17 Free Missouri Life & Health Practice Questions: Application, Underwriting and Delivery (2026)
How to Use This Set
This set covers completing the application, underwriting and delivering life policies, with some questions on retirement and other insurance concepts. On the Life single-line outline, completing the application, underwriting and delivery carries 12 items, and retirement and other insurance concepts carries 8. The combined exam lists the same sections.
The questions follow a policy from application to delivery: correcting an application, insurable interest, settlements, receipts, ratings and the legal ideas behind them. Contract-law vocabulary appears throughout, so learn the terms precisely.
These 17 questions have answers and explanations behind each one. Try each question before you open the explanation.
Practice Questions 1-6: Applications, STOLI, Underwriting and Settlements
Covered here: correcting application errors, stranger-originated life insurance, group conversion, written consent for testing, life settlements and the human life value approach. Work each question before you open the explanation.
Question 1 (Chapter 3)
During the application process, a Missouri producer realizes the applicant's date of birth was recorded incorrectly. To correct this error, the producer should:
- A) Use white-out to fix the error and write the correct date over it.
- B) Sign the producer's name next to the correction to verify its accuracy.
- C) Verbally notify the home office underwriters of the change during the phone interview.
- D) Have the applicant initial the change after the producer corrects the error.
Show answer & explanation
Answer: D
Any changes made to an insurance application must be initialed by the applicant. This protects the producer from accusations of altering the contract without the applicant's knowledge. White-out is never permitted on legal insurance documents.
Question 2 (Chapter 3)
A Missouri producer is helping a client who has been offered a 'Stranger-Originated Life Insurance' (STOLI) arrangement. The producer should inform the client that STOLI is generally prohibited because it violates:
- A) The Fair Credit Reporting Act.
- B) The USA PATRIOT Act's anti-money laundering provisions.
- C) The Gramm-Leach-Bliley Act.
- D) The principle of insurable interest.
Show answer & explanation
Answer: D
STOLI (or IOLI) involves investors persuading individuals to take out life insurance policies with the intent of selling them to the investors. This violates the principle of insurable interest because the purchaser (the investor) has no interest in the insured's continued life.
Question 3 (Chapter 3)
Under Missouri law, if an employee is terminated, they generally have the right to convert their group life insurance to an individual policy without evidence of insurability within how many days?
- A) 31 days
- B) 10 days
- C) 60 days
- D) 90 days
Show answer & explanation
Answer: A
The standard conversion period for group life insurance in Missouri (and most states) is 31 days. During this window, the individual can convert to a permanent policy at their attained age without a medical exam.
Question 4 (Chapter 3)
An insurer wants to perform an HIV test on a Missouri applicant as part of the underwriting process for a $1,000,000 policy. Under standard Missouri underwriting requirements, the insurer must:
- A) Perform the test secretly to ensure the results are not biased by the applicant's behavior.
- B) Notify the Missouri Department of Health and Senior Services of all positive results without the applicant's knowledge.
- C) Charge the applicant a separate 'testing fee' before the application can be processed.
- D) Obtain written informed consent from the applicant before the test is conducted.
Show answer & explanation
Answer: D
Missouri regulation requires insurers to obtain written informed consent from the applicant before testing for HIV. The consent form must explain the test and how the results will be used.
Question 5 (Chapter 3)
A 72-year-old Missouri retiree no longer needs their $500,000 whole life policy because their mortgage is paid off. They sell the policy to an investment group for $150,000. The retiree is not terminally ill. This transaction is a:
- A) Viatical Settlement
- B) Policy Loan
- C) Collateral Assignment
- D) Life Settlement
Show answer & explanation
Answer: D
A Life Settlement involves the sale of an existing life insurance policy to a third party for more than the cash value but less than the death benefit. Unlike Viatical Settlements, the insured is typically a senior and does not need to be terminally ill.
Question 6 (Chapter 3)
A producer is calculating the amount of life insurance a client needs by determining the present value of the client's future earnings. This method is known as the:
- A) Needs Approach
- B) Capital Conservation Method
- C) Estate Liquidity Analysis
- D) Human Life Value Approach
Show answer & explanation
Answer: D
The Human Life Value approach focuses on the individual's earning potential. It calculates the present value of the family's share of the breadwinner's future earnings.
