Missouri life insurance exam practice
For how long is an insurance company allowed to defer policy loan requests? a) 30 days b) 60 days c) 6 months d) 1 year
c) 6 months
In a direct rollover, how is the money transferred from one plan to the new one? a) From trustee to the participant b) From the participant to the new plan c) From the original plan to the original custodian d) From trustee to trustee
d) From trustee to trustee
When an employer terminate coverage under a group policy, how long is that coverage in force?
31 Days. The employee has 31 days under the conversion privilege to convert to an individual policy.
What is the number of credits required for the fully insured status of social Security disability benefits?
40
What will be included in the policy summary?
A policy summary must be delivered along with the policy and will provide •producer's name and address •the insurance company's home office address •the generic name of the policy issued •premium, cash value, surrender value •death benefit figures for specific policy years.
Which of the following statements is correct regarding a whole life policy? a) The policy premium is based on the attained age. b) The death benefit may increase or decrease during the policy period. c) The policyowner is entitled to policy loans. d) Cash values are not guaranteed.
c) The policyowner is entitled to policy loans.
A life insurance policy used to fund an agreement establishing the intent of someone to purchase a business upon the insured, business owners death is? Ps just writing this made my brain hurt.
Buy-sell agreement
A time in which the annuitant or the beneficiary DO NOT receive income.
Depreciation period
What type of insurance would be used for a return premium rider
Increasing Term
What may a participating insurance policy do?
Pay dividends to the policy owner
A soon to be insured receives his conditional receipt, but dies before the policy has been issued. What will the insurer do?
Pay the policy proceeds only if it would have issued the policy.
What nonforfeiture option Provides coverage for the longest period of time
Reduced Paid-Up
Jim Bob buys a $100,000 annual renewable term life policy for extra protection until his children graduate college he finds out that his policy.
Required a premium increase each renewal
Under the fair credit report act if a customer questions the accuracy of the information in his or her report what would the agency do?
Respond to the customers complaints
When an insured under a life insurance policy died the beneficiary receive the face amount of the policy and a refund of all premiums paid. Which rider is attached to this policy.
Return of premium
Which of the following is TRUE regarding variable annuities? a) A person selling variable annuities is required to have only a life agent's license. b) The annuitant assumes the risks on investment. c) The funds are invested in the company's general account. d) The company guarantees a minimum interest rate.
The annuitant assumes the risks on investment.
What is NOT true about beneficiary designations?
The beneficiary must have insurable interest in the insured.
When talking about parties to a contract, what makes a person legally competent.
The person must complete secondary education.
What qualifies employees insured under a group life plan to be allowed to convert to individual insurance of the same coverage once the plan is terminated?
Those who have been insured under the plan for at least 5 years.
The president of a manufacturing company has offered one of the company's officers a special individual annuity plan that is unavailable to lower-echelon employees. This plan would be funded with before-tax corporate dollars, and it does not meet government approval standards. This annuity plan is a) A nonqualified annuity plan. b) An executive annuitv plan. c) Subject to government standards. d) Illegal.
a) A nonqualified annuity plan. Nonqualified plans are a perfectly legal way for selected emplovees to receive certain types of benefits. Before-tax corporate dollars can be used for these plans, and they are not subject to government standards. Because of this. however. nonaualified
The act of trying to discourage a policyholder from dropping his/her existing policy is called a) Conservation effort. b) Dissuasive effort. c) Baiting. d) Bargaining.
a) Conservation effort. The act of trying to discourage a policyholder from dropping his/her existing policy is called "conservation effort".
Contracts that are prepared by one party and submitted to the other party on a take-it-or-leave-it basis are classified as a) Contracts of adhesion. b) Unilateral contracts. c) Aleatory contracts. d) Binding contracts.
a) Contracts of adhesion. Insurance policies are written by the insurer and submitted to the insured on a take- it-or-leave-it basis. The insured does not have any input into the contract, but simply adheres to the contract.
An agent selling variable annuities must be registered with a) FINRA. b) Department of Insurance. c) The Guaranty Association. d) SEC.
a) FINRA. Because variable annuities are considered to be securities, a person must be registered with the FINRA (formerly NASD) and hold a securities license in addition to a life agent's license in order to sell variable annuities.
Which of the following allows the insurer to relieve a minor insured from premium payments if the minor's parents have died or become disabled? a) Pavor Benefit b) Jumping Juvenile c) Juvenile Premium Provision d) Waiver of Premium
a) Pavor Benefit If the payor (usually a parent or guardian) becomes disabled for at least 6 months or dies, the insurer will waive the premiums until the minor reaches a certain age, such as 21.
Which of the following is TRUE for both equity indexed annuities and fixed annuities? a) They have a guaranteed minimum interest rate. b) They are both tied to an equity index. c) Both are considered to be more risky than variable annuities. d) They invest on a conservative basis.
a) They have a guaranteed minimum interest rate.
What is the purpose of the insurability provision in group life policies issued in this state? a) To allow the insurer to require proof of insurability from individual insured b) To automatically renew coverage for a new policy term c) To require the insurer to provide certificates of insurance to individual insured d) To guarantee insurability for all eligible applicants
a) To allow the insurer to require proof of insurability from individual insured Under the insurability provision in group life policies, the insurer has the right to require an individual applicant to provide evidence of insurability as a condition for coverage
Insurance policies are not drawn up through negotiations, and an insured has little to say about its provisions. What contract characteristic does this describe? a) Personal b) Adhesion c) Unilateral d) Conditional
b) Adhesion A contract of adhesion is prepared by only the insurer the insured's only option is to accept or reject the policy as it is written.
