Virginia-Life-Annuities-and-Health-Insurance Exam Dumps - Insurance Licensing Virginia Insurance License Questions and Answers

Virginia Code § 38.2-3505 requires disability income policies to include a misstatement of age provision. If an applicant misstates their age, the insurer adjusts benefits to what the paid premium would have purchased at the correct age, rather than voiding or canceling the policy. Option A reflects this adjustment process. Option B is false; the insurer remains liable, adjusting claims rather than denying them outright. Option C is incorrect; immediate cancellation isn’t standard unless fraud is proven (Virginia Code § 38.2-309), and age misstatements are typically clerical errors, not fraud. Option D is wrong; voiding from inception requires material misrepresentation with intent to deceive, not a simple age error. The study guide likely explains this clause as a fairness mechanism, protecting both parties, making A the correct answer.

A single premium whole life policy requires only one lump-sum payment. That single payment fully funds the policy for the insured’s lifetime. The insurer places the premium into the policy’s cash value account, where it grows to cover the cost of insurance throughout life. Exact extract: “Single premium whole life provides lifetime protection with one lump-sum premium payment at issue.” This design is often used for estate planning or wealth transfer because the insured never has to make another payment, and the cash value builds immediately.

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.

Virginia Code § 38.2-3501 governs health insurance applications, requiring accuracy and applicant consent. Changes or corrections by an agent (e.g., fixing a misspelled name) must be initialed by the applicant (option B) to verify agreement, as the application becomes part of the contract (Virginia Code § 38.2-3503). Option A (agent) initialing alone risks unauthorized alterations. Option C (physician) is irrelevant; medical input isn’t standard for application edits. Option D (underwriter) assesses, not corrects, applications post-submission. The study guide likely stresses this consumer protection rule, with examples—e.g., an agent correcting a birthdate, initialed by the applicant—ensuring transparency, making B the correct party.

In Virginia law and standard insurance terminology, the period during which a new employee must wait before becoming eligible for group health insurance is called a probationary period.

The Code of Virginia defines a “waiting period” as the length of time that must pass before an individual becomes eligible for coverage under a group plan. By law, this waiting period cannot exceed 90 days.

Virginia regulations further distinguish between two types of waiting times:

The eligibility waiting period imposed by an employer before coverage begins (commonly referred to in industry study materials as the probationary period).

A policy’s internal waiting period during which no benefits are provided after coverage becomes effective.

Additionally, Virginia’s insurance replacement regulations explicitly reference “probationary periods” when describing limitations or exclusions related to preexisting conditions. This confirms that the industry-standard term used in exam and licensing study guides for this eligibility wait is probationary period.

References (Virginia official documents and study materials):

Code of Virginia § 38.2-3431 (Definitions — “Waiting period”)

Code of Virginia § 38.2-3452 (Limitation — 90-day maximum waiting period for group health plans)

14VAC5-141-20 (Definitions — distinguishes employer eligibility waiting period from policy waiting period)

14VAC5-200-110 (Replacement notice — references to “probationary periods”)

Detailed Answer in Step-by-Step Solution:

Individual disability income (C) benefits are taxable if the insured paid premiums with pre-tax dollars (e.g., employer-paid), but tax-free if paid with after-tax dollars. The question implies taxable benefits, typical when premiums are deductible.

Business overhead expense (A), disability buy-sell (B), and key person disability (D) benefits are generally tax-free to the business or recipient, as premiums are not deductible.

The Virginia study guide, per IRS rules, states that individual disability income benefits are taxable if premiums were paid pre-tax (e.g., by an employer), unlike business-related disability policies where benefits serve specific tax-exempt purposes. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Taxation of Insurance Benefits."

A single premium whole life insurance policy is a form of permanent life insurance in which the policyowner pays the entire premium in one lump sum at policy issuance. In exchange for this single payment, the policy provides lifetime protection and is immediately paid-up, meaning no additional premiums are required. The policy accumulates cash value and provides a guaranteed death benefit for the insured’s entire life. It does not provide coverage for a limited term, nor does it feature a decreasing face amount. While annuities provide income benefits, a single premium whole life policy remains primarily a life insurance contract. Therefore, the defining feature of this policy is that it provides protection for life as a paid-up policy.

The deductible is the initial portion of covered expenses the insured must pay before the insurer pays benefits. Coinsurance applies only after the deductible has been met. Exact extract: “The deductible is the amount of covered expenses an insured must pay out of pocket before the insurer is obligated to pay under the major medical policy.” This provision ensures cost-sharing and discourages excessive claims.

Premiums paid by employers for qualified long-term care insurance are tax-deductible as a business expense. For employees, the value of employer-paid premiums is excluded from gross income. This aligns with federal tax treatment and is covered in Virginia’s insurance exam outline.

Exact Extract (Virginia Insurance Study Guide): “Employer contributions to qualified long-term care insurance premiums are deductible to the employer as a business expense and not taxable to the employee.”

References (Virginia Documents / Study Guide):

— Virginia Life & Health Insurance Examination Outline, Section 6.2 Tax treatment of long-term care insurance

If the insured fails to repay the full value of loans taken against a life insurance policy, the death benefit is reduced by the outstanding loan balance plus any accrued interest. The insurer can use the loan to pay the policy’s death benefit or any other obligations, but the policy does not become void unless the loan balance exceeds the cash value.