Free Insurance Licensing Virginia-Life-Annuities-and-Health-Insurance Practice Exam with Questions & Answers | Set: 12

A certificate of insurance in a group health plan is evidence of the employee's insurance coverage. It provides a summary of the coverage, terms, and benefits the employee is entitled to under the group policy. It is not a contract between the employee and the insurer or between the employer and the insurer. The employer typically holds the master policy, while the certificate is issued to each employee covered under the plan.

If a health insurance policy provision conflicts with the statutes of Virginia, the provision must be amended to conform to the minimum statutory requirements. This ensures that the policy complies with state law and that the insured receives the protection mandated by Virginia's insurance regulations. Provisions that do not meet these requirements are typically adjusted to align with legal standards.

Level term life insurance provides a fixed premium for a specified period, even though the risk of death increases as the insured ages. This is possible because premiums are averaged over the term of the policy.

In the early years, the insured pays more than the actual mortality cost, while in later years the cost of insurance exceeds the premium paid. This averaging mechanism allows the premium to remain level throughout the term.

Evidence of insurability is not required annually, the face amount does not necessarily decrease, and no additional lump-sum premium is required. Virginia exam materials consistently emphasize premium averaging as the reason level premiums are possible, making option D correct.

Virginia Code § 38.2-623 mandates insurers to implement information security programs to safeguard nonpublic personal information, aligning with the NAIC’s Model Regulation for Privacy. These programs must ensure confidentiality (option B), protect against threats or hazards (option C), and prevent unauthorized access (option D)—all core objectives to secure data against breaches or misuse. Option A (ensure policyholder access without substantial inconvenience) is not a requirement of the security program; while Virginia Code § 38.2-610 allows policyholders to request their information, this is a separate consumer right, not a security program goal. The study guide likely details these mandates in a privacy section, emphasizing protection over access facilitation, as security focuses on safeguarding, not convenience. For example, encryption (B, D) and risk assessments (C) are standard, but streamlining access (A) could even conflict with security if overly permissive, making A the exception.

A spendthrift clause, permitted under Virginia Code § 38.2-3122, protects life insurance proceeds from creditors or the beneficiary’s mismanagement by restricting access to the funds. It’s effective when proceeds are paid in controlled installments (e.g., options A, B, C), as the insurer retains and distributes the money over time, preventing lump-sum dissipation. Option A (fixed amount installments) pays a set dollar amount periodically, option B (fixed period installments) pays over a set time, and option C (interest-only payments) holds the principal while paying interest—all compatible with spendthrift protection. Option D (one lump sum payment) delivers the full proceeds at once, bypassing the clause’s control mechanism, rendering it ineffective since the beneficiary gains unrestricted access. The study guide likely explains this clause as a safeguard for structured payouts, noting that lump-sum elections nullify its purpose, as seen in Virginia case law and NAIC guidelines, making D the correct choice.

The "insurance with other insurers" provision, addressed in Virginia Code § 38.2-3514, is a coordination of benefits (COB) mechanism in individual health insurance policies designed to prevent over-insurance and duplicate payments when an insured has multiple policies covering the same loss. This provision allows the insurer to prorate benefits—paying a share based on the total coverage—when certain conditions are met. Option C states that the insurer wasn’t notified prior to the claim of other coverage, which triggers proration. This aligns with standard COB rules: if the insurer isn’t informed of other policies, it may assume primary liability initially but adjust to a pro-rata share upon discovery, ensuring equitable payment across insurers. Option A (within 31 days of renewal) is irrelevant; renewal proximity doesn’t affect benefit coordination. Option B (grace period) relates to premium payment timing, not other insurance, and doesn’t trigger proration. Option D ($2,000 claim threshold) is arbitrary and not a standard condition in Virginia law or study materials for this provision. The study guide likely emphasizes notification as key to COB, as Virginia follows NAIC model regulations requiring disclosure of other coverage (e.g., via application or claim forms). Without prior notice, the insurer applies proration retroactively, making C the correct choice.

An insurance agent’s overall authority is typically classified as implied authority. This refers to the powers that are not explicitly stated in the agent's contract but are understood to be part of the agent's role in conducting business. Implied authority includes activities such as explaining policy details to clients and collecting premiums. "Imposed" and "residual" authorities are not common terms in the insurance industry, while "absolute authority" is typically reserved for higher-level management or organizational authority.

An immediate annuity is commonly used to structure the payment of liability insurance settlements, lottery winnings, and other large sums. This type of annuity allows the beneficiary to receive a series of periodic payments starting immediately after the lump sum is invested. Immediate annuities are often used to provide a steady stream of income for individuals who receive large sums of money but want to ensure that the funds last over time.

Detailed Answer in Step-by-Step Solution:

A viatical settlement involves a terminally ill policyowner selling their life insurance policy for a lump sum. The policyowner in this transaction is called the viator (C).

The viatical settlement provider (A) is the entity purchasing the policy.

The viatical settlement broker (B) facilitates the transaction.

"Viatee" (D) is not a recognized term in this context.

The Virginia study guide defines the viator as the insured policyowner who sells their policy in a viatical settlement, typically due to a terminal illness. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Viatical Settlements."

Most medical expense policies exclude elective cosmetic procedures unless medically necessary. Exact extract: “Policies may exclude benefits for cosmetic surgery unless required to correct accidental injury or congenital defect.”