Missouri laws and rules
Obtaining a license
1.) Be at least 18 years old. 2.) File an application with Director. 3.) Pay the $100 license fee, submitted with the application. 4.) Pass each examination which is required for the license being sought.
When must insurable interest exist for a life insurance contract to be valid?
Inception of the contract
Group Insurance: policy
copy of the application
All of these are characteristics of an Adjustable Life policy EXCEPT
face amount can be adjusted using policy dividends
Graded Death Benefits
A graded death benefit life insurance policy is a policy intended to be used for substandard risks
Variable Products: Reports and Examinations
Companies that issue individual variable contracts are required to mail the contract holder a statement reporting the investments held in the separate account at least annually. The company must also submit an annual statement of the business of its separate account to the Director.
Which of the following consists of an offer, acceptance, and consideration?
Contract
Which of these require an offer, acceptance, and consideration?
Contract
Insurance policies are offered on a "take it or leave it" basis, which make them
Contracts of Adhesion
Credit Life Insurance:
Credit insurance is a special type of coverage written to insure the life of the debtor and pay off the balance of a loan in the event of the death of the debtor.
F needs life insurance that provides coverage for only a limited amount of time with a death benefit that changes regularly according to a schedule. What kind of policy is needed?
Decreasing term policy
Defamation of Insurer
Defamation occurs when an oral or written statement is made that is intended to injure a person engaged in the insurance business
Change of Address
Every producer licensed in Missouri must notify the Director, in writing,-within 30 days, of any change of address
Term insurance has which of the following characteristics?
Expires at the end of the policy period
E and F are business partners. Each takes out a $500,000 life insurance policy on the other, naming himself as primary beneficiary. E and F eventually terminate their business, and four months later E dies. Although E was married with three children at the time of death, the primary beneficiary is still F. However, an insurable interest no longer exists. Where will the proceeds from E's life insurance policy be directed to?
F
What kind of insurance policy supplies an income stream over a set period of time that starts when the insured dies?
Family Maintenance Policy
Taking receipt of premiums and holding them for the insurance company is an example of
Fiduciary responsibility
Policy Loan Rates
Fixed policy loan interest rates may not exceed 8% per year
In regards to representations or warranties, which of these statements is TRUE?
If material to the risk, false representations will NOT void a policy
In regards to representations or warranties, which of these statements is TRUE?
If material to the risk, false representations will void a policy
graded-death benefit period;
If the insured is age 65 and under, cannot grade the death benefit in excess of 3 years unless the policy provides at least 50% of the face amount as a first-year death benefit
Unfair Discrimination
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
Certificate Of Authority
No insurance company may transact business in Missouri without a Certificate of Authority
Commissions And Compensation
No insurer transacting business in Missouri may pay any commission or other compensation to any person for services as an agent in obtaining insurance, except to a licensed producer of the company or to a licensed insurance agency having a copy of the license on file with the insurance company.
Which of these is NOT a type of agent authority?
Principal
Producers
Producer licenses are issued for periods of 2 years.
Record Keeping
Producers must maintain complete records for each individual insurance policy
What is the consideration given by an insurer in the Consideration clause of a life policy?
Promise to pay a death benefit to a named beneficiary
Rebating
Rebating is defined as any inducement offered to the insured in the sale of insurance products that is not specified in the policy
T has a term policy that allows him to continue the coverage after expiration of the initial policy period. What type of term coverage is this?
Renewable
Retrospective Commissions and Profit Sharing
Retrospective commissions are prohibited and Profit Sharing is permitted
Producer Responsibilities
Solicitation and sales presentations, Policy summary, Buyer's guide
Group Insurance: insurability
Specify an equitable adjustment of premium or benefits in case of misstatement of age.
Variable Products: Suitability and Sales Materials
The insurers must follow the strict standards on suitability of variable products for customers. Insurers may not use any sales or advertising material that may be or appear false, misleading or inaccurate.
