Virginia-Life-Annuities-and-Health-Insurance Practice Exam Questions with Answers Virginia Life, Annuities, and Health Insurance Examination Series 11-01 Certification

Coinsurance is a cost-sharing arrangement where, after the deductible is met, the insured pays a percentage of covered expenses and the insurer pays the rest. A common split is 80/20, where the insurer pays 80% and the insured pays 20% until the maximum out-of-pocket limit is reached.

Exact Extract (Virginia Health Insurance Study Guide): “Coinsurance—after the deductible has been satisfied, the insured and insurer share covered expenses in a stated ratio (e.g., 80/20).”

References (Virginia Documents / Study Guide):

— Virginia Health Insurance Examination Outline, Major Medical Policy Provisions

Mutual insurers are organized for the benefit of their policyholders, who are the owners of the company. Profits are returned to policyholders in the form of dividends or reduced premiums, unlike stock insurers which are owned by shareholders.

Exact Extract (Virginia Insurance Study Guide): “Mutual insurance company—owned by policyholders; profits distributed as dividends or premium reductions.”

References (Virginia Documents / Study Guide):

— Virginia General Insurance Concepts Outline, Section 1.1 Types of insurers

Virginia’s Unfair Claims Settlement Practices Act defines failure to promptly investigate and settle claims as an unfair practice. This protects consumers from unnecessary delay.

Exact Extract (Virginia Insurance Law): “Failing to adopt and implement reasonable standards for prompt investigation and settlement of claims is an unfair claim settlement practice.”

References (Virginia Documents / Study Guide):

— Code of Virginia §38.2-510 (Unfair claim settlement practices)

Federal criminal statutes governing insurance crimes provide imprisonment for embezzlement or theft from an insurer. Exact extract: “Whoever embezzles, abstracts, purloins, or misappropriates any of the moneys, funds… of any person engaged in the business of insurance whose activities affect interstate commerce… shall be fined… or imprisoned not more than 10 years…”

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 Code § 38.2-4306 mandates that Health Maintenance Organizations (HMOs) provide comprehensive health services, including emergency care, as a core benefit. Emergency services must be available 24 hours a day, 7 days a week (option D) to ensure immediate access to life-saving treatment, aligning with federal and state standards (e.g., ACA requirements under 42 CFR § 422.113). This reflects the HMO’s obligation to cover urgent needs—e.g., a heart attack at 2 a.m.—via in-network facilities or out-of-network reimbursement if necessary. Option A (16 hours, 6 days) and Option B (16 hours, 7 days) fall short of the continuous access requirement, limiting coverage unreasonably. Option C (24 hours, 6 days) excludes one day, contradicting the nonstop mandate. The study guide likely emphasizes this 24/7 rule in an HMO benefits section, with examples like ER visits covered anytime, making D the correct standard. This ensures HMOs meet Virginia’s consumer protection goals under § 38.2-4300 et seq., distinguishing them from less comprehensive plans.

In the context of health insurance, particularly dental coverage, Virginia Code § 38.2-3407.1 et seq. governs mandated benefits, though dental specifics often appear in policy riders or standalone plans. Orthodontics (option A) is the branch of dentistry focused on preventing and correcting irregularities of the teeth and jaws using mechanical devices like braces or aligners, precisely matching the question’s description. Endodontics (option B) deals with the tooth’s interior (e.g., root canals), not mechanical correction of alignment. Periodontics (option C) addresses gum diseases and supporting structures, not tooth positioning. Prosthodontics (option D) involves replacing missing teeth with prosthetics (e.g., dentures), not correcting irregularities mechanically. The study guide likely defines these terms in a health insurance section, emphasizing orthodontics’ role in alignment correction—both preventive (e.g., avoiding bite issues) and corrective—making A the clear answer. Examples like braces for malocclusion reinforce this distinction from other specialties.

Health Maintenance Organizations (HMOs) in Virginia, per Virginia Code § 38.2-4306, emphasize preventive care to reduce long-term costs. Preventive services, as defined in the study guide and aligned with ACA standards, include childhood immunizations (option C), such as vaccines for measles or polio, offered at no cost to members. Option A (rehabilitation therapy) is restorative, not preventive, addressing existing conditions. Option B (treatment for alcoholism) is a treatment service, not prevention, though HMOs cover it separately. Option D (home health services) supports recovery or chronic care, not primary prevention. The study guide likely lists immunizations as a core preventive benefit, contrasting them with treatment-oriented services, confirming C as the correct answer.

