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Missouri Life Practice Exam

20 exam-style questions drawn from the same bank as our full Missouri Life course (Missouri Life Insurance Producer — Exam Prep). Answer all 20, then grade yourself — most state exams require 70% to pass. Explanations for every question are part of the full course.

1. A 55-year-old client wants to systematically save for retirement over the next 10 years using after-tax dollars and would like to vary contribution amounts year to year. Which annuity funding type is most appropriate?
Period-certain immediate annuitySPDAFPDASPIA
2. What is the maximum 2024 employer contribution to an employee's SEP IRA, expressed as a percentage of compensation?
Up to 25% of compensation, capped at the §415(c) annual addition limit.Up to 3% of compensation, matched dollar-for-dollar under the §408(p) SIMPLE-IRA matching rules.Up to 50% of compensation, capped at the regular §408 individual IRA dollar limit of $7,000.Up to 100% of compensation, with no statutory ceiling under §408(k) for the SEP contribution.
3. Term coverage with the same face amount for the whole term is
Level termIncreasing termRenewable termDecreasing term
4. Whole life with a lower premium for the first few years, then a higher level premium, is
Straight lifeModified lifeGraded premiumLimited pay
5. The right of a departing employee to buy individual coverage without proof of insurability is the
Reinstatement rightConversion privilegeGrace periodPortability rider
6. Annual renewable term (ART) premiums increase each year because:
The insurer must recover acquisition costs in the early yearsState insurance codes require annual rate adjustments on term contractsCash value accumulation forces a corresponding premium adjustmentThe mortality cost of insuring the same person rises each year as the insured ages
7. Which settlement option pays the beneficiary equal periodic installments for a fixed number of years until the proceeds plus interest are exhausted?
Fixed amountInterest onlyFixed periodLife income only
8. A rider that pays part of the death benefit early when the insured is terminally ill is
Paid-up additionAccelerated death benefitWaiver of premiumViatical settlement
9. A change made to an application should be
Made by the underwriterInitialed by the applicantCovered with correction fluidMade after signing
10. When death proceeds are paid in installments, the taxable part is the
Entire paymentPrincipal portionFirst payment onlyInterest portion
11. An insurer discovers that a permanent policy issued five years ago has failed the §7702 definitional tests every year since issue. What is the federal income-tax consequence to the policyowner?
Nothing — §7702 only governs the issuing insurer's product-design rules; the individual policyowner is unaffected by the contract's failure of the definitional tests under §7702(g) for federal income tax purposesThe income on the contract is taxable to the owner each year as ordinary income, and the death benefit in excess of net premiums is also taxable when paid.Only the death benefit ultimately paid to the named beneficiary becomes taxable for federal income tax purposes, and only when actually distributed by the insurer to the named beneficiary on death of the insuredThe policy automatically converts to a Modified Endowment Contract under IRC §7702A, but otherwise nothing changes about its federal income-tax or estate-tax treatment going forward
12. Three shareholders of a closely held C-corporation own life-insurance policies on each other to fund a cross-purchase buy-sell agreement. When one shareholder retires, the remaining shareholders agree to buy his policies on each other for fair value. Why is this transaction a classic transfer-for-value trap?
Because policies used in a closely held C-corporation cross-purchase buy-sell arrangement are categorically always classified as MECs from issue under §7702A regardless of the contract's actual premium-funding patternBecause cross-purchase buy-sell life-insurance arrangements among shareholders of a closely held C-corporation are categorically forbidden by §101(a)(2), regardless of how the cross-purchase is structured between the participating shareholdersBecause the transfer between co-shareholders is for valuable consideration and shareholder-to-shareholder is NOT one of the five safe-harbor categories — so the death proceeds become taxable above basis.Because corporate-owned life insurance is uniformly disallowed by IRC §264 and all the related employer-owned-life-insurance rules applicable to closely held shareholder-funded buy-sell arrangements among co-shareholders
13. The report filed with the federal government about possible money laundering is a
Adverse action noticeCurrency transaction logSuspicious activity reportPrivacy notice
14. Small face amount life sold with weekly premiums collected at home is
Ordinary lifeGroup lifeCredit lifeIndustrial life
15. Misrepresenting a policy to persuade someone to replace a policy with another insurer is
RebatingSlidingChurningTwisting
16. Paying proceeds in equal installments over a set number of years is the
Fixed period optionInterest only optionFixed amount optionLife income option
17. An applicant materially misrepresents his smoking status on his life application. The policy is issued July 1, 2024. He dies of lung cancer on August 1, 2026 — 25 months after issue. The insurer discovers the misrepresentation during routine claim review. What is the most likely outcome?
The insurer denies the claim outright as intentional fraud committed on the original life-insurance application, and treats the entire face amount as forfeited at the date of deathThe insurer pays the full face amount because the contestable period has expired and the cause of death is not specifically excludedThe insurer pays only the prorated face amount the actual smoker-class premium paid would have purchased at the insured's correct underwriting class at issueThe insurer rescinds the policy retroactively, refunds all premiums to the named beneficiary, and pays no death benefit on the basis of the smoker misstatement on the original application
18. A provision using cash value to pay an overdue premium automatically is the
Automatic premium loanReduced paid-up optionExtended term optionPremium waiver
19. A rider that uses the death benefit to pay for nursing home care is a
Waiver of premiumPayor benefitLong-term care riderDisability income rider
20. An insured names her three children — Ana, Bea, and Carlos — as equal beneficiaries 'per stirpes'. Carlos dies before the insured, leaving two children of his own. How are the proceeds paid?
One-quarter each to Ana, Bea, and the two grandchildren under the per-capita-at-each-generation ruleOne-third each to Ana, Bea, and Carlos's probate estate, which then distributes Carlos's share per his willOne-half each to Ana and Bea under the per-capita-among-survivors rule; Carlos's two children take nothingOne-third each to Ana and Bea; Carlos's two children split the remaining one-third equally

Want a different set? Refresh the page for 20 new questions — the full course has 500+, each with a complete explanation, plus full-length timed exam simulations and an AI tutor.