Pass the Insurance Licensing Virginia Insurance License Virginia-Life-Annuities-and-Health-Insurance Questions and answers with CertsForce

The purpose of Medicare supplement regulation is to ensure consumer protection, fair marketing, and full disclosure. Policies must clearly explain benefits, costs, and relationship to Medicare coverage. Exact extract: “The intent of the rules is to protect Medicare eligible persons by requiring full disclosure in the sale of accident and sickness insurance policies marketed as Medicare supplements.” These rules prevent misleading practices and ensure seniors understand their coverage.

Detailed Answer in Step-by-Step Solution:

A trustee-to-trustee transfer (A) avoids the 20% mandatory tax withholding required when funds are distributed to the participant and rolled over within 60 days.

Options B (lost funds) and C (time) are incidental, not primary benefits. Option D (penalty tax) is irrelevant; rollovers aren’t penalized if timely.

The Virginia study guide, per IRS rules, notes that direct trustee-to-trustee transfers bypass withholding, preserving the full amount for reinvestment. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Retirement Plans."

Detailed Answer in Step-by-Step Solution:

The grace period in a life insurance policy (typically 30 or 31 days) allows the policy to remain in force even if the premium is unpaid, provided the insured dies during this period.

If death occurs during the grace period, the insurer must pay the full death benefit (face amount), minus any unpaid premium, but only if explicitly stated. In this question, no indebtedness or dividends complicate the scenario, and standard practice assumes full payment unless otherwise specified.

Option B (cash value) applies to surrender, not death claims.

Option C (face amount less premium due) is a possibility in some policies, but absent specific policy language here, the default is full payment.

Option D (nonforfeiture provisions) applies if the policy lapses, not during the grace period.

Thus, the insurer pays the face amount (A).

The Virginia study guide states that the grace period provision protects the policyholder by keeping coverage active for a short period after a missed premium, and upon death during this time, the full face amount is payable unless loans or specific deductions apply. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Standard Policy Provisions - Grace Period."

Detailed Answer in Step-by-Step Solution:

A group health insurance contract is a legal agreement between the employer (policyholder) and the insurance company (C), with employees as covered participants, not direct parties to the contract.

Option A (employer and employees) is the employment relationship, not the insurance contract. Option B (employee and insurer) applies to individual policies. Option D (all three) overcomplicates the contractual relationship.

The Virginia study guide states that group insurance contracts are issued to the employer or group sponsor, who contracts with the insurer, while employees receive certificates of coverage. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Group Insurance."

Virginia Code § 38.2-3501 governs health insurance applications, requiring accuracy and applicant consent. Changes or corrections by an agent (e.g., fixing a misspelled name) must be initialed by the applicant (option B) to verify agreement, as the application becomes part of the contract (Virginia Code § 38.2-3503). Option A (agent) initialing alone risks unauthorized alterations. Option C (physician) is irrelevant; medical input isn’t standard for application edits. Option D (underwriter) assesses, not corrects, applications post-submission. The study guide likely stresses this consumer protection rule, with examples—e.g., an agent correcting a birthdate, initialed by the applicant—ensuring transparency, making B the correct party.

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.

Pre-existing conditions are defined as illnesses or conditions for which an insured received medical advice, diagnosis, or treatment prior to the effective date of coverage.

Exact Extract (Virginia Health Insurance Study Guide): “Pre-existing condition—any condition for which diagnosis, medical advice, or treatment was received prior to the policy’s effective date.”

References (Virginia Documents / Study Guide):

— Virginia Health Insurance Examination Outline, Policy Exclusions and Limitations

Detailed Answer in Step-by-Step Solution:

The entire contract clause includes the policy and the attached application (B), ensuring all terms and representations are part of the agreement.

The premium receipt (A) is temporary, the waiver rider (C) is optional, and the declaration page (D) is part of the policy, not separate.

The Virginia study guide states that the entire contract provision encompasses the policy and attached application, defining the full legal agreement. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Life Insurance Policy Provisions."

Virginia Code § 38.2-3508 provides a 31-day grace period for individual health insurance premium payments, during which coverage remains active and claims are paid. If a claim arises, the insurer may deduct any unpaid premium from the reimbursement (option D), ensuring it recovers owed funds while honoring the claim. Option). Option A (deductible waived) is false; deductibles apply regardless of payment status. Option B (10% fee) is unsupported by Virginia law. Option C (automatic cancellation) is incorrect; cancellation requires notice post-grace period if unpaid (Virginia Code § 38.2-3510). The study guide likely explains this with examples—e.g., a $500 claim with a $100 unpaid premium nets $400—reflecting standard practice, making D the correct outcome.

Detailed Answer in Step-by-Step Solution:

Reinsurance (C) is a process where one insurer (the ceding company) transfers part or all of its risk to another insurer (the reinsurer) to reduce exposure.

A reciprocal contract (A) involves mutual insurance exchanges, not risk transfer between insurers.

Coinsurance (B) refers to shared risk between the insurer and policyholder, not between insurers.

A captive contract (D) involves a company insuring itself through a subsidiary, not transferring risk to another insurer.

The Virginia study guide defines reinsurance as a contractual arrangement allowing insurers to mitigate risk by transferring it to another insurer, a common practice in the industry. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Insurance Company Operations."