Vermont Life, Accident & Health Insurance License, Practice Exams

Long-term care policy benefits are commonly triggered when the insured is unable to perform a specified number of:

1. Prescription drug refills scheduled in a calendar month
2. Hours of paid work in a normal 40-hour work week
3. Activities of daily living (ADLs) ✓
4. Routine physician office visits in a calendar year

Why: Benefits typically trigger on inability to perform 2 of 6 ADLs (or severe cognitive impairment).

When does credit insurance commence and how long may it run, under 8 V.S.A. 4106?

1. It commences, subject to acceptance by the insurer, on the date the policy or certificate is delivered to the debtor, or on the policy's effective date for existing obligations under a group policy; and may not run more than thirty days beyond scheduled maturity except at no additional cost to the debtor.
2. It commences, subject to acceptance by the insurer, on the date the debtor becomes obligated to the creditor, or on the policy's effective date for existing obligations under a group policy; and may not run more than fifteen days beyond scheduled maturity except at no additional cost to the debtor, subject to acceptance by the insurer in each case. ✓
3. It commences, subject to acceptance by the insurer, on the date the debtor becomes obligated to the creditor in every case, existing obligations under a group policy being outside the chapter; and may not run more than fifteen days beyond scheduled maturity in any circumstances at all under the section.
4. It commences on the date the insurer accepts the risk and may run for as long as the indebtedness remains outstanding, whatever the scheduled maturity date of that indebtedness, the section setting no outer limit on the term of a credit insurance policy issued in this State to a debtor.

Why: 8 V.S.A. 4106 commences the term, subject to acceptance by the insurer, on the date the debtor becomes obligated to the creditor, except that where a group policy covers existing obligations the insurance commences on the effective date of the policy. The term may not extend more than fifteen days beyond the scheduled maturity date except where extended without additional cost to the debtor. Where the indebtedness is discharged by renewal or refinancing before maturity, the insurance in force must be terminated before new insurance is issued, and a refund paid or credited under section 4109.

A withdrawal from a nonqualified deferred annuity is taxed:

1. Principal first, with no tax until basis is gone
2. Gain first (LIFO), as ordinary income ✓
3. Only when the contract is fully surrendered
4. At long-term capital-gains rates entirely

Why: Nonqualified annuity withdrawals come out earnings-first (LIFO) and are taxed as ordinary income (plus a possible penalty before 59½).

An individual health policy is 'guaranteed renewable.' This means the insurer:

1. May cancel mid-term on 30 days' written notice to the insured
2. Must hold the premium at the issue rate for the life of the contract
3. May decline renewal at any policy anniversary
4. Must renew it but may raise premiums by class ✓

Why: Guaranteed renewable guarantees renewal to a stated age while permitting class-wide premium increases (not individual ones).

What limits the amount of the individual policy under 8 V.S.A. 3820(2)?

1. It may not exceed the amount of life insurance that ceases on termination, whatever other group insurance the person may become eligible for after that date, the subdivision taking no account of cover obtained elsewhere once the group coverage has ended.
2. It may not exceed two thousand dollars, which is the ceiling the subchapter applies to a conversion however the group coverage came to an end and whatever amount of insurance on that person's life ceased when it did so under the policy.
3. It may not exceed half the amount of life insurance that ceases on termination, less any other group insurance for which the person is or becomes eligible within thirty-one days after the termination of the group coverage concerned.
4. It may not exceed the amount of life insurance that ceases on termination, less any life insurance for which the person is or becomes eligible under the same or any other group policy within thirty-one days after that termination. ✓

Why: 8 V.S.A. 3820(2): the individual policy SHALL BE IN AN AMOUNT NOT IN EXCESS OF THE AMOUNT OF LIFE INSURANCE THAT CEASES BECAUSE OF SUCH TERMINATION LESS THE AMOUNT OF ANY LIFE INSURANCE FOR WHICH SUCH PERSON IS OR BECOMES ELIGIBLE UNDER THE SAME OR ANY OTHER GROUP POLICY WITHIN 31 DAYS AFTER SUCH TERMINATION. Insurance that had already MATURED as an endowment payable to the insured is not counted as ceasing. The $2,000 cap belongs to 3821, on termination of the policy itself.

In a whole life policy, the 'net amount at risk' is the:

1. Difference between the death benefit and the cash value ✓
2. Cash value remaining after a policy loan is repaid
3. Total of all premiums the policyowner has paid to date
4. Portion of the premium used to cover the insurer's expenses

Why: The net amount at risk is the death benefit minus the accumulated cash value; it shrinks over time as the cash value grows toward the face amount.

In a variable life insurance policy, the investment risk on the cash value is borne by:

1. The producer who originally sold the policy contract
2. The state insurance guaranty association at all times
3. The insurance company, which guarantees the cash value in full
4. The policyowner ✓

Why: In variable life the cash value is held in separate accounts the owner directs, so the policyowner assumes the investment risk (a minimum death benefit is usually guaranteed).

What extension and what hearing does 8 V.S.A. § 3541(b) provide?

1. The Commissioner may extend the period indefinitely by written notice to the insurer, and must hold a hearing on the filing within sixty days of a written request from the insurer whose form has been disapproved.
2. The Commissioner may take a further sixty days on notice given at any time before the form is used, and must grant a hearing within thirty days of a request, the subsection giving the insurer the right to be heard before the disapproval takes effect rather than after it has already been entered against the filing.
3. The Commissioner may extend the period by not more than an additional 30 days on notice given before the initial 30 days expire, after which the form is still deemed approved; a hearing follows within 20 days on request. ✓
4. The Commissioner may extend the period by thirty days without notice to the insurer, the extension being recorded in the Department's file on the filing, and must grant a hearing within ten days if the insurer asks for one in writing.

Why: 8 V.S.A. § 3541(b). The Commissioner may ALSO, AT ANY TIME AFTER NOTICE AND FOR CAUSE SHOWN, WITHDRAW AN APPROVAL already given.

How may a member insurer recover an assessment under 8 V.S.A. 4183(a)?

1. By offsetting it against its Vermont premium tax liability to the extent of fifty per cent of the assessment for each of the two calendar years following the year in which that assessment was in fact paid.
2. By offsetting the whole of it against its Vermont premium tax liability for the calendar year in which the assessment was paid, any unused balance being lost to the member insurer at the end of that year.
3. By surcharging its Vermont policyholders in a sum reasonably calculated to recoup the assessment, no offset against the premium tax being available to an insurer that is subject to that tax in this State.
4. By offsetting it against its Vermont premium tax liability to the extent of twenty per cent of the assessment for each of the five calendar years following the year in which the assessment was paid. ✓

Why: 8 V.S.A. 4183(a) allows a member insurer to offset an assessment against its Vermont premium tax liability to the extent of twenty per cent of the amount of the assessment for each of the five calendar years following the year in which it was paid, with any uncredited assessments creditable in the year the insurer ceases doing business. The surcharge route in 4183(b) is for a member insurer exempt from those taxes.

A policyowner names their estate as beneficiary. A drawback is that the proceeds:

1. Become taxable income to the heirs at their own ordinary income tax rates
2. Are automatically forfeited to the state
3. May be subject to probate and the insured's creditors ✓
4. Cannot be paid at all by the insurer

Why: Naming the estate exposes proceeds to probate and creditor claims; naming a person avoids that.

An individual pays for their own disability policy with after-tax dollars and later collects benefits. Those benefits are:

1. Subject to a 10% early-distribution penalty
2. Fully taxable as ordinary income
3. Taxed at long-term capital-gains rates
4. Received income-tax-free ✓

Why: Benefits from a policy the insured paid for with after-tax dollars are received tax-free.

What prior experience must a life settlement broker applicant show under 8 V.S.A. 3836(b)(6)(B)?

1. A good business reputation and at least five years' prior experience as a licensed life insurance producer.
2. A good business reputation and at least two years' prior experience as a licensed life settlement provider.
3. A good business reputation alone; the subdivision prescribes no period of prior experience for a broker applicant.
4. A good business reputation and at least two years' prior experience as a licensed life insurance producer. ✓

Why: 8 V.S.A. 3836(b)(6)(B) requires the applicant to have a good business reputation and to have had at least two years' prior experience as a licensed life insurance producer. 3836(b)(6)(A) separately requires competence and trustworthiness.

