Virginia Life & Health Insurance License, Practice Exams

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.

A disability policy has a 30-day elimination period and a $4,000 monthly benefit. If the insured is disabled for 5 months, the total benefit paid is about:

1. $16,000 ✓
2. $20,000
3. $12,000
4. $8,000

Why: The first month (30-day elimination) pays nothing; 4 months are paid × $4,000 = $16,000.

An endowment policy is distinguished by the fact that it:

1. Pays the face amount at a set maturity date if the insured is still living ✓
2. Decreases its face amount steadily over the policy's term
3. Provides only temporary coverage that expires with no value
4. Invests the entire premium in the insurer's separate investment accounts chosen by the owner

Why: An endowment pays the face amount either at the insured's death or upon reaching the maturity date while living; modern tax rules limit their use.

Under § 38.2-1867(B), for an approved classroom CE course, one credit hour is equivalent to a classroom hour providing at least:

1. 30 minutes of instruction, excluding any break time
2. 50 minutes of continuous instruction or participation ✓
3. 45 minutes of instruction plus a graded written review
4. 60 minutes of instruction, including breaks

Why: Section 38.2-1867(B) provides that, for an approved classroom course, a credit hour is equivalent to a classroom hour providing at least 50 minutes of continuous instruction or participation.

Under § 38.2-1834(G), an agent whose appointment has been terminated by an insurer is:

1. Prohibited from selling or soliciting on behalf of that insurer unless and until reappointed ✓
2. Free to continue servicing existing policies for one year after the effective date of the termination
3. Automatically appointed by any affiliated insurer within the same insurance holding company system
4. Required to surrender his agent license to the Commission within 30 calendar days of the termination

Why: Section 38.2-1834(G) prohibits a terminated agent from selling or soliciting applications or policies on behalf of that insurer unless and until reappointed; doing so is a violation subject to penalties under §§ 38.2-218 and 38.2-1831.

An insured is totally disabled and, after the waiting period, the policy's waiver of premium takes effect. This means the insured:

1. Must repay the waived premiums after recovering
2. Owes no premiums while the disability continues ✓
3. Receives double the monthly disability benefit
4. Loses all coverage until premiums resume

Why: Once the disability-based waiver of premium applies, premiums are waived (often retroactive to the start) while the disability continues, keeping coverage in force.

Because an insurance policy is drafted entirely by the insurer and the applicant simply accepts it, it is legally a contract of:

1. Aleatory exchange, in which the dollar amounts traded by the parties are unequal
2. Indemnity
3. Adhesion ✓
4. Warranty

Why: A contract of adhesion is written by one party and offered on a take-it-or-leave-it basis, so ambiguities are construed against the drafter (the insurer).

Under the ACA, in-network preventive services such as immunizations and screenings must be covered:

1. Only after the deductible is fully met
2. With no cost-sharing to the insured ✓
3. At 50% coinsurance in every plan
4. Only for insureds under age 40

Why: ACA-compliant plans must cover specified preventive services in-network with no copay, coinsurance, or deductible.

The 'law of large numbers' is important to insurers because it:

1. Eliminates the need for insurers to classify or underwrite risks
2. Guarantees that no single insured will ever file a large claim
3. Makes losses more predictable as the number of similar risks grows ✓
4. Requires every applicant to be charged the exact same premium

Why: The larger the pool of similar exposures, the more closely actual losses approach predicted losses, allowing accurate pricing.

Which definition of "annuities" matches Title 38.2?

1. Insurance on the lives of human beings that includes endowment benefits, together with any contract promising a stated sum at a fixed maturity date
2. All agreements to make periodic payments in specified or calculable sums for a stated period or for the life of the person(s) specified ✓
3. Insurance against loss resulting from sickness, or from bodily injury or death by accident, including contracts paying a fixed monthly income during disability
4. Any agreement indemnifying a creditor against a debtor's nonpayment

Why: Section 38.2-106 defines "annuities" as all agreements to make periodic payments in specified or calculable sums pursuant to a contract for a stated period or for the life of the person(s) specified. It excludes life insurance contracts defined in § 38.2-102.

