Missouri Life & Health Insurance License, Practice Exams

A comprehensive major medical plan differs from a basic-plus-supplementary design because it:

1. Integrates basic and major medical under a single deductible ✓
2. Has no deductible or coinsurance at all
3. Covers only catastrophic claims above a high floor
4. Pays a fixed daily indemnity regardless of cost

Why: Comprehensive major medical combines basic and major medical into one plan with a single deductible and coinsurance.

A 'life with 10-year period certain' annuity:

1. Pays income for only ten years and then stops entirely
2. Pays for life but guarantees at least ten years of payments ✓
3. Pays nothing at all if the annuitant dies during payout
4. Is functionally identical to a straight life-only annuity

Why: It pays for the annuitant's life and guarantees a minimum number of years of payments to a beneficiary.

The National Association of Insurance Commissioners (NAIC) primarily:

1. Develops model laws and standards that states may choose to adopt ✓
2. Directly licenses every insurance producer in the United States
3. Sets and enforces nationwide insurance premium rates
4. Pays claims when an insurance company becomes insolvent

Why: The NAIC is a coordinating body of state regulators that drafts model laws and promotes uniformity; it has no direct regulatory authority of its own.

Under 20 CSR 400-5.400 (life and annuity replacement), the owner must receive notice of a right to return the policy for an unconditional refund within:

1. ten days of delivery
2. fifteen days of delivery
3. thirty days of delivery ✓
4. sixty days of delivery

Why: 20 CSR 400-5.400 requires that the policy or contract owner be given the right to return the policy within thirty days of delivery for an unconditional refund of premiums.

Under a term insurance 're-entry' option, the insured can obtain lower 'select' renewal rates by:

1. Providing new evidence of insurability at the end of the term ✓
2. Automatically renewing without any proof of good health
3. Converting the policy to whole life at the original age
4. Paying a single lump-sum premium for the entire new term

Why: Re-entry term lets an insured requalify with fresh evidence of insurability for lower select rates; without requalifying, higher rates apply.

Sharing or paying a commission to an unlicensed individual is generally:

1. Prohibited ✓
2. Allowed if the amount is small
3. Required by most state laws
4. Permitted for referrals only

Why: Commissions may be paid only to properly licensed persons; paying an unlicensed individual is prohibited (limited nominal referral fees aside).

The 'reduced paid-up' nonforfeiture option uses the policy's cash value to:

1. Buy a smaller, fully paid-up permanent policy ✓
2. Keep the full face amount in force as term insurance for a limited time
3. Pay the entire surrender value to the owner in one lump sum
4. Convert the coverage into an immediate lifetime income annuity

Why: Reduced paid-up uses the net cash value as a single premium to purchase a smaller amount of fully paid-up permanent insurance; extended term instead keeps the full face for a limited period.

Under § 375.934, RSMo, a practice defined in § 375.936 is an unfair trade practice when committed with such frequency as to indicate:

1. A general business practice ✓
2. A single isolated error
3. A clerical mistake
4. An honest oversight

Why: Section 375.934, RSMo treats a defined practice as an unfair trade practice when committed with such frequency as to indicate a general business practice.

Under § 375.786, RSMo, what is the effect on an unauthorized insurer's ability to sue in Missouri courts if it lacked a certificate of authority?

1. Its contracts are automatically void and unenforceable by anyone
2. It faces no consequence because the requirement is advisory only
3. It may sue only in federal court sitting within the state's borders
4. It may not maintain an action in Missouri courts until it obtains one ✓

Why: Section 375.786, RSMo provides that failure to obtain a certificate of authority does not impair the validity of contracts, but such an insurer may not maintain an action in any Missouri court to enforce a right until it obtains a certificate of authority — therefore it cannot sue until it obtains one.

Under § 385.010, RSMo, how are the provisions of sections 385.010 to 385.080 to be construed?

1. Strictly against the insured party
2. Liberally ✓
3. Only as agreed by the lender and insurer
4. In a manner that discourages competition

Why: Section 385.010, RSMo provides the provisions shall be liberally construed and that nothing is intended to prohibit or discourage reasonable competition — therefore liberally.

The key difference between a defined benefit and a defined contribution plan is that a defined benefit plan:

1. Promises a specific retirement benefit, with the employer bearing the funding risk ✓
2. Specifies only the contributions going in, leaving the participant's final retirement benefit uncertain
3. Is always funded entirely by employee salary deferrals alone
4. Can never be offered by a private for-profit employer

Why: A defined benefit plan guarantees a stated benefit (employer bears investment risk); a defined contribution plan defines inputs, and the benefit depends on account performance.

Under § 375.018, RSMo, a producer reinstating an expired license within twelve months must pay renewal fees plus a penalty per month of:

1. ten dollars
2. twenty-five dollars ✓
3. fifty dollars
4. one hundred dollars

Why: Section 375.018, RSMo requires a penalty of twenty-five dollars per month the license was expired, in addition to the renewal fees, for reinstatement — therefore twenty-five dollars.

A producer tells a client false negative information about a competing insurer to win the sale. This is:

1. Defamation ✓
2. Rebating
3. Twisting
4. Coercion

Why: Making false, maligning statements about another insurer is defamation, an unfair trade practice.

A reciprocal insurer is:

1. An unincorporated group of members who insure each other through an attorney-in-fact ✓
2. A stock company owned entirely by outside investors unless an exception clearly applies
3. A federal agency regulating the insurance industry
4. A nonprofit lodge providing fraternal benefits

Why: A reciprocal is an unincorporated association whose subscribers exchange insurance among themselves, managed by an attorney-in-fact.