What do 8 V.S.A. 8088, 8096 and 8098 direct the Commissioner to do?

1. Adopt loss ratio standards by rule for all health insurance policies alike; adopt the NAIC model rule on secondary notice of cancellation; and require distribution of a buyer's guide in whatever form the insurer chooses.
2. Set loss ratio standards by order in each individual case; adopt a Vermont rule on secondary notice of cancellation departing from the NAIC model; and require a buyer's guide in a prescribed form.
3. Adopt loss ratio standards by rule where the rule refers specifically to long-term care policies; adopt the NAIC model rule on replacement of coverage; and require an outline of coverage instead.
4. Adopt loss ratio standards by rule where the rule refers specifically to long-term care policies; adopt the NAIC model rule on secondary notice of cancellation; and require distribution of a buyer's guide in a prescribed form. ✓

Why: 8 V.S.A. 8088 permits the Commissioner to adopt rules establishing loss ratio standards for long-term care insurance policies provided the rule contains a specific reference to such policies. 8 V.S.A. 8096 requires adoption of the NAIC model rule regarding secondary notice of cancellation of long-term care policies. 8 V.S.A. 8098 requires a person offering long-term care insurance to distribute a buyer's guide to applicants in a form prescribed by the Commissioner.

What does 8 V.S.A. 3844(a)(3) require before a life settlement contract may be entered into within five years of the issuance of the policy?

1. Certification by the policy owner that a qualifying condition commenced or occurred at any time, whether before or after the issuance of the policy, together with independent evidence of it supplied to the life settlement provider before the contract is entered into by the parties to it.
2. Certification by the insurer that issued the policy that it has investigated the circumstances of the origination of the policy and is satisfied that the policy was not the product of a stranger-originated life insurance arrangement of the kind the subchapter prohibits in this State.
3. Nothing at all; the five-year period runs from the date of the life settlement contract rather than from the issuance of the policy, and a policy issued more than five years before the contract requires no certification of any kind from the policy owner who is party to that contract.
4. Certification by the policy owner that a qualifying condition, such as terminal or chronic illness, the death of a spouse, divorce, retirement, disabling injury, bankruptcy or significant economic reversal, commenced or occurred after issuance and within the five-year period. ✓

Why: 8 V.S.A. 3844(a)(3) bars a life settlement contract within five years of issuance unless the policy owner certifies that a qualifying condition commenced or occurred after issuance and within that period. The conversion exception in (3)(A) requires conversion rights out of a group or individual policy with total coverage of at least sixty months. The list in (3)(B) covers terminal or chronic illness, death of a spouse, divorce, retirement from full-time employment, disabling physical or mental condition, bankruptcy or insolvency, and significant economic reversal.

Who may establish separate accounts under 8 V.S.A. 3855(a), and for what purpose?

1. A domestic life insurer, allocating amounts to provide for life insurance or annuities and benefits incidental to them, payable in fixed or variable amounts or both. ✓
2. Any life insurer licensed in this State, allocating amounts to provide for life insurance or annuities and benefits incidental to them, payable in variable amounts alone.
3. A domestic life insurer, allocating amounts to provide for annuities alone, life insurance benefits being outside the separate account provisions of this subchapter.
4. A domestic or foreign life insurer with the written approval of the Commissioner in each case, allocating amounts to provide for life insurance or annuities on a variable basis.

Why: 8 V.S.A. 3855(a) allows a domestic life insurer to establish one or more separate accounts and to allocate to them amounts, including proceeds applied under optional modes of settlement or under dividend options, to provide for life insurance or annuities and benefits incidental to them, payable in fixed or variable amounts, or both.

How does 8 V.S.A. 4053(a) define short-term, limited-duration health insurance?

1. Health insurance providing medical, hospital or major medical expense benefits under a policy with an expiration date specified in it that is three months or less after the original effective date. ✓
2. Health insurance providing medical, hospital or major medical expense benefits under a policy with an expiration date specified in it that is twelve months or less after the original effective date.
3. Health insurance providing any benefits at all under a policy that the health insurer may cancel on thirty days' notice, whatever expiration date is specified in the policy or contract concerned.
4. Health insurance providing medical, hospital or major medical expense benefits under a policy with no expiration date specified in it, the coverage running until either party brings it to an end.

Why: 8 V.S.A. 4053(a) defines short-term, limited-duration health insurance as health insurance providing medical, hospital or major medical expense benefits coverage under a policy or contract with a health insurer that has an expiration date specified in the policy or contract of three months or less after the original effective date.

What may a Vermont life policy contain instead of the provisions 8 V.S.A. 3731 lists?

1. Corresponding provisions that the Commissioner considers at least as favourable to the policyholder as the listed ones as the ones the section itself lists for the policy.
2. Corresponding provisions that in the opinion of the Commissioner are more favourable to the policyholder, the judgment on that question being the Commissioner's own. ✓
3. Corresponding provisions the insurer has filed with the Commissioner and which the Commissioner has not disapproved within thirty days of the filing being made for them, and without any variation of substance at all.
4. Nothing at all; the provisions must appear in the very words that the section uses, without variation of any kind.

Why: 8 V.S.A. 3731: the policy must contain IN SUBSTANCE all of the applicable provisions required by the subchapter OR CORRESPONDING PROVISIONS THAT IN THE OPINION OF THE COMMISSIONER ARE MORE FAVORABLE TO THE POLICYHOLDER. More favourable, not merely as favourable, and the judgment is the Commissioner's.

A Vermont policy issued before 9 April 1982 carries a variable policy loan rate. What does 8 V.S.A. 3731(7)(A)(ii) require of changes to it?

1. A change may take effect six months after the previous rate, and an increase may not exceed one percent per annum, so that the insurer may move the rate twice in twelve months.
2. The effective date of a change may not be less than one year after the effective date of the previous rate, and an increase may not exceed one percent per annum. ✓
3. A change may take effect one year after the previous rate, and an increase may not exceed two percent per annum, provided the rate as increased stays under the eight per cent cap.
4. The insurer may change the rate at any time and by any amount up to the eight per cent ceiling, subject only to the notice requirements that the subdivision imposes on the insurer in respect of it.

Why: 8 V.S.A. 3731(7)(A)(ii): a variable rate may not exceed EIGHT PERCENT per annum; THE EFFECTIVE DATE OF ANY CHANGE SHALL BE NOT LESS THAN ONE YEAR AFTER THE EFFECTIVE DATE OF THE ESTABLISHMENT OF THE PREVIOUS RATE; and IF THE INTEREST RATE IS INCREASED, THE AMOUNT OF THE INCREASE SHALL NOT EXCEED ONE PERCENT PER ANNUM.

When must the disclosures required by 8 V.S.A. 3841(a) be provided, and in what form?

1. Not less than thirty days before the application for the life settlement contract is signed by all parties, in a separate document signed by the policy owner and by the provider or broker.
2. At the time the application for the life settlement contract is signed by all parties, in the body of the life settlement contract itself rather than in any separate document signed by the parties.
3. Not less than ten days after the application for the life settlement contract is signed by all parties, in a separate document signed by the policy owner and by the provider or the broker concerned.
4. Not less than ten days before the application for the life settlement contract is signed by all parties, in a separate document signed by the policy owner and by the provider or broker. ✓

Why: 8 V.S.A. 3841(a) requires the provider or broker to give the listed disclosures with each application, not less than ten days prior to the time the application for the life settlement contract is signed by all parties, in a separate document signed by the policy owner and by the life settlement provider or broker.

What duplication does 8 V.S.A. 4724(9)(K) treat as an unfair claim settlement practice?

1. Delaying investigation or payment by requiring a preliminary claim report and then formal proof of loss forms, both containing substantially the same information about the loss. ✓
2. Delaying investigation or payment by requiring a preliminary claim report from the insured and a separate report from the physician of the insured on the same claim.
3. Requiring formal proof of loss forms at all where the insured has already given the insurer written notice of the claim within the time the policy allows for that notice.
4. Requiring a preliminary claim report from an insured or claimant, the subdivision confining the insurer to the formal proof of loss forms the policy itself prescribes for the purpose.

Why: 8 V.S.A. 4724(9)(K) names delaying the investigation or payment of claims by requiring an insured, claimant or the physician of either to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information.