A life insurance policy's aviation exclusion typically denies the death benefit when the insured dies:

1. While traveling by automobile to a private airport hangar
2. While riding as a paying passenger on a scheduled commercial flight
3. As a non-fare-paying private pilot or crew member ✓
4. From any cause during the first two years of the policy

Why: Aviation exclusions usually apply to non-commercial flying (private pilots/crew); fare-paying passengers on scheduled flights remain covered.

The elimination period in a disability income policy functions as:

1. A flat dollar deductible the insurer subtracts from every monthly benefit check before paying
2. A time deductible the insured must wait through before benefits begin ✓
3. The outside limit, stated in years, on how long monthly benefits will ever be paid
4. A 31-day window for paying an overdue premium

Why: The elimination (waiting) period is a 'time deductible'; a longer elimination period lowers the premium because the insurer pays for fewer short claims.

To reinstate a lapsed policy, an insured must typically provide evidence of insurability and:

1. Wait five years from the lapse date
2. Pay only the single current premium
3. Purchase an additional rider
4. Pay all back premiums with interest ✓

Why: Reinstatement requires proof of insurability plus payment of overdue premiums with interest (and any loan), within the allowed window.

An agent born in an odd-numbered year holds a Virginia life and annuities license. Under § 38.2-1825.1, the license expires at the end of the agent's birth month in:

1. Even-numbered years
2. Every year
3. Odd-numbered years ✓
4. The year of original issuance only

Why: Section 38.2-1825.1(A) provides that the license for an agent born in an odd-numbered year expires at the end of the agent's birth month in odd-numbered years.

'Rebating' generally refers to:

1. Refunding the unearned premium when a policy is properly cancelled
2. Charging a higher premium to a substandard, higher-risk applicant
3. Returning a claim overpayment to the insurer after a billing error
4. Offering something of value not in the contract to induce a sale ✓

Why: Rebating is giving a prospect any inducement (such as part of the commission or a gift) not specified in the policy to persuade them to buy; it is illegal in most states.

A 'mutual' insurance company is:

1. A producer-owned brokerage firm
2. A government agency that pays claims of insolvent insurers
3. Owned by outside stockholders seeking profit
4. Owned by its policyholders, who may receive policy dividends ✓

Why: A mutual insurer is owned by its policyowners; dividends paid to them are treated as a nontaxable return of premium.

Under § 38.2-618, a person who discloses information in accordance with the privacy article generally has immunity from a defamation or invasion-of-privacy action, EXCEPT when the person:

1. Furnishes the authorized information in an electronic format rather than as a paper record
2. Charges the requesting individual a reasonable fee for copying the disclosed records
3. Is merely negligent in verifying the information
4. Discloses or furnishes false information with malice or willful intent to injure ✓

Why: Section 38.2-618 grants immunity from defamation, invasion of privacy, or negligence causes of action for disclosing information in accordance with the article, but provides no immunity for disclosing or furnishing false information with malice or willful intent to injure.

In an equity-indexed annuity using the 'annual point-to-point' crediting method, interest is based on the index value:

1. Averaged across all twelve monthly closing values of the year
2. Measured continuously on every single trading day of the year
3. At the start of the year compared to the end of the year ✓
4. At the single highest point the index reached during the term

Why: Annual point-to-point compares the index at the beginning and end of the year; high-water mark and monthly averaging are alternative methods.

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.

In a variable annuity, accumulation units measure the contract's value:

1. During the pay-in phase before income payments begin ✓
2. Only after the contract has been fully annuitized into a stream of income
3. While the annuitant is receiving level, guaranteed monthly income payments
4. According to a fixed interest rate the insurer declares anew each year

Why: Accumulation units track value during the accumulation phase; annuity units are used during the payout phase.

In a health maintenance organization (HMO), the primary care physician acts as a 'gatekeeper,' meaning the member usually must:

1. Pay the full cost of every visit out of pocket first
2. Submit all claims directly to the state insurance department
3. Get a referral before seeing a specialist ✓
4. Choose a new physician each calendar year automatically

Why: In a gatekeeper HMO, the PCP coordinates care and must refer the member before specialist services are covered.