A tax-sheltered annuity (TSA / 403(b)) is available to employees of:

1. Public schools and certain tax-exempt nonprofit organizations ✓
2. Only for-profit corporations listed on a stock exchange
3. Any employer, with no limits on annual contribution amounts
4. Federal agencies exclusively, in place of Social Security

Why: 403(b) tax-sheltered annuities are for employees of public schools and 501(c)(3) tax-exempt organizations; contributions are pre-tax and grow tax-deferred.

Under § 376.777, RSMo, no legal action to recover on an individual policy may be brought until how long after written proof of loss has been furnished?

1. Thirty days
2. Ninety days
3. Twenty days
4. Sixty days ✓

Why: Section 376.777, RSMo bars any action for sixty days after proof of loss is furnished (and none after three years) — therefore sixty days.

Under § 374.110, RSMo, who conducts the examination of insurance companies and reciprocal exchanges required by law?

1. The chief examiner, acting through the director of the department ✓
2. An independent auditor selected by the insurer being examined
3. The National Association of Insurance Commissioners directly
4. A grand jury empaneled by the circuit court of Cole County

Why: Section 374.110, RSMo provides the director, through the chief examiner, may examine insurers, and the chief examiner shall conduct or assist in conducting examinations required by law — therefore the chief examiner acting through the director.

A Missouri family files a petition to adopt a newborn 20 days after the child's birth. Under § 376.816, RSMo, coverage for the adopted child is effective as of what date?

1. The date of birth ✓
2. The date the petition is filed
3. The date the adoption is final
4. The first of the next month

Why: Section 376.816, RSMo makes coverage effective from the date of birth if the adoption petition is filed within thirty days of birth — therefore the date of birth.

Under § 376.671, RSMo, a company may terminate a deferred annuity if no considerations have been received for two full years and the paid-up annuity benefit would be less than what monthly amount?

1. Twenty dollars monthly ✓
2. Fifty dollars per month in benefits
3. Ten dollars per month in benefits
4. One hundred dollars per month in benefits

Why: Section 376.671, RSMo allows termination of a deferred annuity where no considerations were received for two full years and the paid-up annuity benefit would be less than twenty dollars monthly — therefore twenty dollars monthly.

Under § 374.020, RSMo, what relationship with an insurance company is permitted to the director or a deputy?

1. Serving as a salaried officer of the company
2. Acting as a paid agent for the company
3. Holding the position of company employee
4. Being a policyholder of the company ✓

Why: Section 374.020, RSMo bars the director or deputy from holding any position as officer, agent or employee of, or being otherwise interested in, an insurer, except as a policyholder — therefore being a policyholder is permitted.

Credit life insurance is typically written as:

1. Decreasing term equal to the outstanding loan balance, payable to the creditor ✓
2. Whole life insurance with a growing cash value that the borrower may freely access at any time
3. Level term naming the borrower's family as the primary beneficiary
4. A variable policy whose benefit rises and falls with interest rates

Why: Credit life is decreasing term tied to the loan balance; if the borrower dies, it pays the remaining debt to the creditor.

Under § 376.777, RSMo, the required grace period for an individual accident and health policy paid on a monthly premium basis is at least how many days?

1. Seven days
2. Thirty-one days
3. Ten days ✓
4. Twenty days

Why: Section 376.777, RSMo sets the grace period at 7 days for weekly, 10 days for monthly, and 31 days for all other premium modes — for monthly premiums, therefore ten days.

A 'shared care' rider on long-term care policies allows:

1. Spouses to draw from each other's pool of benefits ✓
2. Two unrelated insureds to split a single premium payment
3. A child to inherit the parent's unused benefits tax-free
4. The insurer to reduce benefits when both spouses are healthy

Why: A shared care rider lets a couple access one another's benefit pool if one spouse exhausts their own coverage.

Case management in a managed-care plan involves:

1. Coordinating cost-effective care for high-cost or complex cases ✓
2. Auditing the producer's commissions on every policy sold
3. Setting the premium an employer group will be charged
4. Deciding which providers may join the plan's network

Why: Case management coordinates appropriate, cost-effective treatment for seriously ill or injured members, often using alternative care settings.

Under § 375.942, RSMo, when the director determines an insurer has violated the unfair trade practices provisions, the director may issue what?

1. Administrative orders as authorized under section 374.046 ✓
2. A criminal indictment referred directly to a grand jury
3. An automatic license revocation without any further process
4. A binding arbitration award enforceable in circuit court

Why: Section 375.942, RSMo provides that the director may issue such administrative orders as authorized under section 374.046 upon determining a violation of sections 375.930 to 375.948 — therefore administrative orders under section 374.046.

Under § 354.536, RSMo, a 'dependent child' eligible to elect continued HMO coverage must be unmarried, a Missouri resident, and no more than what age?

1. Nineteen years of age
2. Twenty-one years of age
3. Twenty-five years of age ✓
4. Twenty-six years of age

Why: Section 354.536, RSMo defines an eligible dependent child as unmarried, no more than twenty-five years of age, a Missouri resident, and not otherwise covered — therefore twenty-five years of age.

Under § 376.758, RSMo, do the guaranty association provisions apply to an insurer that was already insolvent on the law's effective date of August 13, 1988?

1. Yes; the act applies retroactively to all prior insolvencies
2. No; the act does not apply to such already-insolvent insurers ✓
3. Yes, but only for health claims and not life insurance claims
4. Only if the receiver of the insolvent insurer elects coverage

Why: Section 376.758, RSMo states sections 376.715 to 376.758 shall not apply to any insurer which was insolvent or unable to fulfill its obligations on August 13, 1988 — therefore no.