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Virginia Life and Annuities Insurance Examination — Information & Free Practice

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Virginia Life and Annuities Insurance Examination

Examination outline
  • 1.0 Insurance Regulation (17%)
    • 1.1 Licensing General Provisions and Definitions (38.2-1800 ) Process (38.2-1819) Types of licensees Agents (38.2-1800.1(A), 1801, 1814–1815.1, 1817–1818, 1822(A), (B), 1824) Consultants (38.2-1837–1839) Nonresidents (38.2-1836, 1845) Business entities (38.2-1800.1(B), 1820, 1822(C), (D)) Viatical Settlements (38.2-1865.1; 6000; 14VAC5-71-20) Exceptions (38.2-1821.1, 1822 (G)) Maintenance Duration and termination (38.2-1825, 1826) Address and/or name changes (38.2-1826(A)) Assumed names (38.2-1822(E), (F)) Requirement to report felony convictions (38.2-1826(B)) Requirement to report other states actions (38.2-1826(C)) Continuing education (38.2-1866, 1868.1–1871) Appointment procedures (38.2-1825, 1833–1834.1) Agent's contract with insurer versus agent's appointment with insurer Agent's appointment versus agency's appointment Solicitation prior to appointment Appointment requirement after becoming licensed Acknowledgment of appointment/notice to agent Requirement to cease solicitation Termination of appointment/notice to agent Termination of license without active appointment Disciplinary actions Probation, suspension, revocation or refusal to issue or renew (38.2-1821, 1831, 1832) Cease and desist order (38.2-219) Penalties (38.2-218, 1823)
    • 1.2 State regulation State Corporation Commission's general duties and powers (38.2-200) Agent regulation Acting for an unlicensed insurer (38.2-1802) Record retention (38.2-1809(B)) Activities of unlicensed individuals (38.2-1821.1(B), 1822(G); AL 2002-9) Payment and sharing of commissions (38.2-1812) Charging of fees (38.2-310) Illegal compensation; exceptions (38.2-1812.2) Fiduciary capacity (38.2-1813) Responsibility of trust accounts (38.2-1813) Unfair trade practices Misrepresentation (38.2-502, 512) False advertising (38.2-503) Defamation (38.2-504) Boycott, coercion and intimidation (38.2-505) Notice of Adverse Underwriting Decisions (38.2-610) False statements and entries (38.2-506) Unfair discrimination (38.2-508, 38.2-508.1, 38.2-508.2) Rebating (38.2-509) Twisting (38.2-1831(5)) Referrals (38.2-1821.1 (B) 8) Insurance information and privacy protection (38.2-604, 613) Notice of information practices (38.2-604, 608, 609, 613; 38.2-604.1)
  • 2.0 General Insurance (10%)
    • 2.1 Concepts Risk management key terms Risk Exposure Hazard Peril Loss Methods of handling risk Avoidance Retention Sharing Reduction Transfer Elements of insurable risks Adverse selection Law of large numbers Reinsurance
    • 2.2 Insurers Types of insurers Stock companies Mutual assessment insurers Fraternal benefit societies Private versus government insurers Admitted versus nonadmitted insurers Domestic, foreign and alien insurers Financial status (independent rating services) and operating results Marketing (distribution) systems
    • 2.3 Agents and general rules of agency Types Captive Independent Insurer as principal Agent of insurer Authority and powers of agents Express Implied Apparent Responsibilities to the applicant/insured
    • 2.4 Contracts Elements of a legal contract Offer and acceptance Consideration Competent parties Legal purpose Distinct characteristics of an insurance contract Contract of adhesion Aleatory contract Personal contract Unilateral contract Conditional contract Legal interpretations affecting contracts Ambiguities in a contract of adhesion Reasonable expectations Indemnity Utmost good faith Representations/misrepresentations Warranties Concealment Fraud Waiver and estoppel
  • 3.0 Life Insurance Basics (15%)
    • 3.1 Insurable interest (38.2-301, 302, 3105)
    • 3.2 Personal uses of life insurance Survivor protection Estate creation Cash accumulation Liquidity Estate conservation
    • 3.3 Determining amount of personal life insurance Human life value approach Needs approach Types of information gathered Determining lump-sum needs Planning for income needs
    • 3.4 Business uses of life insurance Buy-sell funding Key person Executive bonuses
    • 3.5 Classes of life insurance policies Group versus individual Permanent versus term Participating versus nonparticipating Fixed versus variable life insurance and annuities Regulation of variable products (FINRA and Virginia) (38.2-3113; 14 VAC 5-20-30, 80) Types of variable products
    • 3.6 Premiums Factors in premium determination Mortality Interest Expense Premium concepts Net single premium Gross annual premium Premium payment mode
    • 3.7 Agent responsibilities Rules Governing Advertisement of Life Insurance and Annuities (14VAC 5-41) Solicitation and sales presentations (14 VAC 5-41) Life, Accident and Sickness Insurance Guaranty Association (14 VAC 5-30-10 -70 ) Policy summary Buyer's guide Replacement (14 VAC 5-30-40) Use and disclosure of insurance information (38.2-613) Field underwriting Notice of information practices (38.2-604) Adverse underwriting decisions (38.2-610 – 612 ) Application procedures Required signatures Changes in the application Consequences of incomplete applications Warranties and representations Collecting the initial premium and issuing the receipt Disclosures at point of sale (e.g., HIPAA, HIV consent) USA PATRIOT Act/anti-money laundering Delivery Policy review Effective date of coverage Premium collection Statement of good health
    • 3.8 Individual underwriting by the insurer Information sources and regulation Application Agent report Attending physician statement Investigative consumer (inspection) report Medical Information Bureau (MIB) Medical examinations and lab tests including HIV (38.2-613.01; 14 VAC 5-180-50) Unfair discrimination (38.2-508, 38.2-508.1, 38.2-508.2) Classification of risks Preferred Standard Substandard Declined