An insured and the sole primary beneficiary die in the same crash, order of death unknown. Under the Uniform Simultaneous Death Act, proceeds go to:

1. The contingent beneficiary or the insured's estate ✓
2. Whoever was pronounced dead first at the scene
3. The insurer, as unclaimed property
4. The primary beneficiary's own heirs, through that beneficiary's estate

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

During the contestable period, the insurer discovers a material misrepresentation on the application. The insurer may:

1. Rescind the policy and deny the claim ✓
2. Reduce benefits but must keep the policy
3. Only raise the premium going forward
4. Do nothing, since the policy is already issued

Why: A material misrepresentation discovered within the contestable period lets the insurer rescind the contract.

'Churning' as an unfair practice refers to:

1. Mixing a client's premium funds with the producer's own money
2. Replacing a policy within the same insurer through misrepresentation ✓
3. Refusing to renew a policy after the insured files a large claim
4. Charging higher premiums to applicants with poor health histories

Why: Churning is using misrepresentation to replace a policy with another from the same insurer to generate new commissions; twisting involves different insurers.

A client wants to move funds from an old annuity into an LTC insurance policy tax-free. Under Section 1035, this is:

1. Treated as a full surrender, with the gain taxed as ordinary income
2. Allowed only when the receiving contract is a term life policy
3. Barred, because an annuity may be exchanged only for another annuity
4. Permitted (annuity-to-LTC is a valid 1035 exchange) ✓

Why: Section 1035 permits tax-free exchanges from an annuity to a qualified long-term care policy.

Under the genetic information privacy rule of § 38.2-508.4, a health insurer may NOT do which of the following based on genetic information?

1. Pay a death claim under a policy that was fully underwritten when it was issued
2. Establish differentials in premium rates for coverage ✓
3. Process a routine renewal of the certificate at the rate already on file
4. Issue an explanation of benefits showing the amounts paid and the amounts denied

Why: Section 38.2-508.4(B) prohibits, on the basis of genetic information, terminating/restricting coverage, refusing to renew, excluding from coverage, imposing a waiting period, requiring an exclusionary rider, or establishing premium rate differentials.

Social Security disability benefits use a strict definition: the inability to engage in:

1. The specific occupation the insured personally held immediately before the disability began
2. Any work the insured personally finds enjoyable
3. Physical labor, though desk work is still expected
4. Any substantial gainful activity due to a medically determinable impairment ✓

Why: SSDI requires inability to perform any substantial gainful activity (not just one's own occupation), expected to last at least 12 months or result in death.

Among the stated purposes of Chapter 6 (Insurance Information and Privacy Protection) is to:

1. Enable natural persons to ascertain what information has been collected about them and to access it to verify or dispute its accuracy ✓
2. Require every insurer to publish the policyholder data files it maintains in an annual public report filed with the Commission by March 1
3. Set the minimum reserves an insurer must hold against personal information it stores
4. Eliminate underwriting based on any information the applicant did not personally supply

Why: Section 38.2-600 lists purposes including establishing a mechanism for natural persons to ascertain what information is collected about them and to access it to verify or dispute its accuracy, and to enable obtaining reasons for adverse underwriting decisions.

Under § 38.2-1827, an agent holding a license that includes BOTH life and health and property and casualty authority who intends to sell both types of insurance must:

1. Hold only one combined appointment covering all lines that the insurer is authorized to write
2. Obtain both a life and health appointment and a property and casualty appointment ✓
3. Obtain a single all-lines appointment from each insurer he represents
4. Obtain only a life and health appointment, since it is the broader authority

Why: Section 38.2-1827 requires an agent holding both life and health and property and casualty authority to obtain both a life and health and a property and casualty appointment if he intends to sell both types.

Survivorship (second-to-die) life insurance is most commonly used to:

1. Fund a child's future college costs through the policy's accumulated cash value
2. Provide estate liquidity after the second insured dies ✓
3. Replace the income of a sole wage earner who has several young children at home
4. Cover a short-term business loan that must be fully repaid within five years

Why: It pays at the second death and is widely used to fund estate taxes and costs.

