17 Free Virginia Life and Annuities Exam Practice Questions (2026)

Answer: B

Concealment is the intentional failure to disclose a material fact that the insurer would consider in underwriting. Under Virginia law and general insurance principles, concealment allows the insurer to void the contract from the beginning (ab initio) and return the premium. Misrepresentation involves a false statement, whereas here the applicant omitted information. Waiver and estoppel relate to relinquishing rights or preventing denial of rights, which do not apply to voiding a policy for nondisclosure.

Answer: D

An alien insurer is one incorporated under the laws of another country. A foreign insurer is incorporated in another U.S. state. A domestic insurer is incorporated in Virginia. Being licensed makes the insurer admitted; nonadmitted applies only to unlicensed insurers (often accessed via surplus lines). Since the insurer is from Germany and licensed in Virginia, it is an alien admitted insurer.

Answer: A

The Virginia Life, Accident and Sickness Insurance Guaranty Association (§§ 38.2-1700 et seq.) provides protection to policyholders of admitted life, health, and annuity insurers that become insolvent. It does not cover nonadmitted insurers (B is false). Coverage is subject to statutory per-insured limits that vary by type of coverage, so C's $500,000 figure is not a floor the association guarantees. It is funded by assessments on member insurers, not premium taxes from policyholders (D is false).

Answer: D

A mutual assessment insurer is owned by its policyholders, who may be required to pay extra (assessment) premiums if the insurer's losses exceed what was anticipated. Option A describes a stock company. Option B describes a fraternal benefit society. Option C describes a self-insurer.

Answer: D

Virginia Code §§ 38.2-508, 508.1, and 508.2 prohibit unfair discrimination but allow insurers to classify risks and set rates based on factors that are reasonably related to expected losses (e.g., age, health, occupation). Option A is too broad and ignores the 'unfair' prohibition. Option B is false; classification varies by risk. Option C is false; premiums can differ based on risk factors beyond age and gender.

Answer: D

The human life value approach calculates the present value of an individual's future earnings (after taxes and personal consumption) to determine the economic value of their life. The needs approach (A) focuses on specific financial obligations and income needs of dependents. Capital retention (B) and estate preservation (C) are not standard primary methods described in the chapter; the needs and human life value approaches are the two main personal uses methods discussed.

Answer: C

C is correct because universal life insurance unbundles the death benefit, cash value, and premium components, providing flexibility in premium payments and death benefit amounts within policy limits. Adjustable life, while also allowing changes to premium and death benefit, operates more like a traditional whole life policy where adjustments are made within a fixed structure rather than through unbundled elements. B is incorrect as it reverses the descriptions. D is incorrect because neither policy type inherently requires lifelong premiums (universal life can be structured with limited payments, and adjustable life is not defined by limited payment). A is incorrect because the policies are distinct in design and function.

Answer: A

A is correct because juvenile life insurance is usually bought by adults for a minor to provide permanent coverage, guarantee future insurability, and often accumulate cash value that can be accessed later. B is incorrect because juvenile policies are not for income replacement (children typically have no income to replace) but for protection and future planning. C is incorrect because juvenile life is usually permanent (whole life), not term, and does not expire at 18. D is incorrect because premiums are typically paid by the policyowner (adult), not the child, though some policies may allow the child to take over payments later, but this is not a defining requirement.

Answer: A

A is correct because individual credit life insurance is a policy issued to an individual debtor to cover a specific loan, whereas group credit life insurance covers a group of debtors (e.g., customers of a retailer) under a master policy held by the creditor. C is incorrect because neither type typically requires medical underwriting; both are usually issued on a guaranteed issue basis related to the debt. B is incorrect because standard credit life insurance does not return premiums upon early loan payoff; the benefit is the death benefit payoff of the loan balance. D is incorrect because credit life insurance can be used for various loan types (mortgages, auto, personal, etc.) in both individual and group forms; it is not restricted by loan type in this way.

Answer: D

A waiver of premium rider typically includes an elimination period (here, 90 days) during which the insured must be continuously disabled before the waiver takes effect. Premiums for the elimination period are not waived; the insured remains responsible for paying them. Once the elimination period is satisfied, premiums are waived for as long as the disability continues. Option A is incorrect because it ignores the elimination period. Option B confuses the waiver of premium rider with a disability income benefit, which may have its own duration requirements. Option C describes a waiver of cost of insurance rider, which is distinct from a waiver of premium rider.