Which of the following will NOT be considered unfair discrimination bv insurers? a) Assigning different risk classifications to applicants based on gender identity b) Discriminating in benefits and coverages based on the insured's habits and lifestyle c) Charging applicants with similar health histories different premiums based on their ethnicity d) Cancelling individual coverage based on the insured's marital status
b) Discriminating in benefits and coverages based on the insured's habits and lifestyle Discriminating between individuals of the same class with equal life expectancies, or by reason of race, nationality, or ethnic group would be considered unfair discrimination. Insurers are also not allowed to cancel individual coverage due to a change in marital status. Discriminating in benefits based on the insured's habits and lifestyle such as smoking or dangerous
A person who receives or collects money to be forwarded to the principal is said to have what kind of responsibility? a) Trustee b) Fiduciary c) Bailor d) Bailee
b) Fiduciary
What provision in an insurance policy extends coverage beyond the premium due date? a) Waiver of premium b) Grace period c) Free look d) Automatic premium loan
b) Grace period Grace period is a mandatory provision found in all life and health insurance policies that provides coverage for a period of time after the premium becomes past due.
During partial withdrawal from a universal life policy, which portion will be taxed? a) Loan b) Interest c) Cash value d) Principal
b) Interest During the withdrawal, the interest earned on the withdrawn cash value may be subject to taxation.
In which of the following situations is it legal to limit coverage based on marital status? a) Divorce within the last six months of applying for insurance b) It is never legal to limit coverage based on marital status. c) Excessive number of divorces, as defined by the Insurance Code d) Legal separation during the application process
b) It is never legal to limit coverage based on marital status. Availability of insurance benefits or coverage may not be denied based on sex or marital status. Marital status may be considered for the purpose of defining persons eligible for dependent benefits.
Which statement is NOT true regarding a Straight Life policy? a) It has the lowest annual premium of the three types of Whole Life policies. b) Its premium steadily decreases over time, in response to its growing cash value. c) The face value of the policy is paid to the insured at age 100. d) It usually develops cash value by the end of the third policy year.
b) Its premium steadily decreases over time, in response to its growing cash value. Straight Life policies charge a level annual premium throughout the insured's lifetime and provide a level, guaranteed death benefit.
Group life insurance policies delivered in this state must contain all of the following provisions EXCEPT a) A copy of the application is considered part of the policy. b) Statements of the applicant are considered warranties. c) Agrace period of 31 days. d) Incontestability period of 2 years.
b) Statements of the applicant are considered warranties.
The premium for a group life insurance policy was due on March 1. The policyowner was not able to pay the premium until March 31. What will happen to the coverage under the policy during the 30 days the premium was due but was not paid? a) The coverage will be suspended until the premium is paid. b) The coverage will continue in force. c) The policy will be cancelled due to nonpayment of premium. d) The coverage will be limited.
b) The coverage will continue in force. Grace period provision in group life policies states that policyholders are entitled to a grace period of 31 days for the payment of any premium. During that time, the coverage will continue in force.
Which of the following describes the tax advantage of a qualified retirement plan? a) Emplover contributions are not taxed when paid out to the employee. b) The earnings in the plan accumulate tax deferred. c) Distributions prior to age 59½/ are tax deductible. d) Employer contributions are deductible as a business expense when the employee receives benefits.
b) The earnings in the plan accumulate tax deferred.
An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT? a) The premium for individual coverage will be based upon the insured's attained age. b) The insured may choose to convert to term or permanent individual coverage. c) The insured would not need to prove insurability for a conversion policy. d) The insured may convert coverage to an individual policy within 31 days.
b) The insured may choose to convert to term or permanent individual coverage. When group coverage is converted to an individual policy, the insurer will determine the type of coverage, usually permanent insurance.
The insured under a $100,000 life insurance policy with a triple indemnity rider for accidental death was killed in a car accident. It was determined that the accident was his fault. The triple indemnity rider in the policy specifies that the death must not be contributed to by the insured in any manner. In this case, what will the policy beneficiary receive? a) $0 b) $50,000 (50% of the policy value) c) $100,000 d) $300,000 (triple the amount of policy value)
c) $100,000 The triple indemnity accidental death rider obligates the company to pay three times the face amount of the policy if the insured dies as a result of an accident. The death must be accidental and not contributed to by any other factors and must occur within 90 days of the accident. In this case, since the insured contributed to his own death, the triple indemnity rider is void, but the beneficiary will still receive the policy's death benefit.
An insured owns a $50,000 whole life policy. At age 47, the insured decides to cancel his policy and exercise the extended term option for the policy's cash value, which is currently $20,000. What would be the face amount of the new term policy? a) $20,000 b) $25,000 c) $50,000 d) The face amount will be determined by the insurer.
c) $50,000 The face of the term policy would be the same as the face amount provided under the whole life policy.
The policyowner wants to make sure that upon his death, the life policy will pay a portion of the proceeds annually to his spouse, but that the principal will be paid to their children when they reach a certain age. Which settlement option should the policyowner choose? a) Joint and survivor b) Fixed amount option c) Interest only option d) Life income with period certain
c) Interest only option With the interest-only option, the insurance company retains the policy proceeds and pays interest on the proceeds to the recipient (beneficiary) at regular intervals.
Which of the following is true about the mandatory free look in a Life Insurance policy? a) It applies only to term life insurance policies. b) It is optional on all life insurance policies. c) It commences when the policy is delivered. d) It commences when the application is signed.
c) It commences when the policy is delivered. The free look provision is a mandatory provision that allows the insured to examine a policy, and if dissatisfied for any reason, return the policy for a full refund of any premiums paid.
