneficiary of a life insurance
policy as opposed to naming an individual? – Management of proceeds would be
provided
Virginia requires that an agent must complete___ hours of continuing education on the
subject of ethics every reporting. – 3 hours
According to the needs approach, an emergency reserve fund’s primary purpose is to –
cover the cost of unexpected expenses
Which of the following provisions allows an insured or the insurer to terminate the policy
- Cancelable provision
How much is normally paid to a policyowner in a life (viatical) settlement? – Less than
the death benefit
For purposes of disability income insurance, earned income would include all of the
following EXCEPT – Dividends
(Salary, commissions, bonus)
Which type of group plan is excluded from HIPAA rules? – Disability Income
How does a continuous premium whole life policy differ from a limited payment while life
policy? – The time period in which premiums will be paid
COBRA extends coverage for a surviving spouse but at a rate not more than _ of
the group premium. – 102%
Which of the following approves continuing education courses for credit in Virginia? –
State Continuing Education Board
Which statement regarding the waiver of premium rider is accurate? – Cash payment is
not directly provided to the policyowner
Under a long-term care inflation rider, the benefit levels – periodically increase without
proof of insurability
Which typically changes at the re-entry option date found in some term life policies? –
Premium
Employees generally receive Worker’s Compensation benefits for – Lost wages and
medical expenses due to a occupational accident
Which is an accurate description of the premium in a graded premium life insurance
policy? – Annual increases in premium for a stated number of years then levels off for
the remainder of the contract
A 55 year old recently received a $30,000 distribution from a previous employer’s 401k
plan, minus $6,000 withholding. Which federal taxes apply if none of the funds were
rolled over? – Income taxes plus a 10% penalty tax on $30,000
Sylvia purchased an annuity for $100,000 from the proceeds of an inheritance. No
further payments are permitted and the income stream begins in 15 years. This contract
is a(n) – Single Premium Deferred Annuity
Medicare will cover a maximum of how many days per benefit period in a skilled nursing
facility? – 100 days
A domestic insurance company in Virginia MUST – Be formed under Virginia insurance
laws
What are premium for group credit life insurance based on? – Flat rate unrelated to the
borrower’s age
What minimum percentage of all eligible employees must participate in a group life
insurance plan if the premiums are completely paid for by the employer?
0%
50%
75%
100% – 100%
Where will a life insurance policy’s proceeds be directed to if all the beneficiaries die
before the insured? – The insured’s estate
Under what circumstances does an accident and health insurer have the right to request
an autopsy? – When not prohibited by state law
Which of these is NOT an unfair claims settlement practice? – Offering to settle a claim
by arbitration
How is an insured’s accident and health claim handled by an insurer if it occurs during
the policy’s grace period? – The unpaid premium may be subtracted from the
reimbursement
What is payable to the policyowner if a whole life policy is surrendered prior to its
maturity date? – cash value
How is the insured protected if a payor benefit rider is attached to the life insurance
policy? – Premium payments are waived in the event the premium payor dies or
becomes disabled
After an insurance application has been originated, the producer normally – is the major
personal contact to the insured
Which of the following health provisions requires that the application becomes part of
the policy? – Entire contract clause
Death proceeds from a life insurance policy are typically included in a deceased
insured’s gross estate – for federal income tax reasons
Under which circumstance may an insurer discontinue a small employer group medical
plan? – Employer fails to pay the premium for it to the end of the grease period
What determines how much an annuitant is paid for a variable annuity? – The market
value variations of the securities backing it
Which of the following is covered by a basic dental indemnity plan? – Non-surgical
periodontal treatment
Periodic health claim payments MUST be made at least – monthly
James is covered with health insurance by two different insurers. The “insurance with
other insurers” provision in an individual health insurance policy allows an insurer to pay
benefits to the insured on a pro-rata basis when – The insurer was not notified prior to
the claim that the insured has other health coverage
A major medical expense plan typically includes coverage for hospital room and board.
