Free Insurance Licensing Virginia-Life-Annuities-and-Health-Insurance Practice Exam with Questions & Answers | Set: 4

Detailed Answer in Step-by-Step Solution:

The buyer’s guide for Medicare Supplement insurance must be provided to the consumer at the time of application (B) to ensure they understand the policy’s benefits and limitations before committing.

Option A (replacement only) is incorrect; the guide is required for all sales, though additional notices apply for replacements.

Option C (prior to payment) is too vague and not a specific requirement.

Option D (first-time buyer) is not a condition under Virginia or federal rules.

Per the Virginia study guide, agents must deliver the buyer’s guide at the time of application for Medicare Supplement policies, as mandated by federal and state regulations to promote informed decisions. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Medicare Supplement Insurance Regulations."

Virginia law imposes “prompt pay” standards on insurers. If a claim is not paid within the legally required time frame, the insurer must not only pay the claim amount but also interest from the date payment should have been made. This protects policyholders from financial hardship caused by insurer delays. Exact extract: “Any insurer failing to pay claims when due shall be liable for the amount of the claim plus interest at the legal rate of interest from the date payment was due.” This requirement ensures consumer protection by preventing insurers from using delay tactics.

Federal Age Discrimination in Employment Act (ADEA) requires equal benefits for older workers. Employers cannot deny the same group health coverage offered to younger employees. Exact extract: “Employees age 65 and older must be offered the same health benefits as those under 65.”

Life annuities provide a stream of income during the annuitant’s lifetime. Payments begin after the accumulation period (annuitization) and continue while the annuitant lives. They liquidate a principal sum systematically and protect against longevity risk by pooling risks across many annuitants.

The incorrect statement is B, since benefits start while the annuitant is living, not after death.

Exact Extract (Virginia Annuities Study Guide): “Life annuities are designed to provide income during the lifetime of the annuitant, liquidating principal systematically and protecting against outliving financial resources.”

References (Virginia Documents / Study Guide):

— Virginia Life & Annuities Examination Outline, Section 4.1 Annuity Principles

Detailed Answer in Step-by-Step Solution:

Excess charges in Medicare occur when a provider charges more than the Medicare-approved amount, and the insured (D) is responsible for the difference unless covered by supplemental insurance.

The Social Security Administration (A) and CMS (B) administer Medicare, not pay claims.

Providers (C) may charge excess but don’t absorb it unless they accept assignment.

The Virginia study guide explains that Medicare beneficiaries bear excess charges unless a provider accepts Medicare assignment or a Medigap policy covers them. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Medicare Basics."

Detailed Answer in Step-by-Step Solution:

Life insurance policies typically include a two-year suicide clause; if the insured dies by suicide within this period (e.g., six months), the insurer pays only a refund of premiums, not the full death benefit (C).

Options A (accidental injury), B (lung cancer), and D (heart attack) are covered causes, barring misrepresentation or exclusions, within the first two years.

The Virginia study guide notes that the suicide provision limits payment to premiums paid if suicide occurs within two years of issuance, protecting insurers from early intentional loss. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Life Insurance Policy Provisions."

A SPDA is funded with a single lump sum payment. The payout (distribution) begins at a later date, not immediately, and withdrawals are taxable.

Exact Extract (Virginia Annuities Study Guide): “Single Premium Deferred Annuity—funded with a single lump-sum payment; benefits begin at a future date.”

References (Virginia Documents / Study Guide):

— Virginia Life & Annuities Examination Outline, Types of Annuities

Individual health policies must include a free look period of at least 10 days, giving policyholders the right to return the policy for a full refund if dissatisfied.

Exact Extract (Virginia Insurance Regulations): “Every individual health insurance policy shall include a free-look provision of not less than 10 days.”

References (Virginia Documents / Study Guide):

— Code of Virginia §38.2-3514 (Standard Policy Provisions – Free Look)

In noncontributory group life insurance, the employer pays the full premium, and all eligible employees must be covered. Exact extract: “Noncontributory group life plans require 100% participation of eligible employees.”

Detailed Answer in Step-by-Step Solution:

In a PPO, using a non-PPO provider (out-of-network) leads to higher out-of-pocket expenses (A) due to lower reimbursement rates and potential excess charges.

Option B (full cost) is inaccurate; some coverage applies. Option C (100% reimbursement) is false. Option D (waiting period) is unrelated.

The Virginia study guide reiterates that PPOs cover out-of-network care but at a reduced level, increasing the insured’s costs compared to in-network use. Reference: Virginia Life, Annuities, and Health Insurance study guide, section on "Managed Care Plans."