Virginia Insurance Virginia Life Annuities and Health Insurance Practice Exams
Last updated on Oct 21,2026- Exam Code: Virginia Life Annuities and Health Insurance
- Exam Name: Virginia Life, Annuities, and Health Insurance Examination Series 11-01
- Certification Provider: Virginia Insurance
- Latest update: Oct 21,2026
Question #31
A health maintenance organization (HMO) must offer emergency health services:
- A . Sixteen hours a day, six days per week
- B . Sixteen hours a day, seven days per week
- C . Twenty-four hours a day, six days per week
- D . Twenty-four hours a day, seven days per week
Correct Answer: D
D
Explanation:
Virginia Code § 38.2-4306 mandates that Health Maintenance Organizations (HMOs) provide comprehensive health services, including emergency care, as a core benefit. Emergency services must be available 24 hours a day, 7 days a week (option D) to ensure immediate access to life-saving treatment, aligning with federal and state standards (e.g., ACA requirements under 42 CFR § 422.113). This reflects the HMO’s obligation to cover urgent needs―e.g., a heart attack at 2 a.m.―via in-network facilities or out-of-network reimbursement if necessary.
Option A (16 hours, 6 days) and Option B (16 hours, 7 days) fall short of the continuous access requirement, limiting coverage unreasonably.
Option C (24 hours, 6 days) excludes one day, contradicting the nonstop mandate. The study guide likely emphasizes this 24/7 rule in an HMO benefits section, with examples like ER visits covered anytime, making D the correct standard. This ensures HMOs meet Virginia’s consumer protection goals under § 38.2-4300 et seq., distinguishing them from less comprehensive plans.
D
Explanation:
Virginia Code § 38.2-4306 mandates that Health Maintenance Organizations (HMOs) provide comprehensive health services, including emergency care, as a core benefit. Emergency services must be available 24 hours a day, 7 days a week (option D) to ensure immediate access to life-saving treatment, aligning with federal and state standards (e.g., ACA requirements under 42 CFR § 422.113). This reflects the HMO’s obligation to cover urgent needs―e.g., a heart attack at 2 a.m.―via in-network facilities or out-of-network reimbursement if necessary.
Option A (16 hours, 6 days) and Option B (16 hours, 7 days) fall short of the continuous access requirement, limiting coverage unreasonably.
Option C (24 hours, 6 days) excludes one day, contradicting the nonstop mandate. The study guide likely emphasizes this 24/7 rule in an HMO benefits section, with examples like ER visits covered anytime, making D the correct standard. This ensures HMOs meet Virginia’s consumer protection goals under § 38.2-4300 et seq., distinguishing them from less comprehensive plans.
Question #32
The interest that an insurance company earns on life insurance premiums paid helps to:
- A . Increase the life insurance premium rate
- B . Increase the mortality rate
- C . Decrease the life insurance premium rate
- D . Decrease the mortality rate
Correct Answer: C
C
Explanation:
Detailed Answer in Step-by-Step Solution:
Life insurance premiums are calculated based on three factors: mortality (death rates), interest (investment earnings), and expenses (operating costs).
When an insurer earns interest on premiums invested, it increases the funds available to pay claims, reducing the amount needed from policyholders.
This results in a decrease in the premium rate (C), as higher interest earnings offset the cost of coverage.
Option A (increase premium rate) would occur if interest earnings decreased.
Options B and D (mortality rate changes) are unrelated to interest, as mortality is a statistical factor, not a financial one.
The Virginia study guide explains that interest earned on premiums is a key component of pricing life insurance, allowing insurers to lower premium rates when investment returns are favorable.
Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Premium Determination."
C
Explanation:
Detailed Answer in Step-by-Step Solution:
Life insurance premiums are calculated based on three factors: mortality (death rates), interest (investment earnings), and expenses (operating costs).
When an insurer earns interest on premiums invested, it increases the funds available to pay claims, reducing the amount needed from policyholders.
This results in a decrease in the premium rate (C), as higher interest earnings offset the cost of coverage.
Option A (increase premium rate) would occur if interest earnings decreased.
Options B and D (mortality rate changes) are unrelated to interest, as mortality is a statistical factor, not a financial one.
The Virginia study guide explains that interest earned on premiums is a key component of pricing life insurance, allowing insurers to lower premium rates when investment returns are favorable.
Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Premium Determination."
Question #33
Under which type of policy are benefit payments treated as taxable income?
- A . Business overhead expense
- B . Disability buy-sell
- C . Individual disability income
- D . Key person disability income
Correct Answer: C
C
Explanation:
Detailed Answer in Step-by-Step Solution:
Individual disability income (C) benefits are taxable if the insured paid premiums with pre-tax dollars (e.g., employer-paid), but tax-free if paid with after-tax dollars. The question implies taxable benefits, typical when premiums are deductible.
Business overhead expense (A), disability buy-sell (B), and key person disability (D)benefits are generally tax-free to the business or recipient, as premiums are not deductible.
The Virginia study guide, per IRS rules, states that individual disability income benefits are taxable if premiums were paid pre-tax (e.g., by an employer), unlike business-related disability policies where benefits serve specific tax-exempt purposes.
Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Taxation of Insurance Benefits."
C
Explanation:
Detailed Answer in Step-by-Step Solution:
Individual disability income (C) benefits are taxable if the insured paid premiums with pre-tax dollars (e.g., employer-paid), but tax-free if paid with after-tax dollars. The question implies taxable benefits, typical when premiums are deductible.
Business overhead expense (A), disability buy-sell (B), and key person disability (D)benefits are generally tax-free to the business or recipient, as premiums are not deductible.
The Virginia study guide, per IRS rules, states that individual disability income benefits are taxable if premiums were paid pre-tax (e.g., by an employer), unlike business-related disability policies where benefits serve specific tax-exempt purposes.
Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Taxation of Insurance Benefits."
Question #34
What kind of rider may be added to an individual disability income insurance policy to increase benefits during periods of price inflation?
- A . Inflation guard
- B . Cost of living
- C . Price escalation
- D . Wage protection
Correct Answer: B
B
Explanation:
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."
B
Explanation:
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."
Question #35
The reinstatement provision in individual health insurance:
- A . Reinstates the amount of insurance after payment of a loss
- B . Allows the insured to reinstate the policy after coverage lapses for nonpayment of premium
- C . Allows the insured to change statements made in the application
- D . Requires that all reinstatement applications must be approved by the Bureau of Insurance
Correct Answer: B
B
Explanation:
Detailed Answer in Step-by-Step Solution:
The reinstatement provision in health insurance allows a policy that lapsed due to nonpayment of premiums to be restored (B), typically within a set period (e.g., 3 years), if the insured pays back premiums and meets conditions like proving insurability.
Option A (reinstates amount after loss) relates to property insurance, not health.
Option C (change application statements) is unrelated to reinstatement.
Option D (Bureau approval) is false; reinstatement is handled by the insurer, not a regulatory body.
The Virginia study guide explains that the reinstatement provision protects policyholders by allowing revival of a lapsed health policy upon payment of overdue premiums and, if required, evidence of insurability.
Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Health Insurance Policy Provisions."
B
Explanation:
Detailed Answer in Step-by-Step Solution:
The reinstatement provision in health insurance allows a policy that lapsed due to nonpayment of premiums to be restored (B), typically within a set period (e.g., 3 years), if the insured pays back premiums and meets conditions like proving insurability.
Option A (reinstates amount after loss) relates to property insurance, not health.
Option C (change application statements) is unrelated to reinstatement.
Option D (Bureau approval) is false; reinstatement is handled by the insurer, not a regulatory body.
The Virginia study guide explains that the reinstatement provision protects policyholders by allowing revival of a lapsed health policy upon payment of overdue premiums and, if required, evidence of insurability.
Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Health Insurance Policy Provisions."
Question #36
Which type of life insurance policy is designed to pay the balance of a thirty-year home mortgage loan in the event of the insured’s death?
- A . 30-payment whole life
- B . 30-year decreasing term
- C . 30-year level term
- D . 30-year endowment
Correct Answer: B
B
Explanation:
Detailed Answer in Step-by-Step Solution:
A 30-year decreasing term policy (B) reduces its death benefit over time, matching the declining balance of a 30-year mortgage, making it ideal for this purpose.
30-payment whole life (A) is permanent with level benefits. 30-year level term (C) maintains a constant benefit. 30-year endowment (D) builds cash value and pays out at maturity, not tied to a mortgage.
The Virginia study guide describes decreasing term insurance as tailored for obligations like mortgages, with the benefit decreasing as the debt is paid off.
Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Types of Life Insurance."
B
Explanation:
Detailed Answer in Step-by-Step Solution:
A 30-year decreasing term policy (B) reduces its death benefit over time, matching the declining balance of a 30-year mortgage, making it ideal for this purpose.
30-payment whole life (A) is permanent with level benefits. 30-year level term (C) maintains a constant benefit. 30-year endowment (D) builds cash value and pays out at maturity, not tied to a mortgage.
The Virginia study guide describes decreasing term insurance as tailored for obligations like mortgages, with the benefit decreasing as the debt is paid off.
Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Types of Life Insurance."
Question #37
Which benefit is usually excluded from major medical plan coverage?
- A . Hospital expense
- B . Custodial care
- C . Physicians’ visits
- D . Surgical expense
Correct Answer: B
B
Explanation:
Virginia Code § 38.2-3500 et seq. governs major medical plans, which cover catastrophic costs like hospital expenses (option A), physicians’ visits (option C), and surgical expenses (option D).
Option B (custodial care) ―non-medical assistance with daily living (e.g., bathing)―is typically excluded, as it’s not “medically necessary” under standard definitions (Virginia Code § 38.2-3407.10). The study guide likely lists inclusions (A, C, D) with examples―e.g., $5,000 for surgery―versus exclusions like custodial care, covered by LTC policies instead, making B the usual exception.
B
Explanation:
Virginia Code § 38.2-3500 et seq. governs major medical plans, which cover catastrophic costs like hospital expenses (option A), physicians’ visits (option C), and surgical expenses (option D).