A distinguishing feature of adjustable life insurance is that the owner can:

1. Only ever convert it into a fixed single-premium immediate annuity
2. Invest the cash value directly in stocks and bonds of their choosing
3. Receive guaranteed dividends regardless of the insurer's experience
4. Change the premium, face amount, or coverage period as needs change ✓

Why: Adjustable life lets the owner modify premium, face amount, and protection period, effectively shifting between term and permanent coverage.

A health policy with monthly premiums has a grace period of 10 days. A premium is 8 days late when the insured incurs a covered loss. The insurer:

1. Pays half of the benefit and bills the insured for the two months of overdue premium
2. Rescinds coverage back to the paid-to date and refunds the unearned premium to the insured
3. Denies the claim, since coverage lapsed on the due date
4. Covers the loss, since the policy is still in force during the grace period ✓

Why: Coverage continues during the grace period; the claim is paid (the overdue premium may be deducted).

To keep a producer license active, most states require the producer to:

1. Maintain membership in a fraternal benefit society or trade association
2. Re-take and pass the original state licensing examination every two years
3. Sell a minimum of $250,000 in new annual premium each calendar year
4. Complete continuing education and renew the license periodically ✓

Why: License renewal generally requires periodic continuing education; specific hours and cycles are set by each state.

Under § 38.2-1831, which is an enumerated ground for license action relating to an agent's handling of funds?

1. Charging a policyholder interest on a premium loan made by the appointing insurer
2. Improperly withholding, misappropriating, or converting moneys received in the course of insurance business ✓
3. Maintaining premiums in a separate fiduciary account rather than remitting them directly to the appointing insurer
4. Holding continuing education credits in excess of the hours required for the biennium

Why: Section 38.2-1831(6) lists improperly withholding, misappropriating, or converting any moneys or properties received in the course of doing insurance business as a ground for license action.

All other factors being equal, paying premiums monthly rather than annually generally results in:

1. A lower total cost due to a volume discount for frequent payments
2. An automatic reduction in the policy's face amount each month
3. A higher total annual cost because of added administrative loading ✓
4. Exactly the same total cost regardless of the payment frequency

Why: More frequent modes carry higher total cost (loading) to offset administrative expense and lost interest to the insurer.

A person KNOWINGLY or WILLFULLY violates a provision of Title 38.2. Under § 38.2-218, the maximum penalty for each such violation is:

1. $1,000
2. $2,500
3. $5,000 ✓
4. $10,000

Why: Section 38.2-218(A) provides that any person who knowingly or willfully violates any provision of the title or a regulation issued under it shall be punished for each violation by a penalty of not more than $5,000.

Under § 38.2-509(B), an insurer allowing its bona fide employees a premium reduction on policies on their own lives and property is permitted to extend that reduction to:

1. Any business partner of the employee, their lives and their property, insured by the same insurer
2. Any member of the employee's household, whether or not a dependent
3. All friends of the employee named on a schedule filed with the insurer
4. The lives and property of their spouses and dependent children ✓

Why: Section 38.2-509(B)(4) permits insurers to allow bona fide employees a premium reduction on policies on their own lives and property, and on the lives and property of their spouses and dependent children.

Virginia's annual 'birthday rule' open enrollment for individual Medicare supplement policyholders begins on the insured's birthday and remains open for at least how many days?

1. 30 days
2. 45 days
3. 60 days ✓
4. 90 days

Why: § 38.2-3611(A) requires an annual open enrollment period commencing on the insured's birthday and remaining open for at least 60 days, during which they may buy a policy with the same benefits without health-status underwriting.

Under § 38.2-610, after receiving a timely written request, the insurer or agent must furnish the specific reasons and supporting information within:

1. Ten business days
2. Twenty-one business days ✓
3. Thirty business days
4. Forty-five business days

Why: Section 38.2-610(B) requires the insurer or agent to furnish the specific reasons, the supporting personal/privileged information, and the institutional sources within twenty-one business days from receipt of the written request.

A pure (straight) life annuity payout option provides:

1. Equal payments split between the annuitant and a surviving spouse
2. A guaranteed refund of all unused premiums to a named beneficiary
3. The largest periodic payment, but nothing to anyone after the annuitant dies ✓
4. Payments for a fixed number of years regardless of the annuitant's life

Why: Pure life pays the highest income because payments stop at death with no refund or beneficiary payment; refund and period-certain options pay less but protect a beneficiary.

