REVIEW NOTES

PREPARING PEOPLE TO PASS

VIRGINIA
LAWS & RULES
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Virginia General Laws
➢ State Corporation Commission (The “Commission”)
The Commission is charged with the issue and execution of all laws relating to insurance and insurers. All
companies, domestic, foreign, and alien, transacting or licensed to transact the business of insurance in this
Commonwealth are subject to inspection, supervision, and regulation by the Commission

• The Commission has the authority to issue licenses and certificates of authority as well as the
suspension or revocation of them
• The Commission shall have power to examine and investigate the affairs of each person subject to this
chapter to determine whether this person has been or is engaged in any unfair method of competition,
or in any unfair or deceptive act
• The Commission has the authority to issue cease and desist orders
• The Commission has the authority to impose fines or other penalties for violations of insurance laws
• The Commission appoints the Commissioner of Insurance
• The Commission has the authority to make reasonable insurance rules and regulations
• Examine insurer solvency

➢ Commissioner of Insurance
General Powers and Duties

• The Commissioner of Insurance along with the State Corporation Commission are responsible for
administering Virginia’s insurance laws
• The Commissioner has authority to review Accident & Sickness policy forms if they will be issued for
delivery in Virginia
• The Commissioner is appointed to a 4-year term by the State Corporation Commission (“The
Commission”)

The Commissioner has the following duties:

• Administers all laws relating to insurance, insurance companies, and fraternal benefit societies doing
business in Virginia
• Supervises all persons authorized to transact the business of insurance, indemnity, or suretyship in
Virginia
• Makes regulations to help carry out the Virginia insurance code

Examination of Records

• The Commission or a designated examiner may conduct an examination of any domestic insurance
company at the discretion of the Commissioner and must conduct a financial examination of every
insurance company licensed in Virginia at least once every 5 years. Exams are given to determine the
solvency of the company. All examination fees and expenses are the responsibility of the company
being examined.
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Cease and Desist Orders

• Whenever it appears that any person is violating an insurance law of Virginia or any rule or
regulation made by the Commission, the Commission may issue a cease and desist order and hold
hearing for any purpose within the scope of the insurance code
• Notice of a hearing for a cease and desist order must be given at least 10 days in advance

➢ Licensing Requirements

Agents

An agent is a person required to be licensed pursuant to the laws of this state to sell, solicit, or negotiate
insurance. Agent licenses are issued for periods of 2 years. No person is permitted to sell, solicit, or negotiate
insurance in this state for any class or classes of insurance unless that person is licensed for that line of authority.

• Terms such as “financial planner” or “financial consultant” may not be used by insurance agents to
imply that they are generally engaged in an advisory business in which compensation is unrelated to
sales UNLESS such is actually the case
• An insurance broker in Virginia is a representative of the insured
• An insurance agent in Virginia is a representative of the insurance company

Business Entity Agents

If the applicant is a business entity operating as an insurance agent, the Commissioner also will require the name and
address of a licensed agent responsible for the business entity’s compliance with Virginia’s insurance laws.

Nonresidents

A person who is not a legal resident of Virginia may be licensed to act in this state as a nonresident insurance
agent without taking a written examination, if all of the following conditions are met:

• The person is currently licensed as a resident and in good standing in his or her home state
• The person has submitted the proper request for licensure and has paid the fees prescribed by the
Commissioner

• The person has submitted to the Commissioner the application for licensure (or a completed
uniform application) that the person submitted to his or her home state

• The state in which the person resides accords the same privilege to residents of Virginia (the states
reciprocate)

If a nonresident fulfills the continuing education (CE) requirements in his/her home state, the agent does not have to
fulfill CE requirements in Virginia as long as the agent's home state will do the same for Virginia agents.
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Insurance consultant

An insurance consultant is licensed solely to advise insureds about their policies for a fee or
compensation.

Life and health insurance consultant means an insurance consultant whose services are limited to life and health
insurance services.

Both the consultant and client must sign an agreement prepared for outlining the nature of activity to be performed
and fees to be paid.

Consultants' licenses must be renewed annually by submitting a renewal application and a

nonrefundable renewal fee by June 1.

Obtaining a license

It is unlawful to act as an agent or agency without a license. It is unlawful for insurance contracts to be produced
except through duly licensed agents.

Qualifications

Before the Bureau of Insurance will issue a license, a person must meet the following qualifications:

• Be at least 18 years old

• Has not committed any act that is grounds for denial, suspension, or revocation of a license File an
application with Commissioner
• Pay the license fee submitted with the application
• Pass each examination which is required for the license being sought
• Be of good character and have a good reputation for honesty
• Submit a Criminal History Record Report

Eligibility

Applicants must apply for and obtain a license within 183 calendar days of passing the Virginia prelicensing exam,
or they must retake the exam. All fees will be forfeited, and the exam results will become invalid.

Disputes

For any licensing disputes, the Commission will notify the applicant at least 10 calendar days' notice in writing of the
time and place of the hearing.

Exemptions

The following is a list of licensing requirement exemptions:

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• Any officer, director, or employee of an insurer whose duties are executive, managerial,
administrative, or clerical and who does not receive a commission
• Any person who solely secures and furnishes information or enrolls participants in group insurance
• Any person who solely performs administrative tasks related to mass marketing
• Any person who is solely engaged in the inspection, rating, or classification or risk
• Any person who is solely engaged in the supervision of the training of insurance agents

Temporary License

A temporary license may be issued in cases where an agent has become disabled or dies, requiring a replacement to
service the agent’s business. It also can be issued when the agent is actively serving in the military.

A temporary license is valid for a maximum of 180 days.

New Residents

An individual licensed in another state who moves to Virginia must apply for a license within 90 days of establishing
legal residence.

Moving out-of-state

If a resident agent has moved their place of residence from this Commonwealth, the license authority is terminated
immediately, whether or not the Commissioner has been notified.

