Insurance Licensing Updated Virginia-Life-Annuities-and-Health-Insurance Exam Questions and Answers by elif

Mutual insurers are organized for the benefit of their policyholders, who are the owners of the company. Profits are returned to policyholders in the form of dividends or reduced premiums, unlike stock insurers which are owned by shareholders.

Exact Extract (Virginia Insurance Study Guide): “Mutual insurance company—owned by policyholders; profits distributed as dividends or premium reductions.”

References (Virginia Documents / Study Guide):

— Virginia General Insurance Concepts Outline, Section 1.1 Types of insurers

Ordinary whole life pays the face amount at maturity (traditionally age 100 or 120) if the insured is still alive, or upon earlier death. Term policies have no maturity value.

Exact Extract (Virginia Life Insurance Study Guide): “Ordinary whole life—pays the face amount at death or at policy maturity if the insured survives to that date.”

References (Virginia Documents / Study Guide):

— Virginia Life & Annuities Insurance Examination Outline, Whole Life Characteristics

Virginia Code § 38.2-1809 mandates that licensees maintain specific records for regulatory oversight and consumer protection. Option A (accounting records of premium payments) is required to track funds received and remitted, ensuring financial accountability (e.g., premiums collected for a $1,000 policy). Option B (files of insurance applications on current policies) must be kept as part of the contract and for audit purposes, per § 38.2-1810. Option C (policy renewal notices) is required to document communication with policyholders about ongoing coverage, ensuring transparency. Option D (premium quotations of unissued policies) is not mandated; while agents may provide quotes (e.g., $500 annually for a term policy), these are preliminary offers, not binding until a policy is issued, and Virginia law doesn’t require retaining them unless they result in a transaction. The study guide likely details recordkeeping in a compliance chapter, contrasting required records (A, B, C) with optional ones like quotes (D), using examples—e.g., keeping a paid policy’s file but not a rejected quote—making D the item not required. This reflects Virginia’s focus on executed contracts over prospective ones.

The main advantage of tax-qualified retirement plans is that earnings accumulate tax-deferred until distributed to participants. This allows employees’ investments to grow more quickly compared to taxable accounts. Exact extract: “Employees benefit from tax-deferred accumulation of pension and profit-sharing contributions until retirement distribution.” Employers may deduct contributions, but the true long-term tax benefit accrues to employees.