An insured dies in the third policy year and the insurer discovers a non-fraudulent misstatement on the application. The insurer must:

1. Void the policy back to its original issue date
2. Reduce the death benefit by one half as a penalty
3. Deny the claim and refund the premiums paid to date
4. Pay the claim, because the contestable period has passed ✓

Why: After the two-year contestable period, the insurer cannot contest the policy for non-fraudulent misstatements, so the claim is paid.

How must premiums for Medicare supplement insurance policies be determined under 8 V.S.A. 4051(a)?

1. By a community rating method acceptable to the Commissioner, the premium not deviating from the community rate and the rules permitting no medical underwriting or screening. ✓
2. By a community rating method acceptable to the Commissioner, the premium deviating from the community rate only where medical underwriting shows the risk to be substandard.
3. By an experience rating method acceptable to the Commissioner, the premium reflecting the claims of the individual policyholder over the three preceding calendar years.
4. By whatever method the health insurer files with the Commissioner, community rating being required only for a policy sold to a person eligible by reason of disability.

Why: 8 V.S.A. 4051(a)(1) requires a community rating method acceptable to the Commissioner. 4051(a)(2) requires rules for risk classifications within that method, provides that the premium charged shall not deviate from the community rate, and forbids the rules to permit medical underwriting and screening. The single permitted distinction is between persons eligible for Medicare by reason of age and persons eligible by reason of disability.

State guaranty association protection may NOT be:

1. Used by producers as a selling point in advertising ✓
2. Subject to statutory coverage limits
3. Available to policyholders of an insolvent insurer
4. Funded by assessments on member insurers

Why: Using guaranty fund protection to induce a sale is prohibited; the fund exists to protect policyholders of insolvent insurers, within limits.

What is the effect of the Commissioner approving a form during the waiting period under 8 V.S.A. 3541(b)?

1. The approval takes effect only at the end of the waiting period, which the Commissioner has no power to shorten in any case.
2. The approval constitutes a waiver of any unexpired portion of the waiting period, so the form may be used at once. ✓
3. The approval constitutes a waiver of the waiting period only where the insurer has asked the Commissioner in writing for one.
4. The approval starts a fresh thirty-day period before the form may be used.

Why: 8 V.S.A. 3541(b) requires the filing not less than thirty days in advance of delivery, deems the form approved at the expiration of that period unless affirmatively approved or disapproved by order, and provides that approval of the form by the Commissioner constitutes a waiver of any unexpired portion of the waiting period.

What does the ENTIRE CONTRACT; CHANGES provision required by 8 V.S.A. 4029(1) say about changing the policy?

1. No change is valid until approved by an executive officer of the insurer and endorsed on or attached to the policy, and no agent has authority to change the policy or to waive any of its provisions. ✓
2. No change is valid until approved by an executive officer of the insurer and endorsed on or attached to the policy, but an agent of the insurer may waive any provision of it with the written consent of the insured.
3. No change is valid unless it is agreed in writing between the insurer and the insured, the approval of an executive officer being required only where the change reduces the benefits the policy provides to the insured.
4. A change may be made by the insurer on thirty days' written notice to the insured, and an agent of the insurer has authority to waive any provision of the policy in the course of adjusting a claim under it.

Why: 8 V.S.A. 4029(1) makes the policy, the endorsements and the attached papers the entire contract; no change is valid until approved by an executive officer of the insurer and endorsed on or attached to the policy; and no agent has authority to change the policy or to waive any of its provisions.

Against what standard does 8 V.S.A. 4724(9)(G) measure an attempt to settle a claim for too little?

1. The amount to which a reasonable person would have believed he or she was entitled by reference to written or printed advertising material accompanying or made a part of the application. ✓
2. The amount to which the claimant in fact believed he or she was entitled by reference to the written or printed advertising material that accompanied the application for the insurance concerned.
3. The amount to which a reasonable person would have believed he or she was entitled by reference to the policy as issued, advertising material being irrelevant once the policy has been delivered to the insured.
4. The amount an independent adjuster appointed by the Commissioner determines to be reasonable in the circumstances of the claim, by reference to the terms of the insurance policy under which it arises.

Why: 8 V.S.A. 4724(9)(G) names attempting to settle a claim for less than the amount to which a reasonable person would have believed he or she was entitled by reference to written or printed advertising material accompanying or made a part of the application. The measure is the reasonable person and the advertising material, not the policy wording alone.

A Vermont agency contract is executed on 1 March and the producer's first application reaches the insurer on 20 March. When is the appointment notice due?

1. By 4 April, fifteen days from the submission of the first application, the filing obligation running from the point at which the producer actually begins to act for the insurer rather than from the signing of the contract between them.
2. By 31 March, thirty days from the execution of the agency contract, which is the period the chapter allows for the filing of an appointment with the Department in this State.
3. By 1 June, the date on which appointments expire, every appointment made during the year being filed together before that date so that the renewal list the Commissioner sends each insurer is complete.
4. By 16 March - fifteen days from the execution of the agency contract, which is the sooner of the two events 8 V.S.A. § 4813l(d) names. ✓

Why: 8 V.S.A. § 4813l(d). WHICHEVER IS SOONER - the contract came first.

Which licenses does 8 V.S.A. § 4800 govern?

1. The licenses of an insurance producer, surplus lines broker, managing general agent, reinsurance intermediary, consultant, limited lines producer, business entity limited lines producer, adjuster, public adjuster and appraiser - none may be issued, continued or permitted to continue except in compliance. ✓
2. The insurance producer's license alone. Adjusters, appraisers and consultants are licensed under their own sections of the chapter, each with its own application, fee and examination requirements, and section 4800 is the general provision for producers only.
3. Every license the Department issues, including the certificate of authority of an insurer and the registration of a rating organization, the section being the general licensing provision of the insurance title of this State.
4. The licenses of individuals only. A business entity is licensed under the business entity provisions of the producer licensing subchapter and is outside section 4800, which speaks of natural persons who sell, solicit or negotiate insurance in this State.

Why: 8 V.S.A. § 4800. Ten license types, and the prohibition runs to ISSUING, CONTINUING and PERMITTING TO CONTINUE.

What does 8 V.S.A. 4041(b)(1)(B) allow an employer domiciled outside Vermont to do?

1. Buy insurance in the large group market for its Vermont-domiciled certificate-holder employees, where it has more than fifty such employees whose principal worksite and domicile is in Vermont and it is a small group in its own jurisdiction.
2. Buy insurance in the small group market for its Vermont-domiciled certificate-holder employees, where it has fewer than twenty-five such employees whose principal worksite and domicile is in Vermont, whatever it may be in its own jurisdiction.
3. Buy insurance in the large group market for its Vermont-domiciled certificate-holder employees, where it has more than twenty-five such employees whose principal worksite and domicile is in Vermont and it is a large group in its own jurisdiction. ✓
4. Buy insurance in the large group market for all of its employees wherever they are domiciled, provided it has at least one certificate-holder employee whose principal worksite is in Vermont and it is defined as a large group under federal law.

Why: 8 V.S.A. 4041(b)(1)(B), read with 8 V.S.A. 3368, lets an employer domiciled in a jurisdiction other than Vermont that has more than twenty-five certificate-holder employees whose principal worksite and domicile is in Vermont, and that is defined as a large group both in its own jurisdiction and under the Affordable Care Act, purchase insurance in the large group health insurance market for those Vermont-domiciled employees.

A Medicare beneficiary delayed Part D for three years without other creditable drug coverage. The result is:

1. A one-time penalty collected at the first prescription fill
2. A permanent late-enrollment surcharge added to the Part D premium ✓
3. No consequence, because Part D enrollment is voluntary
4. A permanent bar from enrolling in any Part D drug plan

Why: Going without creditable coverage adds a permanent late-enrollment surcharge to the Part D premium.

For what must an insurer pay an appointment fee under 8 V.S.A. 4813l(e)?

1. For each insurance producer it appoints, whatever the number of lines of insurance in which that producer is qualified.
2. For each line of insurance in which it appoints a producer at all.
3. For each insurance producer it appoints and for each line of insurance in which that producer is qualified. ✓
4. For each insurance producer it appoints who is resident in this State; a nonresident producer attracts no appointment fee.