Continuing Education

The Virginia organization responsible for approving all continuing education instructors, continuing education
courses, and programs of instruction for insurance agents is the Virginia Insurance Continuing Education Board.
Any agent who holds one type of license must complete 16 hours of continuing education every two years
(biennially). Any agent who holds more than one type must complete 24 hours of continuing education.

• 3 of these hours must be in ethics

Each agent shall complete all continuing education requirements by no later than November 30 of each even-
numbered year. After November 30, agents who have failed this requirement will be given a final opportunity to
complete such requirements by December 31.

Reinstatement

An individual insurance agent who allows his or her license to expire may, within 12 months from the expiration
date, reinstate the same license without passing a written exam. The agent must:

• Complete the continuing education requirements

• Pay a reinstatement fee
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License Termination

An agent’s license will be terminated if the agent fails to comply with continuing education Requirements. During the
appeal period, an agent may successfully appeal license termination due to continuing education requirements if proof
of compliance is provided

➢ Regulations

Change of Address

Every agent licensed in Virginia must notify the Bureau of Insurance within 30 calendar days of any change of
address

Assumed names
Anyone (individual or a business entity) using an assumed or fictitious name must notify the Bureau of Insurance
within 30 days of their licensure.

Agent Appointment

Agent appointment defines the authority given to an agent to transact business on behalf of the insurer.
• A licensed agent may sell or solicit insurance on behalf of an insurer if the agent has not yet been appointed
as long as the appointing insurer files a notice of appointment within 30 calendar days from the date the first
insurance application or policy was submitted

Terminated appointment

An insurer or authorized representative of the insurer that terminates the appointment, employment, contract, or
other insurance business relationship with an agent or other licensee shall notify the Commission within 30 calendar
days following the effective date of the termination.

Within 15 calendar days after notifying the Commissioner of an agent's appointment termination, the insurer must
mail a copy of the notification to the agent at his last known address.

Any discrepancies in relation to the termination must be filed within thirty calendar days after the agent has received
the original or additional notification

Reporting of Actions

An insurance agent must report to the Commissioner any administrative action taken against the agent in another
jurisdiction or by another governmental agency in this state within 30 calendar days of the final disposition of the
matter. The report must include:

• Consent to the order

• General and specific facts of circumstances surrounding the conviction/action
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Senior-specific certification

The use of a senior-specific certification or professional designations by any person in advising senior citizens made in
such a way as to mislead in connection with the offer, sale, or purchase of securities or life and health insurance is
prohibited.

Suspension, Revocation, and Refusal to Issue or Renew

The violator of any cease and desist order is subject to suspension or revocation of any insurance license or Certificate
of Authority issued under the laws of Virginia. Before holding a hearing that may lead to suspension or revocation of an
agent's license, the Commissioner MUST give written notice to the agent. In Virginia, the Insurance Commissioner has
the power to penalize an agent for a violation with a fine, only after a hearing.

The Commissioner may suspend, revoke, refuse to issue, or refuse to renew an insurance agent license for any one or
more of the following causes:

• Intentionally providing materially incorrect, misleading, incomplete, or untrue information in the

license application

• Violating any insurance laws, or violating any regulation, subpoena, or order of the
Commissioner or of another insurance commissioner in any other state

• Obtaining or attempting to obtain a license through material misrepresentation or fraud

• Improperly withholding, misappropriating, or converting any moneys or properties received in the

course of doing insurance business
• Intentionally misrepresenting the terms of an actual or proposed insurance contract or
application for insurance

• Having been convicted of a felony or crime involving moral turpitude

• Having admitted or been found to have committed any insurance unfair trade practice or fraud

• Using fraudulent, coercive, or dishonest practices, or demonstrating incompetence,

untrustworthiness, or financial irresponsibility in the conduct of business in this state or
elsewhere

• Having an insurance agent license or its equivalent denied, suspended, or revoked in any other state,
province, district, or territory

• Signing the name of another to an application for insurance or to any document related to an
insurance transaction without authorization

• Improperly using notes or any other reference material to complete an examination for an
insurance license

• Knowingly acting as an insurance agent when not licensed, or accepting insurance business from an
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individual knowing that person is not licensed

• Failing to comply with an administrative or court order imposing a child support obligation

• Failing to comply with any: administrative or court order directing payment of state or federal
income tax

An agent whose license is denied or revoked must wait 5 years before reapplying.

The commissioner may not suspend, revoke, or deny a license application due to filing bankruptcy or receiving a
misdemeanor

➢ Unfair Trade Practices

False Financial Statements

It is illegal to knowingly publish, circulate, or file false statements about the financial condition of anyone
involved in the insurance business.

Defamation

Defamation occurs when an oral or written statement is made that is intended to injure a person engaged in the
insurance business. This also applies to statements that are maliciously critical of the financial condition of any
person or a company.

False Advertising

Advertising covers a wide scope of communication, from publishing an ad in a newspaper or magazine, to broadcasting
a commercial on television or the Internet. Advertisements cannot include any untrue, deceptive, or misleading
statements that apply to the business of insurance or anyone who conducts it.

It is prohibited to advertise or circulate any materials that are untrue, deceptive, or misleading. False or deceptive
advertising specifically includes misrepresenting any of the following:

• Terms, benefits, conditions, or advantages of any insurance policy

• Any dividends to be received from the policy, or previously paid out
• Financial condition of any person or the insurance company
• The true purpose of an assignment or loan against a policy

Misrepresentation

It is illegal to issue, publish, or circulate any illustration or sales material that is false, misleading, or deceptive as to
policy benefits or terms, the payment of dividends, telling an applicant that a policy is like a share of stock etc. This
also refers to oral statements. Committing this illegal act is called misrepresentation.
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Rebating

Rebating is defined as any inducement offered to the insured in the sale of insurance products that is not specified
in the policy. Rebates may include, but are not limited to, the following:

• Rebates of premiums payable on the policy

• Special favors or services
• Advantages in the dividends or other benefits
• Stocks, bonds, securities, and their dividends or profits

Unfair Discrimination

Discrimination in rates, premiums, or policy benefits for persons within the same class or with the same life
expectancy is illegal. No discrimination may be made on the basis of an individual's marital status, race, national
origin, gender identity, sexual orientation, creed, or ancestry unless the distinction is made for a business purpose or
required by law.