Which of the following is normally covered under the category “room and board”? –
General nursing care
Which of the following statements is true regarding accident and health insurance
claims that reimburse on an indemnity basis? – Claims can be sent directly to the
insured
VA Life Insurance Practice Exam (90
Xcel) full update 2023-2024
P is a producer who notices 5 questions on a life application were not answered. What
actions should P take? – Set up a meeting with the applicant to answer the remaining
questions
K buys a policy where the premium stays fixed for the first 5 years. The premium then
increases in year 6 and stays level thereafter, all the while the death benefit remains the
same. What kind of policy is this? – Modified Whole Life
Which of the following would be a valid reason for suspending or revoking an insurance
agent’s license? – Participating in the act of twisting
Post-tax dollar contributions are found in: – Roth IRA investments
Which of the following is a requirement to be eligible for a group life policy in Virginia? –
Group must be formed for a purpose other than obtaining insurance
K applies for a life insurance policy on herself and submits the initial premium with the
application. She is given a receipt by the agent stating that coverage begins
immediately if the application is approved. What kind of receipt was used? – Conditional
If an agent holds 2 license types, the continuing education requirement is _ credits
by December 31 in even number years. – 24
J the agent makes false statements to a prospective client about the projected
dividends for a policy. J may be found guilty of – misrepresentation
When is he face amount paid under a Joint Life and Survivor policy? – upon death of the
last insured
Which provision is NOT a requirement in a group life policy? – Accidental
An agent has made false comparisons of policies to induce the sale of an insurance
policy. This illegal act is called – twisting
All of these are unfair trade practice EXCEPT – Reinsurance
All of the following statements about traditional individual retirement accounts are false
EXCEPT – 10% penalty is applied to withdrawals before age 59 1/2
Which of these statements accurately reflects Virginia law regarding life insurance
advertisements? – An insurance agency is responsible for advertisements placed by its
insurance agents
Premiums collected by insurance agent must be maintained in a fiduciary capacity. At
what point MUST these premiums be remitted to the insurer? – In the ordinary course of
business
If X wants to buy $50,000 worth of permanent protection on his/her spouse and $25,000
worth of 10-year Term coverage on X under the same policy, the applicant should
purchase: – A Whole Life Policy with an Other Insured Rider
When must an agent report a felony conviction to the Bureau of Insurance? – Within 30
calendar days
All of the following are examples of insurance advertisement EXCEPT – An employer
newsletter announcing the availability of coverage for employees
Quarterly premium payments increase the annual cost of insurance because – interest
to the insurer is decreased while the administrative costs are increased
An individual received a quote from an insurance company that is a different rate from
individuals in the same risk class. The insurance company may be accused of – unfair
discrimination
An incomplete life insurance application submitted to an insurer will result in which of
these actions? – Application will be returned to the writing agent
All of these statements about the Waiver of Premium provision are correct, EXCEPT –
Insured must be eligible for Social Security disability for claim to be accepted
Which of these factors do NOT play a role in the underwriting of a life insurance policy?
- Marital status
Traditional individual retirement annuity (IRA) distribution must start by: – April 1st of the
year following the year the participant attains age 70 1/2
According to the Rules Advertisement of Life Insurance and Annuities, an agent may
NOT take which of the following actions during a sales presentation? – Mentioning
guaranteed policy dividends
What type of insurance offers permanent life coverage with premiums that are payable
for life? – Whole Life
If an insurance agent changes his/her address, the Bureau of Insurance must be
notified within __ calendar days. – 30
Virginia Life and Health Exam Review
2023-2024
What contract term means only one party to a contract’s promises are legally
enforceable? – Unilateral
Mr. Jones, the insured, committed suicide after the expiration of the suicide clause in his
life insurance policy. The insurer is obligated to: – Pay the death benefit.
The benefit that encourages the disabled policy owner to try to return to work is: –
Recurrent disability
Jeff has limited financial resources, but finds himself in a position where he needs a
good deal of protection. A __________would probably best suit his needs at this time. –
Term policy
Tyler owns a major medical policy with 70/30 coinsurance and a $3,000 deductible. If he
submits a claim for $20,000, how much will he pay? – $8,100
Life insurance applications require a signature from: – The agent, insured, and
policyowner.
The cheapest premium payment mode would be on a policy that is paid: – Annually
If an applicant misstates their age on an insurance application, what does the insurer do
when it is discovered at claim time? – Adjust the claim benefits to reflect what he would
have been entitled to if his real age had been given.
