17 Free Virginia Life, Annuities & Health Practice Questions: Policy Provisions, Options and Riders (2026)
How to Use This Set
Life Insurance Policy Provisions, Options and Riders is section 5.0 of Prometric's Series 11-01 outline: 11% of the exam and 16 of the 140 scored items, tied for the largest section. It covers the contract's working parts: the grace period, beneficiary rules, settlement options, dividend options, nonforfeiture and cash values, assignment, exclusions and the riders that change the contract.
Work each question before you open the explanation. These 17 questions come from LanePrep's Virginia L&H quiz bank.
Practice Questions 1-6: Waiver of Premium, Settlement Options, Suicide Exclusion and Riders
How a waiver of premium elimination period works, how income settlement options pay, what the suicide exclusion does and how two common riders behave.
Question 1 (Chapter 4)
A Virginia life insurance policy includes a waiver of premium rider that becomes effective after the insured has been continuously disabled for 90 days. The insured becomes disabled and files a claim. The insurer approves the waiver of premium benefit starting on the 91st day of disability. For which period are premiums waived under this rider?
- A) All premiums due from the date of disability onward are waived, including those for the first 90 days.
- B) Premiums are waived only if the disability lasts at least 180 days; the 90-day period is merely a waiting period before benefits begin.
- C) The waiver applies to the cost of insurance only, not the base premium, for the duration of the disability.
- D) Only premiums due after the 90th day of disability are waived; premiums for the first 90 days must be paid by the insured.
Show answer & explanation
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.
Question 2 (Chapter 4)
A Virginia resident purchases a joint life insurance policy covering herself and her husband with a joint and survivor life income settlement option. Upon the first death, the surviving spouse elects to receive the death benefit as a joint and survivor life income. How long will the payments continue?
- A) For the lifetime of the surviving spouse only.
- B) For a fixed period of 10 years, regardless of survival.
- C) Until the surviving spouse remarries.
- D) For the lifetime of the longer-living of the two original insureds.
Show answer & explanation
Answer: D
A joint and survivor life income settlement option provides payments that continue for the lifetime of the longer-living of the two individuals whose lives are covered (in this case, the original joint insureds). After the first death, the surviving spouse is one of the two lives, and payments continue for their lifetime. If the surviving spouse later dies, payments cease because both original lives have ended. Option A describes a single life income option. Option B describes a fixed-period option. Option C is not a standard feature of life income settlement options.
Question 3 (Chapter 4)
A Virginia life insurance policy has been in force for 18 months when the insured dies by suicide. The policy's face amount is $250,000. What is the insurer's obligation regarding the death benefit?
- A) Deny the claim and return all premiums paid, as the suicide exclusion applies for the first two years.
- B) Pay the full face amount of $250,000, as the suicide exclusion only applies after the first two years.
- C) Pay the full face amount because suicide is never excluded in Virginia life insurance policies.
- D) Pay half the face amount ($125,000) as a compromise for the early occurrence of suicide.
Show answer & explanation
Answer: A
Under Virginia Code § 38.2-3106, the suicide exclusion denies the death benefit if the insured dies by suicide within the first two years of the policy's inception. In such cases, the insurer's liability is limited to a return of the premiums paid (without interest). The exclusion does not apply after the first two years. At 18 months, the policy is within the exclusion period. Option B incorrectly states the timing of the exclusion. Option C is false; suicide is a standard exclusion. Option D has no basis in Virginia law or standard policy provisions.
Question 4 (Chapter 4)
A Virginia resident buys a life insurance policy with a spendthrift clause. The primary beneficiary is the policyowner's adult child, who has significant debt. The policyowner dies, and the death benefit is payable. Which statement accurately describes the effect of the spendthrift provision?
- A) The death benefit is paid directly to the adult child's creditors to satisfy outstanding debts.
- B) The death benefit is held by the insurer and paid in installments only if the child agrees to a budget plan.
- C) The spendthrift clause is invalid in Virginia and has no effect on creditor access to the death benefit.
- D) The death benefit is paid to the adult child, but creditors cannot reach the funds to satisfy the child's debts.
Show answer & explanation
Answer: D
Option D is correct because a spendthrift provision restricts the beneficiary's ability to assign or transfer their interest in the policy and prevents creditors from accessing the death benefit to satisfy the beneficiary's debts. The funds are paid to the beneficiary, but creditors cannot garnish or seize the proceeds. Option A is incorrect because the benefit is not paid to creditors. Option B describes a possible settlement option but not the spendthrift clause itself. Option C is incorrect because spendthrift clauses are valid and enforceable in Virginia under standard insurance contract principles and are recognized in the Series 11-01 content outline under beneficiary provisions.