Why: 8 V.S.A. 4813l(e) requires an insurer to pay an appointment fee, in the amount and method set out in section 4800, for each insurance producer appointed by the insurer AND for each line of insurance in which a producer is qualified. 4813l(c) requires a separate appointment for each line of insurance.

What must an insurer show to rescind a long-term care policy in force for at least six months but less than two years, under 8 V.S.A. 8094(b)?

1. Misrepresentation that is material to the acceptance for coverage, whether or not it pertains to the condition for which benefits are sought.
2. That the insured knowingly and intentionally misrepresented relevant facts relating to the insured's own state of health.
3. Misrepresentation that pertains to the condition for which benefits are sought, whether or not it was material to acceptance.
4. Misrepresentation that is both material to the acceptance for coverage and pertains to the condition for which benefits are sought. ✓

Why: 8 V.S.A. 8094(b) raises the bar for a policy or certificate in force for at least six months but less than two years: the misrepresentation must be both material to the acceptance for coverage and pertain to the condition for which benefits are sought.

How must examinations be given, conducted and graded under 8 V.S.A. 4800(3)(D)(vi)?

1. By the Commissioner personally, in a fair and impartial manner and without discrimination as between the individuals who are examined.
2. By the Commissioner or the Commissioner's designee, in a fair and impartial manner and without discrimination as between individuals examined. ✓
3. By the Commissioner or the Commissioner's designee, in whatever manner the designee considers appropriate to the line of insurance concerned.
4. By an independent examining body approved by the National Association of Insurance Commissioners, in a fair and impartial manner throughout.

Why: 8 V.S.A. 4800(3)(D)(vi) requires the Commissioner or the Commissioner's designee to give, conduct and grade all examinations in a fair and impartial manner and without discrimination as between individuals examined.

The 'needs approach' to determining life insurance need calculates coverage by:

1. Matching the largest policy the insured can possibly afford
2. Using a fixed multiple of the insured's annual salary
3. Estimating the present value of the insured's future earnings
4. Totaling the family's specific obligations and financial goals ✓

Why: The needs approach sums specific needs (final expenses, debts, income replacement, education, etc.); the human life value approach instead values future earnings.

What fees does 8 V.S.A. 3836(b) attach to a life settlement broker licence?

1. An application fee of $50.00 and a licence fee of $400.00, with a biennial renewal fee of $400.00 payable in the odd-numbered year next following issuance.
2. An application fee of $30.00 and a licence fee of $100.00, with a biennial renewal fee of $100.00 payable in the odd-numbered year next following issuance.
3. An application fee of $30.00 and a licence fee of $100.00, with a biennial renewal fee of $100.00 payable in the even-numbered year next following issuance. ✓
4. An application fee of $100.00 and a licence fee of $30.00, with an annual renewal fee of $30.00 payable on the anniversary of the issuance of that licence.

Why: 8 V.S.A. 3836(b)(3) requires an application fee of $30.00 and a licence fee of $100.00 for a life settlement broker. 3836(b)(4) allows renewal on the EVEN-numbered year next following issuance on payment of a biennial renewal fee of $100.00. The provider ladder in 3836(a) uses larger figures and the odd-numbered year.

What must the Department of Financial Regulation supply before the Board decides a rate request, under 8 V.S.A. 4026(a)(2)(B)?

1. A certificate that the policy form and the rules for the classification of risks have been approved, without which the Board has no jurisdiction to consider the rate at all.
2. An analysis and opinion on whether the proposed rate is affordable and promotes access to health care, the Board itself being confined to the question of insurer solvency.
3. An analysis and opinion on the impact of the proposed rate on the insurer's solvency and reserves, which the Board must consider in making its determination on the rate. ✓
4. A recommendation that the rate be approved, modified or disapproved, which binds the Board unless it sets out written reasons for departing from that recommendation.

Why: 8 V.S.A. 4026(a)(2)(B) requires the Department of Financial Regulation to provide the Board with an analysis and opinion on the impact of the proposed rate on the insurer's solvency and reserves, and 4026(a)(3) requires the Board to consider it. Affordability, quality, access, solvency and fairness are all for the Board.

A policy has an accidental death benefit (double indemnity) rider. The insured dies of a heart attack. The beneficiary receives:

1. Double the face amount, since the rider doubles every death claim
2. The face amount only, with no doubling ✓
3. Only the accumulated cash value
4. Face amount tripled by the rider

Why: Double indemnity pays an additional amount only for accidental death; death from illness pays the regular face amount.

What does 8 V.S.A. 3815 require about the application and the statements in it?

1. A copy of the policyholder's application, if any, is attached to the policy when issued and becomes part of the contract; all statements by the policyholder or the persons insured are representations and not warranties; and no statement of an insured may be used in a contest unless a copy of the instrument containing it has been furnished to that person or to the beneficiary. ✓
2. A copy of the policyholder's application is attached to the policy when issued and becomes part of the contract; all statements by the policyholder or the persons insured are warranties of the truth of the matters stated; and a statement of an insured may be used in a contest whether or not a copy has been furnished to that person.
3. A copy of each insured person's own application is attached to that person's certificate when issued and becomes part of the contract; all statements in those applications are representations and not warranties; and no statement may be used in a contest unless a copy has been furnished to the person who made it.
4. No application need be attached at all; all statements by the policyholder and by the insured persons are representations, and any of them may be used in a contest whether or not a copy of it has been furnished to anyone.

Why: 8 V.S.A. 3815: A COPY OF THE APPLICATION, IF ANY, OF THE POLICYHOLDER SHALL BE ATTACHED TO THE POLICY WHEN ISSUED AND BECOME A PART OF THE CONTRACT; ALL STATEMENTS MADE BY THE POLICYHOLDER OR BY THE PERSONS INSURED SHALL BE DEEMED REPRESENTATIONS AND NOT WARRANTIES; and NO STATEMENT MADE BY ANY PERSON INSURED SHALL BE USED IN ANY CONTEST UNLESS A COPY OF THE INSTRUMENT CONTAINING THE STATEMENT IS OR HAS BEEN FURNISHED TO SUCH PERSON OR TO HIS OR HER BENEFICIARY. It is the POLICYHOLDER'S application that is attached.

What do 8 V.S.A. 8085(b)(3) and (b)(4) forbid?

1. Coverage for skilled nursing care only; and denial of benefits on the basis that the need arises from a mental condition, though a policy may deny benefits where the need arises from Alzheimer's disease and related disorders of that kind.
2. Significantly more coverage for lower levels of care than for skilled care in a facility; and denial of benefits on the basis that the need for services arises from a mental condition or from Alzheimer's disease and related disorders under the policy.
3. Coverage for skilled nursing care only, or significantly more coverage for skilled care in a facility than for lower levels of care; and denial of benefits on the basis that the need arises from a mental condition or Alzheimer's disease. ✓
4. Coverage for skilled nursing care only; and any underwriting at all on the basis of a mental condition or Alzheimer's disease, whatever the insurer's established underwriting standards may provide about such a condition.

Why: 8 V.S.A. 8085(b)(3) forbids a policy that provides coverage for skilled nursing care only, or that provides significantly more coverage for skilled care in a facility than for lower levels of care. 8 V.S.A. 8085(b)(4) forbids denial of benefits or coverage on the basis that the need for services arises from a mental condition or Alzheimer's disease and related disorders.

What does ANNUALLY mean for the notice required by Regulation IH-2001-01, section 6(A)?

1. Once in each calendar year, the regulation fixing the calendar year as the measure so that every licensee reports on the same cycle and a customer can tell when a notice is overdue.
2. Once in each period of twelve months running from the anniversary of the policy, the licensee having no discretion over the period because it is set by the date on which the customer relationship began, and a notice being overdue the day after that anniversary passes without one having been sent to the customer.
3. At least once every eighteen months, the regulation allowing a longer interval than the federal rule in recognition of the additional opt-in notices a Vermont licensee must send.
4. A clear and conspicuous notice reflecting the licensee's privacy policies not less than annually during the continuation of the customer relationship - and annually means at least once in any period of 12 consecutive months during which the relationship exists. The licensee may define the 12-month period but must apply it to the customer on a consistent basis. ✓

Why: Regulation IH-2001-01, section 6(A) and its example. If the licensee uses the calendar year and a customer opens an account in year one, the annual notice is due BY 31 DECEMBER OF YEAR TWO.