Which of the following best describes the MIB? a) It is a member organization that protects insured against insolvent insurers. b) It is a rating organization for health insurance. c) It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance. d) Itis a government agency that collects medical information on the insured from the insurance companies.
c) It is a nonprofit organization that maintains underwriting information on applicants for life and health insurance. The Medical Information Bureau (MIB) is a nonprofit trade organization which receives adverse medical information from insurance companies and maintains confidential medical impairment information on individuals.
Which of the following settlement options in life insurance is known as straight life? a) Life with period certain b) Fixed amount c) Life income d) Single life
c) Life income The life-income option, also known as straight life, provides the recipient with an income that he or she cannot outlive. It pays the benefit while the beneficiary is alive; however, the payments stop at the beneficiary's death.
On its advertisement, a company claims that it has funds in its possession that are, in fact, not available for the payment of losses or claims. The company is guilty of a) Unfair claim practice. b) Rebating. c) Misrepresentation. d) Concealment.
c) Misrepresentation. Issuing or circulating any sales material that is false or misleading would be considered misrepresentation and is illegal.
All of the following statements about equity index annuities are correct EXCEPT a) The interest rate is tied to an index such as the Standard & Poor's 500. b) They invest on a more aggressive basis aiming for higher returns. c) The annuitant receives a fixed amount of return. d) They have a guaranteed minimum interest rate.
c) The annuitant receives a fixed amount of return. Equity indexed annuities have a guaranteed minimum interest rate, so while they are aggressive in nature, the annuitant will not have to worry about receiving less than what the minimum interest rate would yield.
Upon the death of the insured, the primary beneficiary discovers that the insured chose the interest only settlement option. What does this mean? a) The beneficiary will receive the lump sum, plus interest. b) The primary beneficiary will receive the death benefit and the secondary beneficiaries will share the interest payments. c) The beneficiary will only receive payments of the interest earned on the death benefit. d) The beneficiary must pay interest to the insurer.
c) The beneficiary will only receive payments of the interest earned on the death benefit. With the Interest Only settlement option, the insurance company retains the policy proceeds and pays interest on the proceeds to the recipient (beneficiary) at regular intervals (monthly, quarterly, semiannually, or annually).
All of the following are true regarding a decreasing term policy EXCEPT a) The contract pays only in the event of death during the term and there is no cash value. b) The face amount steadily declines throughout the duration of the contract. c) The payable premium amount steadily declines throughout the duration of the contract. d) The death benefit is $0 at the end of the policy term.
c) The payable premium amount steadily declines throughout the duration of the contract. Premiums remain level with a decreasing term policy; only the face amount decreases.
All of the following are examples of third-party ownership of a life insurance policy EXCEPT a) An insured couple purchases a life insurance policy insuring the life of their grandson. b) A company purchases a life insurance policy on their manager, who is an important part of the operation. c) When an insured purchased a new home, the insured made an absolute assignment of a life insurance policy to the mortgage company. d) An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan.
d) An insured borrows money from the bank and makes a collateral assignment of a part of the death benefit to secure the loan. A collateral assignment is the transfer of some or all of the death benefits of the policy to a creditor as security for a loan, but does not give the creditor the rights of ownership. In the event of the insured's death, the creditor would onlv be able to recover that portion of the policy's proceeds equal to the creditor's remaining interest in the loan.
How is the Director selected for the office? a) Appointed by the NAIC b) Elected by state insurers c) Elected by popular vote d) Appointed by the Governor
d) Appointed by the Governor The Director is appointed by the Governor with the consent of the senate, and holds office concurrently with the Governor until a successor is appointed and qualified.
No insurance policy form can be issued, delivered, or used in this state unless it has been a) Reviewed by the Department and approved by the Governor. b) Developed by the Director. c) Filed with and approved by the Guaranty Association. d) Approved by the Department of Insurance.
d) Approved by the Department of Insurance.
Which of the following is NOT a punishment for violating the Director's cease and desist order? a) Suspension or revocation of license b) A monetary fine c) Imprisonment d) Community service
d) Community service Any person who violates a Cease and Desist order may be subiect to a monetary fine and/or imprisonment, and suspension or revocation of license.
Which of the following authorities may issue a Cease and Desist Order if an insurer is violating the Insurance Code? a) NAIC b) State Insurance Board c) MIB d) Director
d) Director Whenever it appears that any person is violating an insurance law of Missouri or any rule or regulation made by the Director, the Director may issue a cease and desist order.
Two individuals are in the same risk and age class; yet, they are charged different rates for their insurance policies due to an insignificant factor. What is this called? a Law of large numbers b) Misrepresentation c) Adverse selection d) Discrimination
d) Discrimination Permitting individuals of the same class to be charged a different rate for the same insurance is the unfair trade practice of discrimination.
An insured has a life insurance policy with graded death benefits. In the first year of the policy, the death benefit is less than 50% of the face amount on the policy. What amount must the policy contain in accidental death benefits during the graded death benefit period? a) Half the face amount of the policy b) The same amount as the general death benefits c) There is no requirement d) Full face amount of the policy
d) Full face amount of the policy
When a reduced-paid up nonforfeiture option is chosen, what happens to the face amount of the policy? a) Its increased when extra premiums are paid. b) It decreases over the term of the policy. c) It remains the same as the original policy, regardless of any differences in value. d) Itis reduced to the amount of what the cash value would buy as a single premium.
d) Itis reduced to the amount of what the cash value would buy as a single premium. In a reduced paid-up policy, the original policy's cash value is used as single premium to pay for a permanent policy with a reduced face amount from the original, hence the name. The new policy accumulates in cash value until its maturity or the insured's death.