Question 5 (Chapter 4)
A Virginia resident buys a life insurance policy with a children's term rider. The rider provides $10,000 of term life insurance on each child. The policyowner has two children. Ten years later, one child reaches age 25, which is the rider's age limit for coverage. What happens to the coverage on that child?
- A) The coverage on both children ends immediately when the first child reaches age 25.
- B) The coverage on the child who reached age 25 converts to a permanent policy automatically.
- C) The coverage amount is doubled for the remaining child since one child is no longer covered.
- D) The coverage on the child who reached age 25 ends, but the coverage on the other child continues until they reach age 25.
Show answer & explanation
Answer: D
Option D is correct because a children's term rider typically provides individual term coverage on each child, often with an age limit (e.g., 25). When one child reaches the age limit, their coverage ends, but coverage on any other eligible children continues until they reach the age limit. Option A is incorrect because coverage is not joint; each child is covered separately. Option B is incorrect because conversion is not automatic and depends on the rider's terms—some may offer conversion, but it is not guaranteed or automatic. Option C is incorrect because the coverage amount per child does not increase when another child's coverage ends. This aligns with the Series 11-01 content outline under 4.9 Riders Covering Additional Insureds and Affecting the Death Benefit.
Question 6 (Chapter 4)
A Virginia life insurance policyowner wants to add coverage that will increase the death benefit each year to keep pace with inflation. They choose a cost of living (COL) rider. Which statement accurately describes how this rider typically works?
- A) The death benefit increases annually by a fixed percentage, such as 3%, regardless of actual inflation.
- B) The death benefit increases only if the policyowner purchases additional paid-up additions using dividends.
- C) The death benefit is increased by a lump sum at the policy's 10th anniversary, then remains level for the rest of the policy's life.
- D) The death benefit increases annually based on changes in a specified index, such as the Consumer Price Index (CPI).
Show answer & explanation
Answer: D
Option D is correct because a cost of living (COL) rider typically increases the death benefit annually based on changes in a specified economic index, most commonly the Consumer Price Index (CPI), to help the benefit keep pace with inflation. Option A describes a fixed increase, which is not how a COL rider works—it is variable based on inflation. Option B describes the paid-up additions dividend option, not a COL rider. Option C describes a one-time increase, not an annual adjustment. This aligns with the Series 11-01 content outline under 4.9 Riders Covering Additional Insureds and Affecting the Death Benefit.
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Practice Questions 7-12: Exclusions, Disability Definitions, Beneficiary Changes and Cash Values
What a policy may and may not condition payment on, own-occupation wording, changing a revocable beneficiary, the net amount at surrender and the grace period.
Question 7 (Chapter 4)
A Virginia life insurance policy includes a provision that states the death benefit will be paid only if the insured dies while engaging in a hazardous hobby, such as skydiving. This type of provision is:
- A) Permitted under Virginia law as a standard exclusion
- B) Prohibited because it conflicts with the incontestability clause
- C) Allowed only if the policy is rated as substandard
- D) Prohibited as an unlawful restriction on coverage
Show answer & explanation
Answer: D
Virginia law prohibits life insurance policies from containing provisions that condition the death benefit on the circumstances of death, such as dying while engaging in a specific hazardous activity. Such provisions are considered unlawful restrictions on coverage. While insurers can exclude coverage for certain hazards through specific exclusions (like war or aviation), they cannot create a provision that pays the benefit only if death occurs under a specific condition. Option A is incorrect because such provisions are not permitted as standard exclusions; exclusions must be for specific perils, not conditions for payment. Option B is incorrect because the incontestability clause is unrelated to this issue. Option C is incorrect because rating a policy as substandard does not permit such a provision.
Question 8 (Chapter 4)
A Virginia resident purchases a life insurance policy with a waiver of premium rider that defines total disability as the inability to perform the material duties of his own occupation. He becomes disabled and can no longer work as a surgeon but could work as a medical school lecturer. Under this rider, is he considered totally disabled?
- A) No, because he is able to work in another occupation for which he is suited by education and training.
- B) Yes, but only after he has been disabled for at least 6 months.
- C) No, because waiver of premium riders only apply to accidental injuries, not illnesses.
- D) Yes, because he cannot perform the duties of his own occupation as a surgeon.