Twisting

Twisting is the unfair trade practice of replacing an insurance policy from one insurer to another based on
misrepresentation.

Boycott, Coercion, and Intimidation

It is illegal to be involved in any activity of boycott, coercion, or intimidation that is intended to restrict fair trade or
create a monopoly.

Coercion

Coercion is an unfair trade practice that occurs when someone in the insurance business applies a physical or
mental force to persuade another to transact insurance.

Penalties

Any person who violates any Virginia insurance law can be penalized by the State Corporation Commission:

• Up to $1,000 for each nonwillful violation, not to exceed $10,000

• Up to $5,000 for each willful violation

➢ Certificate of Authority
No insurance company may transact business in Virginia without a Certificate of Authority, which acknowledges that
the requirements of the insurance laws have been met and authorizes the company to transact insurance.

• Failure of an insurance company to obtain a Certificate of Authority will not impair the validity of
any insurance contract
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➢ Fiduciary Responsibilities

Any person who is appointed or acts as an agent for an insurance company in Virginia, and who receives or collects
money from any source as an agent, will be held responsible in a fiduciary capacity for those funds. Agents may combine
business funds and insured's premiums when duly appointed and contractually authorized by an insurer. Insurance
agents must maintain premiums in a fiduciary capacity and remit them in the ordinary course of business. If an agent
misappropriates insurance funds held in a fiduciary capacity, the Commission may suspend or revoke the license.

• Funds must be held in a separate account

• The agent must keep detailed records of the funds held
• The agent must act in a reasonable, prudent, and competent manner
• The agent must be held accountable for handling premiums and other funds

Withdrawals

Insurance agents who must maintain premiums in a fiduciary account may withdraw funds from the account to
pay expenses such as:

• return premiums due insureds

• premiums due insurers
• commissions due other licensees

Withdrawals cannot be made for personal expenses.

Insurance transaction records

All licensees, including agents and brokers, must maintain complete records for each individual insurance policy unless
it is the responsibility of the insurer. An insurance licensee is required to provide records of insurance transactions to
the State Corporation Commission promptly upon request for examination of the licensee. The records must be
maintained for 3 years and must be available for inspection by the Commissioner. Such records include, but are not
limited to:
• application records once the policy has been issued
• an accounting of premiums paid on the policy
• the insured's files if the policy cancels mid-term

➢ Commissions and Compensation

No insurer transacting business in Virginia may pay any commission or other compensation to any person for services
as an agent in obtaining insurance, except to a licensed agent of the company or to a licensed insurance agency having
a copy of the license on file with the insurance company.

• It is acceptable to share commissions as long as all agents involved are licensed in the same line of
insurance for which the policy was written
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Fees
All fees and charges for insurance must be stated in the premium. Agents are permitted to charge certain
administrative fees provided the agent posts a schedule of the fees in the office, discloses the fees to the client in
writing, and the client signs the disclosure.
• Written disclosure of administrative fees charged by the agent must be given to the applicant in all
instances prior to any services being rendered

➢ Eligible Groups

Eligible groups for purchasing group insurance include:

• Employee groups
• Debtor groups
• Labor union groups
• Association groups
• Credit unions
• Multiple employer welfare arrangements

➢ Insurance Information and Privacy Protection Act

The purpose of this Act is to establish standards for the collection, use, and disclosure of information gathered
during an insurance transaction.

The Insurance Information and Privacy Protection Act is designed to limit or direct the information collection
activities of:

• agents and limited representatives

• insurance support organizations
• insurance companies

The Insurance Information and Privacy Protection Act requires that an applicant for an individual insurance policy
be notified of an investigation into his personal character, general reputation, and mode of living.

Under the Insurance Information and Privacy Protection Act, insurers must give customers a Privacy Protection
Notice at the time of application.

An insurance company MUST clearly specify questions designed to obtain information solely for marketing
research in any insurance transaction.

When access to recorded personal information is requested following an adverse underwriting decision, the insurer
must make the information available within 30 business days.
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Any reported violations of this Act require the Commissioner of Insurance to issue and serve a statement of
charges and notice of hearing. The date of such hearing shall be at least 10 days after service of charges.

Adverse Underwriting Decision

Based on their insurance guidelines, an insurance company might cancel an existing policy or decline a request for
coverage. This is called an adverse underwriting decision.

Information security program

Insurance companies and agents must implement an information security program to accomplish each of the
following:

• protect against any anticipated threats or hazards to the security or integrity of the information
• ensure the security and confidentiality of policyholder information
• protect against unauthorized access to or use of the information that could result in substantial harm to a
policyholder

➢ Virginia Life and Health Insurance Guaranty Association

The Virginia Life and Health Guaranty Association was created to protect policyholders, insureds, and beneficiaries of life
Insurance policies, health insurance policies, annuity contracts, and supplemental contracts when insurers fail to perform
contractual obligations due to financial impairment. The purpose of the Guaranty Fund is to ensure that claims filed
against insolvent insurance companies will be paid.

• All insurers are required to be members of the Association as a condition of their authority to transact
insurance in this state
• The Life and Health Insurance Guaranty Association is funded by insurance companies through
assessments
• Insurers and agents can not advertise the existence of the Life and Health Insurance Guaranty Association
for the purpose of selling any form of insurance covered by the Association
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Virginia Life Laws

Advertising
Purpose
The purpose of the Rules Governing Advertisement of Life Insurance and Annuities is to assure full disclosure
to the public of all material and relevant information.