Missouri Insurance Guaranty Association
The purpose of the Guaranty Fund is to ensure that claims filed against insolvent insurance companies will be paid.
Policy Replacement
The replacement of insurance policies is strictly regulated and requires full disclosure by both the producer and the replacing insurance company. Replacement regulation is designed to protect the interest of the policyowner.
War and Aviation Exclusion
This provision stipulates that life insurance policies must include a notice of any war or aviation exclusions. The notice must be prominently displayed on the face of the policy and clearly name and explain the exclusions contained in the policy.
How does a typical Variable Life Policy investment account grow?
Through mutual funds, stocks, bonds
In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this?
Unilateral
Life and health insurance policies are
Unilateral contracts
The following are not required to be licensed as an insurance producer:
employee of the insurance company, A person who provides information for group insurance or for enrolling individuals under plans, as long as no commission is paid, Employees involved in underwriting
What kind of special need would a policyowner require with an Adjustable Life insurance policy?
flexible premiums
Which of the following actions require a policyowner to provide proof of insurability in an Adjustable Life policy?
increase face amount
A life insurance policy would be considered a wagering contract WITHOUT
insurable interest
When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have
insurable interest in the proposed insured
Accelerated Death Benefits
insurer must provide a monthly report to the policy owner: Any long-term care benefits paid out during the month; • An explanation of policy changes due to the payment of the benefit (e.g. reduction in the death benefit or cash values); and • The amount of long-term care benefits remaining.
Any individual or business holding a current license as of January 1, 2003
must be issued an individual insurance producer or a business entity insurance producer license upon license renewal on or after January 1, 2003.
Which of these is NOT considered to be an element of an insurance contract?
negotiating
Insurance policies are considered aleatory contracts because
performance is conditioned upon a future occurrence
Who benefits in Investor-Originated Life Insurance (IOLI) when the insured dies?
policy owner
Universal Life: Periodic disclosure to policyowner
policy status report for the period ending
Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called
representations
The investment gains from a Universal Life Policy usually go toward
the cash value
The Consideration clause of an insurance contract includes
the schedule and amount of premium payments
Variable Products: Company Qualifications
1.) in good standing; Have and maintain capital and/or surplus of at least $2,500,000.
Group Insurance: Assignment
A person who is covered by group life insurance may assign any or all rights of ownership
All of the following are considered to be typical characteristics describing the nature of an insurance contract EXCEPT
Bilateral
Insurance contracts are known as ____ because certain future conditions or acts must occur before any claims can be paid.
conditional`
A warranty
is a statement guaranteed to be true
Group Insurance: warranties
right to require evidence of individual
Illegal Inducement
1.) Any special favor or advantage in dividends or benefits 2.) Any stocks, bonds, securities, or accrued dividends or profits 3.) Anything of value not specified in the insurance contract
The Director may suspend, revoke, refuse to issue or refuse to renew an insurance producer license for
1.) Intentionally providing materially incorrect, misleading, incomplete or untrue information, Violating any insurance laws, or violating any regulation, 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.
Duties of the producer
1.) Present to the applicant a Notice Regarding Replacement that is signed by both the applicant and the producer 2.) Obtain a list of all existing life insurance and/or annuity policies to be replaced 3.) leave the applicant with the original or a copy
The Director has the power and authority
1.) Regulate the internal affairs of the Department of Insurance 2.) Prescribe forms and procedures to be followed in proceedings before the Department 3.) Aid in the interpretation of any state insurance law 4.) Withdraw or amend any rule or regulation.
misrepresenting any of the following
1.) Terms, benefits, conditions, or advantages 2.) Any dividends to be received from the policy, or previously paid out
Renewal
1.) The biennial renewal fee for a producer's license is $100 for each license 2.) insurance producer who is unable to comply with license renewal procedures due to military service or some other extenuating circumstance, such as a long-term medical disability, may request a waiver of those procedures
Nonresidents
1.) The person is currently licensed as a resident and in good standing in his or her home state 2.) The person has submitted the proper request for licensure and has paid the fees prescribed by the Director 3.) The person has submitted to the Director the application for licensure (or a completed uniform application) that the person submitted to his or her home state 4.) The state in which the person resides accords the same privilege to residents of Missouri (the states reciprocate).