Under § 38.2-1833(A)(3), when the Commission notifies an appointing insurer that an appointment is invalid, the insurer must notify the agent in writing of the invalid appointment within:

1. Ten calendar days of receiving the notice
2. Thirty calendar days of receiving the Commission's notice
3. The next renewal of the appointment
4. Five business days of receiving the notice ✓

Why: Section 38.2-1833(A)(3) requires the insurer to notify the agent in writing of an invalid appointment within five business days of receiving notice from the Commission.

A state insurance guaranty association exists to:

1. Guarantee that every applicant will be approved for coverage
2. Pay covered claims of insurers that become insolvent, up to set limits ✓
3. Provide free legal representation to policyholders in disputes
4. Set the premium rates that all insurers in the state must charge

Why: Guaranty associations protect policyholders by covering claims (within statutory limits) when a member insurer becomes insolvent; their existence may not be used in advertising or sales.

A disability income policy with a benefit period 'to age 65' will:

1. Pay benefits for a qualifying disability until the insured turns 65 ✓
2. Stop all benefits exactly five years after the disability begins
3. Begin paying benefits only after the insured reaches age 65
4. Refund every premium paid once the insured turns age 65

Why: A 'to age 65' benefit period pays for a continuing disability until the insured reaches 65, a common long-term disability design.

The provision that automatically uses available cash value to pay a premium not paid by the end of the grace period is the:

1. Paid-up addition
2. Reinstatement provision
3. Automatic premium loan ✓
4. Accelerated benefit

Why: The automatic premium loan provision borrows against cash value to cover an unpaid premium, preventing a lapse.

Under § 38.2-619, in addition to a possible fine, a person who obtains insurance information under false pretenses may be punished by confinement in jail for not more than:

1. 6 months
2. 12 months ✓
3. 2 years
4. 30 days

Why: Section 38.2-619 provides for a fine of not more than $10,000 or confinement in jail for not more than 12 months, or both.

Under § 38.2-1817, if an applicant fails to take the examination within 90 calendar days from the date his registration is accepted, the result is that:

1. The examination fee is forfeited and the registration is considered withdrawn ✓
2. The applicant receives one automatic 90-day extension upon paying a second examination fee
3. The applicant is barred from registering again for one year from the acceptance date
4. The examination fee is refunded automatically and the registration remains open indefinitely

Why: Section 38.2-1817(E) provides that failure to take the exam within 90 calendar days forfeits the examination fee and the registration is considered withdrawn.

If no court action is brought, interest on life insurance proceeds payable to a beneficiary in Virginia accrues from the date of death at an annual rate of at least:

1. Six percent, the legal rate of judgment interest in Virginia
2. Two and one-half percent ✓
3. Five percent, running only from the date the insurer receives due proof of death
4. Ten percent

Why: Section 38.2-3115 B requires interest computed at an annual rate of two and one-half percent, or the rate the insurer currently pays on proceeds left under the interest settlement option, whichever is greater, from the date of death.

Under § 38.2-318, an insurance policy or form that contains a condition or provision NOT in compliance with Title 38.2 is:

1. Void in its entirety from the date of issue, and the insurer must refund every premium paid with interest
2. Valid, but construed and applied in accordance with the conditions and provisions required by the title ✓
3. Enforceable only against the insured, since an insurer may not benefit from its own noncompliant language
4. Subject to automatic rescission by the Commission, which orders the insurer to reissue on an approved form

Why: Section 38.2-318(A) provides that any insurance policy or form containing a condition or provision not in compliance with the title shall nonetheless be valid, but shall be construed and applied in accordance with the conditions and provisions required by the title.

Under § 38.2-1815.1, a resident individual may not obtain a license as a health agent unless he has:

1. Held a life and annuities agent license for at least one year before applying
2. Passed an examination in a form and manner prescribed by the Commission ✓
3. Been appointed by a health maintenance organization licensed in Virginia
4. Completed 16 hours of continuing education first

Why: Section 38.2-1815.1(A) requires a resident to pass a Commission-prescribed examination to obtain a health agent license.