Answer: A

Virginia Administrative Code 14VAC5-70-40 defines the conditions for payment of accelerated benefits, including a diagnosis of terminal illness with a life expectancy of 24 months or less (as specified in the policy). ALS with an 18-month life expectancy meets this criterion. The benefit is payable upon diagnosis meeting the defined condition, subject to any policy-specific elimination period (though the question does not mention one, and 14VAC5-70-40 does not mandate an elimination period). Option B is incorrect because the 24-month threshold applies, not 12 months. Option C is incorrect because ALS is not automatically classified as a catastrophic illness under the rider unless the policy defines it as such; the question specifies the rider pays for terminal illness. Option D introduces an elimination period not referenced in the scenario or required by regulation for the trigger itself.

Answer: D

When a policy is surrendered for its cash surrender value, any outstanding policy loan balance—including accrued interest—is deducted from the gross cash surrender value to determine the net amount payable to the policyowner. The loan is not forgiven, and the insurer does not require repayment prior to surrender; instead, the lien is satisfied by reducing the surrender proceeds. Option A incorrectly ignores accrued interest. Option B erroneously adds the loan balance. Option C is incorrect because surrender is permitted with an outstanding loan; the net value is simply reduced accordingly.

Answer: D

Option D is correct because a spouse term rider provides term life insurance coverage on the spouse, usually for a set period (e.g., 10, 20, or 30 years), and is commonly convertible to a permanent policy without evidence of insurability. Option A is incorrect because it is term, not permanent, coverage. Option B describes an accidental death or similar rider affecting the primary insured's benefit, not a spouse term rider. Option C is incorrect because spouse term riders are often issued with simplified or no underwriting, especially when added at policy issue. This aligns with the Series 11-01 content outline under 4.9 Riders Covering Additional Insureds and Affecting the Death Benefit.

Answer: D

A market value adjustment (MVA) modifies the surrender value of an annuity (typically fixed or indexed) based on the difference between the interest rate environment at purchase and at surrender. If rates have risen, the MVA reduces the surrender value; if rates have fallen, it may increase the value. This is authorized under §§ 38.2-107.1 and 3113.1. Option A is incorrect — MVAs are not prohibited on variable annuities, though they are more common on fixed/indexed products. Option B is false — MVA periods vary by contract. Option C is false — MVAs can reduce surrender value below premiums paid.

Answer: A

For a charitable gift annuity under §§ 38.2-106.1 and 3113.2, the charitable deduction equals the donor's transfer amount minus the actuarial value of the annuity received. Here: $50,000 - $30,000 = $20,000. The $30,000 actuarial value represents the present value of the annuity payments (the 'investment in the contract'), and the excess is the charitable contribution. Option B ignores the annuity value. Option C is the annuity value, not the deduction. Option D is the annual payment amount.

Answer: A

Under the 'last-in, first-out' (LIFO) rule for non-qualified annuities (IRC §72(e)), withdrawals before annuitization are treated as coming from earnings first. The annuity has $40,000 of gain ($120,000 - $80,000). The $20,000 withdrawal comes entirely from earnings and is fully taxable as ordinary income. Option B incorrectly applies FIFO (cost recovery) which applies to life insurance surrenders, not annuity withdrawals. Option C describes the exclusion ratio method, which applies only during the annuity phase, not pre-annuitization withdrawals. Option D is incorrect because the 10% penalty (IRC §72(q)) applies only to the taxable portion, not the full amount, and the owner is under 59½ so the penalty would apply to the $20,000 taxable portion — but the question asks how the withdrawal is taxed, not the penalty.

Answer: C

For a self-employed individual with a Keogh plan, the maximum deductible contribution for a defined contribution plan is calculated as 20% of net self-employment income after deducting one-half of self-employment tax and the plan contribution itself. This results in a contribution limit of approximately 18.587% of net self-employment income. For $250,000 net self-employment income, the maximum deductible contribution is $46,500. Option A incorrectly uses 25% without adjustments. Option B confuses the Keogh plan with the 401(k) elective deferral limit. Option D states the annual additions limit but does not account for the self-employment-specific calculation.