VIRGINIA LIFE, HEALTH AND ANNUITIES EXAM

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VIRGINIA LIFE, HEALTH AND ANNUITIES EXAM

Actual Qs and Ans - Expert-Verified Explanation -Guaranteed passing score -100 Questions and Answers

-Format: Multiple-choice / Flashcard

Question 1: Morale Hazard

Answer:

carelessness

Question 2: Changes in the Application

Answer:

must be initialed by the applicant

Question 3: Exposure

Answer:

risks for which the insurance company would be liable

Question 4: Insurable Interest

Answer:

• a risk of loss (assumed in one's self and relationships [spouse, children])
• Must be proven before policy can be purchased
• the relationship doesn't have tp exist at death

Question 5: Types of Variable Policies

Answer:

-variable life (death benefit can increase, has a guaranteed death benefit) -variable universal life (no guaranteed death benefit)

Question 6: Financial Strength Rating

Answer:

a report card of the company

Question 7: Physical Hazard

Answer:

the hazard can be seen

Question 8: Determining Amount of Life Insurance Needed

Answer:

-human life value (current income) -needs approach (money for specific needs)

Question 9: Increasing Term Insurance

Answer:

-death benefit increases -premium increases

Question 10: Insurance

Answer:

transfer of risk

Question 11: Return of Premium Term

Answer:

• premium higher than regular term policy.
• premium paid by insured is paid back if insured alive at the end of the term.

Question 12: Methods of Marketing

Answer:

• Independent
• Exclusive or captive
• General agents or managing general agents
• direct writing companies
• direct response -- no agent/producer involved

Question 13: Self-insurance

Answer:

a business that pays its own claims

Question 14: US Patriot Act

Answer:

• designed to prevent and detect money laundering and financing of terrorism.
• report suspicious activity.

Question 15: Pure Risk

Answer:

chance of loss only; can be insured

Question 16: Producer's Report

Answer:

• completed by the producer (agent).
• not attached to policy if issued.

Question 17: Underwriting Sources of Information

Answer:

• Application - primary source

• Medical exams

• Attending physician statement (APS)

• AIDS testing (may not ask about sexual orientation, testing not based on geographical location,

requires insured's written consent)

• Medical Information Bureau (MIB) [Application cannot be denied solely on MIB information, Insured

must be informed of MIB, MIB gets its information from insurance companies]

• Consumer reports (insured must be informed)
• Investigative consumer reports (insured must give consent)

Question 18: Personal

Answer:

contract between the insurance company and the insured; cannot be changed to someone else

Question 19: Premium Mode

Answer:

Annual, semi-annual, quarterly, monthly -annual is the lowest

Question 20: Moral Hazard

Answer:

a belief that intentionally causing a loss is acceptable

Question 21: Methods of Handling Risk (STARR)

Answer:

Sharing, Transfer, Avoidance, Reduction, Retention

Question 22: Peril

Answer:

cause of loss

Question 23: Agency

Answer:

the insurance agent acts on behalf of the principal (insurance company)

Question 24: Classes of Life Insurance Policies

Answer:

• Individual vs. Group
• Term vs. Permanent
• Participating vs. Non-participating
• Fixed vs. Variable
• Industrial & Home Service

Question 25: Business Uses of Life Insurance

Answer:

-buy sell funding (cross purchase, entity purchase) -key person -executive bonus -deferred compensation