Virginia Insurance License Certified Official Practice Test Virginia-Life-Annuities-and-Health-Insurance - Dec-2025
Ace Virginia Insurance Virginia-Life-Annuities-and-Health-Insurance Certification with Actual Questions Dec 14, 2025 Updated
NEW QUESTION # 78
All of the following statements about tax-sheltered annuities (TSAs) are true EXCEPT:
- A. Accumulation payments often come from voluntary salary reductions.
- B. The annuitant may have an individual account or contract.
- C. They are also known as 403(b) plans.
- D. The investment gain each year is included in the participant's gross income.
Answer: D
Explanation:
Tax-sheltered annuities (TSAs), per IRC § 403(b) and Virginia Code § 38.2-3100 et seq., are retirement plans for nonprofit employees. Option A is true; they're synonymous with 403(b) plans. Option B is true; contributions often come from voluntary salary reductions, tax-deferred until withdrawal. Option C is true; participants can have individual contracts or accounts. Option D is false; investment gains are tax-deferred, not included in gross income annually, only taxed upondistribution. The study guide highlights TSAs' tax advantages, making D the incorrect statement.
NEW QUESTION # 79
Anything of value given to produce a contract is the definition of:
- A. A consideration
- B. A codicil
- C. A covenant
- D. A grant
Answer: A
Explanation:
In insurance contract law, per Virginia Code § 38.2-102, a contract requires consideration-something of value exchanged to make it legally binding. Option C (consideration) fits this definition: the insured's premium payment and the insurer's promise of coverage form the mutual value. Option A (grant) implies a unilateral transfer, not a contract element. Option B (codicil) is a will amendment, irrelevant to insurance contracts. Option D (covenant) is a promise within a contract, not the value exchanged. The study guide likely explains consideration as a foundational principle, using examples like a $500 premium for a $100,000 policy, distinguishing it from other legal terms. Virginia follows common law requiring consideration for enforceability, making C theprecise answer.
NEW QUESTION # 80
A qualified plan participant elected a trustee-to-trustee transfer of rollover funds instead of personally receiving the funds and then rolling them over. This election permits the participant to:
- A. Significantly reduce the amount of time required for the transaction
- B. Avoid mandatory income tax withholding on the amount transferred
- C. Eliminate the possibility of funds being lost in the mail
- D. Eliminate the penalty tax that normally applies to rollover funds
Answer: B
Explanation:
Detailed Answer in Step-by-Step Solution:
* A trustee-to-trustee transfer (A) avoids the 20% mandatory tax withholding required when funds are distributed to the participant and rolled over within 60 days.
* Options B (lost funds) and C (time) are incidental, not primary benefits. Option D (penalty tax) is irrelevant; rollovers aren't penalized if timely.
The Virginia study guide, per IRS rules, notes that direct trustee-to-trustee transfers bypass withholding, preserving the full amount for reinvestment. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Retirement Plans."
NEW QUESTION # 81
Which is true about an adjustable life insurance policy?
- A. No settlement options are available
- B. The policy while in force can alternate between forms of term life insurance and whole life insurance
- C. It is a form of retirement income annuity
- D. The only nonforfeiture option available is cash
Answer: B
Explanation:
Adjustable life insurance (Virginia Code § 38.2-3113.1) allows flexibility in face amount and premiums, effectively shifting between term (lower cost, no cash value) and whole life (higher cost, cash value) features while in force (option A). Option B is false; nonforfeiture options include cash, reduced paid-up, or extended term. Option C is false; settlement options (e.g., lump sum) apply as with other policies. Option D is wrong; it' s life insurance, not an annuity. The study guide likely explains this adaptability-e.g., increasing premiums to build cash value (whole life)-making A the true statement.
NEW QUESTION # 82
Which is true about the conversion privilege in term life insurance?
- A. The policyowner may convert to an annuity at attained age rates only if evidence of insurability is provided
- B. The policyowner may convert to permanent life insurance on an attained age basis without evidence of insurability
- C. The policyowner may obtain additional term insurance at issue age rates without evidence of insurability
- D. The policyowner may convert to another term policy of the insured's choice
Answer: B
Explanation:
Detailed Answer in Step-by-Step Solution:
* The conversion privilege in term insurance allows conversion to a permanent policy (e.g., whole life) at the insured's current (attained) age without proving insurability (B), typically before the term expires.
* Option A (another term policy) is not standard. Option C (annuity with insurability) is incorrect; conversion is to life insurance. Option D (issue age rates) doesn't apply; rates adjust to attained age.