A pre-existing condition provision in a health policy refers to a condition for which the insured:

1. Received advice or treatment before the policy's effective date ✓
2. Must pay a permanently rated-up premium for as long as the policy stays in force
3. Automatically qualifies for an accelerated benefit equal to part of the face amount
4. Will never be covered under the policy, no matter how many years pass

Why: A pre-existing condition is one for which the insured received diagnosis, advice, or treatment within a stated period before the coverage took effect.

What is an UNSUITABLE POLICY under 8 V.S.A. § 4724(16)?

1. Selling a policy whose limits are lower than the value of the property insured, the subdivision making the sale of underinsurance an unfair practice unless the insured has signed a written waiver of the difference.
2. Selling any policy to a person who already holds a policy affording the same coverage, the subdivision prohibiting the duplication of coverage in this State and requiring a producer who learns of existing coverage to advise the applicant in writing that the second contract may pay nothing.
3. Soliciting, selling or issuing a policy when the person doing so has reason to know or should have reason to know that it is unsuitable for the person purchasing it. ✓
4. Selling a policy without first completing a written suitability analysis on a form the Commissioner prescribes, retaining it for five years, and furnishing a copy of it to the insurer with the application.

Why: 8 V.S.A. § 4724(16). The standard is OBJECTIVE - SHOULD HAVE REASON TO KNOW - so actual knowledge is not needed.

What do 8 V.S.A. 3711(d) and (e) provide about the charitable life gift section?

1. Nothing in it prohibits any combination of the applicant, premium payer, owner and beneficiary from being the same person; and the section supersedes the insurable interest requirements of every other law of this State.
2. The applicant, premium payer, owner and beneficiary must each be a different person, so that no one of them occupies more than one of those roles; and the section does not alter any other insurable interest requirement.
3. The applicant and the premium payer may be the same person, but the owner and the beneficiary must each be the charitable organisation and no other person at all under it.
4. Nothing in it prohibits any combination of the applicant, premium payer, owner and beneficiary from being the same person; and the section does not alter the insurable interest requirements of any other law. ✓

Why: 8 V.S.A. 3711(d): NOTHING IN THIS SECTION SHALL PROHIBIT ANY COMBINATION OF THE APPLICANT, PREMIUM PAYER, OWNER, AND BENEFICIARY FROM BEING THE SAME PERSON. And 3711(e): THIS SECTION DOES NOT ALTER THE INSURABLE INTEREST REQUIREMENTS OF ANY OTHER LAW - it adds a route, it does not displace the general requirement.

When is a licensee excused from the annual privacy notice, under Regulation IH-2001-01, section 6(D)?

1. When it has fewer than five hundred Vermont customers, or when it has made no disclosure of any kind in the preceding twelve months, the exception being aimed at small licensees and dormant books of business.
2. It discloses only under sections 14, 15 and 16; has not changed its policies since the last notice; posts the current notice continuously on a page whose only content is the notice and revocation instructions, without login; and keeps it available on request. ✓
3. When it posts its privacy notice on its website, the regulation treating publication as equivalent to delivery in every case and requiring only that the address of the page be printed on the renewal documents sent to each customer so that they know where to find the current version of it.
4. When the customer has agreed in writing to receive no further notices, the licensee retaining the agreement and reinstating the annual notice if the customer later withdraws it.

Why: Regulation IH-2001-01, section 6(D)(1)(a) to (d). ALL FOUR CONDITIONS MUST HOLD. If the licensee later changes its policies so that it no longer qualifies, it must deliver a new privacy notice AT LEAST 60 DAYS BEFORE THE EFFECTIVE DATE of the change, and that notice is treated as AN INITIAL NOTICE.

A family maintenance policy combines whole life with level term to:

1. Provide temporary coverage only, expiring with no cash value at the end of a stated 10- or 20-year term
2. Invest part of each premium in the mutual fund subaccounts the policyowner selects and may switch at will
3. Decrease the death benefit gradually as the children grow up and the family's income need falls away
4. Pay an income for a set period beginning at the insured's death, then the face amount ✓

Why: Family maintenance adds level term to whole life; if the insured dies during the term, it pays income for a stated period from the date of death, then the face amount.

An insured and the primary beneficiary die together in a car accident, and the order of death cannot be determined. Under the common disaster clause, the proceeds go to:

1. The insurer, which retains the proceeds as an unclaimed death benefit
2. The primary beneficiary's own named contingent payee
3. The contingent beneficiary (or the insured's estate) ✓
4. The primary beneficiary's estate, since that beneficiary was alive when the policy was issued

Why: The common disaster provision presumes the insured survived the beneficiary, so proceeds pass to the contingent beneficiary or the insured's estate.

What do Regulation I-2000-02, sections 10 and 11, establish?

1. An advisory board with power to approve courses on the Commissioner's behalf, and an outside vendor funded from the Department's own budget which administers records but takes no part in approvals.
2. A board of five insurance professionals appointed for fixed three year terms which hears appeals from the disapproval of a course or a provider, and a vendor selected by competitive tender whose fees are set by the Commissioner by order and collected with the producer's renewal fee at the time of application.
3. An advisory board of insurance professionals and consumers to recommend on the requirements; and power to contract with an outside vendor paid for by renewal applicants and providers. ✓
4. An advisory board of consumers only, so that the programme is judged by those it protects, and an outside vendor whose costs fall on the providers alone, producers paying nothing beyond their ordinary renewal fee.

Why: Regulation I-2000-02, sections 10(A), 10(B) and 11. THE VENDOR MAY APPROVE COURSES AND PROVIDERS, and its fees MAY BE PAYABLE DIRECTLY TO IT.

What do 8 V.S.A. 4042(b)(1) and (b)(3) forbid in a group insurance policy?

1. Any provision that excludes coverage for a preexisting condition for more than twelve months, and any annual limit on the dollar amount of essential health benefits, a lifetime limit being permitted on out-of-network services.
2. Any provision that excludes, restricts or limits coverage for one or more preexisting health conditions, and any annual or lifetime limit on the dollar amount of essential health benefits, in-network or out-of-network alike. ✓
3. Any provision that excludes, restricts or limits coverage for one or more preexisting health conditions, and any lifetime limit on essential health benefits; an annual limit is permitted where the Commissioner approves the policy form.
4. Any annual or lifetime limit on the dollar amount of essential health benefits; a preexisting condition exclusion remains permissible where it is disclosed in the certificate delivered to the employee or member concerned.

Why: 8 V.S.A. 4042(b)(1) forbids any provision that excludes, restricts or otherwise limits coverage for one or more preexisting health conditions. 8 V.S.A. 4042(b)(3) forbids any annual or lifetime limit on the dollar amount of essential health benefits as defined in section 1302(b) of the Affordable Care Act, for any individual insured, regardless of whether the services are provided in-network or out-of-network.

When does a policy loan become available under 8 V.S.A. 3731(7)(A)?

1. After three full years' premiums have been paid and while no premium is in default beyond the grace period, whether or not any cash surrender value has yet accrued.
2. After two full years' premiums have been paid, after the policy has a cash surrender value, and while no premium is in default beyond the grace period allowed for its payment under the policy.
3. As soon as the policy is issued, on the sole security of the policy and of whatever loan value it will in time acquire under it under the terms of the policy as it was issued to that owner.
4. After three full years' premiums have been paid, after the policy has a cash surrender value, and while no premium is in default beyond the grace period for payment, all three of those conditions having to be met before it. ✓

Why: 8 V.S.A. 3731(7)(A): AFTER THREE FULL YEARS' PREMIUMS HAVE BEEN PAID AND AFTER THE POLICY HAS A CASH SURRENDER VALUE AND WHILE NO PREMIUM IS IN DEFAULT BEYOND THE GRACE PERIOD FOR PAYMENT, the insurer will advance, ON THE SOLE SECURITY of the policy, an amount equal to or less than the loan value. All three conditions must be met.

