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

Policy loans are not prohibited in universal life insurance. In fact, one of the key features of universal life insurance is the ability to take loans against the accumulated cash value. The other options are correct: a mortality charge is deducted from the policy’s cash value, the policy specifies how premiums are divided between expenses and savings, and withdrawals may be allowed but can be subject to surrender charges.

Single premium whole life insurance is funded with one lump-sum premium that immediately creates both cash value and nonforfeiture value. Because the entire premium is paid upfront, a significant portion is allocated to the policy reserve, making options A, B, and C correct.

Whole life insurance has fixed premiums by definition. Once the single premium is paid, no additional premiums are required, regardless of inflation or economic conditions. Therefore, option D is incorrect and is the correct “EXCEPT” answer.

Virginia exam materials emphasize that whole life policies provide guaranteed premiums, guaranteed death benefits, and guaranteed cash value growth, which distinguishes them from flexible or adjustable policies.

Long-term care insurance is designed to provide coverage for services that assist individuals who are unable to care for themselves due to chronic illness, disability, or aging, even if hospitalization is not required. This can include home health care, nursing home care, and other non-hospital care services. Medicare primarily covers hospitalization and some health-related services but not long-term care. Major medical covers broader health care costs, and disability income provides income replacement rather than care services.

When underwriting group health, insurers consider the group’s stability, demographics, and industry risk. Persistency (how long the employer has had coverage) is important for business retention but is not directly a health risk factor.

Exact Extract (Virginia Group Insurance Study Guide): “Underwriting group health considers stability, composition, and industry. Persistency of a contract relates to retention, not health risk.”

References (Virginia Documents / Study Guide):

— Virginia Health Insurance Examination Outline, Group Underwriting Factors

A deferred annuity is commonly used for contributions to an Individual Retirement Account (IRA). Deferred annuities allow the policyholder to contribute funds, which grow tax-deferred until retirement. These types of annuities are well-suited for retirement savings plans such as IRAs, where the income is not taxed until it is withdrawn. Other types of annuities, such as joint life, temporary, and survivorship, are not typically used for IRAs.

When determining the amount of life insurance needed, insurers and agents focus on factors affecting survivors, not the insured. The number and ages of dependents, as well as the family’s standard of living, directly influence how much income replacement and financial support will be needed after death.

Self-maintenance costs refer to expenses incurred by the insured while alive and do not affect survivor needs after death. Therefore, option D is the correct exception. Virginia exam materials stress survivor income needs, education costs, debts, and lifestyle preservation when evaluating death benefit amounts.

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.”

Medicare Part B covers physician services, outpatient hospital treatment, preventive services, and certain medical supplies. Inpatient hospital services fall under Part A.

Exact Extract (Virginia Medicare Study Guide): “Part B—covers outpatient hospital services, physician services, and preventive care. Part A covers inpatient hospitalization.”

References (Virginia Documents / Study Guide):

— Virginia Health Insurance Examination Outline, Medicare Part A and B Benefits

When a corporation buys disability income insurance on a key employee, the corporation is both policyowner and beneficiary. Premiums are not deductible because the business is the direct beneficiary. However, benefits received by the business are tax-free when the insured employee becomes disabled.

Exact Extract (Virginia Disability Income Study Guide): “Key person disability insurance—premiums are not deductible to the business, but benefits received are tax-free to the business.”

References (Virginia Documents / Study Guide):

— Virginia Health Insurance Examination Outline, Business Uses of Disability Insurance

A mortality table displays the statistical probability of death at each age for a defined population. Insurers use mortality tables as a foundational tool in underwriting, premium calculation, and reserve determination for life insurance and annuity products.

Morbidity tables measure the likelihood of illness or disability, not death. Premium rate tables show pricing information derived from actuarial data, while dividend tables reflect non-guaranteed policy dividends.

Virginia licensing materials emphasize mortality tables as essential actuarial tools that help insurers predict life expectancy and properly price life insurance policies. Therefore, option A is correct.