Virginia Code § 38.2-3100 et seq. governs deferred annuities, where a surrender charge (option A) is a penalty for early withdrawal, starting high (e.g., 7-10%) and declining over a surrender period (e.g., 7-10 years) until it reaches zero. Option B (front-end sales load) is a one-time fee deducted upfront, not diminishing over time. Option C (guaranteed interest rate) is a fixed return (e.g., 2%), stable or adjustable, not disappearing. Option D (expense charge) covers ongoing costs (e.g., mortality and expense fees), typically level, not phased out. The study guide likely illustrates this with a table—e.g., 10% year 1, 9% year 2, 0% year 10—emphasizing surrender charges as a liquidity deterrent, making A the matching feature.

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."

Detailed Answer in Step-by-Step Solution:

The entire contract clause includes the policy and the attached application (B), ensuring all terms and representations are part of the agreement.

The premium receipt (A) is temporary, the waiver rider (C) is optional, and the declaration page (D) is part of the policy, not separate.

The Virginia study guide states that the entire contract provision encompasses the policy and attached application, defining the full legal agreement. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Life Insurance Policy Provisions."

Qualified retirement plan funds are protected for the exclusive benefit of employees. Employers cannot repossess plan assets for their own use. They may invest, allocate contributions, or distribute vested benefits, but not reclaim assets.

Exact Extract (Virginia Retirement Plans Study Guide): “Plan assets must be held in trust for employees and may not revert to the employer except under limited IRS-approved termination procedures.”

References (Virginia Documents / Study Guide):

— Virginia Life & Annuities Insurance Examination Outline, Retirement Plans – IRS Rules

Detailed Answer in Step-by-Step Solution:

A trustee-to-trustee transfer (A) avoids the 20% mandatory tax withholding required when funds are distributed to the participant and rolled over within 60 days.

Options B (lost funds) and C (time) are incidental, not primary benefits. Option D (penalty tax) is irrelevant; rollovers aren’t penalized if timely.

The Virginia study guide, per IRS rules, notes that direct trustee-to-trustee transfers bypass withholding, preserving the full amount for reinvestment. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Retirement Plans."

Virginia Code § 38.2-5200 defines ADLs (Activities of Daily Living, option C) as essential tasks—e.g., bathing, dressing, eating—used to determine LTC benefit eligibility (typically inability to perform 2 of 6). Option A (aggregate dollar limits) refers to coverage caps, not ADLs. Option B (aggregate days limitation) might confuse with elimination periods, not ADLs. Option D (approved doctor lists) relates to provider networks, not functional criteria. The study guide likely details ADLs with examples—e.g., needing help with mobility—emphasizing their role in claims, making C the correct term.

A nonoccupational disability income policy covers accidents and sicknesses occurring off the job. Disabilities caused while performing work-related duties are excluded, since they are covered by workers’ compensation instead.

Exact Extract (Virginia Disability Insurance Study Guide): “Nonoccupational policies exclude coverage for work-related disabilities, which are handled under workers’ compensation.”

References (Virginia Documents / Study Guide):

— Virginia Health Insurance Examination Outline, Disability Income Insurance Exclusions

Most medical expense policies contain a war exclusion, denying benefits for losses resulting from war or military action. Auto accidents, sporting accidents, and tropical diseases are generally covered if not otherwise excluded.

Exact Extract (Virginia Health Insurance Study Guide): “Common exclusions include war, military service, self-inflicted injury, and experimental procedures.”

References (Virginia Documents / Study Guide):

— Virginia Health Insurance Examination Outline, Common Exclusions

The main advantage of tax-qualified retirement plans is that earnings accumulate tax-deferred until distributed to participants. This allows employees’ investments to grow more quickly compared to taxable accounts. Exact extract: “Employees benefit from tax-deferred accumulation of pension and profit-sharing contributions until retirement distribution.” Employers may deduct contributions, but the true long-term tax benefit accrues to employees.

Virginia’s Unfair Claims Settlement Practices Act prohibits insurers or agents from misrepresenting facts or policy provisions relating to coverage. Doing so after a loss is classified as an unfair claims settlement practice.