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Practice Questions 7-12: Group Plans, Capacity and Misstatements
Covered here: probationary periods, minors and contractual capacity, waiver and estoppel, settlement brokers, suspicious activity reports and warranties against representations. Work each question before you open the explanation.
Question 7 (Chapter 3)
A new employee at a firm in St. Louis is told they must wait 90 days before they are eligible to join the company's group life insurance plan. This 90-day period is known as the:
- A) Probationary period
- B) Enrollment period
- C) Contributory period
- D) Elimination period
Show answer & explanation
Answer: A
The probationary period is a set period of time (usually 30, 60, or 90 days) that a new employee must wait before becoming eligible to enroll in a group insurance plan. This helps insurers avoid 'adverse selection' from employees who join a company solely for the insurance.
Question 8 (Chapter 3)
A 17-year-old high school student in St. Joseph signs an application for a life insurance policy on their own life. In Missouri, why might this contract be voidable?
- A) Minors are never allowed to own life insurance in Missouri.
- B) A minor cannot be the 'Proposed Insured.'
- C) The applicant lacks the legal capacity of 'Competent Parties' due to age.
- D) The contract lacks 'Legal Purpose.'
Show answer & explanation
Answer: C
To be a valid contract, both parties must be competent. Generally, this means being of legal age (18) and mentally sound. Contracts signed by minors are typically voidable at the minor's option because they lack full legal capacity.
Question 9 (Chapter 3)
A producer submits an application to a Missouri insurer that is missing the applicant's occupation. The insurer issues the policy anyway. Two years later, the insured is injured in a high-risk job. The insurer cannot now deny the claim based on the missing information because of the legal doctrine of:
- A) Waiver
- B) Estoppel
- C) Adhesion
- D) Rescission
Show answer & explanation
Answer: A
A waiver is the voluntary giving up of a known legal right. By issuing the policy despite the incomplete application, the insurer 'waived' its right to that information and is now 'estopped' (legally prevented) from using it as a defense later.
Question 10 (Chapter 3)
A life settlement broker in Missouri represents which party in a life settlement transaction?
- A) The policyowner (the seller).
- B) The insurance company that issued the policy.
- C) The investment group purchasing the policy.
- D) The Missouri Department of Commerce and Insurance.
Show answer & explanation
Answer: A
In Missouri, a life settlement broker is a person who, for a fee, commission, or other consideration, offers or attempts to negotiate life settlement contracts between an owner and providers. The broker owes a fiduciary duty to the owner (the policyholder) to act according to the owner’s instructions and in their best interest.
Question 11 (Chapter 3)
Under the USA PATRIOT Act, if a Missouri insurance company detects suspicious activity that may indicate money laundering, it must file a Suspicious Activity Report (SAR) within how many days of detecting the activity?
- A) 10 days.
- B) 30 days.
- C) 90 days.
- D) 1 year.
Show answer & explanation
Answer: B
Anti-Money Laundering (AML) regulations require financial institutions, including insurance companies, to file a SAR with FinCEN within 30 days of the initial detection of suspicious activity (or 60 days if no suspect is identified).
Question 12 (Chapter 3)
A Missouri applicant for a life insurance policy is required to sign a statement that they have never been diagnosed with a specific heart condition, and the insurer explicitly labels this statement as a 'warranty' in the contract. If the insurer later discovers the statement was false, even if the applicant believed it was true, what is the likely outcome?
- A) The policy remains in force because statements on applications are always considered representations.
- B) The policy is voidable by the insurer because a warranty is a statement guaranteed to be absolutely true.
- C) The insurer must prove the applicant intended to commit fraud before voiding the policy.
- D) The insurer can only adjust the death benefit based on the actual risk presented.
Show answer & explanation
Answer: B
In insurance law, a warranty is a statement that is guaranteed to be true in all respects. If a warranty is breached, the insurer has grounds to void the contract regardless of the applicant's intent. While Missouri law generally treats statements as representations (believed to be true), if a contract specifically creates a warranty, its breach is more severe than a misrepresentation.
Practice Questions 13-17: Tax Treatment, Needs Analysis, Receipts and Ratings
Covered here: employer-paid group premiums, the needs approach, conditional receipts, third-party ownership and the rated policy as a counteroffer. Work each question before you open the explanation.
