VA Life Insurance Practice Exam (90 Xcel)
Under the USA Patriot Act, insurers are required to report receipt of cash payment in excess of:
$10,000
S buys a $50,000 whole life policy with a $50,000 Accidental Death and Dismemberment rider. S dies 1 year later of natural causes. How much will the insurer pay the beneficiary?
$50,000
Which of these circumstances requires an agent to make reasonable efforts to obtain information concerning the suitability of an annuity?
Agent helps a client with the purchase of an annuity
Which of the following would be a valid reason for suspending or revoking an insurance agent's license?
Participating in the act of twisting
Which of the following is a requirement to be eligible for a group life policy in Virginia?
Group must be formed for a purpose other than obtaining insurance
P and Q are married and have three children. P is the primary beneficiary on Q's Accidental Death and Dismemberment (AD&D) policy and Q's sister R is the contingent beneficiary. P, Q, and R are involved in a car accident and Q and R are killed instantly. The Accidental Death benefits will be paid to:
P only
J is an insurance agent who maintains premiums in a fiduciary account. Which of the following expenses many NOT be paid using funds withdrawn from this account?
Personal medical expenses
A policy of adhesion can only be modified by whom?
The insurance company
What type of insurance offers permanent life coverage with premiums that are payable for life?
Whole Life
A life insurance policy would be considered a wagering contract WITHOUT:
insurable interest
Quarterly premium payments increase the annual cost of insurance because
interest to the insurer is decreased while the administrative costs are increased
In order for an individual to receive commissions from an insurance company for service as an agent, the individual MUST be
licensed and appointed
J the agent makes false statements to a prospective client about the projected dividends for a policy. J may be found guilty of
misrepresentation
B the agent recently had her license terminated because she did not meet continuing education requirements. She may successfully appeal IF
proof of compliance is provided
An agent offers an applicant something of value not mentioned in the contract as an inducement to purchase an insurance policy. This illegal act is called
rebating
Under Virginia Law, all of these are required to be kept by licensed agents EXCEPT
records of premium quotations that were rejected by the insured
The Rules Governing Life Insurance and Annuity Replacement were created to
reduce the opportunity for misrepresentation and incomplete disclosure
All of the following statements about traditional individual retirement accounts are false EXCEPT
10% penalty is applied to withdrawals before age 59 1/2
A 15-year mortgage is best protected by what kind of life policy?
15-year decreasing term
If an agent holds 1 license type, the biennial continuing education requirement is _____ hours.
16
After passing the State exam, an applicant is required to obtain the appropriate license within ______ calendar days.
183
The USA Patriot Act was enacted in:
2001
If an agent holds 2 license types, the continuing education requirement is _____ credits by December 31 in even number years.
24
If an insurance agent changes his/her address, the Bureau of Insurance must be notified within ______ calendar days.
30
If X wants to buy $50,000 worth of permanent protection on his/her spouse and $25,000 worth of 10-year Term coverage on X under the same policy, the applicant should purchase:
A Whole Life Policy with an Other Insured Rider
Which of these is an element of a Variable Life policy?
A fixed, level premium
With whom may an agent share commissions with?
A licensed agent with the same license type
Which of the following types of policies pays a benefit if the insured goes blind?
AD&D
Which provision is NOT a requirement in a group life policy?
Accidental
Which of the following statements is CORRECT regarding the tax treatment of a lump-sum payment paid to a life insurance policy's primary beneficiary?
All proceeds are income tax free in the year they are received
Which of these is an example of twisting?
An agent misrepresents a policy to induce a policyowner to surrender an existing policy
All of the following are examples of insurance advertisement EXCEPT
An employer newsletter announcing the availability of coverage for employees
Which of the following BEST describes an insurance agent conducting business in Virginia?
An individual who sells, solicits, or negotiates contract of insurance
Which of these statements accurately reflects Virginia law regarding life insurance advertisements?
An insurance agency is responsible for advertisements placed by its insurance agents
An incomplete life insurance application submitted to an insurer will result in which of these actions?
Application will be returned to the writing agent
Traditional individual retirement annuity (IRA) distribution must start by:
April 1st of the year following the year the participant attains age 70 1/2
Under which circumstance may an agent combine business funds with an insured's premiums?
When dully appointed and contractually authorized by an insurer
Whose life is covered on a life insurance policy that contains a payor benefit clause?
Child
A client would like to purchase an annuity from an agent. The agent does NOT need to make reasonable efforts to obtain information from the client on which of the following?
Client's marital status
K applies for a life insurance policy on herself and submits the initial premium with the application. She is given a receipt by the agent stating that coverage begins immediately if the application is approved. What kind of receipt was used?
Conditional
Which of the following is a role of the State Corporation Commission?
Establish rational insurance rules and regulations
Which of the following would be a valid reason for the Bureau of Insurance to deny an insurance license?