Expiration
1.) who allows his or her license to expire may, within 12 months from the due date of the renewal fee, reinstate the same license without passing a written exam. The producer seeking relicensing must provide proof that the continuing education requirements have been met and pay a penalty of $25 per month that the license was expired
What type of policy would offer a 40-year old the quickest accumulation of cash value?
20-pay life
Group Insurance: Grace Period
31 days
The part of a life insurance policy guaranteed to be true is called a(n)
A warranty
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
Q purchases a $500,000 life insurance policy and pays $900 in premiums over the first six months. Q dies suddenly and the beneficiary is paid $500,000. This exchange of unequal values reflects which of the following insurance contract features?
Aleatory
Continuing Education
All insurance producers must successfully complete 16 credit hours of continuing education every 2 years, prior to license renewal
Premium Handling Standards
All premiums associated with personal insurance policies must be remitted to the insurance company within 30 days of the receipt
Reporting of Actions
An insurance producer must report to the Director any administrative action taken against the producer in another jurisdiction or by another governmental agency in this state -within 30 days of the final disposition of the matter.
Fiduciary Responsibilities
Any person who is appointed or who acts as a producer for an insurance company in Missouri, and who received or collects money from any source as a producer, will be held responsible in a fiduciary capacity for those funds.
Assignability
Assignability provision states that the insured under a group life policy may assign any incidents of ownership under the policy, such as the right to designate a beneficiary, to have an individual policy, and to pay premiums.
Who makes the legally enforceable promises in a unilateral insurance policy?
Insurance company
If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of?
Insured
A life insurance arrangement which circumvents insurable interest statutes is called
Investor-Originated Life Insurance
Which of these arrangements allows one to bypass insurable interest laws?
Investor-Originated Life Insurance
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, etc. This also refers to oral statements.
Which of the following combination plans is designed to protect an insured from an unpaid mortgage balance upon premature death?
Joint Life
Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements?
Legal Purpose (Insurable Interest)
K is looking to purchase Renewable Term insurance. Which of these types of Term insurance may be renewable?.
Level
An insurance producer may qualify for a license in one or more of the following lines of authority:
Life insurance coverage, Accident and health or sickness insurance, Variable life and variable annuity products, Credit-limited line credit insurance, Property, casualty, personal lines and surplus lines
Suicide Exclusion
Life insurance policies issued in the state of Missouri may exclude or restrict liability of death as a result of suicide if the suicide was committed within 1 year from the date of the policy issue, whether the insured is deemed sane or insane
All of these insurance products require an agent to have proper FINRA securities registration in order to sell them EXCEPT for
Modified Whole Life
Which of these life products is NOT considered interest-sensitive?
Modified Whole Life
Business Entity Producers
The business entity must pay a license fee of $100 and must designate a licensed individual insurance producer to be responsible for the entity's compliance with the insurance laws, rules, and regulations.
A policy of adhesion can only be modified by whom?
The insurance company
Which of these is considered a statement that is assured to be true in every respect?
Warranty
At what point does an informal contract become binding?
When one party makes an offer and the other party accepts that offer
When must insurable interest be present in order for a life insurance policy to be valid?
When the application is made
A life insurance policy that provides a policyowner with cash value along with a level face amount is called
Whole life
Duties of the replacing insurance company
a list of the applicant's life insurance or annuity contracts to be replaced. Send each existing insurance company a written communication advising of the proposed replacement
Group Insurance: Incontestability
after the policy has been in force for 2 years.
The Director or a designated examiner may conduct
an examination of any domestic insurance company at the discretion of the Director and must conduct a financial examination of every insurance company licensed in Missouri at least once every 5 years