At death, the insurer learns the insured's age was understated on the application. Under the misstatement-of-age provision, the benefit is:

1. Denied in full, with every premium returned to the beneficiary with interest
2. Paid in full at the applied-for face amount, with no adjustment for the error
3. Adjusted to what the premium paid would have purchased at the true age ✓
4. Raised to the face amount the insured's true age would have required in premium

Why: Misstatement of age adjusts the benefit to the amount the premium would have bought at the correct age, rather than voiding the policy.

A client wants the chance for higher returns and accepts market risk on the annuity's value. The best fit is a:

1. Immediate fixed annuity
2. Bank certificate of deposit
3. Variable annuity ✓
4. Fixed annuity

Why: A variable annuity invests in separate accounts where the owner bears market risk and reward; a fixed annuity guarantees a set return.

Reinstating a Virginia life policy affects the running of the contestable period in what way?

1. Reinstatement permanently waives the insurer's right to contest, because the reinstated policy is treated as a continuation of the original contract for every purpose, contestability included
2. Reinstatement restarts a full new two-year contestable period running from the date of reinstatement, and the insurer may again contest any statement made in the original application for the policy
3. Reinstatement eliminates the incontestability provision entirely, so the insurer may contest the policy at any time until the insured's death, provided it refunds the premiums received after reinstatement
4. The policy is contestable only as to fraud or misrepresentation in the reinstatement application, for the same period after reinstatement as the original policy provided after issue ✓

Why: Section 38.2-3109 provides reinstatement does not affect the running of the contestable period except that the policy is contestable for fraud or misrepresentation in the reinstatement application only for the same period after reinstatement as it provides after original issue.

Current assumption (interest-sensitive) whole life differs from traditional whole life because its premiums and cash values:

1. Adjust with current interest and mortality experience ✓
2. Are fixed by contract and can never be changed for the life of the policy
3. Decrease automatically each year until the policy becomes paid up
4. Are invested entirely in equity sub-accounts selected by the policyowner

Why: Current assumption whole life uses current interest and mortality assumptions, so premiums and cash values can be redetermined periodically.

As defined in § 38.2-3514.1, a 'preexisting conditions provision' may limit or exclude coverage for a covered condition for what maximum period following the insured's effective date of coverage?

1. A 12-month period ✓
2. 6 months
3. 18 months
4. 24 months

Why: § 38.2-3514.1(B) defines a preexisting conditions provision as one limiting or excluding coverage during a twelve-month period following the effective date, for a condition manifesting in the twelve months before the effective date.

A policyowner stops paying premiums but wants to keep some permanent coverage with no further premiums due. The best nonforfeiture option is:

1. Automatic premium loan
2. Reduced paid-up insurance ✓
3. Cash surrender value
4. Extended term insurance

Why: Reduced paid-up uses the cash value to buy a smaller, fully paid-up permanent policy — permanent coverage with no further premiums.

An insurer that issues a Medicare supplement policy may not deny a claim for losses incurred more than how long after the effective date of coverage on the grounds that the condition existed before that date?

1. 3 months
2. 12 months
3. 6 months ✓
4. 24 months

Why: § 38.2-3605 prohibits denying a claim for losses incurred more than six months from the effective date of coverage on preexisting-condition grounds, regardless of the application form used.

In an 'entity' (stock redemption) buy-sell agreement funded with life insurance:

1. The agreement applies only to sole proprietorships, never partnerships
2. The business owns one policy on each owner and buys the deceased owner's interest ✓
3. A bank or other third party holds all of the policies in trust until the business is sold or dissolved
4. Each owner personally owns a policy on every other owner of the firm

Why: In an entity plan the business owns the policies and purchases a deceased owner's share; in a cross-purchase plan the owners insure each other.

A producer places an untrue and misleading announcement about an insurer over a radio station and in a newspaper. This conduct is prohibited as:

1. A pretext interview, since the producer misstated the purpose of a public message
2. Unfair discrimination between individuals of the same class and equal expectation of life
3. False information and advertising generally ✓
4. Rebating, barred by Section 38.2-509

Why: Section 38.2-503 prohibits knowingly placing before the public, by newspaper, radio, television, or any other medium, an advertisement or statement relating to the business of insurance that is untrue, deceptive, or misleading.