Definitions

“Advertisement” means any marketing communication that is oral, printed, or written that is used by an agent
or insurer to induce the public in purchasing insurance. It can also mean any prepared sales presentations used
by insurance agents.

“Guaranteed policy elements” means any premiums, values, or credits under a policy that are guaranteed
at issue.

“Nonguaranteed policy elements” means the premiums, interest rates, benefits, or values that are considered
nonguaranteed.

“Preneed funeral contract” means any agreement where payment is made by the consumer prior to death
for the providing of funeral services.

Prohibited terms

An advertisement shall not use the terms "investment," "investment plan," "founder's plan," "charter plan,"
"expansion plan," "profit," "profits," "profit sharing," "deposit," "interest plan," "savings," "savings plan,"
"retirement plan," "private pension plan," or other similar terms intended to mislead the consumer.

An amount that is a premium for a policy shall be referred to in any advertisement only as a premium.
The use of words such as "deposit," "deposit premium," "investment," or other misleading or confusing
terminology to refer to a premium is prohibited.

The words "free," "no cost," "without cost," "no additional cost," "at no extra cost," or words of similar import
shall not be used with respect to any benefit or service being made available with a policy unless true.

Under the Rules Governing Advertisement of Life Insurance and Annuities, dividends cannot be advertised
as guaranteed.

Disclosure

Any information required to be disclosed by the insurer cannot be minimized or intermingled within the text of
advertisement so as to be confusing or misleading. Also, advertisements may not omit information or use
statements, references, or illustrations that will mislead or deceive prospective purchasers.
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Insurer Identity

Advertisements are the insurer's responsibility, regardless of who writes, designs, or presents them. The name of the
insurer shall be clearly identified in all advertisements about the insurer or its products. All advertisements cannot use
any words, marks, slogans, or symbols that suggest that the solicitation is in some manner connected with a
governmental program or agency. An advertisement cannot use a trade name, name of the insurer’s parent company, or
a reinsurer of the insurer disclosing the actual name of the insurer if the advertisement would have the capacity to
mislead or deceive the true identity of the insurer.

Testimonials and endorsements

A testimonial or endorsement used in an advertisement shall be genuine and represent the current opinion of the author.
If the individual making the testimony has a financial interest in the insurer or is a stockholder, director, officer, or
employee, this fact shall be clearly disclosed in the advertisement. No advertisement should state or imply that an insurer
or policy has been endorsed by a group unless any relationship between the organization and insurer is disclosed.

Policy Loans

After a life insurance policy has been in force for 3 years, any cash value that has accumulated must be made
available in the form of a policy loan.

• After July 1, 1981, the maximum fixed interest rate charged by insurers is in Virginia
• The maximum variable interest rate is based on the Moody’s Corporate Yield Average

Replacement

The purpose of the Rules Governing Life Insurance and Annuity Replacements is to reduce the opportunity for
misrepresentation and incomplete disclosure. Replacement is strictly regulated and requires full disclosure by both the
agent and the replacing insurance company. Policy replacement is a transaction in which a new policy or contract is to be
purchased, and the agent is aware that an existing ordinary life policy or contract has been, or will be:
• Lapsed, forfeited, surrendered or partially surrendered, assigned to the replacing insurer, or otherwise
terminated
• Converted to reduced paid-up insurance, continued as extended term insurance, or otherwise reduced
in value by the use of nonforfeiture benefits or other policy values
• Modified to cause a reduction in benefits or length of policy term
• Reissued with a reduction in cash value
• Used in a financed purchase

Duties of the replacing agent

• Present to the applicant a Notice Regarding Replacement that is signed by both the applicant and the
agent. A copy must be left with the applicant.
• Obtain a list of all existing life insurance and/or annuity policies to be replaced including policy numbers
and the names of all companies being replaced.
• Leave the applicant with the original or a copy of written or printed communications used for
presentation to the applicant.
• Submit to the replacing insurance company a copy of the Replacement Notice with the application.

Duties of the replacing insurance company

• Require from the agent a list of the applicant's life insurance or annuity contracts to be replaced and a
copy of the replacement notice provided to the applicant.
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• Send each existing insurance company a written communication advising of the proposed replacement
within a specified period of time of the date that the application is received in the replacing insurance
company's home or regional office. A policy summary or ledger statement containing policy data on the
proposed life insurance or annuity must be included.

Exemptions

Replacement regulations do not apply to:

• Credit life insurance

• Group life insurance
• Conversion policies
• Replacement policies within the same insurer

➢ Group Life Insurance

Associations

A policy issued to an association for the benefits of its members shall:

• Have a minimum of 100 persons

• Have been organized in good faith for purposes other than that of obtaining insurance
• Have been existence for at least 5 years
• Have a constitution and bylaws where meetings must be

To be eligible for a group life policy, a group must be formed for a purpose other than obtaining insurance

Conversion

In the event of a termination of a group life plan or termination of a covered employee, a person covered by a group
policy has the right to convert such coverage to an individual policy within the conversion period (31 days) without
proving insurability. If this right is exercised, the employee is responsible for the payment of premium.

