MISSOURI LIFE INSURANCE EXAM

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MISSOURI LIFE INSURANCE EXAM

Actual Qs and Ans - Expert-Verified Explanation -Guaranteed passing score -100 Questions and Answers

-Format: Multiple-choice / Flashcard

Question 1: Individual Retirement Account (IRA)

Answer:

A qualified retirement plan that provides most individuals with a deferred federal income tax benefit.

Question 2: Qualified Retirement Plan

Answer:

A retirement plan that meets certain federal requirements and therefore qualifies for special tax treatment.

Plans must be:

• for the exclusive benefit of employees,

• in writing,

• nondiscriminatory,

• either defined benefits or defined contributions, and

• permanent.

Question 3: Stock Insurer

Answer:

An insurance company publicly owned and controlled by its stockholders who elect a board of directors to manage it.

Question 4: License

Answer:

Documentation issued by a state's department of insurance to an individual verifying that he/she is qualified to engage in the insurance business.

Question 5: Proof of Insurability

Answer:

A statement about or evidence of a person's physical and/or mental health, personal character, occupation, living habits, etc. Used by the insurance company in assessing whether to accept the person's risk.

Question 6: General Account v. Separate Account

Answer:

General Account: Contains the regulated, or

guaranteed, funds of an insurance company.Separate Account: Contains the investments of an insurance company. These investments have no guaranteed rate of return and are regulated by the SEC and NASD.

Question 7: Policy Owner

Answer:

The person in an insurance contract that has all the rights contained in the policy; designated on the application and may or may not be the insured.

Question 8: Riders

Answer:

Optional coverages that can be added to policies that provide additional benefits or protections. Vary from policy to policy and company to company. Also known as addendums, additions, amendments, or additional policy benefits.

Question 9: Group Insurance

Answer:

An insurance policy that covers multiple people (who have a common interest). A Master Policy is issued to the policyowner and individual insureds receive Certificates of Insurance.

Question 10: Equity Indexed Annuity

Answer:

The annuity that has a guaranteed minimum interest rate and allows the annuitant to invest money in an

index (i.e.: S&P 500). The investments grow as the index grows.

Question 11: Renewable Term

Answer:

Term insurance where at the end of the specified term the policyowner has the right to continue the policy for another term without proof of insurability. Premiums will be determined by the new attained age.

Question 12: Reinsurance

Answer:

The sharing of risk between insurance companies. One insurance company sells part of its risk to another insurance company.

Question 13: Spendthrift Clause

Answer:

State legislation that protects the rights of policyowners and beneficiaries from creditors. Death benefits cannot be attached by creditors of the policyowner.

Question 14: Joint and Survivor Annuity

Answer:

An annuity that makes payments to two or more annuitants throughout their lifetimes. Payments normally reduce at the death of each annuitant and stop altogether upon the death of the last annuitant.

Question 15: Free Look Provision

Answer:

A policy provision required by state law that establishes a set number of days (usually 10) for the policyowner to review a newly issued policy. The policyowner may return the policy to the insurer during this time for any reason and receive a 100% refund. Also known as refund provision, unconditional refund provision, return provision, exchange provision, or right to examine.

Question 16: Tax Sheltered Annuity (403B)

Answer:

A qualified retirement program for employees of non-profit organizations. Contributions are made through a salary reduction program.

Question 17: Insuring Clause

Answer:

The heart of an insurance policy. It contains the company's promise to the policyowner and describes the coverage provided and the policy limits.

Question 18: Insurable Interest

Answer:

A financial interest in the life of another person. In a position to loose something of value if the insured should die.

Question 19: Agent/Producer

Answer:

Anyone who sells or aids in the selling of insurance. Legally represents the company.

Question 20: Indemnify

Answer:

To make financially whole again; restore to the condition enjoyed before a loss was suffered; to replace what was lost. Insurance is not designed for parties to profit from a loss.

Question 21: Annual Renewable Term

Answer:

A Term Life Insurance contract which gives the policyowner the option to renew the policy each year without showing proof of insurability. Premiums increase at each renewal.

Question 22: Human Life Value Approach

Answer:

In determining how much life insurance is needed the worker's annual earnings are multiplied by the number of years remaining until he/she retires. From the resulting figure taxes and expenses are subtracted.

Question 23: Reinstatement Clause

Answer:

Contained in the policy this clause described how a policy can be restored to its original condition. It states the conditions, period of time and necessary steps to reinstate a policy.