Exact Extract (Virginia Unfair Claims Settlement Law): “Misrepresenting pertinent facts or policy provisions relating to coverages at issue is an unfair claim settlement practice.”

References (Virginia Documents / Study Guide):

— Code of Virginia §38.2-510 (Unfair claim settlement practices)

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.

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.”

Detailed Answer in Step-by-Step Solution:

The health insurance application is signed by the applicant (who provides personal info) and the agent (D), who certifies the information’s accuracy and their role in the process.

The spouse (A) or dependents (B) don’t sign unless they’re co-applicants. An inspection representative (C) is not involved in the application process.

The Virginia study guide specifies that the agent signs the application alongside the applicant to verify the submission and their involvement, per standard industry practice. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Application Process."

Virginia Code § 38.2-623 mandates insurers to implement information security programs to safeguard nonpublic personal information, aligning with the NAIC’s Model Regulation for Privacy. These programs must ensure confidentiality (option B), protect against threats or hazards (option C), and prevent unauthorized access (option D)—all core objectives to secure data against breaches or misuse. Option A (ensure policyholder access without substantial inconvenience) is not a requirement of the security program; while Virginia Code § 38.2-610 allows policyholders to request their information, this is a separate consumer right, not a security program goal. The study guide likely details these mandates in a privacy section, emphasizing protection over access facilitation, as security focuses on safeguarding, not convenience. For example, encryption (B, D) and risk assessments (C) are standard, but streamlining access (A) could even conflict with security if overly permissive, making A the exception.

Detailed Answer in Step-by-Step Solution:

In health insurance, the "entire contract" refers to all the documents that collectively form the legal agreement between the insurer and the policyholder.

This includes the insurance policy itself (the main document outlining coverage), any endorsements (modifications or additions to the policy), and attached papers such as the application (if attached).

The completed application (A) is part of the contract only if attached, but it alone does not constitute the entire contract.

Uniform mandatory policy provisions (C) are specific clauses required by law within the policy, not the whole contract.

Notice of coverage (D) is a notification, not the contract itself.

Therefore, the correct answer is "entire contract."

The concept of the "entire contract" is a standard provision in health and life insurance policies. Per the Virginia insurance study guide, the entire contract clause ensures that all terms and conditions are contained within the policy, endorsements, and attached documents (like the application), protecting both parties by defining the full scope of the agreement. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Policy Provisions and Contracts."

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."

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.

Virginia Code § 38.2-1800 et seq. outlines roles in life insurance. Agents and underwriters both evaluate risks (option B): agents assess initial client risk (e.g., health questions) for application accuracy, while underwriters analyze it for approval (e.g., medical records). Option A (finding clients) is agent-only; underwriters don’t prospect. Option C (collecting premiums) is primarily the agent’s task, not underwriting’s. Option D (reviewing coverage) is a post-sale service, not a core underwriting function. The study guide likely contrasts roles but notes this shared risk focus—e.g., an agent flags smoking, underwriter rates it—making B the common duty.

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

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.

Detailed Answer in Step-by-Step Solution:

Employer-paid premiums for qualified long-term care insurance are treated as a business expense and are tax-deductible for the employer (B), provided the plan meets IRS requirements.

These premiums are not included in the employee’s gross income (A), as they are tax-exempt benefits under IRC Section 106.

Employees cannot deduct these premiums (C) since they are employer-paid.

Reimbursement (D) does not apply.

The Virginia study guide, aligned with IRS rules, notes that employer-paid premiums for qualified long-term care insurance are deductible as a business expense and excluded from employees’ taxable income. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Taxation of Insurance Benefits."

Detailed Answer in Step-by-Step Solution:

A single premium whole life policy is a type of permanent life insurance where the entire premium for the policy’s lifetime coverage is paid in one lump sum at issuance.

Unlike policies with recurring premiums (e.g., monthly or annual), this single payment funds the policy for the insured’s full life (D).

Options A (one month) and B (one year) apply to term or recurring premium policies.

Option C (to age 65) might relate to limited-pay policies, not single premium ones.

Per the Virginia study guide, a single premium whole life policy requires one payment upfront, providing coverage for the insured’s entire life and building immediate cash value. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Types of Life Insurance Policies."

