Virginia-Life-Annuities-and-Health-Insurance Exam Questions and Answers (Page: 10)

QUESTION: 73

What is the agent's primary role in underwriting life insurance?

Assuring that the application provides proper information to the insurer
Binding coverage immediately without home office approval
Issuing the policy if all underwriting information is satisfactory
Securing information from the Medical Information Bureau

Answer(s): A

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.

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QUESTION: 74

The information which gives an insurer necessary personal data regarding an individual and helps determine whether the individual can be insured under an individual health insurance policy is contained in the:

Enrollment form
Policy schedule
Application
Agent's statement

Answer(s): C

Explanation:

Virginia Code § 38.2-3501 requires individual health insurance policies to incorporate the application as part of the contract, as it contains critical personal data (e.g., name, age, medical history) used to determine insurability (option C). This document--completed by the applicant and agent--details health conditions, lifestyle factors (e.g., smoking), and other risk indicators the underwriter evaluates--e.g., a 30-year-old with asthma noted for rating. Option A (enrollment form) applies to group health plans, not individual policies, where employees join a pre-set plan. Option B (policy schedule) summarizes coverage (e.g., limits, premiums) after issuance, not initial data for underwriting. Option D (agent's statement) may supplement the application with observations, but it's not the primary source; the application itself holds the insured's data. The study guide likely highlights the application's role in a health insurance section, with examples--e.g., a question about prior hospitalizations triggering a premium adjustment--making C the key document, per Virginia's legal requirement that it be attached to the policy (§ 38.2-3503) for transparency and enforceability.

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QUESTION: 75

In health insurance, the insurance policy, the endorsements, and any relevant papers attached to the policy make up the:

Completed application
Entire contract
Uniform mandatory policy provisions
Notice of coverage

Answer(s): B

Explanation:

Detailed Answer in Step-by-Step Solution:
In health insurance, the "entire contract" refers to all the documents that collectively form the legal agreement between the insurer and the policyholder.
This includes the insurance policy itself (the main document outlining coverage), any endorsements (modifications or additions to the policy), and attached papers such as the application (if attached). The completed application (A) is part of the contract only if attached, but it alone does not constitute the entire contract.
Uniform mandatory policy provisions (C) are specific clauses required by law within the policy, not the whole contract.
Notice of coverage (D) is a notification, not the contract itself.
Therefore, the correct answer is "entire contract."

The concept of the "entire contract" is a standard provision in health and life insurance policies. Per the Virginia insurance study guide, the entire contract clause ensures that all terms and conditions are contained within the policy, endorsements, and attached documents (like the application), protecting both parties by defining the full scope of the agreement.

Reference:

Virginia Life, Annuities, and Health Insurance study guide, section on "Policy Provisions and Contracts."

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QUESTION: 76

Assuming no indebtedness or dividend accumulations, how much will the insurer pay under a life insurance policy if the insured dies during the grace period without having paid the premium?

The face amount of the policy
The cash value of the policy
The face amount of the policy less the premium due
The reduced amount of paid-up insurance provided under the nonforfeiture provisions

Answer(s): A

Explanation:

Detailed Answer in Step-by-Step Solution:
The grace period in a life insurance policy (typically 30 or 31 days) allows the policy to remain in force even if the premium is unpaid, provided the insured dies during this period. If death occurs during the grace period, the insurer must pay the full death benefit (face amount), minus any unpaid premium, but only if explicitly stated. In this question, no indebtedness or dividends complicate the scenario, and standard practice assumes full payment unless otherwise specified.

Option B (cash value) applies to surrender, not death claims. Option C (face amount less premium due) is a possibility in some policies, but absent specific policy language here, the default is full payment.
Option D (nonforfeiture provisions) applies if the policy lapses, not during the grace period.
Thus, the insurer pays the face amount (A).

The Virginia study guide states that the grace period provision protects the policyholder by keeping coverage active for a short period after a missed premium, and upon death during this time, the full face amount is payable unless loans or specific deductions apply.

Reference:

Virginia Life, Annuities, and Health Insurance study guide, section on "Standard Policy Provisions - Grace Period."