What is the other term for the cash payment settlement option? a) Principal amount b) Face amount c) Proceeds d) Lump sum
d) Lump sum Upon the death of the insured, the contract is designed to pay the proceeds in cash, called a lump sum.
Traditional IRA contributions are tax deductible based on which of the following? a) How long the plan has been in force b) Owner's age c) IRA limit d) Owner's income
d) Owner's income Traditional IRA contributions are tax deductible, but may be limited if the owner's income exceeds a certain level.
Which of the following may NOT be included in an insurance companv's advertisement? a) Some of the company policies may have limitations and exclusions. b) Policies may include conditions under which the insurer may require evidence of insurability. c) Policies may include illustrations of nonguaranteed benefits. d) Policies issued by the company are protected by the state Guaranty Association.
d) Policies issued by the company are protected by the state Guaranty Association.
Which of the following describes the duties of an insurance producer? a) Procuring insurance from an unauthorized insurer b) Soliciting or negotiating insurance contracts on behalf of clients c) Providing advice or counsel regarding insurance policies for a fee d) Soliciting, negotiating or delivering insurance policies
d) Soliciting, negotiating or delivering insurance policies An insurance producer is a person required to be licensed pursuant to the laws of this state to sell, solicit or negotiate insurance.
If a company has transacted insurance in this state without a Certificate of Authority, which of the following is true of its obligations for the policies sold? a) The company's financial obligations will be transferred to the Guaranty Association. b) The company cannot be sued in this state. c) The company is only liable for policies sold within the scope of the Certificate of Authority. d) The company can still be liable for its policies in any court of this state.
d) The company can still be liable for its policies in any court of this state. The failure of a company transacting insurance business in this state to obtain a certificate of authority will not impair the validity of any act or contract of such company and will not prevent such company from defending any action in any court of this state.
Who is responsible for covering the expenses associated with the examination of domestic insurers? a) The Director b) The Department of Insurance c) The Insurance Guaranty Association d) The examined insurer
d) The examined insurer All reasonable expenses and charges associated with the examination must be paid by the examined insurer.
An insured purchased a 10-year level term life policy that is guaranteed renewable and convertible. What happens at the end of the 10-year term? a) The insured must provide evidence of insurability to renew the policy. b) The insured may only convert the policy to another term policy. c) The insured may renew the policy for another 10 years at the same premium rate. d) The insured may renew the policy for another 10 years, but at a higher premium rate.
d) The insured may renew the policy for another 10 years, but at a higher premium rate. Policies that are guaranteed renewable and convertible may be renewed, without evidence of insurability, for another like term, or may be converted to permanent insurance, without evidence of insurability.
In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe? a) Unidirectional b) Aleatory c) Conditional d) Unilateral
d) Unilateral In a unilateral contract, the insured is not legally bound to do anything. The insurer, however, must pay losses covered by the policy.
A producer's license lasts for how many ears before it needs to be renewed? a) 2 b) 3 c) 5 d)Until it is terminated
a) 2 Producer licenses are issued for periods of 2 years.
How many hours of continuing education must be completed in ethics and Missouri law each licensing period? a) 3 b) 5 c) 16 d) 1
a) 3 Three of the credit hours must be completed in courses related to ethics, state law and producer duties.
Which of the following is another term for an authorized insurer? a) Certified b) Licensed c) Legal a) Admitted
a) Admitted Insurers who meet the state's financial requirements and are approved to transact business in the state are considered authorized or admitted into the state as a legal insurer.
Another name for a substandard risk classification is a) Elevated. b) Rated. c) Controlled. d) Declined.
b) Rated.
A domestic insurer issuing variable contracts must establish one or more a) General accounts. b) Separate accounts. c) Liability accounts. d) Annuity accounts.
b) Separate accounts.
The initial amount of credit life insurance may NOT exceed a) The borrower's annual income. b) The amount to be repaid under the contract. c) An amount set by statute and adjusted regularly for inflation. d) The borrower's monthly income.
b) The amount to be repaid under the contract.
An employee is insured under her employer's group life plan. If she terminates her group coverage, which of the following statements is INCORRECT? a) The premium for individual coverage will be based upon the insured's attained age. b) The insured may choose to convert to term or permanent individual coverage.
b) The insured may choose to convert to term or permanent individual coverage.
All of the following are true regarding the guaranteed insurability rider EXCEPT a) The insured may purchase additional coverage at the attained age. b) The insured may purchase additional insurance up to the amount specified in the base policy. c) It allows the insured to purchase additional amounts of insurance without proving insurability only at specified dates or events. d) This rider is available to all insureds with no additional premium.
d) This rider is available to all insureds with no additional premium.
In order for a life insurance policy with graded death benefits to be issued to an individual over the age of 76, the first year death benefit must be at least what percentage of the total face amount on the policy? a) 50% b) 75% c) 100% d)Graded death benefits cannot he iccued to someone over the
a) 50% If the insured is age 76 or older, the graded death benefit policy cannot be issued unless the policy provides at least 50% of the face amount as a first-year death benefit.
Which of the following producer designations may be used in life insurance advertisements? a) Agent b) Seller c) Financial planner d) Consultant
a) Agent
In classifying a risk, the Home Office underwriting department w look at all of the following EXCEPT a) Applicant's past income. b) Applicant's past medical history. c) Applicant's present physical condition. d) Applicant's present occupation.
a) Applicant's past income.