Detailed Answer in Step-by-Step Solution:

In a PPO, using a non-PPO provider (out-of-network) leads to higher out-of-pocket expenses (A) due to lower reimbursement rates and potential excess charges.

Option B (full cost) is inaccurate; some coverage applies. Option C (100% reimbursement) is false. Option D (waiting period) is unrelated.

The Virginia study guide reiterates that PPOs cover out-of-network care but at a reduced level, increasing the insured’s costs compared to in-network use. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Managed Care Plans."

When all named beneficiaries predecease the insured, the policy proceeds revert to the insured’s estate. This allows settlement under probate unless otherwise directed by policy terms.

Exact Extract (Virginia Life Insurance Study Guide): “If no living beneficiary is designated at the time of the insured’s death, proceeds are payable to the estate of the insured.”

References (Virginia Documents / Study Guide):

— Virginia Life Insurance Examination Outline, Beneficiary Succession

Penalty-free withdrawals from a traditional IRA before age 59½ are permitted for disability, qualified first-time home purchase (up to $10,000), or certain unreimbursed medical expenses. Bankruptcy is not a qualifying exception.

Exact Extract (Virginia Retirement Study Guide): “Exceptions to early withdrawal penalty include disability, first-time home purchase, qualified education, or medical expenses. Bankruptcy is not included.”

References (Virginia Documents / Study Guide):

— Virginia Life & Annuities Examination Outline, Retirement Plans – Taxation Rules

Virginia Code § 38.2-3100 et seq. defines immediate annuities as contracts starting payments within one year of purchase, typically funded with a lump sum. Option C fits: retirees with savings (e.g., $200,000 from a 401(k)) buy immediate annuities for instant income. Option A (tax deduction) applies to contributions to qualified plans, not immediate annuities, which use after-tax funds unless from a rollover. Option B (tax-sheltered annuity) refers to 403(b) plans, not immediate annuities. Option D (accumulate funds) suits deferred annuities, not immediate ones. The study guide likely contrasts immediate (C) with deferred annuities (D), using examples like a 65-year-old converting a lump sum to monthly payments, making C the typical buyer.

Certain Medicare supplement policies in Virginia may include preventive benefits not fully covered by Medicare, such as annual physical exams. These benefits are limited and distinct from core Medicare Part A (hospitalization) and Part B (medical) services.

Exact Extract (Virginia Medicare Supplement Study Guide): “Preventive medical care benefit may include annual physical exams and preventive screening tests, which are not part of basic Medicare coverage.”

References (Virginia Documents / Study Guide):

— Virginia Health Insurance Examination Outline, Medicare Supplement Provisions

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)

Virginia exam materials describe standard STD plan design as wage-replacement for a short duration with a weekly cap; integration with Social Security and multi-year benefit periods are characteristics of long-term disability (LTD), not STD. Exact extract (Study Guide): “Short-Term Disability (STD) pays weekly benefits, typically 50%–60% of earnings, subject to a weekly maximum, for a short duration (commonly up to 13–26 weeks).” “Coordination with Social Security benefits is generally a feature of LTD, not STD.”

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

Moral hazard refers to the increased chance of loss due to the insured’s dishonesty or fraudulent intent. Examples include exaggerating claims or intentionally causing loss.

Exact Extract (Virginia Insurance Fundamentals Study Guide): “Moral hazard—hazard arising from dishonesty or lack of integrity of the insured, such as filing fraudulent claims.”

References (Virginia Documents / Study Guide):

— Virginia General Insurance Concepts Outline, Risk and Hazards

The deductible is the initial portion of covered expenses the insured must pay before the insurer pays benefits. Coinsurance applies only after the deductible has been met. Exact extract: “The deductible is the amount of covered expenses an insured must pay out of pocket before the insurer is obligated to pay under the major medical policy.” This provision ensures cost-sharing and discourages excessive claims.

A 10-year certain annuity guarantees payments for 120 months. If the annuitant dies after receiving 119 payments, only one more payment remains for the beneficiary. Exact extract: “Life with 10-year certain annuities guarantee at least 120 payments; if the annuitant dies before that period, remaining payments go to the beneficiary.” After 120 months, no benefits continue.