Phil and Sarah bought a life policy in which both are insured. Sarah dies before Phil. If
the policy pays the death benefit after Phil dies, it is a: – Survivorship life
A decreasing term life policy would be the most appropriate for: – A 41 year old lawyer
who wants a policy to pay his mortgage if he dies
When an insured completed his health policy application, his producer did not take a
premium when he submitted it to the insurer. When the producer delivers the policy to
the applicant, he needs to do all of the following EXCEPT: – Issue the applicant a
conditional receipt.
What type group plan requires 75% participation? – Contributory
How much time does a licensee have to notify the Commissioner of Insurance of any
change of residential, mailing, or business address? – 30 days
The services are provided on a prepaid per person basis called capitation in: – HMOs
In life insurance, insurable interest must be present at the time of: – Application
Mr. Johnson is looking at Medicare Supplement policies. These policies are designed
primarily to: – Provide benefits not covered by Medicare.
If the cash values of an annuity are invested in securities, it is a: – Variable annuity
What is a marketing communication that is oral, printed, or written and designed to
create public interest in life insurance or annuities? – Advertisement
What is the minimum time required for the basis of a long-term policy? – 12 consecutive
months
Alex’s life policy lapsed, which Nonforfeiture option would the insurer send him the value
of the policy? – Cash surrender
On January 3, an application is submitted without the initial premium. The insurer
requires a medical exam, and it is completed on January 15. On January 20, the insurer
issued the policy standard, and the producer delivers it on January 22. When is
coverage effective? – January 22, after the statement of good health is signed, and the
initial premium is paid.
What part of the policy directs the insurer on the recipients of benefits? – Payment of
Claims provision
What is the advantage of a payor benefit rider? – It provides a temporary waiver of
premium if the person paying the premium dies.
Dylan tells the insurer to keep the dividend and apply it to his next premium. He is using
which dividend option? – Reduction of premium
The Commissioner is responsible for all of the following in Virginia, EXCEPT: –
Enactment of insurance laws
How many hours of continuing education for 1 line of authority must insurance agents
complete every 2 years? – 16 hours
If James has an increasing term policy, which of the following must increase? – The
death benefit
The manner in which the proceeds of a life policy are handled are specified in what
provision? – Settlement options
HOW TO PASS VIRGINIA LIFE
INSURANCE AND ANNUITIES NEW
EXAM
Methods of Handling Risk (STARR) – 1. Sharing (each member of group pays portion of
loss)
- Transfer (spreading risk among customers)
- Avoidance (not engaging in certain activity)
- Reduction (lessening chance)
- Retention (indiv pays for loss)
Elements of Insurable Risk (CANHAM) – 1. Calculable (based on prior loss stats) - Affordable (for avg consumer)
- Non-catastrophic (no widespread loss events)
- Homogeneous (similar indiv risks)
- Accidental
- Measurable ($ amt)
Types of Insurers (7) – 1. Stock insurer - Mutual insurer
- Fraternal benefit societies
- Reciprocal insurers
- Risk retention groups
- Lloyd’s Associations
- Self-insurers
Classification of Insurers: Private v. Gov’t – -Gov’t includes SS, military life insurance,
residual market insurance
-Subsidize insurance programs to cover for catastrophic risk
Classification of Insurers: Domestic, Foreign, and Alien – 1. Domestic: insurer located in
state where they are incorporated - Foreign: insurer sells in states other than where they are incorporated
- Insurer formed under laws of country outside of US
Classification of Insurers: Authorized v. Unauthorized – 1. Authorized: company is
licensed (has Cert of Authority) to sell insurance in that state - Unauthorized: sell certain types of insurance (surplus) w/o having license
Classification of Insurers: Surplus Lines Insurers – unauthorized insurers that provide
insurance for indivs with large risk that no other authorized insurer will cover
Types of Agents (4) – 1. Independent Insurance Agents (represent the insured of
several companies)
- Exclusive/captive Agents (represent 1 insurer)
- General Agents/Managing General Agents: hire/train/supervise other agents
- Direct-writing Companies: no independent agents, they all work for the insurer
Agent Authority – 1. Express - Implied: not written, but actions agent normally do to sell insurance
- Apparent: actions by agent that a reasonable person would assume as authority
Elements of a Legal Contract (CLOAC) – -Consideration
-Legal Purpose
-Offer
-Acceptance
-Competent Parties
Characteristics of Insurance Contracts (12) – 1. Adhesion - Aleatory
- Utmost Good Faith, Reasonable Expectation
- Unilateral
- Personal
- Conditional
- Indemnity
- Representations, misrepresentations, warranties
- Concealment
- Fraud
- Fraud and False Statements
- Waiver and Estoppel
Underwriting Application Parts (3) – 1. General Information - Health Information
- Producer’s Report
Medical Information Bureau (MIB) – -maintains underwriting info on applicants
-all member companies have access
-reduces misrepresentation/fraud
-can’t be sole criteria for underwriting decision
Virginia life insurance exam complete
document
All of the following entities regulate variable life policies EXCEPT
a)The Insurance Department.