Show answer & explanation
Answer: D
An 'own occupation' definition of total disability considers the insured disabled if they cannot perform the material duties of their specific occupation, even if they could work in another occupation. Therefore, the surgeon who cannot perform surgery but could teach is considered totally disabled under this rider. Option A describes an 'any occupation' definition. Option B is incorrect because the duration requirement is not specified in the scenario and varies by policy, but the key issue is the definition of disability. Option C is incorrect because waiver of premium riders typically cover both illness and injury.
Question 9 (Chapter 4)
A Virginia life insurance policyowner wants to change the beneficiary from her brother (a revocable beneficiary) to her sister. She lives in Virginia, which is not a community property state. Which statement is true regarding this change?
- A) She needs her brother's consent to change the beneficiary because he is a family member.
- B) She can only change the beneficiary during the policy's annual anniversary period.
- C) She can change the beneficiary at any time without her brother's consent.
- D) She needs the consent of her sister to change the beneficiary to her.
Show answer & explanation
Answer: C
For a revocable beneficiary, the policyowner can change the beneficiary designation at any time, for any reason, without the consent of the current beneficiary. Virginia is not a community property state, so there is no spousal consent requirement for beneficiary changes (and even in community property states, the rule applies to spouses, not siblings). Option A is incorrect because consent is not required for a revocable beneficiary, regardless of relationship. Option B is incorrect because there is no restriction to the anniversary period. Option D is incorrect because the new beneficiary's consent is not required for a revocable designation.
Question 10 (Chapter 4)
A Virginia life insurance policyowner wants to ensure that if the insured dies by suicide after the first two policy years, the full death benefit is paid. Which statement is accurate regarding the suicide exclusion in Virginia?
- A) The suicide exclusion applies for the first two years only; after that, the full death benefit is paid even if death is by suicide.
- B) The suicide exclusion never applies; the full death benefit is always paid for suicide.
- C) The suicide exclusion applies for the first five years only.
- D) The suicide exclusion is prohibited in Virginia life insurance policies.
Show answer & explanation
Answer: A
Under Virginia law (§ 38.2-3106), the suicide exclusion allows the insurer to deny the death benefit if the insured dies by suicide within the first two years of the policy. After the two-year period has passed, the full death benefit is payable even if the cause of death is suicide. Option B is incorrect because the exclusion does apply initially. Option C is incorrect as the statutory period is two years, not five. Option D is incorrect because the suicide exclusion is permitted and standard in life insurance contracts.
Question 11 (Chapter 4)
A Virginia life insurance policyowner surrenders her policy for its cash surrender value. The policy has a cash surrender value of $8,000 and an outstanding policy loan of $3,000 with $180 in accrued interest. What is the net amount the policyowner will receive upon surrender?
- A) $5,000
- B) $4,820
- C) $8,000
- D) $11,180
Show answer & explanation
Answer: B
The net cash surrender value is calculated by subtracting the outstanding loan balance and accrued interest from the cash surrender value: $8,000 - ($3,000 + $180) = $8,000 - $3,180 = $4,820. Option A is incorrect as it only subtracts the principal loan ($8,000 - $3,000 = $5,000) but ignores accrued interest. Option C is incorrect as it ignores the loan entirely. Option D is incorrect as it adds the loan and interest to the cash value instead of subtracting.
Question 12 (Chapter 4)
A Virginia resident has a life insurance policy with an annual premium due on January 1st. The policyowner forgets to pay the premium. On January 20th, the insured unexpectedly dies. The insurer is notified of the death. What is the insurer's obligation under Virginia law regarding the death benefit?
- A) The insurer must pay the death benefit, minus the overdue premium, because the insured died within the grace period.
- B) The insurer must pay the full death benefit, as the policy was technically still in force.
- C) The insurer is not obligated to pay any death benefit because the premium was not paid by the due date.
- D) The insurer must offer the beneficiary the option to pay the overdue premium to keep the policy in force.
Show answer & explanation
Answer: A
Virginia Code Section 38.2-3303 mandates a grace period, typically 30 or 31 days, during which a life insurance policy remains in force even if the premium is late. If the insured dies during this grace period, the death benefit is paid, but the overdue premium is deducted from the proceeds. Therefore, the insurer must pay the death benefit minus the overdue premium.
Practice Questions 13-17: Class Beneficiaries, Dividends, Assignment, Divorce and Accelerated Benefits
How a class designation is read at death, what the accumulation-at-interest dividend option does, the collateral assignment and two Virginia rules on divorce and accelerated benefits.
Question 13 (Chapter 4)
A Virginia resident designates 'my children, equally' as the beneficiaries of her life insurance policy. At the time of designation, she has two children. Five years later, she has a third child. She then dies without updating her beneficiary designation. How will the death benefit be distributed?