Which of the following protects the insured from an unintentional policy lapse due to a nonpayment of premium? a) Automatic premium loan b) Extended term c) Reinstatement d) Reduced paid-up option
a) Automatic premium loan Automatic premium loan provision is not required, but is commonly added to contracts with a cash value at no additional charge. This is a special type of loan that prevents the unintentional lapse of a policy due to nonpayment of the premium.
An insurer cannot transact business until it obtains a/an a) Certificate of Authority. b) State Insurer's Certificate. a) Director's Statement of Approval. d) Insurer's License.
a) Certificate of Authority. No insurance company may transact business in Missouri unless it first obtains from the Director a Certificate of Authority.
Which of the following is TRUE about credit life insurance? a) Creditor is the policyowner. b) Debtor is the annuitant. c) Creditor is the insured. d) Debtor is the policy beneficiary.
a) Creditor is the policyowner.
The purpose of the Missouri Life and Health Guaranty Association is Do Nintendo... to a) Help protect policyowners and beneficiaries against financial loss caused by the insolvency of an insurance company. b) Encourage Life insurers to write substandard business. c) Allow producers to continue to solicit insurance, even if the company they represent is financially impaired. d)Protect the reputation of the Insurance, Department if they
a) Help protect policyowners and beneficiaries against financial loss caused by the insolvency of an insurance company.
Variable Whole Life insurance is based on what type of premium? a) Flexible b Graded b) Level fixed d) Increasing
a) Level fixed Variable Whole Life insurance is a level fixed premium investment-based product.
All of the following are true regarding rebates EXCEPT a) Rebates are allowed if it is in the best interest of the client. b) Rebates are only allowed if specifically stated in the policy. c) Rebating can be anything of monetary value given as an inducement to purchase insurance. d)Dividends are not considered to be rebates.
a) Rebates are allowed if it is in the best interest of the client. A rebate is an illegal act which involves returning something of value to the client as an inducement to buy, such as the commission. Rebates are only allowed if specifically stated in the policy. Insurance dividends are not considered rebates as the IRS considers it as a return of overpaid premium.
Which rule would apply if an agent knows an applicant is going to cash in an old policy and use the funds to purchase new insurance? a) Replacement rule b) Reinstatement rule c) Conversion rule d) Disclosure rule
a) Replacement rule Anytime a new policy is issued that replaces or modifies existing insurance, a replacement form must be submitted to the ceding company.
If an insured under a variable life insurance policy dies, how will the insurer respond to outstanding policy loans? a) The loan amounts are deducted from the death benefit. b) The policy is withheld until payments are met. c) The loan amount is charged to the beneficiaries. a) The loans are waived.
a) The loan amounts are deducted from the death benefit. In the event an insured dies, any outstanding policy loans and accrued interest is deducted from the policy proceeds. Loans cannot exceed the cash value of the policy.
Which of the following insurance arrangements will be appropriate for a parent buying a life insurance policy on a child where the parent is the policyowner? a) Third-party ownership b) An irrevocable beneficiary c) A buy-sell agreement d) Family term rider
a) Third-party ownership Contracts that are owned by someone other than the insured are known as third-party ownership. Most policies involving third-party ownership are written in business situations or for minors in which the parent owns the policy.
Which of the following is a key distinction between variable whole life and variable universal life products? a) Variable whole life has a guaranteed death benefit. b) Variable universal life is regulated solely through FINRA. c) Variable whole life allows policy loans from the cash value. d) Variable universal life has a fixed premium.
a) Variable whole life has a guaranteed death benefit.
Buy-Sell Agreement
are used to contractually establish the intent of someone else to purchase the business upon the insured's death, and to set a value (purchase price) on a business. Life insurance is used to fund the buy-sell agreement. Any type of life insurance may be purchased to provide the necessary funds for the agreement. Insurance can be used to either fully or partially fund the buy-sell agreement.
If an individual producer's license expires and the producer doesn't want to pass a written exam, the license must be reinstated within what time period from the renewal date? a) 9 months b) 12 months c) 3 months d) 6 months
b) 12 months
To attain currently insured status under Social Security, a worker must have earned at least how many credits during the last 13 quarters? a) 4 credits b) 6 credits c) 10 credits d) 40 credits
b) 6 credits
The dividend option in which the policyowner uses dividends to purchase a term policy for one year is referred to as the a) Paid-up additions. b) One-year term option. c) Paid-up option. d) Accelerated endowment.
b) One-year term option.
A producer is helping a married couple determine the financial needs of their children in the event one or both should die prematurely. This is a personal use of life insurance known as a) Juvenile protection provision. b) Survivor protection. c) Life planning. a) Survivorship insurance.
b) Survivor protection. Life insurance can provide the funds necessary for the survivors of the insured to be able to maintain their lifestyle in the event of the insured's death. This is known as survivor protection.
All of the following would be different between qualified and nonqualified retirement plans EXCEPT a) IRS approval requirements b) Taxation on accumulation c) Taxation of withdrawals a) Taxation of contributions
b) Taxation on accumulation Taxation on accumulation is deferred in both types of plans. The rest of the characteristics would differ.
