VA LIFE HEALTH PRACTICE EXAM QUESTIONS
AND ANSWERS SET A+
✔✔Suicide Clause - ✔✔2 years, if applicant commit suicide within first two years of
policy benefit is not paid
✔✔Misstatement of Age or Sex Provision - ✔✔This provision allows the insurer to
adjust the policy benefits if the insured's age or sex is misstated on the policy
application.
✔✔Revocable Beneficiaries - ✔✔The policyowner may change a revocable beneficiary
at any time. Without having to acquire the existing beneficiaries permission
✔✔Irrevocable Beneficiaries - ✔✔the policy owner may not change the beneficiary
without written consent of the beneficiary, cannot borrow against the policies cash value
✔✔Accumulation Phase - ✔✔the period of time by which the owner of the contract pays
in to the annuity; a beneficiary must be named if the policy owner dies during the
accumulation phase.
✔✔Annuitization period - ✔✔Payments out, to insured
✔✔Index annuity cap - ✔✔The maximum interest rate credited in a period
✔✔Index annuity market link - ✔✔Returns are linked to an external index, but do not
directly invest in it
✔✔Variable annuity payment variability - ✔✔Payments fluctuate based on investment
performance
✔✔Index annuity floor - ✔✔Typically guarantees a minimum interest rate, even if the
index performs poorly
, ✔✔Index Annuity - ✔✔an interest bearing fixed annuity tied to an equity index, such as
the Dow Jones Industrial Average or S & P 500.
✔✔Variable Annuity - ✔✔pays a lifetime income, but the income payments vary
depending on common stock prices
✔✔Fixed Annuity - ✔✔An annuity that offers fixed payments and guarantees a minimum
rate of interest to be credited to the purchase payment or payments.
✔✔When is an annuity taxed - ✔✔During withdrawals or during early withdrawal before
the age of 59 1/2 resulting in a 10% penalty
✔✔When is taxation deferred? - ✔✔During the annuity growth
✔✔Non-Qualified Annuity - ✔✔funded with after-tax dollars, meaning taxes on the
money were paid before it goes into the annuity. Upon distribution, only the earnings are
taxable as ordinary income.
✔✔Qualified Annuities - ✔✔Annuities that are funded with pre-tax dollars paid through
an employer-based IRA or other qualified retirement plans such as Keogh or TSA plans
on behalf of the employee. In regards to contributions paid into an annuity, pre-tax
dollars provide an annuitant with greater fund growth in comparison to after-tax dollars.
✔✔LIFO - ✔✔last in first out: only used in non-qualified annuities when determining how
withdrawals are taxed
✔✔When someone takes money out of a non-qualified annuity - ✔✔Earnings are
withdrawn before principle and earnings are then taxable
✔✔Risk Transfer - ✔✔This is the act of exchanging the responsibility for a significant
potential loss (risk) to another party in exchange for a smaller, preset cost or premium.
✔✔Insurable Interest - ✔✔Any financial interest in life or property such that, if the life or
property were lost or harmed, the insured would suffer financially. (insurable interest is
required at issue of insurance.)
✔✔Term Life Insurance - ✔✔Life insurance that pays a death benefit if the policyholder
dies within a specific time period but has no remaining value at the end of this time.
✔✔Whole Life Insurance - ✔✔Insurance that is kept in force for a person's entire life
and pays a benefit upon the person's death, whenever that may be. (benefit may be
fixed or could accrue additional value based on investments.)
AND ANSWERS SET A+
✔✔Suicide Clause - ✔✔2 years, if applicant commit suicide within first two years of
policy benefit is not paid
✔✔Misstatement of Age or Sex Provision - ✔✔This provision allows the insurer to
adjust the policy benefits if the insured's age or sex is misstated on the policy
application.
✔✔Revocable Beneficiaries - ✔✔The policyowner may change a revocable beneficiary
at any time. Without having to acquire the existing beneficiaries permission
✔✔Irrevocable Beneficiaries - ✔✔the policy owner may not change the beneficiary
without written consent of the beneficiary, cannot borrow against the policies cash value
✔✔Accumulation Phase - ✔✔the period of time by which the owner of the contract pays
in to the annuity; a beneficiary must be named if the policy owner dies during the
accumulation phase.
✔✔Annuitization period - ✔✔Payments out, to insured
✔✔Index annuity cap - ✔✔The maximum interest rate credited in a period
✔✔Index annuity market link - ✔✔Returns are linked to an external index, but do not
directly invest in it
✔✔Variable annuity payment variability - ✔✔Payments fluctuate based on investment
performance
✔✔Index annuity floor - ✔✔Typically guarantees a minimum interest rate, even if the
index performs poorly
, ✔✔Index Annuity - ✔✔an interest bearing fixed annuity tied to an equity index, such as
the Dow Jones Industrial Average or S & P 500.
✔✔Variable Annuity - ✔✔pays a lifetime income, but the income payments vary
depending on common stock prices
✔✔Fixed Annuity - ✔✔An annuity that offers fixed payments and guarantees a minimum
rate of interest to be credited to the purchase payment or payments.
✔✔When is an annuity taxed - ✔✔During withdrawals or during early withdrawal before
the age of 59 1/2 resulting in a 10% penalty
✔✔When is taxation deferred? - ✔✔During the annuity growth
✔✔Non-Qualified Annuity - ✔✔funded with after-tax dollars, meaning taxes on the
money were paid before it goes into the annuity. Upon distribution, only the earnings are
taxable as ordinary income.
✔✔Qualified Annuities - ✔✔Annuities that are funded with pre-tax dollars paid through
an employer-based IRA or other qualified retirement plans such as Keogh or TSA plans
on behalf of the employee. In regards to contributions paid into an annuity, pre-tax
dollars provide an annuitant with greater fund growth in comparison to after-tax dollars.
✔✔LIFO - ✔✔last in first out: only used in non-qualified annuities when determining how
withdrawals are taxed
✔✔When someone takes money out of a non-qualified annuity - ✔✔Earnings are
withdrawn before principle and earnings are then taxable
✔✔Risk Transfer - ✔✔This is the act of exchanging the responsibility for a significant
potential loss (risk) to another party in exchange for a smaller, preset cost or premium.
✔✔Insurable Interest - ✔✔Any financial interest in life or property such that, if the life or
property were lost or harmed, the insured would suffer financially. (insurable interest is
required at issue of insurance.)
✔✔Term Life Insurance - ✔✔Life insurance that pays a death benefit if the policyholder
dies within a specific time period but has no remaining value at the end of this time.
✔✔Whole Life Insurance - ✔✔Insurance that is kept in force for a person's entire life
and pays a benefit upon the person's death, whenever that may be. (benefit may be
fixed or could accrue additional value based on investments.)