Withdrawals of earnings from a nonqualified deferred annuity are taxed:

1. At favorable long-term capital-gains rates in every case
2. On a first-in, first-out basis, returning principal first
3. On a last-in, first-out basis, so gains are taxed first ✓
4. Only after the entire account value has been withdrawn

Why: Nonqualified annuity withdrawals are taxed LIFO — earnings (gains) are considered withdrawn first and taxed as ordinary income.

What does 8 V.S.A. § 3661(a)(2) allow, and what fine follows?

1. The Commissioner may refer the violation to the State's Attorney for the county in which it occurred, who must bring a prosecution, the offender being liable to a fine of not more than $5,000 on conviction.
2. The Commissioner may report each violation, with any information he or she has about it, to the Attorney General, who shall prosecute if he or she deems it advisable. On such a prosecution the offender shall be fined not more than $2,000. ✓
3. The Commissioner may bring a civil action in the name of the State in the Washington Superior Court and recover a penalty of not more than $2,000 for each violation, together with the costs of the investigation, the Attorney General appearing for the Department in the action if the Commissioner requests it.
4. The Commissioner may report the violation to the Attorney General, who must then prosecute it, the offender being liable to a fine of not more than $2,000 for a first violation and not more than $10,000 for any later one.

Why: 8 V.S.A. § 3661(a)(2). THE DISCRETION IS THE ATTORNEY GENERAL'S - IF HE OR SHE DEEMS IT ADVISABLE - and this is a FINE ON A PROSECUTION, not an administrative penalty.

What are the conditions for disclosing financial information to a nonaffiliated third party, under section 11?

1. An initial notice under section 5, an opt-in notice under section 8, and the consumer's written or electronic authorization. It applies whether or not a customer relationship exists and reaches information collected before or after the notice; a partial opt-in to certain information or certain third parties is permitted. ✓
2. The licensee must have given an initial notice and a reasonable opportunity to opt out, and the consumer must not have objected within the period stated in the notice, which may not be less than thirty days.
3. The licensee must have given an initial notice and obtained consent, but only where a customer relationship exists, a consumer who is not a customer being outside the section because the licensee holds no continuing information about them to disclose in the first place.
4. The licensee must have obtained written consent covering all of its nonaffiliated third parties together, the regulation not permitting a consumer to consent to some disclosures and refuse others because a partial consent cannot be administered reliably.

Why: Regulation IH-2001-01, sections 11(A), 11(B) and 11(C). THE OPT-IN REACHES BACKWARDS over information already collected, and PARTIAL OPT-IN is expressly permitted.

A policy loan taken against a life policy's cash value:

1. Is treated as taxable income in the year the loan is taken
2. Must be repaid in full within thirty days or it lapses
3. Requires the owner to submit new evidence of insurability
4. Reduces the death benefit by any unpaid loan and interest ✓

Why: Unpaid loan balance and interest are subtracted from the death benefit; loans are not taxable while the policy stays in force.

To whom are benefits payable under 8 V.S.A. 4107(b)?

1. To the creditor in every case, whatever the relationship between the amount of the insurance and the unpaid indebtedness; the section makes no provision for an excess or for a beneficiary named by the debtor.
2. To a beneficiary named by the debtor or to the debtor's estate, who then discharges the unpaid indebtedness out of the proceeds; the creditor has no direct claim on the benefits under the policy or certificate.
3. To the creditor, to reduce or extinguish the unpaid indebtedness; and any excess of the insurance over that indebtedness to the creditor as well, as compensation for arranging the coverage for the debtor.
4. To the creditor, to reduce or extinguish the unpaid indebtedness; and any excess of the insurance over that indebtedness to a beneficiary other than the creditor named by the debtor, or to the debtor's estate. ✓

Why: 8 V.S.A. 4107(b) requires the policy or certificate to state that benefits are paid to the creditor to reduce or extinguish the unpaid indebtedness, and that wherever the amount of insurance exceeds the unpaid indebtedness, the excess is payable to a beneficiary other than the creditor named by the debtor, or to the debtor's estate. The document must also set out the insurer's name and home office address, the debtor's name, the premium separately for each coverage, and a description of the coverage with its exceptions and limitations.

A Medicare Part B late enrollment penalty generally:

1. Applies as a one-time fee at the first physician visit
2. Is automatically waived after the first two years of coverage
3. Blocks the person from ever enrolling in Part B in the future
4. Permanently raises the monthly Part B premium ✓

Why: Delaying Part B without creditable coverage adds a lifetime surcharge (about 10% per 12 months of delay) to the premium.

How does 8 V.S.A. 3835(18) define stranger-originated life insurance?

1. An act, practice or arrangement to initiate a policy on a Vermont resident for the benefit of a third party who at the time of the settlement has no insurable interest in the life of the insured person.
2. Any life settlement contract entered into within five years of the issuance of the policy that is its subject, whatever insurable interest the beneficiary may have had when the policy was first written.
3. Any arrangement under which a policy owner borrows the premium for a life insurance policy from a lender who takes the policy as security for the loan that has been made to that policy owner.
4. An act, practice or arrangement to initiate a policy on a Vermont resident for the benefit of a third party who at the time of origination has no insurable interest in the life of the insured. ✓

Why: 8 V.S.A. 3835(18) defines STOLI as an act or acts, practice or arrangement to initiate a life insurance policy in the name of a resident of this State for the benefit of a third party who, at the time of POLICY ORIGINATION, has no insurable interest under Vermont law in the life of the insured. It includes cases where the insurance is bought with resources or guarantees from a person who could not lawfully initiate the policy and where there is an arrangement at inception to transfer ownership or benefits to a third party.

In an indexed universal life policy, the interest credited to cash value is:

1. Determined each year solely by the policyowner's own elections
2. Based entirely on separate-account mutual fund performance and risk
3. Guaranteed at a fixed rate set for the life of the contract
4. Tied to a stated market index, subject to a cap and a guaranteed floor ✓

Why: Indexed UL credits interest linked to an external index (e.g., S&P 500) with a cap/participation rate and a guaranteed minimum floor.

Within what period must the Green Mountain Care Board decide a rate request under 8 V.S.A. 4026(a)(2)(A)?

1. Within sixty calendar days after receipt of an initial rate filing, extendable by a reasonable further period not exceeding thirty calendar days where the insurer fails to provide materials to the Board in a timely manner.
2. Within ninety calendar days after receipt of an initial rate filing, extendable by a reasonable further period not exceeding thirty calendar days where the insurer is slow with materials or other information. ✓
3. Within ninety calendar days after receipt of an initial rate filing, with no power to extend that period for any reason, a rate not decided within it being deemed approved as filed by the health insurer in this State.
4. Within one hundred and eighty calendar days after receipt of an initial rate filing, extendable by a reasonable further period not exceeding sixty calendar days where the insurer is slow with the materials the Board requires.

Why: 8 V.S.A. 4026(a)(2)(A) gives the Board ninety calendar days from receipt of an initial rate filing to approve, modify or disapprove it. Where the health insurer fails to provide necessary materials or other information in a timely manner, the Board may extend its review for a reasonable additional period not to exceed thirty calendar days.

Between which insureds does 8 V.S.A. 3701 forbid a life insurance company to discriminate, and in what respects?

1. Between individual insureds of the same class and of equal expectation of life, as to premiums or their terms of payment, the rate charged, the dividends or other benefits payable, and any of the terms and conditions of the policies it issues. ✓
2. Between individual insureds of the same class and of equal expectation of life, as to premiums or their terms of payment and the rate charged alone, dividends being left to the company.
3. Between all individual insureds, whatever their class or expectation of life, as to premiums, the rate charged, the dividends payable and the terms and conditions of the policies the company issues to them in this State.
4. Between individual insureds of the same class, as to the rate charged for policies of life or endowment insurance and nothing else at all under the section as it is drawn.

Why: 8 V.S.A. 3701: a life insurance company doing business in the State may not make or permit any distinction or unfair discrimination BETWEEN INDIVIDUAL INSUREDS OF THE SAME CLASS AND OF EQUAL EXPECTATION OF LIFE as to (1) the amount of the premiums or the terms of payment; (2) the rate charged for policies of life or endowment insurance; (3) the dividends or other benefits payable; or (4) any of the terms and conditions of the policies it issues. Same class AND equal expectation of life - both limbs.

What is the most restrictive definition of 'preexisting condition' permitted by 8 V.S.A. 8086(a)?

