Virginia Insurance Laws, Rules, and Regulations
What the exam actually tests
Virginia regulation is administered by the State Corporation Commission's Bureau of Insurance. Expect questions on licensing, producer conduct, unfair trade practices, and consumer protections.
Licensing and appointment. Producers are licensed by line (life and health), complete prelicensing education, pass the state exam, and submit fingerprints for a criminal background check. A producer must be appointed by an insurer before soliciting on its behalf. Licenses renew biennially and require continuing education that includes ethics and Virginia insurance law. A lapsed license means no soliciting and no commissions. Premiums belong to the insurer: a producer holds them in a fiduciary capacity, may not commingle them with personal funds, and may split commissions only with other licensed producers.
Unfair trade practices. Learn the definitions precisely: misrepresentation (false statements about policy terms), twisting (inducing a replacement through misrepresentation), churning (replacement solely to generate commission), rebating (any inducement not stated in the policy, including paying part of the premium), plus defamation, boycott, coercion, intimidation, false advertising, and unfair claim settlement practices. Replacing existing life insurance or an annuity requires a signed replacement notice and disclosure to the consumer and to the existing insurer.
Consumer protections. Free-look periods, disclosure of cost and benefits, suitability standards for annuity sales, limits on HIV testing (written consent and confidentiality), privacy of personal information, and the Virginia Life and Health Insurance Guaranty Association, which pays covered claims up to statutory limits when an insurer is insolvent.
Rule of thumb: if the producer offers the buyer anything of value that is not written in the policy, it is a rebate - illegal even when the client requests it.