Virginia Code § 38.2-600 requires written consent for HIV testing in insurance underwriting, signed by the applicant (option A) to comply with privacy laws (e.g., Virginia Code § 32.1-36.1). This ensures the individual authorizes the test, protecting their rights. Option B (physician) may order tests but doesn’t consent for insurance. Option C (agent) facilitates but can’t consent. Option D (technician) performs the test, not authorizes it. The study guide likely stresses this consent process in a privacy section, with examples of applicants signing before blood draws, making A the correct party.

Detailed Answer in Step-by-Step Solution:

The "time limit on certain defenses" provision (B), often tied to incontestability, limits the insurer’s ability to deny claims based on application errors after a period (e.g., 2 years), unless fraud is proven.

Legal actions (A) governs lawsuits, grace period (C) covers premium delays, and time payment of claims (D) sets claim payment deadlines—none relate to application defenses.

The Virginia study guide explains that the time limit on certain defenses provision protects insureds by restricting post-issuance claim denials after a contestable period, absent fraud. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Health Insurance Policy Provisions."

Detailed Answer in Step-by-Step Solution:

The Medicare Supplement open enrollment period (6 months starting the first month a person is 65 and enrolled in Medicare Part B) guarantees issuance of a policy without regard to health status (D).

Premiums (A), benefits (B), and exclusions (C) are standardized and not altered during this period due to health.

The Virginia study guide states that during the Medicare Supplement open enrollment, insurers must issue policies without medical underwriting, ensuring access regardless of health. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Medicare Supplement Insurance."

Detailed Answer in Step-by-Step Solution:

Life insurance policies typically include a two-year suicide clause; if the insured dies by suicide within this period (e.g., six months), the insurer pays only a refund of premiums, not the full death benefit (C).

Options A (accidental injury), B (lung cancer), and D (heart attack) are covered causes, barring misrepresentation or exclusions, within the first two years.

The Virginia study guide notes that the suicide provision limits payment to premiums paid if suicide occurs within two years of issuance, protecting insurers from early intentional loss. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Life Insurance Policy Provisions."

Tax-sheltered annuities (TSAs), per IRC § 403(b) and Virginia Code § 38.2-3100 et seq., are retirement plans for nonprofit employees. Option A is true; they’re synonymous with 403(b) plans. Option B is true; contributions often come from voluntary salary reductions, tax-deferred until withdrawal. Option C is true; participants can have individual contracts or accounts. Option D is false; investment gains are tax-deferred, not included in gross income annually, only taxed upon distribution. The study guide highlights TSAs’ tax advantages, making D the incorrect statement.

Detailed Answer in Step-by-Step Solution:

Life insurance premiums are calculated based on three factors: mortality (death rates), interest (investment earnings), and expenses (operating costs).

When an insurer earns interest on premiums invested, it increases the funds available to pay claims, reducing the amount needed from policyholders.

This results in a decrease in the premium rate (C), as higher interest earnings offset the cost of coverage.

Option A (increase premium rate) would occur if interest earnings decreased.

Options B and D (mortality rate changes) are unrelated to interest, as mortality is a statistical factor, not a financial one.

The Virginia study guide explains that interest earned on premiums is a key component of pricing life insurance, allowing insurers to lower premium rates when investment returns are favorable. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Premium Determination."

A contingent beneficiary is the person designated to receive life insurance proceeds only if the primary beneficiary is unable to do so, usually because the primary beneficiary has died before the insured. This designation ensures that benefits are still directed to another party without passing through the estate.

Exact Extract (Virginia Life & Annuities Study Guide): “Contingent beneficiary—person designated to receive policy proceeds if the primary beneficiary dies before the insured.”

References (Virginia Documents / Study Guide):

— Virginia Life & Annuities Insurance Examination Outline, Section 5.2 Beneficiaries

— Virginia Consumer’s Guide to Life Insurance, Beneficiary Designation Section

The misstatement of age provision is a required standard provision. If age was misstated, the insurer adjusts the death benefit to the amount the paid premium would have purchased at the correct age, rather than canceling the policy.

Exact Extract (Virginia Policy Provisions): “In case of misstatement of age, the amount payable shall be adjusted to what the premium would have purchased at the correct age.”

