Free Practice Questions for Insurance Licensing Virginia-Life-Annuities-and-Health-Insurance Exam

The grace period provision allows a policyholder a specified time (usually 31 days) after the due date to pay overdue premiums while coverage continues. If the insured dies during this period, the premium due is deducted from the policy proceeds.

Exact Extract (Virginia Policy Provisions Requirement): “Life insurance policies shall provide a grace period of not less than 31 days for the payment of premiums, during which the policy shall continue in force.”

References (Virginia Documents / Study Guide):

— Code of Virginia §38.2-3107 (Grace period in life insurance policies)

Term life insurance is designed to provide pure death benefit protection for a specific period of time at a relatively low cost. It does not accumulate cash value and therefore is not appropriate for savings or investment objectives. This makes option D the correct answer.

Term life insurance is commonly used to cover temporary financial needs such as income replacement, mortgage protection, and family readjustment expenses. Because premiums are lower than permanent life insurance, it is well-suited for individuals seeking maximum death benefit for minimal premium.

Virginia exam materials emphasize that term insurance ends at the end of the term unless renewed or converted and does not build savings. Accumulating funds for education requires a policy with a cash value component, such as whole life or universal life, not term insurance.

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.

An agent must provide an outline of coverage to an applicant for long-term care insurance at the time of the initial solicitation. This ensures that the applicant is fully informed about the key features and benefits of the long-term care insurance policy before they make a decision. The outline provides details about the policy's coverage, limitations, exclusions, and other essential elements.

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.

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.

Misrepresentation occurs when an agent provides false, misleading, or incomplete information about a policy’s terms, benefits, or exclusions. Failing to disclose exclusions leads the applicant to believe coverage exists when it does not. This is specifically prohibited under Virginia’s Unfair Trade Practices laws.

Exact Extract (Virginia Unfair Trade Practices Act): “Misrepresentation includes any statement or omission of material fact, including failure to disclose policy limitations or exclusions.”

References (Virginia Documents / Study Guide):

— Code of Virginia §38.2-502 (Misrepresentations and false advertising of policies)

The Medical Information Bureau (MIB) is an organization whose members are insurance companies, primarily life and health insurers. Its purpose is to help insurers detect misrepresentation and fraud during underwriting by sharing coded medical and application history data.

Consumers, agents, and physicians are not members of MIB. However, consumers have rights to access and correct their MIB records under privacy laws.

Virginia exam content emphasizes the role of MIB in underwriting accuracy and risk management while also stressing consumer privacy protections and disclosure requirements.

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.

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."