R has a life insurance policy that specifically excludes his death from being covered should it occur in an act of war. Where must this be spelled out in the policy? a) In the excluded provisions section b) On the convertible coverage page c) On the face of the policy a) In the binder of the policy under exclusions
c) On the face of the policy 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
What is required of an insurer should an insured commit suicide prior to one year elapsing under a life insurance policy? a) Half the paid premiums must be returned. b) No premiums are to be refunded, but half the death benefits will be given to the beneficiary. c)Full death benefits will be paid out to the beneficiary. d) All paid premiums must be returned.
d) All paid premiums must be returned.
The LEAST expensive first-year premium is found in which of the following policies? a) Increasing Term b) Decreasing Term c) Level Term d) Annually Renewable Term
d) Annually Renewable Term
All of the following could be considered rebates if offered to an insured in the sale of insurance EXCEPT a) An offer of employment. b) Stocks, securities, or bonds. c) offer to share in commissions generated by the sale. d) Dividends from a mutual insurer.
d) Dividends from a mutual insurer. Dividends paid to policyholders of a mutual insurer are not considered to be a rebate because the policy specifies that they might be paid.
When the insured selects the extended term nonforfeiture option, the cash value will be used to purchase term insurance with what face amount? a) In lesser amounts for the remaining policy term of age 100. b) Equal to the cash value surrendered from the policy c) The same as the original policy minus the cash value d) Equal to the original policy for as long as the cash values will purchase.
d) Equal to the original policy for as long as the cash values will purchase.
All of the following are Nonforfeiture options EXCEPT a) Cash surrender b) Extended term c) Reduced paid-up d) Interest only
d) Interest only Nonforfeiture values include cash surrender, extended term and reduced paid-up. Interest only is a settlement option.
Which of the following is correct regarding credit life insurance? a) It is purchased on an installment basis. b) It insures the life of a creditor. c) It has a maximum term of 20 years. d) It insures the life of a debtor.
d) It insures the life of a debtor. Credit life 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 death of debtor.
A married couple owns a permanent policy which covers both of their lives and pays the death benefit only upon the death of the first insured. Which policy is that? a) Survivorship Life Policy b) Second-to-Die c) Family Income Policy d) Joint Life Policy
d) Joint Life Policy
The Director has just finished examining a domestic insurer. When is the Director next required to examine that insurer? a) No sooner than 3 vears from now b) Next vear c) 2 vears from now d) No later than 5 years from now
d) No later than 5 years from now
Equity indexed annuities a) Are more risky than variable annuities. b) Are security instruments. c) Invest conservatively. d) Seek higher returns.
d) Seek higher returns.
When does credit life insurance coverage take effect? a) The date the policy is delivered b) 30 days after the first payment is received c)The date the application is completed d)The date the debtor becomes obligated to the creditor
d) The date the debtor becomes obligated to the creditor The term of credit life insurance takes effect on the date the debtor becomes obligated to the creditor. If the insurer requires evidence of insurability, and that evidence is provided 30 days after the date the debtor becomes obligated to the creditor, the term of the insurance begins on the date the company determines the evidence of insurability to be satisfactory.
If an applicant for a life insurance policy and person to be insured by the policy are two different people, the underwriter would be concerned about a) The gender of the applicant. b) The type of policy requested. c) Which individual will pay the premium. d) Whether an insurable interest exists between the individuals.
d) Whether an insurable interest exists between the individuals.
All of the following are requirements for life insurance illustrations EXCEPT a) They must differentiate between guaranteed and projected amounts. b) They must be part of the contract. c) They may only be used as approved. d) They must identify nonguaranteed values.
b) They must be part of the contract.
Group life insurance policies delivered in this state must contain all of the following provisions EXCEPT a) Incontestability period of 2 years. b) A copy of the application is considered part of the policy. c) Statements of the applicant are considered warranties. d) A grace period of 31 days.
c) Statements of the applicant are considered warranties. No policy of group life insurance can be delivered in this state unless it contains the following provisions, among others: the policyholder is entitled to a grace period of 31 days; the validity of the policy cannot be contested, except for nonpayment of premiums, after it has been in force for 2 years; a copy of the application must be attached to the policy. Statements of the applicant are considered representations, not warranties.
In comparison to consumer reports, which of the following describes a unique characteristic of investigative consumer reports? a) They provide information about a customer's character and reputation. b) The customer has no knowledge of this action. c)The customer's associates, friends, and neighbors provide the report's data. d) They provide additional information from an outside source
c) The customer's associates, friends, and neighbors provide the report's data. Both consumer reports and investigative consumer reports provide additional information from an outside source about a customer's character and reputation, and both types of reports are used under the Fair Credit Reporting Act. The main difference is that the information for investigative consumer reports is obtained through an investigation and interviews with associates, friends and neighbors of consumers.
If an insurer requires a medical examination of an applicant in connection with the application for life insurance, who is responsible for paying the cost of the examination? a) The examiner b) The applicant c) The insurer d) The cost of the examination will be waived.
c) The insurer
Which of the following is NOT true regarding Equity Indexed Annuities? a) They have guaranteed minimum interest rates. b) They are less risky than variable annuities. c) They earn lower interest rates than fixed annuities. d) The insurance company keeps a percentage of the returns.
c) They earn lower interest rates than fixed annuities.
Which of the following products requires a securities license? a) Equity Indexed annuity b) Deferred annuity c) Variable annuitv d) Fixed annuity
c) Variable annuitv
Which of the following is TRUE regarding the premium in term policies? a) The premium in term policies is not based on the insured's age. b) Decreasing term policy will have a decreasing premium. c)The premium is level. d)Only level term policy has a level premium.
c)The premium is level. Regardless of the type of term insurance purchased, the premium is level throughout the term of the policy. Only the amount of the death benefit may change.