The Virginia study guide explains that the conversion privilege ensures continued coverage by allowing term policies to convert to permanent ones without medical exams, based on attained age. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Term Insurance Features."
NEW QUESTION # 83
All of the following are underwriting criteria for individual life insurance EXCEPT:
- A. Gender
- B. Religion
- C. Ability to pay premiums
- D. Occupation
Answer: B
Explanation:
Virginia Code § 38.2-3107 governs life insurance underwriting, where insurers assess risk using factors like gender (option A, affecting mortality rates), occupation (option C, e.g., hazardous jobs increase risk), and ability to pay premiums (option D, ensuring policy sustainability). Option B (religion) is not a permissible criterion; Virginia Code § 38.2-211 prohibits unfair discrimination in insurance based on religion, race, or other protected traits, reflecting federal and state anti-discrimination laws. The study guide likely explains underwriting with examples-e.g., higher premiums for a male firefighter-but flags religion as an illegal factor, with case studies of compliance, making B the exception.
NEW QUESTION # 84
Which term refers to the period of time from the beginning of confinement to the beginning of benefits under a long-term care insurance policy?
- A. The elimination period
- B. The exclusion period
- C. The qualifying period
- D. The trial period
Answer: A
Explanation:
In long-term care (LTC) insurance, the elimination period, per Virginia Code § 38.2-5202, is the waiting period between the onset of a qualifying condition (e.g., confinement due to inability to perform ADLs) and the start of benefit payments. It's akin to a deductible in days (e.g., 30, 60, or 90 days), during which the insured must cover costs. Option D correctly names this period. Option A (trial period) isn't a standard LTC term. Option B (exclusion period) might confuse with pre-existing condition exclusions, but it's not the waiting period for benefits. Option C (qualifying period) could imply eligibility determination, but
"elimination period" is the precise industry term. The study guide likely defines this as a cost-sharing feature, with examples illustrating how longer periods reduce premiums, solidifying D as the answer.
NEW QUESTION # 85
All of the following are elements of an insurable risk EXCEPT:
- A. An ability to measure the loss
- B. Accidental loss
- C. Speculative risk
- D. A large number of similar units
Answer: C
Explanation:
Detailed Answer in Step-by-Step Solution:
* Insurable risks require accidental loss (B), a large number of similar exposure units (C), and measurable loss (D) to allow statistical predictability and premium calculation.
* Speculative risk (A), like gambling or business ventures, involves potential gain or loss and is not insurable, as insurance covers only pure risk (loss only).
The Virginia study guide distinguishes pure risk (insurable) from speculative risk (uninsurable), listing accidental, measurable, and widespread exposure as key criteria. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Risk and Insurance."
NEW QUESTION # 86
What is the agent's primary role in underwriting life insurance?
- A. Securing information from the Medical Information Bureau
- B. Assuring that the application provides proper information to the insurer
- C. Issuing the policy if all underwriting information is satisfactory
- D. Binding coverage immediately without home office approval
Answer: B
Explanation:
In the underwriting process for life insurance, as governed by Virginia Code § 38.2-1800 et seq., the agent's primary role is to act as a field underwriter, ensuring the application provides accurate and complete information to the insurer (option A). This includes collecting personal data (e.g., age, health history) and verifying its correctness-e.g., asking about smoking habits or past surgeries-to enable the home office underwriter to assess risk properly. Option B (binding coverage immediately) is incorrect; agents typically lack authority to bind life insurance without insurer approval, unlike some property/casualty lines, unless a conditional receipt with premium is issued (Virginia Code § 38.2-3106), which isn't "immediate" or primary.
Option C (issuing the policy) is false; only the insurer's home office issues policies after underwriting approval, not the agent. Option D (securing MIB information) is an underwriter's task; agents don't directly access the Medical Information Bureau-though they may note MIB codes if disclosed, their role is data collection, not retrieval. The study guide likely emphasizes the agent's frontline duty with examples-e.g., ensuring a 45-year-old applicant discloses diabetes-making A the primary role, aligning with Virginia's agency framework where agents facilitate, not finalize, underwriting.
NEW QUESTION # 87
Which is true about disability buy-sell insurance policies?
- A. The policyowner may not be the beneficiary
- B. The policy proceeds are normally received income tax-free
- C. The premiums are tax-deductible
- D. The insurer pays the benefits to the disabled individual
Answer: B
Explanation:
Disability buy-sell insurance funds a business partner's buyout if one becomes disabled, per Virginia Code §
38.2-3100 et seq. Option C is true; proceeds are typically tax-free under IRC § 104(a)(3) as insurance benefits, not income, if premiums aren't deducted. Option A is false; the policyowner (e.g., a partner or business) is often the beneficiary to fund the buyout. Option B is false; benefits go to the business or partner, not the disabled individual, who may receive separate disability income coverage. Option D is false; premiums aren't tax-deductible (IRC § 265), preserving tax-free proceeds. The study guide likely explains this with scenarios-e.g., $500,000 paid tax-free to buy out a disabled partner-highlighting tax treatment, making C the true statement.