'Misrepresentation' as an unfair trade practice means:

1. Returning part of an unearned premium to a policyowner who cancels coverage before the end of the policy period
2. Making false statements about a policy's terms or benefits to induce action ✓
3. Recommending the lowest-cost policy an applicant qualifies for after comparing the rates of several insurers
4. Charging an applicant in poor health a higher premium that reflects the substandard rate class underwriting assigned

Why: Misrepresentation is issuing or circulating untrue statements about the terms, benefits, or nature of a policy.

Under § 38.2-309, statements, declarations, and descriptions in an application for an insurance policy are deemed to be:

1. Warranties that void the policy if inaccurate
2. Representations, not warranties ✓
3. Binding admissions against the insured
4. Conditions precedent to coverage

Why: Section 38.2-309 provides that all statements, declarations, and descriptions in an application (or in an application for reinstatement) are deemed representations and not warranties, and no such statement bars recovery unless clearly proved to be material to the risk and untrue.

A cash refund annuity guarantees that, if the annuitant dies early, the beneficiary receives:

1. Double the original premium as an accidental-death style bonus payment
2. Any premium not yet paid out, in a lump sum ✓
3. Nothing, because all annuity payments stop at the annuitant's death
4. Continued lifetime payments for the rest of the beneficiary's own life

Why: A cash refund pays the beneficiary, in a lump sum, the difference between premiums paid and payments already received; an installment refund pays it out in continued installments.

Chapter 3 of Title 38.2 (provisions relating to insurance policies and contracts) applies to all classes of insurance EXCEPT:

1. Group life insurance policies delivered to a Virginia employer for its resident employees
2. Individual accident and sickness policies issued for delivery to residents of the Commonwealth by a foreign insurer
3. Life and accident and sickness insurance policies not delivered or issued for delivery in the Commonwealth ✓
4. Homeowners policies written on Virginia risks, and ocean marine coverage on private pleasure vessels operated here

Why: Section 38.2-300 makes Chapter 3 applicable to all classes of insurance except, among others, life and accident and sickness policies not delivered or issued for delivery in the Commonwealth, ocean marine (other than private pleasure vessels), contracts of reinsurance, and (largely) annuities.

The key distinction between an agent and a broker is that an agent:

1. May write only one line of insurance, while a broker may write several
2. Represents the applicant's interests, while a broker is the insurer's appointed representative
3. Is paid a salary only, while a broker earns commission on placed coverage
4. Legally represents the insurer, while a broker represents the client ✓

Why: An agent is the insurer's legal representative (acting under an agency contract); a broker represents the insurance buyer in seeking coverage.

For a monthly premium individual accident and sickness policy, what is the minimum grace period Virginia requires in the GRACE PERIOD provision?

1. 7 days
2. 10 days ✓
3. 31 days
4. 60 days

Why: Provision 3 of § 38.2-3503 requires a grace period of not less than 7 days for weekly premium policies, 10 days for monthly premium policies, and 31 days for all other policies.

Under § 38.2-321, an insurer is fully discharged from all claims under a life, accident and sickness, or annuity contract when the proceeds become payable and the insurer pays in accordance with the policy or assignment — UNLESS, before payment, the insurer:

1. Has not yet collected the final premium installment falling due within the grace period
2. Has failed to report the paid claim to the Commission within 30 days of the insured's death, as Chapter 3 requires of life insurers
3. Has failed to give the originally named beneficiary written notice at least 15 days before paying an assignee or a later-named beneficiary
4. Has received at its home office written notice that some other person claims entitlement to payment or an interest in the contract ✓

Why: Section 38.2-321(B) provides that an insurer is not fully discharged if, before payment, it has received at its home office written notice that some other person claims to be entitled to payment or some interest in the policy or contract.

Under § 38.2-612.1, before financial information may be disclosed to a nonaffiliated third party, the individual must be given an opportunity to opt out, and in no case may the individual be given less than:

1. 15 days from the date of notice
2. 60 days from the date of notice
3. 30 days from the date of notice ✓
4. 10 days from the date of notice

Why: Section 38.2-612.1(A)(2) provides that the individual must be given an opportunity to opt out before the information is initially disclosed, and in no case shall the individual be given less than 30 days from the date of notice to direct that the information not be disclosed.

