Virginia-Life-Annuities-and-Health-Insurance Exam Questions and Answers (Page: 7)

QUESTION: 49

Which of these is true of a conditionally renewable individual health contract?

A covered individual's health status may be a condition for renewal
Premiums are guaranteed as long as renewal conditions are met
The insurer may refuse renewal if they move outside of the stated geographical location
The insurer may change the conditions of renewability at any time

Answer(s): A

Explanation:

Virginia Code § 38.2-3508 allows conditionally renewable health policies, where renewal isn't guaranteed and depends on insurer-specified conditions. Option A is true; health status (e.g., new chronic illness) can be a renewal condition, unlike guaranteed renewable policies. Option B is false; premiums can increase based on risk, not guaranteed. Option C is incorrect; geographic moves typically don't void renewability unless specified, but health status is more common. Option D is wrong; conditions are set at issuance, not altered arbitrarily. The study guide likely contrasts this with guaranteed renewable policies, using examples like non-renewal for worsening health, making A the true statement.

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QUESTION: 50

Under Virginia standards for marketing long-term care coverage, all of these are prohibited sales practices EXCEPT:

Twisting
Replacing existing coverage
High pressure tactics
Cold lead advertising

Answer(s): D

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.

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QUESTION: 51

All of the following statements about the interest ONLY settlement option in life insurance policies are true EXCEPT:

The proceeds of the policy are left with the insurance company
The option can be selected only by the beneficiary
The interest on the principal amount is paid periodically to the beneficiary
At some later date, the principal may be paid under one of the other options

Answer(s): B

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.

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QUESTION: 52

In a deferred annuity, which contract feature begins at a high level, often 5%-10%, and then diminishes until it disappears after a specified number of years?

The surrender charge
The front end sales load
The guaranteed interest rate
The expense charge

Answer(s): A

Explanation:

Virginia Code § 38.2-3100 et seq. governs deferred annuities, where a surrender charge (option A) is a penalty for early withdrawal, starting high (e.g., 7-10%) and declining over a surrender period (e.g., 7-10 years) until it reaches zero. Option B (front-end sales load) is a one-time fee deducted upfront, not diminishing over time. Option C (guaranteed interest rate) is a fixed return (e.g., 2%), stable or adjustable, not disappearing. Option D (expense charge) covers ongoing costs (e.g., mortality and expense fees), typically level, not phased out. The study guide likely illustrates this with a table--e.g.,

10% year 1, 9% year 2, 0% year 10--emphasizing surrender charges as a liquidity deterrent, making A the matching feature.

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QUESTION: 53

The injury or damage sustained by the insured is called:

A claim
A peril
A loss
An accident

Answer(s): C

Explanation:

Virginia Code § 38.2-100 et seq. defines insurance terms. A loss (option C) is the actual injury or damage sustained (e.g., a broken leg or burned house), the event insurance covers. Option A (claim) is the request for payment post-loss, not the loss itself. Option B (peril) is the cause (e.g., fire, collision), not the result. Option D (accident) is a type of peril or event, not the damage. The study guide likely clarifies this chain--e.g., a car crash (peril/accident) causes $5,000 damage (loss), prompting a claim--using examples to distinguish loss as the outcome, making C the precise term.

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QUESTION: 54

Which is true about disability buy-sell insurance policies?

The policyowner may not be the beneficiary
The insurer pays the benefits to the disabled individual
The policy proceeds are normally received income tax-free
The premiums are tax-deductible

Answer(s): C

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.

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QUESTION: 55

A function performed by both the life insurance agent and the home office underwriter is:

Finding new clients
Evaluating risks
Collecting premiums
Reviewing a client's coverage periodically

Answer(s): B

Explanation:

Virginia Code § 38.2-1800 et seq. outlines roles in life insurance. Agents and underwriters both evaluate risks (option B): agents assess initial client risk (e.g., health questions) for application accuracy, while underwriters analyze it for approval (e.g., medical records). Option A (finding clients) is agent-only; underwriters don't prospect. Option C (collecting premiums) is primarily the agent's task, not underwriting's. Option D (reviewing coverage) is a post-sale service, not a core underwriting function. The study guide likely contrasts roles but notes this shared risk focus--e.g., an agent flags smoking, underwriter rates it--making B the common duty.

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QUESTION: 56

When an HIV test is requested by a health insurer, who signs the consent form?

The applicant
The applicant's physician
The insurance agent
The medical laboratory technician

Answer(s): A

Explanation:

Virginia Code § 38.2-600 requires written consent for HIV testing in insurance underwriting, signed by the applicant (option A) to comply with privacy laws (e.g., Virginia Code § 32.1-36.1). This ensures the individual authorizes the test, protecting their rights. Option B (physician) may order tests but doesn't consent for insurance. Option C (agent) facilitates but can't consent. Option D (technician) performs the test, not authorizes it. The study guide likely stresses this consent process in a privacy section, with examples of applicants signing before blood draws, making A the correct party.

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Virginia Insurance Virginia-Life-Annuities-and-Health-Insurance Exam (page: 7) Virginia Insurance Virginia Life, Annuities, and Health Insuranceination Series 1101 Updated on: 09-Feb-2026

QUESTION: 49

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QUESTION: 50

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QUESTION: 51

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QUESTION: 52

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QUESTION: 53

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QUESTION: 54

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QUESTION: 55

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QUESTION: 56

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Virginia Insurance Virginia-Life-Annuities-and-Health-Insurance Exam (page: 7)
Virginia Insurance Virginia Life, Annuities, and Health Insuranceination Series 1101
Updated on: 09-Feb-2026