b)The Guaranty Association.
c)Federal government.
d)The SEC. – b)The Guaranty Association.
Which of the following is TRUE for both equity indexed annuities and fixed annuities?
a)They have a guaranteed minimum interest rate
.b)They are both tied to an equity index.
c)Both are considered to be more risky than variable annuities.
d)They invest on a conservative basis. While equity indexed annuities earn higher
interest rates than fixed annuities, both types of annuities guarantee a specific minimum
interest rate. – a)They have a guaranteed minimum interest rate.
Which of the following best describes annually renewable term insurance?
a)It is level term insurance.
b)It requires proof of insurability at each renewal.
c)Neither the premium nor the death benefit is affected by the insured’s age.
d)It provides an annually increasing death benefit. – a)It is level term insurance.
If a consumer requests additional information concerning an investigative consumer
report, how long does the insurer or reporting agency have to comply?
a)5 days
b)7 days
c)10 days
d)3 days – a)5 days
Group life insurance is a single policy written to provide coverage to members of a
group. Which of the following statements concerning group life is CORRECT?
a)100% participation of members is required in noncontributory plans.
b)Each member covered receives a policy.
c)Coverage cannot be converted when an individual leaves the group.
d)Premiums are determined by age, occupation, and individual underwriting. – a)100%
participation of members is required in noncontributory plans.
Which of the following is correct concerning the taxation of premiums in a key-person
life insurance policy?
a)Premiums are taxable to the employee.
b)Premiums are not tax deductible as a business expense.
c)Premiums are tax deductible by the key employee.
d)Premiums are tax deductible as a business expense. – b)Premiums are not tax
deductible as a business expense.
In a life settlement contract, whom does the life settlement broker represent?
a)The beneficiary
b)The life settlement intermediary
c)The owner
d)The insurer – c)The owner
Under which nonforfeiture option does the company pay the surrender value and have
no further obligations to the policyowner?
a)Cash surrender
b)Reduced paid-up
c)Paid-up options
d)Extended term – a)Cash surrender
Because an insurance policy is a legal contract, it must conform to the state laws
governing contracts which require all of the following elements EXCEPT
a)Conditions.
b)Consideration.
c)Legal purpose.
d)Offer and acceptance. – a)Conditions.
When an employer offers to give an employee a wage increase in the amount of the
premium on a new life insurance policy, this is called a(n)
a)Key person policy.
b)Fraternal association.
c)Aleatory contract.
d)Executive bonus. – d)Executive bonus.
The validity of coverage under a life insurance policy may not be contested, except for
nonpayment of premium, after the policy has been in force for at least how many years?
a)1 year
b)2 years
c)5 years
d)7 years – b)2 years
Which of the following is the best reason to purchase life insurance rather than
annuities?
a)To liquidate a sum of money over a lifetime
b)To create an estate
c)To liquidate a sum of money over a period of years
d)To create regular income payments – b)To create an estate
Which of the following riders would NOT cause the Death Benefit to increase?
a)Cost of Living Rider
b)Accidental Death Rider
c)Payor Benefit Rider
d)Guaranteed Insurability Rider – c)Payor Benefit Rider
Which of the following settlement options in life insurance is known as straight life?
a)Fixed amount
b)Life income
c)Single life
d)Life with period certain – b)Life income
What is the purpose of a conditional receipt?
a)It is given only to applicants who fully prepay the premium