Missouri Life Insurance Exam
401(k) Plan - Answer- A qualified retirement plan in which the employee can set
aside a portion of their income with pre-tax dollars.
Absolute Assignment v. Collateral Assignment - Answer- Absolute: A permanent and
irrevocable transfer of rights and/or benefits by the policyowner.
Collateral: A temporary and/or revocable transfer of benefits by the policyowner
Accelerated Death Benefit - Answer- Policy provision that allows full or partial
payment of the policy's death benefit before the insured's death if he/she is
terminally ill.
Accidental Death Benefit - Answer- An extra cost rider that requires the insurance
company to pay an additional benefit in the event that the insured dies within 90
days of an accident as a direct result of the accident.
Accumulate at Interest - Answer- The Dividend Option where the policyowner leaves
the dividends with the insurer to invest and earn interest.
Adhesion - Answer- Since the insurer created all the documents of the contract, any
ambiguities in the contract will be settled in favor of the insured. Since the insurer
wrote the contract they are stuck with it.
Adverse Selection - Answer- The tendency for less favorable risks to seek or
continue insurance to a greater extent than more favorable risks.
Agency Agreement or Agency Contract - Answer- A legal document containing the
terms of the agreement between the agent and the insurance company. It clearly
defines what an agent can and cannot do, and how he/she will be compensated.
Agent Authorities - Answer- Expressed: Power or authority specifically
granted in writing to an agent by the insurance
company in their Agency Agreement.
Apparent: Power or authority that the public reasonably assumes an agent has
based upon his/her actions.
Implied: Power or authority that is not
expressly granted by the company but that an
agent can assume or that are implied he/she has
in order to transact insurance business.
Agent/Producer - Answer- Anyone who sells or aids in the selling of insurance.
Legally represents the company.
, Agent's Report - Answer- A written report from the agent submitted to the insurer
along with the application disclosing what the agent knows, observed, or learned
about the proposed insured's risks.
Aleatory - Answer- Unequal exchange of value. One party may obtain a far greater
value than the other under the contract.
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.
Annuitant - Answer- The person that buys an annuity; may or may not be an
annuity's policyowner.
Annuity - Answer- A contract/policy that guarantees to pay income for a specified
period of time or for the life of the annuitant. Designed to prevent people from
outliving their savings.
Appointment - Answer- Authorization of an agent/producer by an insurer to represent
the company.
Blackout Period - Answer- The period of time between the youngest child turning 16
and the widow(er) reaching retirement age during which no Social Security Survivor
Benefits are paid to the surviving spouse.
Buy-Sell Agreement - Answer- Business use of Life Insurance where partners in a
business buy life insurance on each other. They agree that when one of them dies
the survivors have the right to purchase the deceased partner's share of the
business. The death benefit from the insurance is used to finance the purchase.
Cash Nonforfeiture Option - Answer- Policyowner receives a lump-sum payment of
the current cash value of the policy upon surrender of the policy. The policy cannot
be reinstated.
Cash Settlement Option - Answer- Upon maturity of an insurance policy the
beneficiary receives a lump-sum payment of the entire policy proceeds due.
Cash Value - Answer- That part of an insurance policy that is the equity amount
legally available to the policyowner. The cash value accumulates throughout the
duration of the policy. Also known as living benefit or policy savings.
Commissioner - Answer- Public official in charge of the state's department of
insurance. Charged with regulating the insurance industry in his/her state by
enforcing the insurance laws.
Conditional - Answer- Certain conditions must be met in order for policy to pay-out.
Conditional Receipt - Answer- An interim insuring agreement under which the
insurance company agrees to start coverage on the later of either the date of
401(k) Plan - Answer- A qualified retirement plan in which the employee can set
aside a portion of their income with pre-tax dollars.
Absolute Assignment v. Collateral Assignment - Answer- Absolute: A permanent and
irrevocable transfer of rights and/or benefits by the policyowner.
Collateral: A temporary and/or revocable transfer of benefits by the policyowner
Accelerated Death Benefit - Answer- Policy provision that allows full or partial
payment of the policy's death benefit before the insured's death if he/she is
terminally ill.
Accidental Death Benefit - Answer- An extra cost rider that requires the insurance
company to pay an additional benefit in the event that the insured dies within 90
days of an accident as a direct result of the accident.
Accumulate at Interest - Answer- The Dividend Option where the policyowner leaves
the dividends with the insurer to invest and earn interest.
Adhesion - Answer- Since the insurer created all the documents of the contract, any
ambiguities in the contract will be settled in favor of the insured. Since the insurer
wrote the contract they are stuck with it.
Adverse Selection - Answer- The tendency for less favorable risks to seek or
continue insurance to a greater extent than more favorable risks.
Agency Agreement or Agency Contract - Answer- A legal document containing the
terms of the agreement between the agent and the insurance company. It clearly
defines what an agent can and cannot do, and how he/she will be compensated.
Agent Authorities - Answer- Expressed: Power or authority specifically
granted in writing to an agent by the insurance
company in their Agency Agreement.
Apparent: Power or authority that the public reasonably assumes an agent has
based upon his/her actions.
Implied: Power or authority that is not
expressly granted by the company but that an
agent can assume or that are implied he/she has
in order to transact insurance business.
Agent/Producer - Answer- Anyone who sells or aids in the selling of insurance.
Legally represents the company.
, Agent's Report - Answer- A written report from the agent submitted to the insurer
along with the application disclosing what the agent knows, observed, or learned
about the proposed insured's risks.
Aleatory - Answer- Unequal exchange of value. One party may obtain a far greater
value than the other under the contract.
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.
Annuitant - Answer- The person that buys an annuity; may or may not be an
annuity's policyowner.
Annuity - Answer- A contract/policy that guarantees to pay income for a specified
period of time or for the life of the annuitant. Designed to prevent people from
outliving their savings.
Appointment - Answer- Authorization of an agent/producer by an insurer to represent
the company.
Blackout Period - Answer- The period of time between the youngest child turning 16
and the widow(er) reaching retirement age during which no Social Security Survivor
Benefits are paid to the surviving spouse.
Buy-Sell Agreement - Answer- Business use of Life Insurance where partners in a
business buy life insurance on each other. They agree that when one of them dies
the survivors have the right to purchase the deceased partner's share of the
business. The death benefit from the insurance is used to finance the purchase.
Cash Nonforfeiture Option - Answer- Policyowner receives a lump-sum payment of
the current cash value of the policy upon surrender of the policy. The policy cannot
be reinstated.
Cash Settlement Option - Answer- Upon maturity of an insurance policy the
beneficiary receives a lump-sum payment of the entire policy proceeds due.
Cash Value - Answer- That part of an insurance policy that is the equity amount
legally available to the policyowner. The cash value accumulates throughout the
duration of the policy. Also known as living benefit or policy savings.
Commissioner - Answer- Public official in charge of the state's department of
insurance. Charged with regulating the insurance industry in his/her state by
enforcing the insurance laws.
Conditional - Answer- Certain conditions must be met in order for policy to pay-out.
Conditional Receipt - Answer- An interim insuring agreement under which the
insurance company agrees to start coverage on the later of either the date of
