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

The fixed-period installment option provides that the death benefit proceeds, together with interest, are paid in equal installments to the beneficiary over a specified number of years. Each installment consists of principal and interest until the proceeds are fully distributed at the end of the fixed period. This ensures a guaranteed stream of income for the chosen period regardless of when the proceeds are exhausted.

Exact Extract (Virginia Life & Annuities Study Guide): “Settlement options include: fixed-period installments—payment of proceeds in equal installments over a specified period of years, consisting of principal and interest.”

References (Virginia Documents / Study Guide):

— Virginia Life & Annuities Insurance Examination Outline, Section 5.3 Settlement Options

— Code of Virginia §38.2-3117.2 (Requirement to provide settlement option explanations to beneficiaries)

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.

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)

Medicare Part A Hospital Insurance is available regardless of age to individuals who have received Social Security disability benefits for at least 24 months. This is a key provision that allows individuals who are disabled and have been receiving Social Security Disability Insurance (SSDI) for two years to qualify for Medicare Part A.

Detailed Answer in Step-by-Step Solution:

In Virginia, unintentional violations by an agent can result in fines, with a maximum aggregate penalty of $10,000 (C) for similar violations, as set by state insurance regulations.

Options A, B, and D deviate from this standard cap for unintentional acts.

The Virginia study guide, aligned with Virginia Code, specifies a $10,000 maximum aggregate penalty for unintentional violations, with higher penalties possible for willful acts. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Penalties and Enforcement."

Under the conversion option of a group life insurance plan, the insured can convert their coverage to an individual policy without requiring evidence of insurability. This means the individual does not need to prove they are in good health to convert their group coverage to a personal policy. The new policy's premium rate, coverage amount, and duration will vary based on the terms of the conversion option, but no proof of health is required for conversion.

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."

Rebating—the act of returning a portion of commission or offering inducements not specified in the policy—is prohibited under Virginia insurance law. Engaging in rebating is considered an unfair trade practice and is grounds for disciplinary action, including license suspension.

Sharing commissions with properly licensed agents is allowed. There is no requirement to report annual commission earnings, and administrative changes such as account location updates may require notice but are not suspension-level violations. Therefore, option B is correct.

Detailed Answer in Step-by-Step Solution:

A foreign insurer (A) is an insurance company operating in a state other than its state of domicile (where it is incorporated).

A domestic insurer (B) operates in its home state. An alien insurer (C) is domiciled outside the U.S. A captive insurer (D) insures its parent company, not based on location.

The Virginia study guide defines a foreign insurer as one licensed to do business in Virginia but incorporated in another state, per insurance regulatory terminology. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Insurance Company Types."

Keogh plans, established under the Internal Revenue Code, are retirement plans for self-employed individuals and small businesses, also known as HR 10 plans (option B) after the 1962 legislation (H.R. 10) creating them. They allow tax-deferred contributions, similar to qualified plans. Option A (Section 457 plans) applies to government and nonprofit employees, not self-employed individuals. Option C (403(b) plans) is for nonprofit employees (e.g., teachers), distinct from Keogh’s self-employed focus. Option D (Section 2503(c) trusts) relates to gifting for minors, not retirement. The study guide likely contrasts Keogh (HR 10) with other plans in a retirement section, noting its tax benefits and eligibility, confirming B as the correct synonym.