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

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."

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 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.

Virginia law requires agents to report any administrative action taken against them in another jurisdiction within 30 calendar days. Exact extract: “A licensee shall report to the Commission any administrative action taken against the licensee in another jurisdiction within 30 days.” This requirement ensures transparency and regulatory oversight.

Only distributions from qualified employer-sponsored retirement plans (like 401(k)s or pensions) are eligible for rollover into an IRA. Personal savings, lottery winnings, or insurance death benefits do not qualify. Exact extract: “Eligible rollover distributions from qualified plans may be directly transferred or rolled over into an IRA within 60 days to preserve tax-deferred status.” This ensures retirement funds remain tax-deferred until later withdrawal.

Under IRC § 1035, certain insurance exchanges avoid immediate taxation: option B (life to annuity), option C (annuity to annuity), and option D (life to life) qualify if like-kind and properly executed, deferring gains. Option A (annuity to life) isn’t permitted tax-free; annuities (income-focused) and life insurance (death-benefit-focused) aren’t “like-kind,” triggering taxable gain recognition. Virginia Code § 38.2-3100 et seq. aligns with federal tax rules. The study guide likely explains § 1035 exchanges with examples—e.g., swapping a $50,000 life policy for an annuity tax-free (B)—noting A’s taxable status due to product mismatch, making it the exception.

The grace period provision allows a policyholder a specified time (usually 31 days) after the due date to pay overdue premiums while coverage continues. If the insured dies during this period, the premium due is deducted from the policy proceeds.

Exact Extract (Virginia Policy Provisions Requirement): “Life insurance policies shall provide a grace period of not less than 31 days for the payment of premiums, during which the policy shall continue in force.”

References (Virginia Documents / Study Guide):

— Code of Virginia §38.2-3107 (Grace period in life insurance policies)

Medical expense claim forms are designed to gather information relevant to the medical loss itself—its occurrence, character, and extent. Employee salary is not part of the standard claim form for medical expense policies.

Exact Extract (Virginia Health Insurance Study Guide): “Claim forms must provide space for details of the occurrence, character, and extent of loss but do not request information unrelated to medical expenses, such as salary.”

References (Virginia Documents / Study Guide):

— Virginia Uniform Health Policy Provisions