Insurance Licensing Virginia-Life-Annuities-and-Health-Insurance - Virginia Life, Annuities, and Health Insurance Examination Series 11-01

Virginia Code § 38.2-5200 defines Activities of Daily Living (ADLs) in long-term care (LTC) insurance as basic self-care tasks triggering benefits if the insured can’t perform them (typically 2 of 6). Option D lists common ADLs: dressing, eating, bathing, and mobility (often with toileting and transferring), aligning with federal and Virginia standards (e.g., HIPAA). Option A (age, sex, income, occupation) is underwriting data, not ADLs. Option B (health providers) is unrelated to functional ability. Option C (family members) might confuse beneficiaries, not ADLs. The study guide likely lists ADLs with examples—e.g., needing help bathing due to arthritis—emphasizing their role in LTC eligibility, making D the precise answer.

The agent’s report includes observations on the applicant’s financial status, character, and other relevant factors, but the applicant’s signature belongs on the application form, not the agent’s report.

Exact Extract (Virginia Health Insurance Study Guide): “The agent’s report is confidential and includes information on financial condition and character. It does not contain the applicant’s signature.”

References (Virginia Documents / Study Guide):

— Virginia Health Insurance Examination Outline, Field Underwriting

A captive agent represents only one insurance company under a contractual agreement. The agent sells only that insurer’s products and acts as its exclusive representative.

Independent agents represent multiple insurers, brokers represent clients rather than insurers, and “free agent” is not a recognized licensing category. Virginia licensing materials clearly distinguish captive agents from other distribution roles, making option A correct.

Individual disability income insurance policies are designed to provide coverage for both accident-related disabilities and sickness-related disabilities, unless otherwise excluded.

Exact Extract (Virginia Disability Insurance Study Guide): “Disability income insurance provides benefits for loss of income due to both accident and sickness.”

References (Virginia Documents / Study Guide):

— Virginia Health Insurance Examination Outline, Disability Income Insurance

For an insurance policy to be legally binding, four essential elements must exist: (1) offer and acceptance, (2) consideration, (3) competent parties, and (4) legal purpose. Consideration refers to the exchange of value: the applicant’s premium and representations in the application, and the insurer’s promise to pay benefits. Exact extract: “Consideration is the value each party gives to the other: the insured provides premiums and truthful statements, while the insurer provides the promise of benefits.” Without consideration, a contract cannot be enforced.

The notice of claim provision states that notice may be given to the insurer or its authorized agent. Legally, providing notice to an authorized agent constitutes notice to the insurer itself.

Exact Extract (Virginia Uniform Policy Provisions): “Notice of claim may be given to the insurer or to any authorized agent of the insurer.”

References (Virginia Documents / Study Guide):

— Code of Virginia §38.2-3514 (Uniform accident and sickness provisions – Notice of claim)

Virginia Code § 38.2-3502 mandates a “free look” period (typically 10 days) for individual health insurance, allowing the insured to review the policy and cancel it with a full premium refund (option D) if returned within that time. Option A (try without paying) is false; premiums are paid upfront, refundable only upon cancellation. Option B (compare policies) is a practical use but not the legal purpose; the provision ensures cancellation rights, not comparison. Option C (change coverage) isn’t allowed; modifications require underwriting, not free-look terms. The study guide likely details this consumer protection with examples—e.g., returning a policy on day 9 for a refund—making D the precise right.

The extended term nonforfeiture option uses the cash value to purchase term insurance for the full face amount ($35,000) for as long a term as the cash value allows. The face amount remains unchanged; only the term length varies.

Exact Extract (Virginia Life Insurance Study Guide): “Extended term—uses cash value to buy term insurance equal to the original face amount for a period determined by cash value.”

References (Virginia Documents / Study Guide):

— Virginia Life Insurance Examination Outline, Nonforfeiture Options

A POS plan blends characteristics of HMOs and PPOs/indemnity plans. Like an HMO, members choose a primary care physician, but they can also go out-of-network and receive partial reimbursement (similar to indemnity coverage). Exact extract: “POS plans combine features of HMOs and indemnity plans, permitting members to seek care within the network or outside the network at higher cost-sharing.” This flexibility allows broader provider choice while controlling costs through the HMO model.

Universal life (Virginia Code § 38.2-3113.1) features: Option A is true; a mortality charge funds the death benefit, deducted monthly from cash value. Option B is true; expense charges are disclosed (e.g., admin fees). Option D is true; loans reduce the cash value earning interest. Option C is false; death benefits are generally tax-free under IRC § 101(a)(1), not ordinary income, unless an exception (e.g., transfer for value) applies, which isn’t standard. The study guide likely contrasts universal life mechanics—e.g., $50 monthly mortality charge—with tax-free benefits, making C the exception.