Pass the Insurance Licensing Virginia Insurance License Virginia-Life-Annuities-and-Health-Insurance Questions and answers with ExamsMirror

Term life provides pure death protection with no cash value. Its major advantage is lower initial premium compared to whole life insurance. Premiums increase at renewal, but initial affordability makes it attractive for temporary coverage needs.

Exact Extract (Virginia Life Insurance Study Guide): “Term life—provides temporary protection with lower initial premiums than permanent insurance.”

References (Virginia Documents / Study Guide):

— Virginia Life Insurance Examination Outline, Term Life Characteristics

Detailed Answer in Step-by-Step Solution:

A cost of living (COLA) rider (B) adjusts disability income benefits to account for inflation, maintaining purchasing power.

Inflation guard (A) is more common in property insurance. Price escalation (C) and wage protection (D) are not standard disability riders.

The Virginia study guide describes the COLA rider as an optional feature in disability income policies, increasing benefits based on inflation indices like the CPI. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Disability Insurance Riders."

Virginia Code § 38.2-3209 allows a guaranteed insurability rider, enabling the policyowner to buy additional coverage at specified intervals (e.g., every 3 years or life events like marriage) without proving insurability. Option D matches this definition. Option A is unrelated; non-medical underwriting isn’t implied. Option B contradicts the rider’s purpose, which waives insurability proof. Option C is false; premium adjustments aren’t part of this rider. The study guide describes this rider as a planning tool for future needs, confirming D.

Penalty-free withdrawals from a traditional IRA before age 59½ are permitted for disability, qualified first-time home purchase (up to $10,000), or certain unreimbursed medical expenses. Bankruptcy is not a qualifying exception.

Exact Extract (Virginia Retirement Study Guide): “Exceptions to early withdrawal penalty include disability, first-time home purchase, qualified education, or medical expenses. Bankruptcy is not included.”

References (Virginia Documents / Study Guide):

— Virginia Life & Annuities Examination Outline, Retirement Plans – Taxation Rules

In insurance terminology, per Virginia Code § 38.2-100 et seq., a hazard (option A) is a condition increasing the likelihood or severity of a loss from a covered peril (e.g., smoking increases fire risk). Option B (peril) is the cause of loss (e.g., fire, theft). Option C (exposure) is the extent of potential loss, not the condition itself. Option D (risk) is the broader uncertainty of loss, encompassing hazards and perils. The study guide likely differentiates these with examples—e.g., icy roads (hazard) causing a crash (peril)—highlighting hazard’s role in amplifying loss probability, making A the exact match.

Detailed Answer in Step-by-Step Solution:

An absolute assignment transfers all ownership rights (C) of a life insurance policy to a new owner, relinquishing the original owner’s control.

Option A (limited rights) is a partial assignment. Option B (premium payment) is not ownership. Option D (collateral) is a collateral assignment, not absolute.

The Virginia study guide defines absolute assignment as the complete transfer of all policy rights to a new owner, distinct from collateral assignments for loans. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Policy Assignments."

Detailed Answer in Step-by-Step Solution:

Long-term care insurance (B) is designed to cover custodial care (e.g., help with daily activities like bathing or dressing) when individuals cannot care for themselves, often outside a hospital setting.

Medicare (A) provides limited long-term care coverage (e.g., skilled nursing for a short period), not comprehensive custodial care.

Major medical (C) covers hospital and medical expenses, not long-term custodial care.

Disability income (D) replaces lost income, not care costs.

The Virginia study guide defines long-term care insurance as coverage for extended care needs, such as in nursing homes or at home, when individuals cannot perform activities of daily living, distinguishing it from Medicare or major medical plans. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Types of Health Insurance."

Adjustable life insurance (Virginia Code § 38.2-3113.1) allows flexibility in face amount and premiums, effectively shifting between term (lower cost, no cash value) and whole life (higher cost, cash value) features while in force (option A). Option B is false; nonforfeiture options include cash, reduced paid-up, or extended term. Option C is false; settlement options (e.g., lump sum) apply as with other policies. Option D is wrong; it’s life insurance, not an annuity. The study guide likely explains this adaptability—e.g., increasing premiums to build cash value (whole life)—making A the true statement.

Virginia Code § 38.2-1809 mandates that licensees maintain specific records for regulatory oversight and consumer protection. Option A (accounting records of premium payments) is required to track funds received and remitted, ensuring financial accountability (e.g., premiums collected for a $1,000 policy). Option B (files of insurance applications on current policies) must be kept as part of the contract and for audit purposes, per § 38.2-1810. Option C (policy renewal notices) is required to document communication with policyholders about ongoing coverage, ensuring transparency. Option D (premium quotations of unissued policies) is not mandated; while agents may provide quotes (e.g., $500 annually for a term policy), these are preliminary offers, not binding until a policy is issued, and Virginia law doesn’t require retaining them unless they result in a transaction. The study guide likely details recordkeeping in a compliance chapter, contrasting required records (A, B, C) with optional ones like quotes (D), using examples—e.g., keeping a paid policy’s file but not a rejected quote—making D the item not required. This reflects Virginia’s focus on executed contracts over prospective ones.

Detailed Answer in Step-by-Step Solution:

Needs analysis (A) assesses an individual’s and dependents’ financial requirements (e.g., income replacement, debts) to determine appropriate life insurance coverage.

It doesn’t eliminate interest/inflation estimates (B), require underwriter collaboration (C), or ignore Social Security (D), which is often factored in.

The Virginia study guide describes needs analysis as a planning tool to calculate insurance needs based on personal and family financial obligations, including potential Social Security benefits. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Life Insurance Planning."