Missouri Life Insurance Exam with Complete
Solutions| Latest Update
Representations Correct Ans-Statements made by the applicant on the insurance application
that are believed to be true, but are not guaranteed to be true.
Revocable Beneficiary v. Irrevocable Beneficiary Correct Ans-Revocable: A beneficiary
named by the policy
owner that can be changed by the policyowner at
his/her discretion.
Irrevocable: A beneficiary named by the policy owner that can not be changed by the
policyowner at his/her discretion. Changing this beneficiary requires the permission of the
beneficiary.
Riders Correct Ans-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.
Risk Classifications Correct Ans-Standard Risk: A normal or average risk; no
special conditions are required in the policy.
Substandard Risk: A high risk; requires special
conditions to be included in the policy or issued a
,rated policy.
Preferred Risk: Less risky than the
normal or average risk. Usually issued policies
on a discounted basis.
Roth IRA Correct Ans-A non-tax deductible individual retirement account which grows tax
free after 5 years.
Settlement Options Correct Ans-The five ways that the proceeds of a policy can be paid upon
maturity.
1. Cash
2. Interest Only
3. Fixed Period
4. Fixed Amount
5. Life Income
Speculative Risk Correct Ans-The possibility of experiencing either a loss or a gain.
Gambling is an example of speculative risk.
Spendthrift Clause Correct Ans-State legislation that protects the rights of policyowners and
beneficiaries from creditors. Death benefits cannot be attached by creditors of the policyowner.
, Stock Insurer Correct Ans-An insurance company publicly owned and controlled by its
stockholders who elect a board of directors to manage it.
Tax Sheltered Annuity (403B) Correct Ans-A qualified retirement program for employees of
non-profit organizations. Contributions are made through a salary reduction program.
Third Party Ownership Correct Ans-When a person(s) other than the insured purchases the
insurance policy.
Twisting Correct Ans-Knowingly making misleading statements or making fraudulent
comparisons in order to induce a client to drop a policy with an existing insurer and start a new
one with a different company.
Underwriting Correct Ans-The process by which an insurer evaluates, classifies and
ultimately either accepts or rejects risks.
Uniform Simultaneous Death Act Correct Ans-It directs that in life insurance if the insured
and the primary beneficiary die at the same time the policy benefits are payable as if the insured
outlived the beneficiary.
Unilateral Correct Ans-One-sided promise. Only one party makes a legally enforceable
promise. The insurance company promises to pay the policy proceeds at some future date or
event.
Solutions| Latest Update
Representations Correct Ans-Statements made by the applicant on the insurance application
that are believed to be true, but are not guaranteed to be true.
Revocable Beneficiary v. Irrevocable Beneficiary Correct Ans-Revocable: A beneficiary
named by the policy
owner that can be changed by the policyowner at
his/her discretion.
Irrevocable: A beneficiary named by the policy owner that can not be changed by the
policyowner at his/her discretion. Changing this beneficiary requires the permission of the
beneficiary.
Riders Correct Ans-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.
Risk Classifications Correct Ans-Standard Risk: A normal or average risk; no
special conditions are required in the policy.
Substandard Risk: A high risk; requires special
conditions to be included in the policy or issued a
,rated policy.
Preferred Risk: Less risky than the
normal or average risk. Usually issued policies
on a discounted basis.
Roth IRA Correct Ans-A non-tax deductible individual retirement account which grows tax
free after 5 years.
Settlement Options Correct Ans-The five ways that the proceeds of a policy can be paid upon
maturity.
1. Cash
2. Interest Only
3. Fixed Period
4. Fixed Amount
5. Life Income
Speculative Risk Correct Ans-The possibility of experiencing either a loss or a gain.
Gambling is an example of speculative risk.
Spendthrift Clause Correct Ans-State legislation that protects the rights of policyowners and
beneficiaries from creditors. Death benefits cannot be attached by creditors of the policyowner.
, Stock Insurer Correct Ans-An insurance company publicly owned and controlled by its
stockholders who elect a board of directors to manage it.
Tax Sheltered Annuity (403B) Correct Ans-A qualified retirement program for employees of
non-profit organizations. Contributions are made through a salary reduction program.
Third Party Ownership Correct Ans-When a person(s) other than the insured purchases the
insurance policy.
Twisting Correct Ans-Knowingly making misleading statements or making fraudulent
comparisons in order to induce a client to drop a policy with an existing insurer and start a new
one with a different company.
Underwriting Correct Ans-The process by which an insurer evaluates, classifies and
ultimately either accepts or rejects risks.
Uniform Simultaneous Death Act Correct Ans-It directs that in life insurance if the insured
and the primary beneficiary die at the same time the policy benefits are payable as if the insured
outlived the beneficiary.
Unilateral Correct Ans-One-sided promise. Only one party makes a legally enforceable
promise. The insurance company promises to pay the policy proceeds at some future date or
event.