• There are no restrictions regarding the assignment of coverage under a group life insurance policy
• In group life insurance policies, assignment of benefits is not permitted to the insured’s employer

Termination of group policy

Any person covered under a group life plan for at least 5 years prior to the termination date of that group plan will be
entitled to have an individual life policy issued by the insurer

Death after termination of group policy

If a person insured under a group policy dies during the 31-day conversion period, a death claim will be payable under the
group plan

➢ Accelerated benefits
Qualifying events

“Qualifying event” means one or more of the following:

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• A medical condition that would result in a drastically limited lifespan as specified in the contract
• A medical condition that has required or requires extraordinary medical intervention
• A condition that usually requires continuous confinement in an eligible institution

Life insurance policies may include a provision for accelerated payment of benefits if the insured is no longer able to
perform two of the following activities of daily living:

• Bathing
• Dressing
• Continence
• Eating
• Toileting
• Transferring

➢ Viatical Settlements

A viatical settlement contract is an agreement under which the owner of a life insurance policy sells the policy to another
person in exchange for a bargained-for-payment, which is generally less than the expected death benefit under the
policy.
• The viator is considered to be an individual suffering from a terminal illness or severe chronic illness who
sells his/her life insurance policy to a viatical settlement provider
• “Terminally ill” means having an illness or sickness that can be reasonably expected to result in death in
24 months or less
• “Chronically ill” means being unable to perform at 2 activities of daily living, which includes eating,
toileting, transferring, bathing, dressing, or continence
• The viatical settlement provider becomes the policyowner and assumes responsibility for paying
premiums. When the insured dies, the provider receives the death benefits.
• Proceeds of the viatical settlement contract could be subject to the claims of creditors
• Viatical settlement brokers are insurance agents licensed to solicit viatical settlement agreements
between providers and policyowners (viators), charging a fee for their services
• An agent must obtain a license to transact viatical settlements in Virginia

➢ Suitability in Annuity Transactions

Standards and procedures are in existence to ensure that anyone looking to purchase, exchange, or replace an annuity is
properly informed and the recommendations given to them are in their best interests. The intended goal of this
regulation is a consumer who has had their insurance needs and financial objectives properly addressed.

The following list is information that should be taken into consideration when making suitable recommendations
concerning the purchase, exchange, or replacement of an annuity:

• Age
• Annual income
• Financial situation and needs
• Financial experience
• Financial objectives
• Intended use of the annuity
• Financial time horizon
• Existing assets
• Liquidity needs
• Liquid net worth
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• Risk tolerance

➢ Military Sales
Servicemember’s Group Life Insurance (SGLI)

SGLI is a program that provides low-cost term life insurance coverage to eligible servicemembers. If eligible, you are
automatically issued the maximum SGLI coverage. If you qualify for SGLI, you are automatically enrolled and do not need
to apply for coverage.

• Coverage amounts offered are $50,000 up to a maximum of $400,000

Veterans’ Group Life Insurance (VGLI)

Veterans’ Group Life Insurance (VGLI) is a program that allows you to continue life insurance coverage after you separate
from service. VGLI provides lifetime coverage as long as you pay the premiums. You may enroll for a maximum amount of
coverage that is equal to the amount of Servicemembers’ Group Life Insurance (SGLI) coverage you had when you
separated from service.
• Provides up to a maximum of $400,000 of group term life for veterans
• Renews every 5 years, with the option of increasing coverage up to $25,000 if they meet qualifications
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Virginia Health Laws

➢ Required provisions

Entire contract

A provision that the policy, application, and all attachments shall constitute the entire contract between the
parties.

Time limit on certain defenses (Incontestable Period)

A health or disability policy is incontestable after it has been in force for a period of 2 years. Only
fraudulent misstatements in the application may be used to void the policy or deny any claim at this point.

Grace Period

The grace period for health and accident insurance is required to be no less than 7 days for weekly
premium policies, 10 days for monthly premium policies, and 31 days for all other policies. If premium is
paid within the grace period, coverage shall remain in effect.

Reinstatement

If a health policy is reinstated after it has lapsed for nonpayment, there is a waiting period of 10 days before a
claim covering sickness will be covered. Injuries sustained from an accident, however, will be covered
immediately.

Notice of claim

Written notice of a claim must be given within 20 days after a covered loss starts, or as soon as reasonably
possible.

Claim forms

An insurance company will send forms for filing proof of loss to a claimant within 15 days after company
receives notice of a claim.

Proof of loss

Written proof for any loss must be given to the insurance company within 90 days.
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Payment of claims

If benefits are not paid on a timely basis, the benefits paid shall bear simple interest from a date
60 days after satisfactory proof of loss was received by the insurer.

Legal Actions

No legal action can be initiated within 60 days after proof of loss has been submitted to the insurance
company. In addition, no legal action can be initiated after 5 years from the initial time written proof of loss
has been provided.

Physical Exams and Autopsies

The insurer has the right to examine the insured during the claim process, and to an autopsy when death is
involved and where it is not forbidden by law.

Illegal occupation

The insurer shall not be liable for any loss to which a contributing cause was the insured being engaged in a
felony or illegal occupation.

➢ Pre-existing conditions
Individual health insurance

For individual health insurance: pre-existing conditions (conditions for which medical advice, diagnosis,
care, or treatment was recommended or received in the 12 months prior to the effective date of
enrollment) may be excluded for a maximum of 12 months from the date of enrollment.

Group health insurance

For group health insurance: Pre-existing conditions (conditions for which medical advice, diagnosis, care, or
treatment was recommended or received in the 6 months prior to the effective date of enrollment) may be
excluded for a maximum of 12 months from the date of enrollment (18 months for late enrollees).
Creditable coverage will be used to reduce the exclusion period, unless the individual has a coverage gap of
63 days prior to enrollment in the group plan.

Pre-existing conditions, replacement policies

When replacing an individual health policy in Virginia, the required replacement notice to the applicant
must include notice that pre-existing conditions may not be covered.

An individual’s waiting period for pre-existing conditions is reduced when he or she has “creditable
coverage.” Creditable coverage is previous coverage under another group or individual health plan when
there has not been a break in coverage of 63 days. The 63-day period begins when the individual’s
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previous coverage ended. It ends when coverage under your plan begins, or, if earlier, when your group’s
waiting period for eligibility begins.

➢ Regulations

Defined groups

To be eligible for a group health policy, a group MUST be formed for a purpose other than obtaining
insurance.

A group plan may be issued to any labor union with at least 25 members.

