VIRGINIA LIFE INSURANCE EXAM
QUESTIONS WITH 100% CORRECT
ANSWERS LATEST VERSION 2025/2026.
Commercial Insurers - ANS are in the business of selling insurance for a profit. Commercial
insurance is divided into two main groups: stock and mutual insurers.
Stock Companies - ANS organized and incorporated under state laws for the purpose of
making a profit for its stockholders (shareholders).
Nonparticipating insurer - ANS Stock insurers policyholders do not participate in receiving
dividends, unless they are also a stockholder of the company.
stock dividend - ANS Paid to the stockholders
Responsible to stockholders - ANS Directors and officers
Mutalization - ANS Transformation of a stock insurer into a mutual insurer
Demutualization - ANS Transformation of a mutual insurer into a stock insurer.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,Taxation - ANS Dividends are subject to taxation because they are considered profit
Mutual Companies - ANS Owned by the policy owners and issue participating policies.
Mutual Insurer - ANS An insurer that is owned by its policyholders and formed as a
corporation for the purpose of providing insurance to them.
Mutual companies also - ANS When declared are paid to the policyholders
Dividends from a mutual insurer - ANS Are not subject to taxation because the dividends are
considered to be a return premium
Exception to taxation of dividends - ANS If the policy wonder chooses to let the dividends sit
and collect interest. Accumulated interest would be taxable
Mixed Insurer - ANS A company that operates as both a participating and nonparticipating
insurer. Dividends can never be guaranteed regardless of the type of company offering them
Strong Assessment Mutual Companies - ANS Are classified by the way they charge premium.
Pure Assessment Mutual Company - ANS Operates on the basis of loss-sharing by group
members. No premium is payable in advance. Instead, each
member is assessed an individual portion of losses that actually occur.
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, Advanced premium assessment mutual - ANS charges a premium at the beginning of the
policy period. If the original premiums exceed the operating expenses and losses, the surplus is
returned to the policyholders as dividends.
Fraternal Benefit Societies - ANS Special type of mutual companies/nonprofit religious,
ethnic, or charitable organizations that provides insurance solely to their members. Must be
formed for reasons other than obtaining insurance
Risk Retention Group - ANS Mutual companies formed by a group of people in the same
industry or profession
service provider - ANS offer benefits to subscribers in return for the payment of a premium
Reciprocal Insurer - ANS Unincorporated group of individual members that provide insurance
for other members through indemnify contracts. Each member acts as both insurer and insurer
are managed by attorney in fact
Shareholders - ANS Normally receive a dividends in a stock insurance company
Reinsurance contract - ANS Accept a portion of the risk underwritten by another insurer who
has contracted for the entire coverage amount
Life insurance - ANS creates an instant estate, regardless of when death occurs.
Incorporation of a business is an example of - ANS Risk transfer
Eliminating a hazard is an example of - ANS Risk avoidance
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
QUESTIONS WITH 100% CORRECT
ANSWERS LATEST VERSION 2025/2026.
Commercial Insurers - ANS are in the business of selling insurance for a profit. Commercial
insurance is divided into two main groups: stock and mutual insurers.
Stock Companies - ANS organized and incorporated under state laws for the purpose of
making a profit for its stockholders (shareholders).
Nonparticipating insurer - ANS Stock insurers policyholders do not participate in receiving
dividends, unless they are also a stockholder of the company.
stock dividend - ANS Paid to the stockholders
Responsible to stockholders - ANS Directors and officers
Mutalization - ANS Transformation of a stock insurer into a mutual insurer
Demutualization - ANS Transformation of a mutual insurer into a stock insurer.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,Taxation - ANS Dividends are subject to taxation because they are considered profit
Mutual Companies - ANS Owned by the policy owners and issue participating policies.
Mutual Insurer - ANS An insurer that is owned by its policyholders and formed as a
corporation for the purpose of providing insurance to them.
Mutual companies also - ANS When declared are paid to the policyholders
Dividends from a mutual insurer - ANS Are not subject to taxation because the dividends are
considered to be a return premium
Exception to taxation of dividends - ANS If the policy wonder chooses to let the dividends sit
and collect interest. Accumulated interest would be taxable
Mixed Insurer - ANS A company that operates as both a participating and nonparticipating
insurer. Dividends can never be guaranteed regardless of the type of company offering them
Strong Assessment Mutual Companies - ANS Are classified by the way they charge premium.
Pure Assessment Mutual Company - ANS Operates on the basis of loss-sharing by group
members. No premium is payable in advance. Instead, each
member is assessed an individual portion of losses that actually occur.
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, Advanced premium assessment mutual - ANS charges a premium at the beginning of the
policy period. If the original premiums exceed the operating expenses and losses, the surplus is
returned to the policyholders as dividends.
Fraternal Benefit Societies - ANS Special type of mutual companies/nonprofit religious,
ethnic, or charitable organizations that provides insurance solely to their members. Must be
formed for reasons other than obtaining insurance
Risk Retention Group - ANS Mutual companies formed by a group of people in the same
industry or profession
service provider - ANS offer benefits to subscribers in return for the payment of a premium
Reciprocal Insurer - ANS Unincorporated group of individual members that provide insurance
for other members through indemnify contracts. Each member acts as both insurer and insurer
are managed by attorney in fact
Shareholders - ANS Normally receive a dividends in a stock insurance company
Reinsurance contract - ANS Accept a portion of the risk underwritten by another insurer who
has contracted for the entire coverage amount
Life insurance - ANS creates an instant estate, regardless of when death occurs.
Incorporation of a business is an example of - ANS Risk transfer
Eliminating a hazard is an example of - ANS Risk avoidance
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