What is the maximum penalty for habitual willful noncompliance with the Fair Credit Reporting Act? a) $1,000 b) $100 per violation c) Revocation of license d) $2,500
d) $2,500
Which of the following determines the length of time that benefits will be received under the Fixed-Amount settlement option? a) Size of each installment b) Predetermined length of time stated in the contract c) Length of income period d) Amount of interest
a) Size of each installment
The chief officer of the Department of Insurance is the Director. All the following statements concerning the Director are true EXCEPT a) The Director may serve as an officer or director for an unauthorized insurer. b) The Director must be experienced in matters of insurance. c) The Director must be a citizen of the state of Missouri. d) The Director is appointed by the Governor.
a) The Director may serve as an officer or director for an unauthorized insurer. The Director cannot have any interest, other than as a policyholder, in an insurance company while serving in office.
Which type of life insurance policy allows the policyowner to pay more or less than the planned premium? a) Universal life b) Variable life c) Decreasing term a) Straight whole life
a) Universal life The policyowner has the flexibility to increase the amount of premium going into the policy and to later decrease it again. In fact, the policyowner may even skip paying a premium and the policy will not lapse as long as there is sufficient cash value at the time to compensate for the nonpayment of premium.
All of the following information about the applicant is identified in the General Information section of a life insurance application EXCEPT a) Gender. b) Occupation. c) Education. a) Age.
c) Education. Education is not an underwriting factor nor is it information included on the application.
What must contain a notice of the graded death benefit in a life insurance policy with graded death benefits? a) The policy underwriting explanation b) The policy's provisions section c) The policy's exclusions section d) The policy application
d) The policy application The policy application must contain a notice of the graded death benefit.
During replacement of life insurance, a replacing insurer must do which of the following? a) Guarantee a replacement for each existing policy b)Designate a new producer for a replaced policy c) Send a copy of the Notice Regarding Replacement to the Department of Insurance d)Obtain a list of all life insurance policies that will be replaced
d)Obtain a list of all life insurance policies that will be replaced The replacing insurance company must require from the producer a list of the applicant's life insurance policies to be replaced and a copy of the replacement notice provided to the applicant, and send each existing insurance company a written communication advising of the proposed replacement.
Which of the following is NOT among the actions that the Director could take after determining that an insurer has engaged in an unfair trade practice? a) Suspend the insurer's certificate of authority b) Void any applicable policies c) Seek civil action d) Revoke the insurer's license
b) Void any applicable policies Under these circumstances, the Director could issue administrative orders, seek civil action, and suspend or revoke the insurer's license or certificate of authority.
What happens when a policy is surrendered for its cash value? a) The policy can be converted to term coverage. b) Coverage ends and the policy cannot be reinstated. c) Coverage ends but the policy can be reinstated at any time. d) The policy can be reinstated by paying back all policy loans and premiums.
b) Coverage ends and the policy cannot be reinstated.
All of the following are requirements to obtain an insurance producer license in Missouri EXCEPT a) Pass a written examination on the line(s) of insurance for which a license is sought. b) Attend an approved prelicensing course. c) Be at least 18 years of age. a) Be of good moral character.
b) Attend an approved prelicensing course.
Because an insurance policy is a legal contract, it must conform to the state laws governing contracts which require all of the following elements EXCEPT a) Consideration. b) Legal purpose. c) Offer and acceptance. d) Conditions.
d) Conditions.
All of the following are dividend options EXCEPT a) Paid-up additions. b) Fixed-period installments. c) Accumulated at interest d) Reduction of premium.
b) Fixed-period installments.
Which of the following is NOT a requirement for companies that issue variable contracts in this State? a) Maintain a capital of $2,500,000 b) Have surplus of at least $3,000,000 c) Have a license to transact insurance d) Be considered in good standing by the Director
b) Have surplus of at least $3,000,000 Companies that issue and deliver variable contracts in this state must be licensed to transact insurance in this state, be in good standing, and have and maintain capital and/or surplus of at least $2,500,000.
What are the two components of a universal policy? a) Mortality cost and interest b) Separate account and policy loans c) Insurance and cash account d) Insurance and investments
c) Insurance and cash account A universal policy has two components: an insurance component and a cash account. The insurance component of a universal life policy is always annual renewable term insurance. The cash account accumulates on a tax deferred basis each ear and earns either the guaranteed contract rate or the current rate, whichever is higher.
Which of the following statements is TRUE concerning the Accidental Death Rider? a) This rider is only available to insureds over the age of 65. b) It is only available in group insurance. c) It will pay double or triple the face amount. d) It is also known as a triple indemnity rider.
c) It will pay double or triple the face amount.
When a whole life policy lapses or is surrendered prior to maturity, the cash value can be used to a) Pay back all premiums owed plus interest. b) Receive payments for a fixed amount. c) Purchase a single premium policy for a reduced face amount. a) Purchase a term rider to attach to the policy.
c) Purchase a single premium policy for a reduced face amount.
Which of the following types of insurance policies is most commonly used in credit life insurance? a) Equity indexed life b) Decreasing term c) Increasing term d) Whole life
b) Decreasing term 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. It is usually written as decreasing term insurance.
The Director can revoke an insurance producer license for any of the following causes, EXCEPT a) Licensee providing materially incorrect or untrue information in the license application. b) Licensee is charged with bank robbery. c) Violation of any insurance law in another state. a) Licensee fails to comply with an administrative or court order imposing a child supart oblication.
b) Licensee is charged with bank robbery. Being charged with a felony is not sufficient grounds for revocation of a license; however, conviction of a felony is grounds.