Question 13 (Chapter 3)
A small business in Columbia, Missouri, pays the entire premium for a $40,000 group term life insurance policy for each of its 20 employees. What is the tax treatment of these premium payments for the employer?
- A) The premiums are not deductible as they are considered a gift.
- B) Only 50% of the premiums are deductible under Missouri law.
- C) The premiums are tax-deductible as a legitimate business expense.
- D) The premiums are deductible only if the employer is the beneficiary.
Show answer & explanation
Answer: C
Premiums paid by an employer for group life insurance for employees are generally tax-deductible as a business expense, provided the employer is not a beneficiary of the policy.
Question 14 (Chapter 3)
A producer is helping a family in Joplin determine their life insurance needs. They calculate the immediate cash needed for funeral costs, the amount required to pay off the mortgage, and a fund for the children's college education. This method of needs analysis is known as the:
- A) Human Life Value Approach.
- B) Capital Conservation Approach.
- C) Needs Approach.
- D) Estate Liquidation Approach.
Show answer & explanation
Answer: C
The 'Needs Approach' focuses on the specific financial objectives of the survivors, such as final expenses, debt payoff (mortgage), and education funds, rather than just the future earnings of the breadwinner (which is the Human Life Value approach).
Question 15 (Chapter 3)
An individual applies for a life insurance policy on their spouse. Which of the following sets of signatures is required by the insurer to process the application in Missouri?
- A) The applicant and the producer only.
- B) The applicant, the proposed insured, and the producer.
- C) The proposed insured and the producer only.
- D) The applicant and the beneficiary only.
Show answer & explanation
Answer: B
In a third-party ownership scenario (like a spouse applying for a policy on another spouse), the application requires the signatures of the applicant (owner), the proposed insured (consenting to the coverage), and the producer (witnessing the transaction). The beneficiary is not required to sign.
Question 16 (Chapter 3)
A grandfather in Columbia, Missouri, purchases a life insurance policy on his 10-year-old grandson. The grandfather pays the premiums and retains all rights to the policy, including the right to change the beneficiary. This is an example of:
- A) Stranger-Originated Life Insurance (STOLI).
- B) Third-Party Ownership.
- C) A Viatical Settlement.
- D) An Adverse Underwriting Decision.
Show answer & explanation
Answer: B
Third-party ownership occurs when the policyowner is someone other than the insured. This is common in juvenile insurance (parents/grandparents owning policies on children) and business insurance (Key Person).
Question 17 (Chapter 3)
An applicant applies for a $200,000 life insurance policy at standard rates and pays the initial premium. The insurer's underwriter finds the applicant is a 'Substandard' risk and issues the policy with a higher premium (a 'rated' policy). In contract law, the insurer's action is considered:
- A) Acceptance of the offer.
- B) An invitation to negotiate.
- C) A counteroffer.
- D) A breach of contract.
Show answer & explanation
Answer: C
When an applicant submits an application with a premium, they are making an 'offer.' If the insurer issues a policy differently than applied for (e.g., at a higher price), the insurer has rejected the original offer and made a 'counteroffer.' Coverage does not begin until the applicant accepts the counteroffer and pays the additional premium.
The Mistakes That Cost Marks
Using the wrong way to correct an application. Changes are made visibly and initialed by the applicant, never hidden (question 1).
Mixing up the amount-of-insurance methods. The human life value approach looks at earnings, while the needs approach adds up specific survivor needs such as final expenses, the mortgage and education (questions 6 and 14).
Missing the insurable interest problem. Arrangements where an investor arranges coverage on a stranger fail on insurable interest (question 2).
Treating a rated policy as an acceptance. A policy issued on different terms from the application is a counteroffer, and coverage depends on the applicant accepting it (question 17).
Blurring warranty and representation. The contract's own wording affects how a false statement is treated (question 12).
Overlooking who owns the policy. A grandparent who owns a policy on a grandchild is a third-party owner (question 16).
Your Next Step
Score yourself on the three groups and note which ones went worst, then return to that part of the outline. The course preview lets you try the audio lessons and quiz format, and our free practice question hub has the full list of topic sets for the Missouri Life & Health exam.
For the format and difficulty, read how many questions are on the exam and whether the exam is hard.
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