NEW QUESTION # 88
All of the following are dividend options in life insurance policies EXCEPT:
- A. Receiving the entire policy cash value
- B. Using the dividends to purchase additional paid-up life insurance
- C. Applying the dividends to reduce the premium due
- D. Accumulating the dividends with interest
Answer: A
Explanation:
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 (accumulatewith 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.
NEW QUESTION # 89
An individual health insurance policy must include:
- A. A 10-day free look provision
- B. Only the optional uniform provisions
- C. A 60-day grace period
- D. Coverage for pre-existing conditions
Answer: A
Explanation:
Detailed Answer in Step-by-Step Solution:
* Individual health insurance policies in Virginia must include a 10-day free look provision (B), allowing the policyholder to review and return the policy for a full refund.
* Option A (pre-existing conditions) is not mandatory unless required by the ACA, and exclusions may apply.
* Option C (only optional provisions) is incorrect; mandatory provisions are required, not just optional ones.
* Option D (60-day grace period) is excessive; the standard is typically 30 or 31 days for health insurance.
The Virginia study guide mandates a 10-day free look period for individual health insurance policies, ensuring consumer protection, as per state law and NAIC standards. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Health Insurance Policy Provisions."
NEW QUESTION # 90
If an agent unknowingly violates insurance laws, what is the maximum aggregate penalty for similar violations occurring?
- A. $5,000
- B. $15,000
- C. $10,000
- D. $7,500
Answer: C
Explanation:
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."
NEW QUESTION # 91
A health maintenance organization (HMO) must offer emergency health services:
- A. Twenty-four hours a day, six days per week
- B. Sixteen hours a day, six days per week
- C. Twenty-four hours a day, seven days per week
- D. Sixteen hours a day, seven days per week
Answer: C
Explanation:
Virginia Code § 38.2-4306 mandates that Health Maintenance Organizations (HMOs) provide comprehensive health services, including emergency care, as a core benefit. Emergency services must be available 24 hours a day, 7 days a week (option D) to ensure immediate access to life-saving treatment, aligning with federal and state standards (e.g., ACA requirements under 42 CFR § 422.113). This reflects the HMO's obligation to cover urgent needs-e.g., a heart attack at 2 a.m.-via in-network facilities or out-of-network reimbursement if necessary. Option A (16 hours, 6 days) and Option B (16 hours, 7 days) fall short of the continuous access requirement, limiting coverage unreasonably. Option C (24 hours, 6 days) excludes one day, contradicting the nonstop mandate. The study guide likely emphasizes this 24/7 rule in an HMO benefits section, with examples like ER visits covered anytime, making D the correct standard. This ensures HMOs meet Virginia's consumer protection goals under § 38.2-4300 et seq., distinguishing them from less comprehensive plans.
NEW QUESTION # 92
A spendthrift clause in a life insurance policy would have NO effect if the beneficiary receives the proceeds as:
- A. Fixed period installments
- B. Fixed amount installments
- C. One lump sum payment
- D. Interest-only payments
Answer: C
Explanation:
A spendthrift clause, permitted under Virginia Code § 38.2-3122, protects life insurance proceeds from creditors or the beneficiary's mismanagement by restricting access to the funds. It's effective when proceeds are paid in controlled installments (e.g., options A, B, C), as the insurer retains and distributes the money over time, preventing lump-sum dissipation. Option A (fixed amount installments) pays a set dollar amount periodically, option B (fixed period installments) pays over a set time, and option C (interest-only payments) holds the principal while paying interest-all compatible with spendthrift protection. Option D (one lump sum payment) delivers the full proceeds at once, bypassing the clause's control mechanism, rendering it ineffective since the beneficiary gains unrestricted access. The study guide likely explains this clause as a safeguard for structured payouts, noting that lump-sum elections nullify its purpose, as seen in Virginia case law and NAIC guidelines, making D the correct choice.