Option B (custodial care) ―non-medical assistance with daily living (e.g., bathing)―is typically excluded, as it’s not “medically necessary” under standard definitions (Virginia Code § 38.2-3407.10). The study guide likely lists inclusions (A, C, D) with examples―e.g., $5,000 for surgery―versus exclusions like custodial care, covered by LTC policies instead, making B the usual exception.
Question #38
Which is true about ownership of a deferred annuity contract?
- A . All of the participants in a group contract are part-owners
- B . Ownership rights are neither transferable nor assignable
- C . An owner may be the annuitant or the beneficiary or neither
- D . An owner’s rights take effect when the benefit payment phase begins
Correct Answer: C
C
Explanation:
Detailed Answer in Step-by-Step Solution:
In a deferred annuity, the owner (who purchases the contract) can be the annuitant (who receives payments), the beneficiary (who receives proceeds), or a third party (C).
Option A (group contract) applies to group annuities, not individual ownership.
Option B (non-transferable) is false; ownership can often be assigned.
Option D (rights at payment phase) is incorrect; owners have rights during accumulation.
The Virginia study guide notes that deferred annuity ownership is flexible, allowing the owner to differ from the annuitant or beneficiary, with rights exercisable before payout.
Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Annuities."
C
Explanation:
Detailed Answer in Step-by-Step Solution:
In a deferred annuity, the owner (who purchases the contract) can be the annuitant (who receives payments), the beneficiary (who receives proceeds), or a third party (C).
Option A (group contract) applies to group annuities, not individual ownership.
Option B (non-transferable) is false; ownership can often be assigned.
Option D (rights at payment phase) is incorrect; owners have rights during accumulation.
The Virginia study guide notes that deferred annuity ownership is flexible, allowing the owner to differ from the annuitant or beneficiary, with rights exercisable before payout.
Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Annuities."
Question #39
Which is true about a term life insurance policy?
- A . It usually provides a cash value
- B . It provides temporary protection
- C . It may only be written for periods of five years or less
- D . It usually can be renewed at the same premium
Correct Answer: B
B
Explanation:
Detailed Answer in Step-by-Step Solution:
Term life insurance (B) provides coverage for a specified period (temporary protection) and does not accumulate cash value.
Option A (cash value) applies to permanent life insurance, not term.
Option C (five years or less) is false; term policies can span 10, 20, or 30 years.
Option D (same premium) is incorrect; renewable term policies increase premiums at renewal based on age.
The Virginia study guide describes term life insurance as temporary coverage with no cash value, contrasting it with permanent policies.
Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Types of Life Insurance."
B
Explanation:
Detailed Answer in Step-by-Step Solution:
Term life insurance (B) provides coverage for a specified period (temporary protection) and does not accumulate cash value.
Option A (cash value) applies to permanent life insurance, not term.
Option C (five years or less) is false; term policies can span 10, 20, or 30 years.
Option D (same premium) is incorrect; renewable term policies increase premiums at renewal based on age.
The Virginia study guide describes term life insurance as temporary coverage with no cash value, contrasting it with permanent policies.
Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Types of Life Insurance."
Question #40
All of the following statements about the installments for a fixed period settlement option in life insurance policies are true EXCEPT:
- A . The amount of the periodic payment is based on the beneficiary’s age
- B . The longer the period of time, the smaller each installment
- C . Each installment payment consists of both principal and interest
- D . The beneficiary may elect this option unless the policyowner has specified otherwise
Correct Answer: A
A
Explanation:
The fixed period settlement option in life insurance, per Virginia Code § 38.2-3115, pays the death benefit in equal installments over a set time (e.g., 10 years), determined by the policyowner or beneficiary if not restricted.
Option B is true; a longer period spreads the principal and interest over more payments, reducing each installment (e.g., $100,000 over 20 years yields smaller payments than over 5 years).
Option C is true; payments blend principal and interest earned on the remaining proceeds held by the insurer.
Option D is true; Virginia law allows beneficiaries to choose settlement options unless the policyowner locks in a method (e.g., via a policy endorsement).
Option A is false; the payment amount depends on the proceeds, interest rate, and period length―not the beneficiary’s age, which might influence a life income option instead. The study guide likely contrasts fixed period (time-based) with life annuity (age-based) options, using examples like $500 monthly for 10 years, making A the exception.
A
Explanation:
The fixed period settlement option in life insurance, per Virginia Code § 38.2-3115, pays the death benefit in equal installments over a set time (e.g., 10 years), determined by the policyowner or beneficiary if not restricted.
Option B is true; a longer period spreads the principal and interest over more payments, reducing each installment (e.g., $100,000 over 20 years yields smaller payments than over 5 years).
Option C is true; payments blend principal and interest earned on the remaining proceeds held by the insurer.
Option D is true; Virginia law allows beneficiaries to choose settlement options unless the policyowner locks in a method (e.g., via a policy endorsement).
Option A is false; the payment amount depends on the proceeds, interest rate, and period length―not the beneficiary’s age, which might influence a life income option instead. The study guide likely contrasts fixed period (time-based) with life annuity (age-based) options, using examples like $500 monthly for 10 years, making A the exception.