1. A condition for which medical advice or treatment was recommended by or received from a provider of health care services within twelve months preceding the effective date of coverage of an insured person.
2. A condition for which medical advice or treatment was recommended by or received from a provider of health care services within six months preceding the effective date of coverage of an insured person. ✓
3. A condition for which medical advice or treatment was recommended by or received from a provider of health care services at any time before the effective date of coverage of an insured person under the policy.
4. A condition of which the insured person was aware, whether or not any medical advice or treatment was recommended or received, within six months preceding the effective date of coverage under the policy.

Why: 8 V.S.A. 8086(a) forbids a definition more restrictive than a condition for which medical advice or treatment was recommended by or received from a provider of health care services within six months preceding the effective date of coverage of an insured person. The Commissioner may extend the period by rule for specific age groups in specific policy forms under 8086(c).

How is a COURSE approved under Regulation I-2000-02, section 6?

1. A course is approved if it appears on the outside vendor's national list, the Commissioner accepting that list in place of a Vermont review and assigning the credit hours it shows.
2. A course must be submitted by the instructor rather than the provider, approved within thirty days, and renewed annually, a lapsed approval being revived automatically on payment of a late fee at any time within twelve months of the expiry date recorded by the Department for that course.
3. It must expand insurance skills and knowledge. An active provider applies; notification comes within 45 days, with 30 days to answer a query. Approval runs 24 months, renewable 60 days before expiry. ✓
4. A course must be approved before it is offered but may be advertised as soon as the application is filed, and its approval runs for the life of the provider's registration rather than for a period of its own.

Why: Regulation I-2000-02, sections 6(A) to (F). NO COURSE MAY BE ADVERTISED FOR CE BEFORE APPROVAL IS RECEIVED - 6(D) says so expressly.

The age of a person whose age was used to fix the premium on a Vermont life policy has been misstated. What does 8 V.S.A. 3731(5) require?

1. Such as the premium would have purchased at the correct age, and the insurer may recover the premium difference as well from the owner or from the proceeds payable under the policy.
2. The policy is voidable at the insurer's option where the misstatement was material, subject to the incontestable clause set out in the preceding subdivision of the same section here.
3. The premium is corrected from the next policy anniversary and the benefit payable under the policy is unaffected by the misstatement.
4. Any amount payable or benefit accruing under the policy is such as the premium would have purchased at the correct age or ages. ✓

Why: 8 V.S.A. 3731(5): if THE AGE OF THE INSURED OR OF ANY OTHER PERSON WHOSE AGE IS CONSIDERED IN DETERMINING THE PREMIUM OR BENEFIT has been misstated, ANY AMOUNT PAYABLE OR BENEFIT ACCRUING UNDER THE POLICY SHALL BE SUCH AS THE PREMIUM WOULD HAVE PURCHASED AT THE CORRECT AGE OR AGES. Note that the subdivision reaches any person whose age was used, not only the insured; the remedy is an adjustment of benefit, not avoidance or a premium recovery.

What does 8 V.S.A. 4109(b) and (c) require about refunds and undelivered coverage?

1. A refund of any amount paid by the debtor paid or credited promptly on termination before scheduled maturity, on a formula filed with and approved by the Commissioner, subject to a prescribed minimum; and immediate written notice and an appropriate credit where no policy or certificate is issued. ✓
2. A refund of any amount paid by the debtor paid or credited promptly on termination before scheduled maturity, calculated on whatever formula the insurer thinks fit, with no prescribed minimum; and immediate written notice but no credit where no policy or certificate is issued to the debtor concerned.
3. No refund on termination before scheduled maturity, the premium being fully earned when the indebtedness is incurred; and immediate written notice and an appropriate credit where the creditor has required a payment and no policy or certificate of insurance is issued to that debtor at all.
4. A refund of any amount paid by the debtor paid or credited promptly on termination before scheduled maturity, on a formula filed with and approved by the Commissioner, with no minimum of any kind; and a credit to the debtor within thirty days where no policy or certificate is issued to that debtor.

Why: 8 V.S.A. 4109(b) requires each policy, certificate or notice of proposed insurance to provide for prompt payment or credit of any refund on termination before the scheduled maturity date, on a formula filed with and approved by the Commissioner, with the Commissioner prescribing a minimum refund below which no refund need be made. 4109(c) requires the creditor, where it has required a payment and no policy or certificate is issued, to give immediate written notice to the debtor and promptly make an appropriate credit.

How may the notice of a conversion right be given under 8 V.S.A. 3823?

1. By written notice presented to the individual in person only; a notice mailed by the policyholder or by the insurer to the last known address does not satisfy the section, which requires actual receipt of the notice.
2. By written notice presented to the individual, or mailed by the policyholder to the individual's last known address, or mailed by the insurer to the last known address as furnished by the policyholder. ✓
3. By written notice mailed by the insurer to the individual's last known address only; a notice presented in person, or one mailed by the policyholder, does not start the additional period.
4. By any means the policyholder considers reasonable, including a notice posted at the place of employment or circulated in a newsletter to the staff of the employer concerned.

Why: 8 V.S.A. 3823: notice may be given by WRITTEN NOTICE PRESENTED TO THE INDIVIDUAL, OR MAILED BY THE POLICYHOLDER TO THE LAST KNOWN ADDRESS OF THE INDIVIDUAL, OR MAILED BY THE INSURER TO THE LAST KNOWN ADDRESS OF THE INDIVIDUAL AS FURNISHED BY THE POLICYHOLDER. Any of the three will do.

A producer who holds client premiums must keep them in a fiduciary capacity, which means the producer must:

1. Report each premium directly to the federal tax authorities
2. Lend the premiums to other clients who are short on funds
3. Invest the premiums for personal profit until they are remitted
4. Keep those funds separate and not mix them with personal money ✓

Why: As a fiduciary, the producer holds premiums in trust for the insurer and must not commingle them with personal funds (doing so is commingling).

What fees does 8 V.S.A. 3836(a) attach to a life settlement provider licence?

1. An application fee of $50.00 and a licence fee of $400.00, with a biennial renewal fee of $400.00 payable in the odd-numbered year next following issuance. ✓
2. An application fee of $30.00 and a licence fee of $100.00, with a biennial renewal fee of $100.00 payable in the even-numbered year next following issuance.
3. An application fee of $50.00 and a licence fee of $400.00, with an annual renewal fee of $400.00 payable on the anniversary of the issuance of that licence.
4. An application fee of $400.00 and a licence fee of $50.00, with a biennial renewal fee of $50.00 payable in the odd-numbered year next following issuance.

Why: 8 V.S.A. 3836(a)(2) requires an application fee of $50.00 and a licence fee of $400.00 for a life settlement provider. 3836(a)(3) allows renewal on a date the Commissioner prescribes of the odd-numbered year next following issuance, on payment of a biennial renewal fee of $400.00, and failure to pay by the renewal date expires the licence.

The group policy itself terminates, or is amended to end the insurance of a class. Who may convert under 8 V.S.A. 3821?

1. Every person insured at the date of termination whose insurance terminates, whatever period that person had been insured under the group policy before that date.
2. Every person insured at the date of termination whose insurance terminates and who has been so insured for at least five years before that date. ✓
3. Every person insured at the date of termination whose insurance terminates and who has been so insured for at least two years.
4. No one; conversion is available only on termination of employment or of membership in an eligible class under the preceding section.

Why: 8 V.S.A. 3821: if the group policy TERMINATES OR IS AMENDED SO AS TO TERMINATE THE INSURANCE OF ANY CLASS of insured persons, EVERY PERSON INSURED AT THE DATE OF SUCH TERMINATION WHOSE INSURANCE TERMINATES AND WHO HAS BEEN SO INSURED FOR AT LEAST FIVE YEARS PRIOR TO SUCH TERMINATION DATE is entitled to an individual policy, subject to the same conditions and limitations as section 3820. There is no qualifying period for a conversion under 3820.

What ceiling does 8 V.S.A. 4173(c)(2) set on annuity benefits?