NEW QUESTION # 93
Under Virginia standards for marketing long-term care coverage, all of these are prohibited sales practices EXCEPT:
- A. Twisting
- B. High pressure tactics
- C. Cold lead advertising
- D. Replacing existing coverage
Answer: C
Explanation:
Virginia Code § 38.2-5207 and 14VAC5-200-185 outline marketing standards for long-term care (LTC) insurance to protect consumers. Option A (twisting)-misrepresenting a policy to induce replacement-is prohibited as an unfair practice (Virginia Code § 38.2-502). Option C (high pressure tactics)-aggressive sales forcing quick decisions-violates ethical standards and is banned (14VAC5-200-40). Option B (replacing existing coverage) is incorrect as stated; replacement itself isn't prohibited but requires disclosure via a replacement notice (14VAC5-200-75), making it regulated, not banned outright-however, the question implies unauthorized or deceptive replacement, which is prohibited. Option D (cold lead advertising)- soliciting via broad, unsolicited leads (e.g., mailers)-is permitted if it complies with disclosure rules and isn' t deceptive (14VAC5-200-50). The study guide likely lists twisting and high pressure as unethical, with examples like misstating benefits, while allowing cold lead ads with proper labeling (e.g., "advertisement"), making D the exception.
NEW QUESTION # 94
What type of insurance pays a lump sum benefit if an insured loses sight in both eyes?
- A. Medical expense
- B. Hospital expense
- C. Major medical
- D. Accidental death and dismemberment
Answer: D
Explanation:
Detailed Answer in Step-by-Step Solution:
* Accidental death and dismemberment (AD&D) insurance (B) provides a lump sum benefit for specific losses, such as loss of sight in both eyes, due to an accident.
* Hospital expense (A) covers hospital stays, not lump sums for dismemberment.
* Major medical (C) and medical expense (D) cover healthcare costs, not specific injury benefits.
The Virginia study guide describes AD&D as providing lump sum payments for accidental death or specific injuries like loss of sight, distinct from medical expense coverage. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Health Insurance Types."
NEW QUESTION # 95
All of the following statements about the interest ONLY settlement option in life insurance policies are true EXCEPT:
- A. At some later date, the principal may be paid under one of the other options
- B. The proceeds of the policy are left with the insurance company
- C. The interest on the principal amount is paid periodically to the beneficiary
- D. The option can be selected only by the beneficiary
Answer: D
Explanation:
Virginia Code § 38.2-3115 governs life insurance settlement options. The interest-only option keeps proceeds with the insurer (option A, true), paying interest periodically to the beneficiary (option C, true, e.g., quarterly), and allows the principal to be withdrawn or redirected later (option D, true, e.g., switching to fixed period).
Option B is false; the policyowner can select this option during the policy term, not just the beneficiary post- death-though beneficiaries may elect it if not pre-specified. The study guide likely explains this flexibility with examples-e.g., a $100,000 policy earning 3% interest paid monthly-noting both parties' roles, making B the exception since it restricts choice to the beneficiary alone.
NEW QUESTION # 96
Which statement is true of trade association groups eligible for group medical benefits?
- A. Such associations are formed for the purpose of purchasing insurance
- B. Members of the association are usually in the same industry
- C. Employer contributions are usually waived
- D. The association membership primarily consists of large employers
Answer: B
Explanation:
Detailed Answer in Step-by-Step Solution:
* Trade association groups (A) are eligible for group medical benefits because members share a common industry or profession, not just insurance purposes (B).
* Membership isn't limited to large employers (C), and employer contributions (D) depend on the plan, not waived by default.
The Virginia study guide notes that trade associations qualify for group coverage due to a common industry tie among members, distinguishing them from groups formed solely for insurance. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Group Insurance Eligibility."
NEW QUESTION # 97
What is often payable to a life insurance policyowner when a medical condition drastically limits the insured' s life expectancy?
- A. Death benefit
- B. Extended term insurance
- C. Accelerated death benefit
- D. Reduced paid-up insurance
Answer: C
Explanation:
Virginia Code § 38.2-3117.1 permits life insurance policies to include an accelerated death benefit (ADB) provision, allowing the policyowner to receive a portion of the death benefit early if the insured is diagnosed with a terminal illness (typically less than 12-24 months life expectancy, per policy terms). Option B correctly identifies this benefit, often used for medical expenses or quality-of-life needs. Option A (death benefit) is paid only upon death, not during life, so it's incorrect here. Option C (reduced paid-up insurance) is a nonforfeiture option converting cash value to a smaller, paid-up policy, unrelated to terminal illness. Option D (extended term insurance) uses cash value to extend term coverage, also not tied to life expectancy triggers.
The study guide likely details ADB as a modern feature addressing critical health scenarios, distinguishing it from standard death benefits or nonforfeiture options, confirming B as the accurate choice.
NEW QUESTION # 98
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