References (Virginia Documents / Study Guide):

— Code of Virginia §38.2-3108 (Misstatement of age provision in life insurance)

Virginia Code § 38.2-4306 requires HMOs to offer preventive care, coordinated by primary care physicians (PCPs), focusing on health maintenance. Option A (well-baby checkups), option B (immunizations for children), and option D (physical examinations) are standard preventive services—e.g., growth monitoring, vaccines, and annual exams—covered at no cost under ACA-aligned plans (Virginia Code § 38.2-3440). Option C (experimental surgery) is not preventive; it’s a treatment, often excluded or requiring special approval due to its unproven nature, not a PCP’s routine role. The study guide likely lists HMO preventive benefits with examples (e.g., flu shots), contrasting them with non-preventive interventions like surgery, making C the exception.

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."

Detailed Answer in Step-by-Step Solution:

A continuous premium whole life policy requires premiums for the insured’s lifetime (A), while a limited payment policy has a set payment period (e.g., 20 years).

Settlement options (B), mortality tables (C), and dividends (D) are similar across both types.

The Virginia study guide distinguishes continuous premium whole life (lifelong payments) from limited payment whole life (fixed-term payments), both providing permanent coverage. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Whole Life Insurance."

Flexible premium life insurance, such as universal life (Virginia Code § 38.2-3113.1), allows the policyowner to adjust premium payments within policy limits (e.g., minimum to maintain coverage, maximum for tax advantages), offering flexibility over fixed-premium plans like whole life. Option A correctly identifies the policyowner as the decision-maker. Option B (contingent beneficiary) is false; beneficiaries have no control over premiums. Options C and D tie adjustments to economic indices (CPI, interest rates), but Virginia law and standard policies don’t grant insurers unilateral premium-changing rights based on these factors—flexibility is the policyowner’s prerogative, subject to cash value sufficiency. The study guide likely contrasts this with traditional policies, using examples of skipped or increased payments, confirming A as the defining trait.

Ordinary whole life pays the face amount at maturity (traditionally age 100 or 120) if the insured is still alive, or upon earlier death. Term policies have no maturity value.

Exact Extract (Virginia Life Insurance Study Guide): “Ordinary whole life—pays the face amount at death or at policy maturity if the insured survives to that date.”

References (Virginia Documents / Study Guide):

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

Medical expense claim forms are designed to gather information relevant to the medical loss itself—its occurrence, character, and extent. Employee salary is not part of the standard claim form for medical expense policies.

Exact Extract (Virginia Health Insurance Study Guide): “Claim forms must provide space for details of the occurrence, character, and extent of loss but do not request information unrelated to medical expenses, such as salary.”

References (Virginia Documents / Study Guide):

— Virginia Uniform Health Policy Provisions

Detailed Answer in Step-by-Step Solution:

A group health insurance contract is a legal agreement between the employer (policyholder) and the insurance company (C), with employees as covered participants, not direct parties to the contract.

Option A (employer and employees) is the employment relationship, not the insurance contract. Option B (employee and insurer) applies to individual policies. Option D (all three) overcomplicates the contractual relationship.

The Virginia study guide states that group insurance contracts are issued to the employer or group sponsor, who contracts with the insurer, while employees receive certificates of coverage. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Group Insurance."

Whole life contracts guarantee cash values, nonforfeiture options, loan values, and settlement values. Dividends are not guaranteed because they depend on company performance.

Exact Extract (Virginia Life Insurance Study Guide): “Whole life policies provide guaranteed cash values, policy loans, and settlement options. Dividends, if declared, are not guaranteed.”

References (Virginia Documents / Study Guide):

— Virginia Life Insurance Examination Outline, Policy Provisions and Guarantees

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.

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

A POS plan blends characteristics of HMOs and PPOs/indemnity plans. Like an HMO, members choose a primary care physician, but they can also go out-of-network and receive partial reimbursement (similar to indemnity coverage). Exact extract: “POS plans combine features of HMOs and indemnity plans, permitting members to seek care within the network or outside the network at higher cost-sharing.” This flexibility allows broader provider choice while controlling costs through the HMO model.

Medicare supplement policies in Virginia are guaranteed renewable. This means the insurer cannot cancel coverage as long as premiums are paid on time, regardless of the insured’s health status or claim history. Exact extract: “Every Medicare supplement policy shall be guaranteed renewable and may not be terminated except for nonpayment of premium or material misrepresentation.” This provides strong consumer protection for seniors relying on supplemental coverage.