1. $100,000.00 in the present value of annuity benefits for one life, including net cash surrender and withdrawal values; and $250,000.00 for each participant in a governmental retirement plan and for each structured settlement payee under the chapter.
2. $250,000.00 in the present value of annuity benefits for one life, including net cash surrender and withdrawal values; and the same figure for each participant in a governmental retirement plan and for each structured settlement payee. ✓
3. $250,000.00 in the present value of annuity benefits for one life, including net cash values; but no coverage at all for a participant in a governmental retirement plan or for the payee of a structured settlement annuity.
4. $300,000.00 in the present value of annuity benefits for one life, which is the same figure the subdivision uses for life insurance death benefits, and $300,000.00 for each structured settlement payee or beneficiary of that payee.

Why: 8 V.S.A. 4173(c)(2)(A)(iii) gives $250,000.00 in the present value of annuity benefits, including net cash surrender and net cash withdrawal values. The same $250,000.00 figure is used in subdivision (c)(2)(B) for each individual participating in a governmental retirement benefit plan covered by an unallocated annuity contract and in (c)(2)(C) for each payee of a structured settlement annuity.

What is prohibited by the STOCK OPERATIONS subdivision, 8 V.S.A. § 4724(6)?

1. Issuing stock in an insurance company to the public without registering the offering with the securities regulator, the subdivision protecting investors rather than policyholders and operating alongside the securities law of this State.
2. Permitting an agent or employee to own stock in the insurer whose policies that person sells, the conflict between the interest of a shareholder and the duty of a producer being the mischief at which the subdivision is aimed.
3. Delivering an advisory board contract to a policyholder, whether or not it promises returns or profits and whether or not it was an inducement to insure, all such contracts being forbidden in this State.
4. Permitting agents, officers or employees to issue or deliver agency or company stock, benefit certificates, shares, securities, or special or advisory board contracts promising returns as an inducement to insure. ✓

Why: 8 V.S.A. § 4724(6). The words AS AN INDUCEMENT TO INSURE are what tie the subdivision to the insurance sale.

What penalty does 8 V.S.A. § 3368(c) carry?

1. An administrative penalty of not more than $5,000 for each violation, the subsection setting a ceiling but leaving the Commissioner free to impose a nominal penalty where the violation was inadvertent.
2. An administrative penalty of not less than $500 nor more than $5,000 for each violation of subsection (a), the floor being as much a part of the subsection as the ceiling. ✓
3. A fine of not more than $10,000 for each violation, recoverable by the Attorney General in a civil action, together with an order requiring the insurer to return every premium it has collected in this State during the period in which it was transacting business without a certificate of authority.
4. Revocation of the insurer's eligibility to apply for a certificate of authority for three years, in addition to an administrative penalty in whatever amount the Commissioner finds proportionate to the business written.

Why: 8 V.S.A. § 3368(c). THE FLOOR MATTERS: this is one of the few penalties in the title with a MINIMUM as well as a maximum.

What is the SERVICE PROVIDER AND JOINT MARKETING exception in Regulation IH-2001-01, section 14?

1. The opt-in requirements do not apply to any disclosure to a person acting for the licensee, no contract being required because the service provider is treated as the licensee itself for the purposes of the regulation.
2. The opt-in requirements do not apply where the third party is licensed in this State, the regulation relying on that person's own obligations under the rule rather than on a contract between the parties, and requiring only that the licensee record the disclosure in the consumer's file together with the purpose for which it was made.
3. The opt-in requirements do not apply to joint marketing with another financial institution provided the consumer is told the name of that institution in the initial notice, and no contractual restriction is required where both parties are subject to this regulation.
4. The opt-in rules do not apply where the third party performs services for or functions on behalf of the licensee, if the licensee gives the initial notice and enters a contract forbidding the third party to disclose or use the information except to carry out those purposes - and, for joint marketing, gives only name, contact information and its own transaction and experience information. ✓

Why: Regulation IH-2001-01, sections 14(A)(1)(a) to (c). A JOINT AGREEMENT is a WRITTEN CONTRACT to jointly OFFER, ENDORSE OR SPONSOR a product. The narrow name-and-contact limit in (c) DOES NOT apply to a plain service-provider disclosure such as one to a producer acting as an independent contractor.

Which dividend option increases both death benefit and cash value with no new underwriting?

1. Cash payment
2. Paid-up additions ✓
3. Reduction of premium
4. Accumulate at interest

Why: Paid-up additions use dividends to buy single-premium whole life, raising both the death benefit and cash value without evidence of insurability.

Whom may an individual health policy insure under 8 V.S.A. 4028(3)?

1. Only one person, except that on the application of an adult family member it may insure two or more eligible family members, including children under a specified age not exceeding nineteen years at the date of the application.
2. Any number of persons who have an insurable interest in each other, the subdivision placing no limit on the composition of the group and naming no age at which a child ceases to be eligible for the coverage provided.
3. Only one person, except that on the application of an adult family member, who is deemed the policyholder, it may insure two or more eligible family members, including children under a specified age not exceeding twenty-six. ✓
4. Only one person in every case; a family is insured by a group policy under the group subchapter rather than by an individual policy, whoever applies for the coverage and whatever the relationship of the persons concerned.

Why: 8 V.S.A. 4028(3) requires the policy to purport to insure only one person, except that on the application of an adult member of a family, who is deemed the policyholder, it may insure two or more eligible members of that family, including a spouse or civil union partner, dependent children or any children under a specified age that shall not exceed twenty-six, and any other person dependent on the policyholder.

What grace period must a Vermont life policy give under 8 V.S.A. 3731(2)?

1. Thirty days, or at the insurer's option one month of not less than thirty days, or four weeks on an industrial policy paid monthly or less often, the shorter period being allowed because the premium is smaller.
2. Thirty-one days for every premium including the first, with no distinction drawn between an ordinary policy and an industrial one in the length of the grace period that it requires of the insurer.
3. Sixty days for any premium after the first, during which the policy continues in full force on the terms that it sets out for the policyholder while the grace period is running on it.
4. Thirty days, or at the insurer's option one month of not less than thirty days, or four weeks on an industrial policy whose premiums are payable more frequently than monthly. ✓

Why: 8 V.S.A. 3731(2): a grace period of THIRTY DAYS, or at the insurer's option ONE MONTH OF NOT LESS THAN THIRTY DAYS, or FOUR WEEKS IN THE CASE OF INDUSTRIAL POLICIES THE PREMIUMS FOR WHICH ARE PAYABLE MORE FREQUENTLY THAN MONTHLY, within which any premium AFTER THE FIRST may be paid, the policy continuing in full force during it.

A joint and survivor annuity covering a couple continues full or reduced payments:

1. Only until the first annuitant dies
2. Until the second of the two annuitants dies ✓
3. To the couple's heirs after both die
4. For a fixed ten-year term regardless of survival

Why: A joint and survivor annuity pays as long as either annuitant lives, often reducing to a percentage for the survivor.

When a child is covered under both parents' health plans, the primary plan is usually determined by the:

1. Birthday rule, using the parent whose birthday is earlier in the year ✓
2. Alphabetical order of the two parents' last names on their policies
3. Age of the child at the time the particular medical expense was incurred
4. Plan that happens to charge the lower of the two monthly premiums

Why: The birthday rule makes primary the plan of the parent whose birthday falls earlier in the calendar year.

How does 8 V.S.A. 4173(b)(2)(C) limit coverage of a policy by reference to Moody's Corporate Bond Yield Average?

1. A portion is excluded where the rate averaged over the four years before impairment or insolvency exceeds Moody's for that period less three percentage points, and, on and after that date, the most recent Moody's figure less two points.
2. A portion is excluded where the rate at the date of impairment or insolvency exceeds the most recent Moody's figure by two percentage points, no averaging being required by the subdivision over any earlier period of the policy's life.
3. A portion is excluded where the rate averaged over the four years before impairment or insolvency exceeds Moody's averaged for that period less two percentage points, and, on and after that date, the most recent Moody's figure less three points. ✓
4. A portion is excluded where the rate exceeds Moody's averaged over the ten years before impairment or insolvency by any margin at all, the subdivision setting no fixed number of percentage points at all for the comparison it requires.

Why: 8 V.S.A. 4173(b)(2)(C) works in two stages. Averaged over the four years before the member insurer becomes impaired or insolvent, whichever is earlier, the rate must not exceed Moody's Corporate Bond Yield Average for the same period less two percentage points; on and after that date it must not exceed the most recently available Moody's figure less three percentage points.