Up to what portion of Social Security benefits may be subject to federal income tax for higher-income recipients?

1. 100% in all cases
2. Exactly 50% always
3. Up to 85% ✓
4. 0%, benefits are never taxed

Why: Depending on combined income, up to 85% of Social Security benefits may be taxable.

Which type of care is generally NOT covered by Medicare?

1. Inpatient hospital care following an approved admission
2. Physician services and outpatient diagnostic testing
3. Long-term custodial care ✓
4. Hospice care for a terminally ill beneficiary

Why: Medicare generally does not pay for long-term custodial care (help with daily living); it covers hospital, physician, and hospice care.

If a policyowner returns an individual accident and sickness policy within the 10-day examination period, when does coverage become void?

1. At the end of the current premium period, with the unearned premium refunded to the policyowner pro rata
2. From its inception, upon mailing or delivery of the policy to the insurer or its agent ✓
3. Thirty days after the insurer receives the returned policy at its home office in Virginia
4. Only after the insurer issues and mails a written notice of cancellation to the policyowner

Why: § 38.2-3502(B) states that returning the policy within ten days renders coverage void from its inception upon the mailing or delivery of the policy to the insurer or its agent.

Under Virginia's Guaranty Association law, what is the maximum amount of life insurance death benefits the Association is obligated to cover with respect to any one life, regardless of the number of policies?

1. $100,000
2. $250,000
3. $300,000 ✓
4. $500,000

Why: Section 38.2-1700 D 2 a (1) caps the Association's obligation at $300,000 in life insurance death benefits with respect to one life, regardless of the number of policies or contracts.

To be 'fully insured' for Social Security retirement benefits, a worker generally needs:

1. A minimum of 30 years of continuous full-time employment
2. Only a single quarter of covered earnings at any point in life
3. 20 quarters earned within the most recent five-year period
4. 40 quarters (about 10 years) of covered earnings ✓

Why: Fully insured status requires 40 quarters of coverage (roughly 10 years of work in covered employment).

Under § 38.2-3541, group continuation of coverage is NOT available to an individual whose eligibility ceased because the individual was:

1. Laid off due to a workforce reduction
2. Discharged for gross misconduct ✓
3. Voluntarily resigned
4. Reduced to part-time hours

Why: § 38.2-3541(B)(5) excludes continuation for an individual whose eligibility ceased because the individual was discharged for gross misconduct, as defined by reference to § 60.2-618.

A 'jumping juvenile' policy is characterized by a face amount that:

1. Increases automatically at a stated age without a premium increase ✓
2. Is invested in mutual fund subaccounts the child's parents select each year
3. Declines steadily each year until the insured child reaches the age of majority
4. Is payable only after the insured child has passed a paramedical exam at age 18

Why: A jumping juvenile policy's face amount jumps (e.g., fivefold) at the age of majority with no increase in premium and no new evidence of insurability.

Concurrent utilization review in a managed-care plan assesses:

1. Whether the group's premium rate should be adjusted at renewal
2. The commission owed to the producer on each enrolled member
3. Whether continued care is necessary while a patient is being treated ✓
4. Which providers will accept a capitation payment before joining the network

Why: Concurrent review evaluates the necessity and appropriateness of care during treatment (e.g., an ongoing hospital stay); prospective review occurs before, retrospective after.

The LEGAL ACTIONS provision bars bringing any legal action on an individual accident and sickness policy after how long from the time written proof of loss is required to be given?

1. One year
2. Two years
3. Three years ✓
4. Six years

Why: Provision 11 of § 38.2-3503 provides that no legal action may be brought after three years from the time written proof of loss is required to be given.

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.

In group insurance underwriting, the insurer primarily evaluates:

1. The credit score of every employee covered by the plan
2. Each individual member's detailed personal medical history
3. The characteristics and risk of the group taken as a whole ✓
4. Only the health of the employer's executive leadership team

Why: Group underwriting assesses the group as a unit (size, industry, turnover, purpose), not each member individually.