Virginia Code § 38.2-503 prohibits unfair or deceptive advertising in insurance, including Accident and Sickness policies. Terms like “reductions” (option A), “exclusions” (option B), and “pre-existing conditions” (option C) are factual policy features that must be disclosed clearly under Virginia Administrative Code 14VAC5-41-10 et seq., ensuring transparency. However, “unlimited benefits” (option D) is misleading if untrue, as all policies have limits (e.g., maximum benefits or coverage caps). Advertising “unlimited benefits” without substantiation violates Virginia’s rules against exaggerated or false claims, risking consumer deception. The study guide likely warns against such terms, citing examples where insurers faced penalties for overstating coverage, making D the prohibited choice.

A SPDA is funded with a single lump sum payment. The payout (distribution) begins at a later date, not immediately, and withdrawals are taxable.

Exact Extract (Virginia Annuities Study Guide): “Single Premium Deferred Annuity—funded with a single lump-sum payment; benefits begin at a future date.”

References (Virginia Documents / Study Guide):

— Virginia Life & Annuities Examination Outline, Types of Annuities

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’s long-term care (LTC) rules allow certain exclusions (e.g., war, alcoholism/drug addiction, intentionally self-inflicted injury) but prohibit disease-specific exclusions for conditions like Alzheimer’s or senile dementia. Exact extract: “No long-term care insurance policy or certificate may exclude or limit coverage for Alzheimer’s disease, senile dementia, organic brain disorder, or other demonstrable organic disease.” Permitted exclusions include: “loss resulting from war or act of war,” “alcoholism and drug addiction,” and “intentionally self-inflicted injury.”

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.

Disability income insurance excludes coverage for claims resulting from participation in illegal activities or employment considered unlawful. Therefore, disability resulting from an illegal occupation may be denied.

Exact Extract (Virginia Disability Insurance Study Guide): “Policies exclude disabilities arising from illegal occupations or activities. Claims in connection with such occupations may be denied.”

References (Virginia Documents / Study Guide):

— Virginia Health Insurance Examination Outline, Exclusions in Disability Income Policies

The return of premium benefit refunds a percentage of premiums paid if the policy is canceled or if the insured dies before benefits are used. Exact extract: “A return of premium rider provides a refund of premiums paid, less claims paid, upon cancellation or death of the insured.” This option is often added to long-term care policies to protect policyholder investment.

Detailed Answer in Step-by-Step Solution:

Needs analysis (A) assesses an individual’s and dependents’ financial requirements (e.g., income replacement, debts) to determine appropriate life insurance coverage.

It doesn’t eliminate interest/inflation estimates (B), require underwriter collaboration (C), or ignore Social Security (D), which is often factored in.

The Virginia study guide describes needs analysis as a planning tool to calculate insurance needs based on personal and family financial obligations, including potential Social Security benefits. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Life Insurance Planning."

Accidental death benefit (ADB) riders pay an additional death benefit if death results from accidental causes. It is not automatically included in every policy and requires an additional premium. Exact extract: “The accidental death benefit rider provides extra coverage in the event of accidental death and is available only by payment of an additional premium.” It does not affect cash values or nonforfeiture options.

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."

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)

Agents may collect premiums but cannot personally cash or deposit checks as if they were funds of their own. Exact extract: “Agents must forward funds promptly to insurers and may not treat premiums as personal assets.”

Detailed Answer in Step-by-Step Solution:

Health insurance covers claims incurred during the policy period (A), not after termination (B), unless extended benefits (e.g., COBRA) apply, which is not indicated here.

Claims above the deductible (C), regardless of amount, are payable if covered.

Mental or nervous disorder claims (D) are typically covered unless excluded by the policy, which is not specified.

Thus, claims after termination (B) are the exception.

The Virginia study guide states that health insurance liability ends upon policy termination, barring specific continuation provisions, making post-termination claims generally non-payable. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Health Insurance Coverage Terms."

Detailed Answer in Step-by-Step Solution:

Accidental death and dismemberment (AD&D) insurance (B) provides a lump sum benefit for specific losses, such as loss of sight in both eyes, due to an accident.

Hospital expense (A) covers hospital stays, not lump sums for dismemberment.

Major medical (C) and medical expense (D) cover healthcare costs, not specific injury benefits.

The Virginia study guide describes AD&D as providing lump sum payments for accidental death or specific injuries like loss of sight, distinct from medical expense coverage. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Health Insurance Types."

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.”