An agent is asked whether a client should buy a qualified or a nonqualified long-term care policy. Under Virginia's long-term care regulation, which statement is accurate?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under 14 VAC 5-200-40, Virginia's long-term care regulation aligns with the federal tax standards that define qualified policies, so the qualified/nonqualified distinction carries real consequences for tax treatment of premiums and benefits. At the same time, the distinction changes nothing about the Virginia Bureau of Insurance's consumer protections — outlines of coverage, suitability standards, and the other requirements apply to long-term care coverage regardless of its tax classification. The agent's accurate advice addresses both halves: the tax difference and the shared protections.
Why the other options are wrong
- A) Escaping the federal tax standards does not make a policy richer; qualified status is what opens favorable tax treatment.
- B) No consumer-protection exemption exists for qualified policies; the Bureau's requirements reach both kinds.
- D) The distinction matters for tax treatment, so it is not regulationally meaningless.
Memory hook
Tax status differs, protections don't: Virginia's rules hug every LTC policy.