Virginia Life & Health Practice Test

Answer choices

1. A. Virginia prohibits nonforfeiture benefits because long-term care insurance has no cash-value-related consumer protections.
2. B. A nonforfeiture benefit must be included automatically in every policy at no additional cost, with no option to decline.
3. C. Nonforfeiture requirements apply only to Medicare supplement policies and never to long-term care insurance.
4. D. Virginia requires an offer of a nonforfeiture benefit for covered long-term care policies, and the offer must satisfy the applicable statutory and regulatory requirements.

Wrong-answer review

• A. Virginia prohibits nonforfeiture benefits because long-term care insurance has no cash-value-related consumer protections.: Incorrect. Virginia law and regulation expressly address an offer of nonforfeiture benefits.
• B. A nonforfeiture benefit must be included automatically in every policy at no additional cost, with no option to decline.: Incorrect. The framework requires an offer; it does not support the stated universal no-cost automatic inclusion.
• C. Nonforfeiture requirements apply only to Medicare supplement policies and never to long-term care insurance.: Incorrect. Virginia's long-term care chapter and regulations directly address nonforfeiture benefits.

Answer choices

1. A. All qualified-plan distributions are permanently exempt from federal income tax
2. B. Taxation is generally deferred until distribution, subject to basis and other federal rules
3. C. The employer owes income tax on every employee distribution instead of the employee
4. D. Contributions and earnings are taxed twice by design

Answer choices

1. A. Own-occupation disability
2. B. Any-occupation disability
3. C. Presumptive disability only
4. D. Residual disability

Answer choices

1. A. Evidence of insurability, arrears with permitted interest, and payment or reinstatement of policy indebtedness with interest
2. B. Only a new beneficiary designation, with no payment of overdue amounts
3. C. Automatic reinstatement merely because the request is made within three years
4. D. A new policy issue date and cancellation of all prior values

Answer choices

1. A. The annuity period
2. B. The elimination period
3. C. The accumulation period
4. D. The contestable period

Answer choices

1. A. A UCR-based reimbursement approach
2. B. A fixed benefit schedule only
3. C. Capitation to an HMO physician
4. D. Life-insurance mortality pricing

Answer choices

1. A. Only the owners need licenses; the entity can transact insurance without separate authority
2. B. The entity needs only a corporate charter because the individual producers' licenses automatically extend insurance authority to the agency itself.
3. C. The entity must obtain an insurer certificate of authority instead of a producer license
4. D. The business entity may need its own producer license in addition to the licenses held by the individuals acting for it

Answer choices

1. A. Termination of active coverage always eliminates every future right immediately
2. B. The employee automatically becomes the master policyholder
3. C. Active group coverage must continue indefinitely if the former employee keeps paying the employee premium share, because loss of eligibility does not end group membership.
4. D. The end of active coverage from any continuation, extension-of-benefits, or conversion rights that may still apply

Answer choices

1. A. A mandatory covered peril
2. B. A nonforfeiture benefit
3. C. A coordination-of-benefits rule
4. D. A common policy exclusion

Answer choices

1. A. Gain is generally treated as distributed first, and a taxable amount may also be subject to the additional 10% tax unless an exception applies
2. B. Premium basis is always recovered first with no possible additional tax because MEC distributions use first-in, first-out treatment and life-insurance withdrawals are never subject to a 10% additional tax.
3. C. All MEC distributions are tax free because the contract is life insurance
4. D. The distribution is treated only as a capital loss