Free Insurance Licensing Virginia-Life-Annuities-and-Health-Insurance Practice Exam with Questions & Answers | Set: 3

Detailed Answer in Step-by-Step Solution:

Whole life insurance offers policy loans (A), lifelong protection (B), and cash value (D), but its initial cost (C) is higher than term insurance for the same death benefit due to the savings component.

Term insurance is cheaper initially, making C the exception.

The Virginia study guide highlights that whole life provides permanent coverage and cash value, but at a higher initial premium than term insurance, which offers temporary, lower-cost protection. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Types of Life Insurance."

Detailed Answer in Step-by-Step Solution:

Group health underwriting considers average age (A), claims history (B), and occupation type (D) to assess risk, but marital status (C) is typically irrelevant for group policies, unlike individual underwriting.

The Virginia study guide notes that group underwriting focuses on collective risk factors like age, claims experience, and occupation, not personal details like marital status. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Group Insurance Underwriting."

Detailed Answer in Step-by-Step Solution:

Agents assist underwriting by collecting application data (A), obtaining additional info (C), and reporting material facts (D), but determining the final rate classification (B) is the insurer’s underwriter’s role, not the agent’s.

Rate classification involves risk assessment, which is beyond an agent’s authority.

The Virginia study guide specifies that agents facilitate underwriting by providing accurate information, while the insurer’s underwriters set rates based on that data. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Underwriting Process."

Virginia Code § 38.2-5208 allows LTC policy cancellation by the insurer for nonpayment of premium (option A) after a 31-day grace period and notice, a standard contract right. Option B (Medicaid eligibility) isn’t a cancellation cause; it may coordinate benefits, not terminate coverage. Option C (insurer insolvency) affects payment ability, not lawful cancellation grounds. Option D (nuisance claims) isn’t a legal basis; claims frequency doesn’t void coverage unless fraudulent (Virginia Code § 38.2-309). The study guide likely lists nonpayment as the primary insurer-initiated cancellation reason, with examples like missed payments triggering notice, making A the lawful cause.

Detailed Answer in Step-by-Step Solution:

The Affordable Care Act (ACA) mandates 10 Essential Health Benefits, including hospitalization (A), laboratory services (B), and preventive care (D), but adult dental services (C) are not included (pediatric dental care is, however).

Adult dental is often an optional or separate coverage, not a required benefit.

The Virginia study guide, aligned with ACA regulations, lists the 10 Essential Health Benefits, excluding adult dental services while including pediatric dental and vision as distinct categories. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Affordable Care Act."

Flexible premium life insurance, such as universal life (Virginia Code § 38.2-3113.1), allows the policyowner to adjust premium payments within policy limits (e.g., minimum to maintain coverage, maximum for tax advantages), offering flexibility over fixed-premium plans like whole life. Option A correctly identifies the policyowner as the decision-maker. Option B (contingent beneficiary) is false; beneficiaries have no control over premiums. Options C and D tie adjustments to economic indices (CPI, interest rates), but Virginia law and standard policies don’t grant insurers unilateral premium-changing rights based on these factors—flexibility is the policyowner’s prerogative, subject to cash value sufficiency. The study guide likely contrasts this with traditional policies, using examples of skipped or increased payments, confirming A as the defining trait.

Detailed Answer in Step-by-Step Solution:

Medical expense insurance covers healthcare costs, while disability insurance replaces lost income, together protecting against medical costs and earning power loss (B).

Death benefits (A) are for life insurance. Dismemberment (C) is specific to AD&D. Rehabilitation (D) may be included but isn’t primary.

The Virginia study guide defines the core purpose of medical expense and disability insurance as mitigating financial loss from healthcare and income interruption. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Health Insurance Basics."

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.

Universal life (Virginia Code § 38.2-3113.1) features: Option A is true; a mortality charge funds the death benefit, deducted monthly from cash value. Option B is true; expense charges are disclosed (e.g., admin fees). Option D is true; loans reduce the cash value earning interest. Option C is false; death benefits are generally tax-free under IRC § 101(a)(1), not ordinary income, unless an exception (e.g., transfer for value) applies, which isn’t standard. The study guide likely contrasts universal life mechanics—e.g., $50 monthly mortality charge—with tax-free benefits, making C the exception.

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."