10 exam-style questions with answers and explanations, straight from our 1,030-question bank. Tap an answer to check yourself. When you're ready, take the scored version in the free practice test.
The VT LAH&HMO exam has 150 questions and runs 2 hours 30 minutes.
These 10 free VT LAH&HMO questions are organized by exam domain, so you can see how each part of the Vermont Producer's Examination for Life, Accident, Health and HMO blueprint is tested. Reveal the answer and explanation under each question.
A Vermont producer receives a customer's initial premium on Friday and deposits it into the producer's personal checking account, intending to remit the full amount to the insurer on Monday. Which assessment is correct?
Correct answer: C - The premium must be held in a fiduciary capacity and kept separate from the producer's personal funds
An insurer provides a producer with a branded office, approved forms, and public-facing materials, then repeatedly accepts business submitted through that office. A customer reasonably believes the producer may perform an act that the agency contract does not expressly mention. What type of authority is implicated?
Correct answer: D - Apparent authority created by the insurer's conduct
A family's needs analysis identifies $1,150,000 of lump-sum and income needs. Available liquid assets are $175,000, existing life insurance is $300,000, and the present value of stated survivor benefits is $75,000. Assuming all listed resources are available, how much additional life insurance is indicated?
Correct answer: D - $600,000
A producer recommends that a client buy a new life policy and take a substantial loan from an existing policy to fund the purchase. The client has not yet applied for the policy loan. What should the producer do?
Correct answer: C - Treat the transaction as a replacement and complete the required disclosure and comparison procedures
A client wants permanent life coverage with flexible premium timing, an adjustable death benefit, and owner-directed separate-account investments. The client understands that poor investment performance and inadequate funding can cause the policy to lapse. Which product best matches these objectives?
Correct answer: A - Variable universal life insurance
An employee with a newly diagnosed serious illness loses employer group life coverage. The standard conversion privilege applies, and 18 days have passed since coverage ended. What can the employee still do?
Correct answer: A - Convert to an individual permanent policy without evidence of insurability
A whole life policyowner wants to stop paying premiums but retain lifetime coverage. The owner accepts a smaller face amount and does not want to borrow against the policy. Which nonforfeiture option fits this objective?
Correct answer: B - Reduced paid-up insurance with a smaller permanent death benefit
A fixed annuity with a market-value adjustment is surrendered after market interest rates rise well above the contract's credited rate. Ignoring any separate surrender charge, how will the market-value adjustment generally affect the surrender value?
Correct answer: B - It produces a negative adjustment because the older contract rate is less attractive
An owner annuitizes a nonqualified contract with a $120,000 investment in the contract and a $200,000 expected return. Annual payments are $20,000. Under exclusion-ratio treatment, how much of each annual payment is taxable while basis is being recovered?
Correct answer: A - $8,000
A nonprofit hospital described under Internal Revenue Code Section 501(c)(3) wants employees to make salary-reduction contributions to a retirement arrangement commonly funded through annuity contracts or custodial mutual funds. The arrangement specifically designed for this employer is:
Correct answer: D - 403(b) plan
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