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

A reinsurance company agrees to accept all or a portion of a risk covered by another insurance company. This helps the original insurer spread its risk by transferring part of it to the reinsurer. Reinsurance allows insurance companies to remain financially stable and continue offering coverage to policyholders.

Virginia Code § 38.2-3330 requires group life insurance policies to include a conversion provision, allowing an employee to convert group coverage to an individual policy without evidence of insurability, typically within 31 days after termination of employment or group eligibility. Option B (conversion) directly describes this right, ensuring continued protection. Option A (nonforfeiture) applies to cash value options (e.g., reduced paid-up insurance) in individual policies, not group-to-individual transitions. Option C (assignment) transfers policy ownership, unrelated to conversion. Option D (incontestability) limits the insurer’s ability to deny claims after a period (e.g., 2 years), not a conversion mechanism. The study guide likely highlights conversion as a key group life feature, with scenarios like an employee leaving a job and converting to a whole life policy, making B the precise answer.

Term life provides pure death protection with no cash value. Its major advantage is lower initial premium compared to whole life insurance. Premiums increase at renewal, but initial affordability makes it attractive for temporary coverage needs.

Exact Extract (Virginia Life Insurance Study Guide): “Term life—provides temporary protection with lower initial premiums than permanent insurance.”

References (Virginia Documents / Study Guide):

— Virginia Life Insurance Examination Outline, Term Life Characteristics

Home health care insurance covers long-term physical therapy or nursing services provided at the insured's residence. This type of insurance helps pay for the costs associated with receiving medical care in the home, such as nursing services, physical therapy, or assistance with activities of daily living. Nursing home insurance, on the other hand, covers care provided in a facility, not at home.

If the amount of a policy loan plus accrued interest exceeds the life insurance policy’s cash value, the policy will generally lapse and become no longer in force. This occurs because the insurer cannot lend more than the available cash value, and the outstanding loan would exceed the policy’s value, leading to its termination.

Policy loan provisions are typically found in whole life and universal life policies, where the policyholder can borrow against the cash value of the policy. A twenty payment life policy is a type of whole life insurance where premiums are paid for 20 years, and it may include loan provisions. However, a five-year life policy is typically a limited-pay policy, and policy loans are generally not available under this type because there is insufficient cash value accumulation in such a short time frame.

A revocable beneficiary designation allows the policyowner to change beneficiaries at any time without the consent of the existing beneficiary. This right remains solely with the policyowner.

Exact Extract (Virginia Health Insurance Study Guide): “Revocable beneficiaries—policyowner retains the right to change the beneficiary designation at will.”

References (Virginia Documents / Study Guide):

— Virginia Life & Health Insurance Examination Outline, Beneficiary Designations

A five-year annuity certain provides guaranteed payments for a specific period (in this case, five years). If the annuitant dies before the end of the five-year period, the beneficiary will receive the remaining payments for the balance of the five years. This ensures the payment duration regardless of the annuitant’s death.

An application for individual health insurance must be in writing and becomes part of the insurance contract. The information provided in the application, along with any attachments, helps form the basis of the policy. If any statements or answers in the application are found to be false or misrepresented, the insurer may have grounds for denying a claim.

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.