In the context of life insurance underwriting in Virginia, which practice would constitute unfair discrimination prohibited by the state's unfair-discrimination provisions?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Virginia's unfair-discrimination provisions — including Va. Code § 38.2-507 and the related provisions of the unfair-practices family — prohibit discriminating between individuals of the same actuarial class and in essentially the same circumstance, such as by charging materially different premiums based on factors unrelated to the risk. The prohibition targets arbitrary differences, not underwriting itself: rating by sound actuarial principles, applying uniform guidelines, and pricing different product designs are all legitimate. The line is whether the difference in treatment has a real risk basis.
Why the other options are wrong
- B) Actuarially sound rating tied to the risk is the lawful foundation of insurance pricing, not a form of discrimination the statute condemns.
- C) Uniform application of written underwriting guidelines is consistent treatment; declining one applicant for a uniformly applied reason is not unfair discrimination.
- D) Distinct products with distinct benefits and prices are choices offered to everyone, not unequal treatment of like individuals in the same class.
Memory hook
Same class, same price — unfair discrimination is an arbitrary gap, not a real risk difference.