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

A major medical policy is designed as a comprehensive health policy, covering a wide range of expenses, including hospital, surgical, physician, and prescription costs. It provides broader coverage than limited benefit plans such as dental or vision policies. Workers’ compensation is not considered a general health policy because it specifically covers occupational injuries.

Exact Extract (Virginia Health Insurance Study Guide): “Major medical insurance—provides comprehensive coverage for hospital, physician, surgical, and other medical expenses, subject to deductibles and coinsurance. Distinguished from limited health expense policies (dental, vision).”

References (Virginia Documents / Study Guide):

— Virginia Health Insurance Examination Outline, Section 2.2 Comprehensive vs. Limited Policies

A conditional receipt is issued when the initial premium is collected with the application. Coverage may become effective upon meeting insurability conditions. Exact extract: “When the first premium is paid, the applicant is given a receipt. This conditional receipt provides coverage based on insurability.”

Most group disability income insurance policies exclude coverage for disability resulting from military service. Disabilities caused by active duty in the military are typically covered under separate government programs, such as Veterans Affairs (VA) benefits. Commercial airline crashes, injuries at home, and automobile accidents are typically covered under group disability policies, though specifics may vary by policy.

Detailed Answer in Step-by-Step Solution:

The reinstatement provision in health insurance allows a policy that lapsed due to nonpayment of premiums to be restored (B), typically within a set period (e.g., 3 years), if the insured pays back premiums and meets conditions like proving insurability.

Option A (reinstates amount after loss) relates to property insurance, not health.

Option C (change application statements) is unrelated to reinstatement.

Option D (Bureau approval) is false; reinstatement is handled by the insurer, not a regulatory body.

The Virginia study guide explains that the reinstatement provision protects policyholders by allowing revival of a lapsed health policy upon payment of overdue premiums and, if required, evidence of insurability. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Health Insurance Policy Provisions."

A stock insurance company is owned by its shareholders, who invest capital into the company and receive dividends based on the company’s profits. This contrasts with mutual insurance companies, which are owned by the policyholders. Shareholders typically vote on corporate matters, such as electing the board of directors.

Virginia Code § 38.2-1826(C) mandates that licensees (agents, brokers, etc.) report administrative actions—such as license revocation or fines by another state or agency—to the Bureau of Insurance within 30 calendar days of the final disposition. “Final disposition” means the conclusion of the action (e.g., final order or settlement). This requirement ensures Virginia regulators can assess the licensee’s fitness to hold a license and protect consumers. Option C (30 days) matches this statutory timeline precisely. Option A (10 days) is too short and not supported by Virginia law. Option B (20 days) lacks a basis in the Code or study materials. Option D (45 days) exceeds the mandated period, risking delayed oversight. The study guide likely emphasizes this 30-day rule as a critical compliance deadline, reinforced by Virginia’s alignment with NAIC standards for licensee reporting, making C the definitive answer.

A 10% penalty tax applies to "premature" distributions of gains from a modified endowment contract (MEC) before the policyholder reaches the age of 59½. This penalty is applied in addition to regular income taxes on the distribution. The MEC rules were established to prevent the use of life insurance policies as tax shelters.

Detailed Answer in Step-by-Step Solution:

Excess charges in Medicare occur when a provider charges more than the Medicare-approved amount, and the insured (D) is responsible for the difference unless covered by supplemental insurance.

The Social Security Administration (A) and CMS (B) administer Medicare, not pay claims.

Providers (C) may charge excess but don’t absorb it unless they accept assignment.

The Virginia study guide explains that Medicare beneficiaries bear excess charges unless a provider accepts Medicare assignment or a Medigap policy covers them. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Medicare Basics."

During the contestable period (typically the first two years of a life insurance policy), insurers may rescind a policy for material misrepresentation, fraud, or material concealment. These actions affect underwriting decisions and risk evaluation and are grounds for rescission under Virginia law.

However, misstatement of age is treated differently. Virginia-required policy provisions mandate that if the insured’s age is misstated, the insurer does not rescind the policy. Instead, benefits are adjusted to reflect what the premium would have purchased at the correct age. This makes option A the correct exception.

This distinction protects consumers from harsh outcomes for honest mistakes while still preserving insurer rights against intentional deception. Misstatement-of-age clauses are standard in life insurance policies and are specifically excluded from contestability rescission rules.

Medical expense insurance typically excludes coverage for injuries or sickness resulting from military duty. This exclusion is common across most health insurance policies and aligns with the understanding that military personnel are covered under separate government programs (e.g., Veterans Affairs or military health insurance). The other options, such as terminal diseases, dread diseases, or tropical diseases, are not universally excluded, though they may have specific policy restrictions or coverage limits.