An association may be the policyholder of a group policy that covers its members, providing that is has a
minimum of 100 members, has been organized and maintained in good faith for purposes other than obtaining
insurance, and has been in active existence for at least 5 years.

Disclosure

When offering health insurance coverage to an employee, a health insurer must inform the employer of
all the following information:

• the benefits and premiums available under all health insurance coverage for which the employer
is qualified
• the provisions relating to renewability of coverage
• the provisions relating to exclusions

Minimal standards

Minimum standards provide reasonable standardization of terms and coverages contained in individual
Accident & Health policies.

Replacement

An agent MUST deliver a Notice to Applicant Regarding Replacement of Accident & Sickness insurance when
the application is taken. The replacement form must be signed by both the client and the agent, with a copy
staying with the client and the other filed with the insurer.

• An Accident and Sickness (A&S) insurance application must include a question to determine if the
applicant has other A&S insurance in force
• The replacement of an Accident and Health policy should be based upon a policy’s cost,
benefits, waiting periods, exclusions and limitations, and underwriting requirements

Right to examine (free-look)

Health insurance policies must provide a minimum free-look period of 10 days upon policy delivery. This
allows the policyowner time to decide whether or not to keep it. If the policyowner decides not to keep
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the policy within the 10 days allowed, a full refund will be given.

• Medicare supplements and long-term policies have a free-look period of 30 days Accident only
disclosure

Under the Virginia disclosure regulation, the first page of an Accident Only policy MUST contain the following
specific statement: “This is an Accident Only policy and it does not pay benefits for loss from sickness”.

• Accident only plans do NOT qualify as creditable coverage under HIPAA

Advertisements

• All advertisements for health insurance shall make clear the identity of the insurer
• Insurance companies are responsible for the accuracy of testimonials

Testimonials

Testimonials used in Accident & Health insurance must meet all of the following requirements:

• They must represent the current opinion of the person giving the testimonia
• They must be accurately reproduced
• They must be applicable to the advertised policy

Conversion

In order to convert from group coverage to an individual plan, an eligible individual must pay the premium
within 31 days after the written notice of termination.

Rate adjustments

If a company is using experience rating for determination of group rates, they may adjust the rates every six
months after second year.

Newborn child coverage

All health plans that provide coverage to family members of the insured must provide coverage for the
insured’s newborn child from the moment of birth, and for a period of 31 days.

• If a premium is required to continue the newborn’s coverage, it must be paid within the 31-day period
• Coverage includes injury and sickness, including medical care for diagnosed congenital defects
and birth abnormalities

Adopted and prospective adopted children

All health plans must provide coverage to the insured’s adopted children on the same basis as other
dependents.
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Definition of small employer

A small employer is one that employs between 2 and 50 employees during the preceding calendar year.
When offering a health benefit plan to small employers, the carrier MUST offer at least the standard plan.

Premium readjustments, group plans

As long as it is based on 12 months experience, a Group Health Policy can provide for readjustment
of the premium rate once every 6 months after the second year.

Premium readjustments, individual plans

An insurer must provide written notice at least 30 days before the effective date of a rate increase for
individual accident and health insurance policies.

HIPAA

Virginia's Health Insurance Portability and Accountability Act (HIPAA) provides certain benefits to those who
terminate employment and wish to continue individual coverage in lieu of coverage with a new employer or
during a period of unemployment. A health insurance issuer of may NOT discontinue coverage if the insured’s
health status has declined.

Discontinuation of group plans

If an insurer elects to discontinue all health insurance coverage in the group market, a notice of their intention
is required 180 days prior to discontinuation. This notice must be provided to the Commission, plan sponsors,
and participants.

➢ Long-Term Care
Definition

Long-term care insurance is designed to provide coverage for diagnostic, preventive, therapeutic,
rehabilitative, maintenance, or personal care services in a setting other than an acute care unit of a
hospital.

• A health insurance agent license is required in order to solicit Long-term care insurance in
the State of Virginia
• Long-term care insurance is any policy designed to provide coverage for at least 12
consecutives
months for each covered person on an expense-incurred, indemnity, prepaid, or other basis

Notice to buyer

A “notice to buyer” must be on the first page of each long-term care policy delivered. It explains that some
long-term care costs may not be covered.
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Outline of Coverage

An outline of coverage is required and provides a very brief description of the important features of
the policy. It is considered a summary of coverage.

Renewability Provision

Individual long-term care insurance policies shall contain an appropriately captioned renewability
provision on the first page of the policy form.

• The renewability provision shall clearly state that the coverage is guaranteed renewable or
noncancellable

Pre-existing Conditions

Pre-existing conditions are those for which medical advice or treatment was recommended by or received
from a health provider within six months preceding the effective date of an individual long- term care policy.

Free look

A 30-day free look period is required for long-term care policies.

Inflation Protection

All insurers issuing long-term care insurance policies must offer, as an optional benefit, an inflation
protection feature which provides for automatic 5% annual future increases in the level of benefits
without evidence of insurability.

Replacement

When replacing an existing Long-Term Care policy, agents are required to list any other health insurance
policies they have sold to the applicant.

Home Health Care

Long-term care policies must pay for "at-home" care at the same daily amount as paid for a nursing home
if the insured meets the qualifications for nursing home care.

Limitations and Exclusions

Exclusion or limitation of benefits on the basis of Alzheimer’s disease is NOT permitted. However,
limits and exclusions may be placed on:

• Preexisting conditions or diseases

• Alcoholism and drug addiction

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• War or acts of war

• Participation in a felony, riot, or insurrection
• Suicide or self-inflicted injury
• Aviation (except for fare-paying passengers)

Virginia Long Term Care Insurance Partnership

Established on September 1, 2007, the Virginia Long Term Care Insurance Partnership Program is an innovative
alliance between the state government and the private insurance companies which aims to help Virginia
residents' awareness regarding long term care planning. It aspires to aid the residents to make wise decisions
without sacrificing their assets.