  • 4.0 Life Insurance Policies (20%)
    • 4.1 Term life insurance Level term Annual renewable term Level premium term Decreasing term Increasing term Return of premium
    • 4.2 Whole life insurance Ordinary whole life Continuous premium (straight life) Limited payment Interest sensitive/current assumption Indexed life Equity indexed life Single premium Variable whole life Variable universal life
    • 4.3 Flexible premium policies Adjustable life Universal life
    • 4.4 Specialized policies Joint life (first-to-die) Survivorship life (second-to-die) Juvenile/student life
    • 4.5 Group life insurance Characteristics of group plans Types of eligible groups (38.2-3318.1) Employer/employee Debtor groups Labor union groups Group underwriting requirements Benefit payments (38.2-3330) Covered dependents (38.2-3323) Lives covered (38.2-3322.2) Conversion to individual policy (38.2-3332–3334) Contributory vs. noncontributory
    • 4.6 Credit life insurance (individual versus group)
  • 5.0 Life Insurance Policy Provisions, Options and Riders (18%)
    • 5.1 Standard provisions Ownership Assignment (38.2-3111) Entire contract (38.2-3304) Right to examine (free look) (38.2-3301) Payment of premiums (38.2-3302) Grace period (38.2-3303) Reinstatement (38.2-3311) Incontestability (38.2-3107, 3305) Misstatement of age and misstatement of gender (38.2-3108, 3306) Exclusions Suicide (38.2-3106) War clause Interest on proceeds (38.2-3115) Prohibited provisions including backdating (38.2-3104, 3316)
    • 5.2 Beneficiaries Designation options Individuals Classes Estates Minors Trusts Succession Revocable versus irrevocable Annulment or divorce (38.2-305(C)) Common disaster clause Spendthrift clause
    • 5.3 Settlement options Cash payment Interest only Fixed-period installments Fixed-amount installments Life income Single life Joint and survivor
    • 5.4 Nonforfeiture options Cash surrender value Extended term Reduced paid-up insurance
    • 5.5 Policy loans (38.2-3308) Cash loans Automatic premium loans Withdrawals or partial surrenders Educational loans (38.2-3113.3)
    • 5.6 Dividend options (38.2-3307) Cash payment Reduction of premium payments Accumulation at interest One-year term option Paid-up additions Paid-up insurance
    • 5.7 Disability riders Waiver of premium Waiver of cost of insurance Disability income benefit Payor benefit life/disability (juvenile insurance)
    • 5.8 Accelerated benefit provision/rider (38.2-3115.1; 14 VAC 5-70-40) Conditions for payment Diagnosis of terminal illness Diagnosis of catastrophic illness Permanent confinement Inability to perform ADLs Disclosure (14 VAC 5-70-80) Written disclosure required Effect on death benefit Cash value Loans and loan interest Tax consequences Premium
    • 5.9 Riders covering additional insureds Spouse/other-insured term rider Children's term rider Family term rider
    • 5.10 Riders affecting the death benefit amount Accidental death Guaranteed insurability Cost of living Return of premium
  • 6.0 Annuities (12%)
    • 6.1 Annuity principles and concepts Accumulation period versus annuity period Owner, annuitant and beneficiary Insurance aspects of annuities
    • 6.2 Immediate versus deferred annuities Single premium immediate annuities (SPIAs) Deferred annuities Premium payment options Nonforfeiture Surrender charges Bail-out provisions Death benefits
    • 6.3 Annuity (benefit) payment options Life contingency options Pure life versus life with guaranteed minimum Single life versus multiple life Annuities certain (types)
    • 6.4 Annuity products Fixed annuities General account assets Interest rate guarantees (minimum versus current) Level benefit payment amount Variable Annuities Equity indexed annuities Market value adjusted annuities (modified guaranteed annuities) (38.2-107.1, 3113.1)
    • 6.5 Uses of annuities Lump-sum settlements Qualified retirement plans including group versus individual Personal uses Tax-deferred growth Retirement income Education funds Charitable gift annuity (38.2-106.1, 3113.2) Suitability in Annuity Transactions (14VAC5-45)
  • 7.0 Federal Tax Considerations for Life Insurance and Annuities (4%)
    • 7.1 Taxation of personal life insurance Amounts available to policyowner Cash value increases Dividends Policy loans Surrenders Amounts received by beneficiary General rule and exceptions Settlement options Values included in insured's estate Cost Recovery Rule
    • 7.2 Modified endowment contracts (MECs) Modified endowment versus life insurance Seven-pay test Distributions
    • 7.3 Taxation of non-qualified annuities Individually-owned Accumulation phase (tax issues related to withdrawals) Annuity phase and the exclusion ratio Distributions at death Corporate-owned
    • 7.4 Taxation of individual retirement accounts (IRAs) Traditional IRAs Contributions and deductible amounts Premature distributions (including taxation issues) Annuity phase benefit payments Values included in the annuitant's estate Amounts received by beneficiary Roth IRAs Contributions and limits Distributions
    • 7.5 Rollovers and transfers (IRAs and qualified plans)
    • 7.6 Section 1035 exchanges
  • 8.0 Qualified Plans (4%)
    • 8.1 General requirements
    • 8.2 Federal tax considerations Tax advantages for employers and employees Taxation of distributions (age-related)
    • 8.3 Plan types, characteristics and purchasers Simplified employee pensions (SEPs) Self-employed plans (HR 10 or Keogh plans) Profit-sharing and 401(k) plans SIMPLE plans 403(b) tax-sheltered annuities (TSAs)
Examination sources