- A) The death benefit will be divided equally among the two children living at the time of designation.
- B) The death benefit will be divided equally among all three children, including the one born after the designation.
- C) The death benefit will be paid to her estate, as the designation of 'my children' is too vague.
- D) The death benefit will be divided among the two oldest children, excluding the youngest.
Show answer & explanation
Answer: B
When a beneficiary is designated as a 'class' (e.g., 'my children'), it typically includes all members of that class who are alive at the time the death benefit becomes payable, unless the policy specifically states otherwise. Therefore, all three children, including the one born after the initial designation, would share equally in the proceeds.
Question 14 (Chapter 4)
A Virginia resident has a participating whole life insurance policy and selects the 'accumulation at interest' dividend option. Which statement accurately describes the effect of this option?
- A) The dividends are used to purchase a small amount of paid-up additional insurance.
- B) The dividends are paid out to the policyowner in cash each year.
- C) The dividends are kept by the insurer in a separate account and earn interest, which is taxable.
- D) The dividends are used to reduce the amount of the next premium payment.
Show answer & explanation
Answer: C
Under the 'accumulation at interest' dividend option, the dividends are left with the insurer to accumulate interest. While the dividends themselves are generally not taxable (as they are considered a return of excess premium), the interest earned on these accumulated dividends is taxable as ordinary income in the year it is credited, even if not withdrawn. Option A describes paid-up additions, B describes cash payment, and D describes reduction of premium.
Question 15 (Chapter 4)
A policyowner wants to use his $500,000 whole life policy as collateral for a $100,000 business loan at a local bank. He executes a document transferring partial rights of the policy to the bank. Which type of assignment has occurred under Virginia Code § 38.2-3111?
- A) Absolute Assignment
- B) Revocable Assignment
- C) Collateral Assignment
- D) Beneficiary Assignment
Show answer & explanation
Answer: C
A collateral assignment is a temporary transfer of specific policy rights (usually the death benefit up to the loan amount) to a creditor. Once the debt is repaid, the assigned rights return to the policyowner. An absolute assignment involves a permanent transfer of all ownership rights.
Question 16 (Chapter 4)
A Virginia policyowner names his spouse as the revocable beneficiary of his life insurance policy. They divorce two years later. The policyowner dies shortly after the divorce without updating the beneficiary designation. Under Virginia Code § 20-111.1, what happens to the proceeds?
- A) The proceeds are paid to the former spouse because the designation was never changed.
- B) The proceeds are paid to the former spouse only if the divorce was 'no-fault'.
- C) The designation of the spouse is revoked by operation of law upon divorce, and proceeds are paid as if the spouse predeceased the insured.
- D) The insurer keeps the proceeds until a court determines the rightful heir.
Show answer & explanation
Answer: C
Virginia Code § 20-111.1 provides that a divorce or annulment revokes the designation of a former spouse as a beneficiary of a life insurance policy unless a court order, a written contract between the parties, or the policy itself specifically provides otherwise.
Question 17 (Chapter 4)
When an agent is explaining an Accelerated Benefit rider to a Virginia applicant, 14VAC5-70-80 requires which of the following disclosures?
- A) A statement that the benefit is 100% tax-free in all circumstances.
- B) A statement that receipt of these benefits may affect eligibility for Medicaid or other government programs.
- C) A statement that the cash value of the policy will increase if the rider is exercised.
- D) A statement that the rider is mandatory for all policies over $50,000.
Show answer & explanation
Answer: B
Virginia regulation 14VAC5-70-80 requires specific disclosures for accelerated benefits, including the fact that receiving the benefits may be taxable and may adversely affect the recipient's eligibility for public assistance programs like Medicaid.
The Mistakes That Cost Marks
Waiving premiums during the elimination period. Under a waiver of premium rider, premiums due during the elimination period are still owed. The waiver starts once the elimination period is satisfied.
Mixing own-occupation and any-occupation. An own-occupation definition treats you as totally disabled if you cannot do your specific job, even if you could work in another one.
Asking a revocable beneficiary for consent. The owner can change a revocable beneficiary at any time without that beneficiary's consent.
Forgetting the loan when valuing a surrender. Net surrender proceeds are the cash value minus the outstanding loan and accrued interest.
Misreading the grace period. If the insured dies during the grace period, the death benefit is payable less the overdue premium.
Mistaking who is in a class. A designation such as "my children" generally includes members of the class alive when the benefit becomes payable, including one born after the designation.
Calling accumulated dividends taxable in full. Under accumulation at interest, the dividends are generally a return of premium, but the interest they earn is taxable.
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