State RegulationsVA specificDifficulty 1/5
Under Virginia law, when does an assignment of an individual life insurance policy become binding on the insurer?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Va. Code § 38.2-3111 provides that an assignment of a life insurance policy is not binding on the insurer until the insurer has notice of it, such as by a copy of the assignment being filed with the insurer. This protects the insurer from paying twice — once to the assignee and once to the original beneficiary — when it had no way of knowing the ownership had changed. The practical consequence is that an assignee who fails to notify the insurer promptly leaves the assignment ineffective against the insurer, even though it may be valid between the parties.
Why the other options are wrong
- B) A signed assignment is effective between the assignor and assignee, but Va. Code § 38.2-3111 makes notice to the insurer the condition for binding the insurer.
- C) Beneficiaries are not the party the statute protects; what matters under Va. Code § 38.2-3111 is notice to the insurer, not notice to beneficiaries.
- D) Recording with a court clerk is not the mechanism the statute recognizes; the insurer must receive notice for the assignment to bind it under Va. Code § 38.2-3111.
Memory hook
The insurer is not psychic: no notice to the company, no binding assignment.