• Agents licensed under this section must undergo ongoing training every 24 months
• Initial training will be 8 hours, while ongoing training will be at least 4 hours
• Records regarding agent training must be maintained for 5 years
• An insurer or its agent shall provide to each prospective applicant a Partnership
Program Notice outlining the requirements and benefits of a partnership policy

➢ Medicare Supplements

• When soliciting a Medicare Supplement policy, an insurance agent should advise an

applicant that the agent is there to determine what, if any, policy is appropriate for the
purchaser, considering existing coverage

• Insurers must file with the Commission a copy of any Medicare supplement
advertisement before it is to be used in Virginia

• The State Corporation Commission (or "Commission") establishes the minimum

standards for Medicare supplement policies
• An agent may only accept a commission for a Medicare supplement policy if the first-
year commission doesn't exceed 200% of the commission for the second year

• The marketing of Medicare Supplements is regulated to prevent sales of excessive

insurance, inaccurate policy comparisons, and the failure to display notice of
limitations to the buyer

• The agent who solicits the application is primarily responsible for determining the
appropriateness of a Medicare supplement policy for a proposed insured

• To verify if replacement is involved in a Medicare Supplement sale, insurance law

requires that a question about replacement appear on the application form

• When a Medicare supplement policy is purchased during the open enrollment period, the
policy must be issued regardless of health status
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• Free-look period for Medicare Supplements is 30 days and can be returned for any
reason

• The open enrollment period for Medicare (and Medicare Supplements) begin 3 months
before your 65th birthday and lasts for 7 months

• An insurer may exclude coverage for a preexisting condition on a Medicare Supplement

Policy for up to 6 months

• All Medicare supplements must be guaranteed renewable

• Policy deliverance: Agents must deliver a policy to an applicant no more than 7 business
days after they received it for delivery

➢ Prohibited Long-term care and Medicare Supplement Sales Practices

• Twisting: Using misrepresentations or inaccurate comparisons to induce a person to

terminate or borrow against their current insurance policy in order to take out an
insurance policy with another insurer
• High pressure tactics: Used to induce the purchase of insurance through force, fright, threat,
or undue pressure
• Cold lead advertising: Failing to disclose that the purpose of the marketing effort is
insurance solicitation
• Misrepresentation: Misrepresenting a material fact in selling a long-term care
insurance policy

➢ Health Maintenance Organizations (HMOs)

Member

A person who makes a contract, or on whose behalf a contract is made, with a health maintenance
organization for health care services.

Provider

Any person, including a physician or hospital, who is licensed or otherwise authorized in this state to
provide health care services. The HMO must employ or contract with health care providers who undertake
a continuing responsibility to provide health care to enrollees.

HMO

A public or private organization that provides or makes available health services that are restricted to a
specific service area on a prepaid basis is referred to as a Health Maintenance Organization.
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Subscriber

A person who makes a contract with a health maintenance organization, either directly or through an insurer
or marketing organization, under which the person or other designated persons are entitled to the health care
services.

Individual contract

A contractual agreement for the provision of health care services on a prepaid basis entered into between
an HMO and a subscriber covering the subscriber and the subscriber’s dependents.

• An insurer may NOT issue an HMO contract

Emergency care

HMOs are required to provide emergency care services to members on a 24-hour basis, including telephone
access to a physician who can refer a member for prompt medical care in cases of medical emergency.

Prescription drugs

HMOs may not prohibit members from selecting pharmaceutical benefits from any provider they may
choose. Additionally, HMOs may not limit pharmaceutical benefits provided by such providers in any way to
the detriment of the member.

HMO Regulation

HMOs are subject to examination by the Commission every 5 years.

➢ Dental
Restorative

Restorative dentistry is the procedure for restoring the function and integrity of a missing tooth structure. Examples
include fillings, crowns, and dental bridges.

Oral surgery

Oral and maxillofacial surgery is surgery to treat many diseases, injuries, and defects in the head, neck, face,
jaws, and the hard and soft tissues of the oral and maxillofacial region.

Endodontics

Endodontics is the branch of dentistry dealing with diseases of the dental pulp. Root canals would be an
example. Endodontics is commonly excluded or limited from a dental policy.

Periodontics

Periodontics is a dental specialty that involves the prevention, diagnosis, and treatment of disease of the
27
supporting and surrounding tissues of the teeth or their substitutes. It also involves the maintenance of the
health, function, and esthetics of these structures or tissues.

Prosthodontics

Prosthodontics is a branch of dentistry dealing with the replacement of missing parts using biocompatible
substitutes such as bridgework or dentures

Orthodontics

Orthodontics is the treatment of irregularities in the teeth (esp. of alignment and occlusion) and jaws, including the
use of braces.

Dental Plans

Occasionally, dental insurance is part of a health benefits package with a single deductible called an integrated
deductible, applying to both medical and dental coverages. More often, however, dental coverage and claims
are handled separately with a separate deductible. There also may be a probationary period in group dental
insurance to help hold down coverage for preexisting conditions. Some dental policies are scheduled, meaning
benefits are limited to specified maximums per procedure, with first dollar coverage. Most, however, are
comprehensive policies that work in much the same way as comprehensive medical expense coverage. In
addition to deductibles, coinsurance and maximums may also affect the level of benefits payable under a
dental plan.