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QUESTION: 77

The interest that an insurance company earns on life insurance premiums paid helps to:

Increase the life insurance premium rate
Increase the mortality rate
Decrease the life insurance premium rate
Decrease the mortality rate

Answer(s): C

Explanation:

Detailed Answer in Step-by-Step Solution:
Life insurance premiums are calculated based on three factors: mortality (death rates), interest (investment earnings), and expenses (operating costs).
When an insurer earns interest on premiums invested, it increases the funds available to pay claims, reducing the amount needed from policyholders.
This results in a decrease in the premium rate (C), as higher interest earnings offset the cost of coverage.
Option A (increase premium rate) would occur if interest earnings decreased. Options B and D (mortality rate changes) are unrelated to interest, as mortality is a statistical factor, not a financial one.

The Virginia study guide explains that interest earned on premiums is a key component of pricing life insurance, allowing insurers to lower premium rates when investment returns are favorable.

Reference:

Virginia Life, Annuities, and Health Insurance study guide, section on "Premium Determination."

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QUESTION: 78

One premium payment covers which period of time in a single premium whole life policy?

One month
One year
To the insured's age 65
The full life of the policy

Answer(s): D

Explanation:

Detailed Answer in Step-by-Step Solution:
A single premium whole life policy is a type of permanent life insurance where the entire premium for the policy's lifetime coverage is paid in one lump sum at issuance. Unlike policies with recurring premiums (e.g., monthly or annual), this single payment funds the policy for the insured's full life (D).
Options A (one month) and B (one year) apply to term or recurring premium policies. Option C (to age 65) might relate to limited-pay policies, not single premium ones.

Per the Virginia study guide, a single premium whole life policy requires one payment upfront, providing coverage for the insured's entire life and building immediate cash value.

Reference:

Virginia Life, Annuities, and Health Insurance study guide, section on "Types of Life Insurance Policies."

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QUESTION: 79

A contractual arrangement that transfers exposure from one insurer to another insurer is a:

Reciprocal contract
Coinsurance contract
Reinsurance contract
Captive contract

Answer(s): C

Explanation:

Detailed Answer in Step-by-Step Solution:
Reinsurance (C) is a process where one insurer (the ceding company) transfers part or all of its risk to another insurer (the reinsurer) to reduce exposure.
A reciprocal contract (A) involves mutual insurance exchanges, not risk transfer between insurers. Coinsurance (B) refers to shared risk between the insurer and policyholder, not between insurers. A captive contract (D) involves a company insuring itself through a subsidiary, not transferring risk to another insurer.

The Virginia study guide defines reinsurance as a contractual arrangement allowing insurers to mitigate risk by transferring it to another insurer, a common practice in the industry.

Reference:

Virginia Life, Annuities, and Health Insurance study guide, section on "Insurance Company Operations."

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QUESTION: 80

The designation of a beneficiary by class in a life insurance policy means that:

The policy must be a form of business life insurance
A primary beneficiary cannot be designated in the policy
Individual beneficiaries are not specified by name
The beneficiaries are unrelated to the insured

Answer(s): C

Explanation:

Detailed Answer in Step-by-Step Solution:

Designating a beneficiary "by class" means identifying a group (e.g., "my children") rather than naming specific individuals (C).
Option A (business life insurance) is unrelated to class designation. Option B (no primary beneficiary) is incorrect; a class can still be primary. Option D (unrelated beneficiaries) is not a requirement of class designation.

The Virginia study guide notes that a class designation identifies beneficiaries by a category (e.g., "spouse" or "heirs") rather than specific names, offering flexibility.

Reference:

Virginia Life, Annuities, and Health Insurance study guide, section on "Beneficiary Designations."

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Virginia Insurance Virginia-Life-Annuities-and-Health-Insurance Exam (page: 10) Virginia Insurance Virginia Life, Annuities, and Health Insuranceination Series 1101 Updated on: 09-Feb-2026

QUESTION: 73

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QUESTION: 74

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QUESTION: 75

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QUESTION: 76

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QUESTION: 77

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QUESTION: 78

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QUESTION: 79

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QUESTION: 80

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Virginia Insurance Virginia-Life-Annuities-and-Health-Insurance Exam (page: 10)
Virginia Insurance Virginia Life, Annuities, and Health Insuranceination Series 1101
Updated on: 09-Feb-2026