Insurance Pt. 2!

When must insurable interest exist for a life insurance contract to be valid?

Inception of the contract

A life insurance arrangement which circumvents insurable interest statutes is called:

Investor-Originated Life Insurance

A contract where one party either accepts or rejects the terms of a contract written by another party is called a contract of

adhesion

A policy of adhesion can only be modified by whom?

insurance company

Which of these is NOT considered to be an element of an insurance contract?

negotiating

Insurance policies are considered aleatory contracts because

performance is conditioned upon a future occurrence

Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called:

representations

The Consideration clause of an insurance contract includes:

the schedule and amount of premium payments

Who makes the legally enforceable promises in a unilateral insurance policy?

insurance company

Which of these is considered a statement that is assured to be true in every respect?

warranty

Life and health insurance policies are:

unilateral contracts

Stranger Originated Life Insurance (STOLI ) has been found to be in violation of which of the following contractual elements?

Legal Purpose (Insurable Interest)

A life insurance policy would be considered a wagering contract WITHOUT:

insurable interest

In regards to representations or warranties, which of these statements is TRUE?

If material to the risk, false representations will void a policy

Insurance contracts are known as (______) because certain future conditions or acts must occur before any claims can be paid.

conditional

Which of the following consists of an offer, acceptance , and consideration ?

contract

Taking receipt of premiums and holding them for the insurance company is an example of:

fiduciary responsibility

When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have:

insurable interest in the proposed insured

A policy of adhesion can only be modified by whom ?

insurance company

If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of?

insured

Which of the following BEST describes warranty?

statement guaranteed to be true

The part of a life insurance policy guaranteed to be true is called a(n)

warranty

At what point does an informal contract become binding ?

When one party makes an offer and the other party accepts that offer

All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT:

bilateral

Which of these require an offer, acceptance , and consideration ?

contract

Which of these arrangements allows one to bypass insurable interest laws ?

Investor-Originated Life Insurance

Insurance policies are offered on a "take it or leave it" basis, which make them:

Contracts of Adhesion

When must insurable interest be present in order for a life insurance policy to be valid?

When the application is made

Which of these is NOT a type of agent authority?

principal

What is the consideration given by an insurer in the Consideration clause of a life policy ?

Promise to pay a death benefit to a named beneficiary

In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this?

unilateral

Q purchases a $ 500,000 life insurance policy and pays $900 in premiums over the first six months. Q dies suddenly and the beneficiary is paid $500,000. This exchange of unequal values reflects which of the following insurance contract features?

aleatory

E and F are business partners. Each takes out a $500,000 life insurance policy on the other, naming himself as primary beneficiary. E and F eventually terminate their business, and four months later E dies. Although E was married with three children at the time of death , the primary beneficiary is still F. However, an insurable interest no longer exists. Where will the proceeds from E's life insurance policy be directed to?

F because the proceeds from E's life insurance policy will go to F