Here are some other bullet points to consider when addressing dental plans:

• A pre-treatment estimate of the cost of dental services may be required whenever the
patient requires dental treatment
• Comprehensive dental plans usually provide routine dental care services without
deductibles or coinsurance to encourage preventative care (such as teeth cleanings,
fluoride treatments, etc.)
• Dental plans are typically indemnity plans, which pay benefits based on a
predetermined, fixed rate set for the services provided…regardless of the actual
expenses incurred.
• To prevent adverse selection in a group dental expense plan, the plan may require any of
the following: probationary periods, waiting periods, evidence of insurability, or limits on
annual benefits
• With prepaid dental plans, coverage is limited to a closed panel of dentists
• The absence of deductibles on routine examinations encourages preventive care in
dental insurance
• Dental treatment expenses required to repair an injury would normally be covered
under a hospital or medical expense policy.
• Some hospital and medical expense plans will provide coverage for some dental related
services related to the jaw or facial bones. Some of these include: reduction of any facial
bone fractures; removal of tumors; treatment of dislocations, facial and oral
wounds/lacerations in order to repair an injury; and the removal of cysts or tumors of the
28
jaws or facial bones.

➢ Patient Protection and Affordable Care Act

"Exchanges" are created by the Affordable Care Act (ACA) health reform bill to help individuals and small
businesses purchase health insurance coverage. The purposes of the exchange include:

• Reduce the number of uninsured in the state

• Facilitate the purchase and sale of qualified health plans in the individual market
• Assist qualified employers in the state in enrolling their employees in qualified health plans
• Assists individuals in accessing public programs, premium tax credits, and cost-sharing
reductions
Under the Affordable Care Act (ACA), the health insurance exchange will perform all of the following
roles:

o Certify health plans as qualified, based on pre-determined criteria

o Utilize individual, unique formats for presenting health benefit plan options
o Verify and resolve inconsistent information provided to the exchange by applicants

Essential health benefits

Beginning January 1, 2014, the exchange shall allow any qualified plans that meet the minimum
standards established by the exchange to be offered in the exchange. All plans must include the
following:

• Ambulatory patient services

• Emergency services
• Hospitalization
• Maternity and newborn care
• Mental health and substance use disorder services, including behavioral health treatment
• Prescription drugs
• Rehabilitative services and devices
• Laboratory services
• Preventative and wellness services and chronic disease management
• Pediatric services, including oral and vision care

An Accident & Health policy must provide Essential Benefits without annual and lifetime limits when
purchased individually or with group coverage through the Federal Marketplace.

Metal levels

There are four tiers of "qualifying health plans" you or your employer can purchase on the exchange. They range
from lower quality, but more affordable "Bronze plans", to "Silver plans" to a more expensive plan with better
coverage called a "Gold plan". There is also a "Platinum plan" which is the highest quality and cost plan. Lower
premium plans will have higher deductibles, less benefits and larger out of pocket costs. The actuarial level is
29
calculated as the percentage of total average cost for covered benefits that a plan will cover.

• Bronze Plans: 60% actuarial level of coverage provided

• Silver Plans: 70% actuarial level of coverage provided
• Gold Plans: 80% actuarial level of coverage provided
• Platinum Plans: 90% actuarial level of coverage provided

Preexisting conditions

Health plans cannot limit or deny benefits or deny coverage for a child younger than age 19 because of
preexisting conditions. This applies to both group and individual policies

Lifetime and annual limits

The ACA prohibits health plans from putting lifetime dollar limits on most benefits that are received by an
insured.

• For plans starting on or after September 23, 2012, but not before January 1, 2014, the
annual dollar limit is $2 million. After January 1, 2014, there are no annual dollar limits

• Plans are allowed to put an annual dollar limit on health care services that are not
considered essential

Grandfathered Plans

Grandfathered plans are plans that were purchased before March 23, 2010. These plans do not have to follow
the ACA’s rules and regulations or offer the same benefits, rights and protections as new plans.

An exception to this is:

• A grandfathered plan cannot impose lifetime limits on how much health care coverage
people may receive

Other ACA requirements

• As defined by the Affordable Care Act, the MAXIMUM amount an individual can contribute to a
Flexible Savings Account is $2,500

• Under the Affordable Care Act (ACA), parents can insure their dependent adult children up to their
26th birthday, even if they are married or not living with their parents

• Low-income individuals and families whose incomes are between 100% and 400% of the federal
poverty level will receive federal subsidies on a sliding scale if they purchase insurance via an
exchange

• Beginning January 1, 2014, the Patient Protection and Affordable Care Act (ACA) will require adjusted
community rating in the small group market. Small group health plans will be allowed to vary rates
only based on whether the policy covers an individual or family, geographic area, age, and tobacco
30
use
• If an insurer fails to adhere to the Affordable Care Act requirements related to internal appeals, the
internal appeal may be deemed exhausted for purposes of submitting an external review
• According to the Affordable Care Act, if a large employer does NOT provide health insurance and
owes an employer mandate penalty, the annual penalty is calculated by multiplying $2,000 by the
number of full time employees minus 30

An advertisement shall not state or imply that the payment or amount of nonguaranteed policy
elements is guaranteed.

An advertisement shall not imply or state that all older policies are more or less costly than newer
policies.

In the advertising of Individual Life Insurance policies, an "introductory" or "special enrollment" may
not be made available until any previous enrollment period for the same policy has been closed for at
least 3 months.

Insurer identity

Advertisements are the insurer's responsibility, regardless of who writes, designs, or presents them. The
name of the insurer shall be clearly identified in all advertisements about the insurer or its products.

All advertisements cannot use any words, marks, slogans, or symbols that suggest that the
solicitation is in some manner connected with a governmental program or agency.

An advertisement cannot use a trade name, name of the insurer’s parent company, or a reinsurer of the
insurer without disclosing the actual name of the insurer if the advertisement would have the capacity to
mislead or deceive the true identity of the insurer.

Testimonials and endorsements

A testimonial or endorsement used in an advertisement shall be genuine and represent the current opinion
of the author.

If the individual making the testimony has a financial interest in the insurer or is a stockholder,
director, officer, or employee, this fact shall be clearly disclosed in the advertisement.

No advertisement should state or imply that an insurer or policy has been endorsed by a group unless
any relationship between the organization and insurer is disclosed.