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Virginia Insurance Virginia-Life-Annuities-and-Health-Insurance Exam
Virginia Life, Annuities, and Health Insuranceination Series 1101 (Page 3 )

Updated On: 4-Feb-2026
Page 3 of 89
PDF with 440 Questions

When there is a misstatement of age by an applicant for a disability income policy:

  1. Any amount payable will be the amount of coverage the premium would have purchased at the insured's correct age.
  2. The insurer is not liable for any claims made during the period before correction of the insured's age.
  3. The company will cancel the policy immediately upon discovery of the misstatement of age.
  4. The policy will be void from its inception because of the insured's misrepresentation.

Answer(s): A

Explanation:

Virginia Code § 38.2-3505 requires disability income policies to include a misstatement of age provision. If an applicant misstates their age, the insurer adjusts benefits to what the paid premium would have purchased at the correct age, rather than voiding or canceling the policy. Option A reflects this adjustment process. Option B is false; the insurer remains liable, adjusting claims rather than denying them outright. Option C is incorrect; immediate cancellation isn't standard unless fraud is proven (Virginia Code § 38.2-309), and age misstatements are typically clerical errors, not fraud. Option D is wrong; voiding from inception requires material misrepresentation with intent to deceive, not a simple age error. The study guide likely explains this clause as a fairness mechanism, protecting both parties, making A the correct answer.



Renewal of small employer health insurance plans may be denied for all of the following reasons EXCEPT:

  1. Nonpayment of premiums
  2. Having less than the required number of participants
  3. Overuse of physician and hospital services
  4. Fraud by the employer

Answer(s): C

Explanation:

Virginia Code § 38.2-3432.1, aligned with the Affordable Care Act (ACA), mandates guaranteed renewability for small employer health plans (1-50 employees in Virginia). Insurers can deny renewal for nonpayment of premiums (option A), insufficient participants (option B, e.g., falling below one eligible employee), or fraud (option D), per Virginia Code § 38.2-3407. However, option C--overuse of services (high claims)--a--is not a permissible reason for denial, as renewability cannot be based on claims experience or health status. The study guide emphasizes this protection under Virginia's small group market rules, making C the exception.



All of the following statements about tax-sheltered annuities (TSAs) are true EXCEPT:

  1. They are also known as 403(b) plans.
  2. Accumulation payments often come from voluntary salary reductions.
  3. The annuitant may have an individual account or contract.
  4. The investment gain each year is included in the participant's gross income.

Answer(s): D

Explanation:

Tax-sheltered annuities (TSAs), per IRC § 403(b) and Virginia Code § 38.2-3100 et seq., are retirement plans for nonprofit employees. Option A is true; they're synonymous with 403(b) plans. Option B is true; contributions often come from voluntary salary reductions, tax-deferred until withdrawal. Option C is true; participants can have individual contracts or accounts. Option D is false; investment gains are tax-deferred, not included in gross income annually, only taxed upon distribution. The study guide highlights TSAs' tax advantages, making D the incorrect statement.



Including a guaranteed insurability rider on a life insurance policy means that:

  1. The original policy was sold on a non-medical basis.
  2. The company will require evidence of insurability for any future purchase of life insurance.
  3. Any extra premium charged for a health impairment will be discontinued if standard insurability is proved later.
  4. The policyowner may purchase additional life insurance periodically without proving insurability.

Answer(s): D

Explanation:

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.



The voluntary act of terminating an insurance contract is called:

  1. Elimination
  2. Rejection
  3. Finalization
  4. Cancellation

Answer(s): D

Explanation:

Cancellation, per Virginia Code § 38.2-3106 (life) and § 38.2-3508 (health), is the voluntary termination of a policy by the insured or insurer. Options A, B, and C aren't standard terms for this action in Virginia insurance law. The study guide defines cancellation as a deliberate act, distinct from lapse (nonpayment) or nonrenewal, making D the correct term.



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