If an applicant for a life insurance policy is found to be a substandard risk, the insurance company is most likely to a) Lower its insurability standards. b) Refuse to issue the policy. c) Charge a higher premium. d) Require a yearly medical examination.
c) Charge a higher premium.
A key person insurance policy can pay for which of the following? a) Workers compensation b) Hospital bills of the key employee c) Costs of training a replacement a) Loss of personal income
c) Costs of training a replacement
Which of the following terms is used to name the nontaxed return of unused premiums? a) Interest b) Surrender c) Dividend d) Premium return
c) Dividend The return of unused premiums is called a dividend. Dividends are not considered to be income for tax purposes, since they are the return of unused premiums.
Which of the following best describes the aleatory nature of an insurance contract? a) Ambiguities are interpreted in favor of the insured b) Policies are submitted to the insurer on a take-it-or-leave-it basis c) Exchange of unequal values d) Only one of the parties being legally bound by the contract
c) Exchange of unequal values
Which of the following documents must be provided to the policyowner or applicant during policy replacement? a) Policy illustrations b) Notice Regarding Replacement c) Disclosure Authorization Form d) Buyer's Guide and Policy Summary
b) Notice Regarding Replacement
Which of the following is NOT required on an application for a variable life insurance policy? a) A statement that cash values may increase or decrease based on the separate account b) Questions designed to assist the insurer in determining suitability of the insurance c)A statement explaining the use of separate accounts in variable insurance.
c) A statement explaining the use of separate accounts in variable insurance There is no requirement that applications for variable life insurance policies contain a statement explaining separate accounts to the applicant.
Which of the following is NOT among the lines of authority for which an insurance producer may qualify in the state of Missouri? a) Variable life and annuities b) Personal lines c) Group health insurance d) Surplus lines
c) Group health insurance
Life income joint and survivor settlement option guarantees a) Payout of the entire death benefit. b) Equal payments to all recipients. c) Income for 2 or more recipients until they die. d) Payment of interest on death proceeds.
c) Income for 2 or more recipients until they die.
A life insurance policy has a legal purpose if both of which of the following elements exist? a) Offer and counteroffer b) Policyowners and named beneficiaries c) Insurable interest and consent d) Underwriting and reciprocity
c) Insurable interest and consent
What is the time limit to contest life insurance policies in Missouri? a) 3 years b) 5 years c) 1 year d) 2 years
d) 2 years The validity of the policy may not be contested, unless it's for nonpayment of premium or fraudulent misstatements by the applicant, after the policy has been enforced for 2 vears.
A 71 year old female recently purchased a life insurance policy with graded death benefits. If the policy has graded death benefits for three years, which of the following must be true? a) The third year of the policy must have a death benefit equal to 80% of the total face amount. b) The third year of the policy must have a death benefit equal to 65% of the total face amount.
b) The third year of the policy must have a death benefit equal to 65% of the total face amount. If the insured is between the ages of 66 and 75, the policy cannot grade the death benefit in excess of 2 years unless the policy provides at least 50% of the face amount as a first-year death benefit. The 2-year period can be extended to 3 years if the death benefit during the third policy year equals or exceeds 65% of the ultimate death benefit.
The minimum interest rate on an equity indexed annuity is often based on a) The annuitant's individual stock portfolio. b) The insurance company's general account investments. c) An index like Standard & Poor's 500. d) The returns from the insurance company's separate account.
c) An index like Standard & Poor's 500.
Level term insurance provides a level death benefit and a level premium during the policy term. If the policy renews at the end of a specified period of time, the policy premium will be a) Determined by the health of the insured. b) Based on the issue age of the insured. c) Discounted. d)Adjusted to the insured's age at the time of renewal.
d) Adjusted to the insured's age at the time of renewal. If a level term product is renewed at the end of the term period the premium will be based upon the attained age of the insured.
In insurance, an offer is usually made when a) The insurer approves the application and receives the initial premium. b)The agent hands the policy to the policyholder. c)An agent explains a policy to a potential applicant. d)An applicant submits an application to the insurer.
d) An applicant submits an application to the insurer. In insurance, the offer is usually made by the applicant in the form of the application. Acceptance takes place when an insurer's underwriter approves the application and issues the policy.
Who can make a fully deductible contribution to a traditional IRA? a) Anybody; all IRA contributions are fully deductible regardless of income level b) Someone making contributions to an educational IRA c) A person whose contributions are funded by a return on investment d) An individual not covered by an employer-sponsored plan who has earned income
d) An individual not covered by an employer-sponsored plan who has earned income Individuals who are not covered by an employer-sponsored plan may deduct the amount of their IRA contributions regardless of their income level.
Nonforfeiture values guarantee which of the following for the policyowner? a) That the dividends will be paid annually b) That the death benefit will be paid in a lump sum c) That the policy premiums will never increase d) That the cash value will not be lost
d) That the cash value will not be lost Because permanent life insurance policies have cash values, there are certain guarantees built into the policy that cannot be forfeited by the policyowner. Nonforfeiture values give the insured the right to the cash value even if the policy lapses or is surrendered.
Assignability provision in a life insurance policy relates to a) The insured's right to convert from group to individual policy. b) The company's right to replace a policy. c) The company's right to add new riders to the policy. d) The insured's right to designate a new beneficiary.
d) The insured's right to designate a new beneficiary. Assignability provisions relate to assignments of ownership by a person insured under a group life policy, including the right to designate a beneficiary, to have an individual policy, and to pay premiums