Failing to report a felony
The Rules Governing Advertisement of Life Insurance and Annuities were created to provide
full disclosure to the public of all material and relevant information
Credit life insurance is typically issued with which of the following types of coverage?
Decreasing Term
A group life insurance policy can be converted to an individual whole life policy under which circumstance?
Employment termination
Premiums collected by insurance agent must be maintained in a fiduciary capacity. At what point MUST these premiums be remitted to the insurer?
In the ordinary course of business
Which of these retirement plans can be started by an employee, even if another plan is in existence?
Individual Retirement Account (IRA)
Which of these actions should a producer take when submitting an insurance application to an insurer?
Inform insurer of relevant information not included on the application
If a contract of adhesion contains questionable language, to whom would the interpretation be in favor of?
Insured
All of these statements about the Waiver of Premium provision are correct, EXCEPT
Insured must be eligible for Social Security disability for claim to be accepted
During a sales transaction, which of the following forms must be completed by an agent if the customer has existing insurance coverage?
Notice Regarding Replacement of Life Insurance or Annuity
How are policyowner dividends treated in regards to income tax?
Interest on accumulations is taxed
Which of the following statements is CORRECT about the period in which a Term Policy can be converted?
It varies according to the contract
D needs life insurance that provides coverage for only a limited amount of time while also paying the lowest possible premium. What kind of policy is needed?
Level term
Life insurance that covers an insured's whole life with level premiums paid over a limited time is called:
Limited Pay Life
Which of these is an element of a Single Premium annuity?
Lump-sum payment
Which of these factors do NOT play a role in the underwriting of a life insurance policy?
Marital status
According to the Rules Advertisement of Life Insurance and Annuities, an agent may NOT take which of the following actions during a sales presentation?
Mentioning guaranteed policy dividends
Which type of policy is considered to be overfunded, as stated by IRS guidelines?
Modified Endowment Contract
K buys a policy where the premium stays fixed for the first 5 years. The premium then increases in year 6 and stays level thereafter, all the while the death benefit remains the same. What kind of policy is this?
Modified Whole Life
When funds are shifted straight from one IRA to another IRA, what percentage of the tax is withheld?
None
All of these are unfair trade practice EXCEPT
Reinsurance
Post-tax dollar contributions are found in:
Roth IRA investments
P is a producer who notices 5 questions on a life application were not answered. What actions should P take?
Set up a meeting with the applicant to answer the remaining questions
Which of these actions by a licensee would NOT likely result in license suspension or revocation?
Sharing a commission with another similarity-licensed agent
T would like to be assured $10,000 is available in 10 years to replace a roof on his house. What kind of $10,000 policy should T purchase?
Ten-Year Endowment
Which of these policies does NOT require a policy loan provision?
Term Life
An example of an Adverse Underwriting Decision is
Terminating insurance coverage
If an annuity is terminated prior to beginning of the income payment period, the contract owner receives:
The contract surrender value at that time
Who is normally considered to be the owner of a 403(b) tax-sheltered annuity?
The employee
Which of the following is a characteristic of a variable annuity?
Underlying equity investments
Which of the following types of policies BEST identifies one in which the cash value may fluctuate to reflect changing assumptions regarding mortality cost, interest, and expense factors?
Universal Life
What type of annuity has a cash value that is based upon the performance of it's underlying investment funds?
Variable
Which of the following policies is characterized by a a flexible premium and health benefit and allows the policyowner control of the investment aspect of the plan?
Variable universal life
Which of these organizations approves continuation courses in Virginia?
Virginia Insurance Continuing Education Board
When must an agent report a felony conviction to the Bureau of Insurance?
Within 30 calendar days
Variable Life products require a producer to
hold a Life Insurance license and a Securities license
A life insurance application must signed by all of these, EXCEPT:
beneficiary
S would like to use dividends from her life insurance policy to purchase paid-up additions. All of these would be factors that determine how much coverage can be purchased EXCEPT
beneficiary's age
T is an insurance agent running television ads stating he is licensed for a line of annuity, when in fact he is not. T has engaged in
false advertising
T circulated false statements that were maliciously critical of an insurer's financial condition. T may be found guilty of
defamation
A business entity acting as an insurance agent MUST
designate at least one license producer to be responsible for the entity's compliance with the insurance laws and rules
An underwriter determines that an applicant's risk should be recategorized due to a health issue. This policy may be issued with a(n)
exclusion for the medical condition
Under a Renewable Term policy,
the renewal premium is calculated on the basis of the insured's attained age
An individual who purchases a Life annuity is given protection against:
the risk of living longer than expected
The reason for backdating a policy is
to obtain a premium rate based on an earlier age
An agent has made false comparisons of policies to induce the sale of an insurance policy. This illegal act is called
twisting
An individual received a quote from an insurance company that is a different rate from individuals in the same risk class. The insurance company may be accused of
unfair discrimination
When is he face amount paid under a Joint Life and Survivor policy?
upon death of the last insured
An insurance consultant's license MUST be renewed every
year
