Legal Concepts of Insurance Contract
What does a contact consist of?
An offer, acceptance, and consideration
Which of the following consists of an offer, acceptance, and consideration?
Contract
Which of these require an offer, acceptance, and consideration?
Contract
Insurance policies are offered on a "take it or leave it" basis, which make them:
Contracts of Adhesion
In regards to representations or warranties, which of these statements is TRUE?
If material to the risk, false representations will void a policy'
When must insurable interest exist for a life insurance contract to be valid?
Inception of the contract
A life insurance policy would be considered a wagering contract WITHOUT:
Insurable interest
If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of?
Insured
Life and health insurance policies are:
Multi-lateral contracts
Which of these is NOT a type of agent authority?
Principal
What is a contract of adhesion?
The contract that would be legally binding once signed in approval by the party being offered the contract
A policy of adhesion can only be modified by whom?
The insurance company
In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this?
Unilateral
The part of a life insurance policy guaranteed to be true is called a(n)
Warranty
Which of these is considered a statement that is assured to be true in every respect?
Warranty
At what point does an informal contract become binding?
When one party makes an offer, and the other party accepts that offer
When must insurable interest be present in order for a life insurance policy to be valid?
When the application is made
Insurance company
Who makes the legally enforceable promises in a unilateral insurance policy?
Which of these is not an element of an insurance contract?
[X] Consideration [__] the offer [__] acceptance [__] negotiating
Insurance contracts are known as [_____] because certain future conditions or acts must occur before any claims can be paid.
[conditional]
A life insurance policy would be considered a wagering contract WITHOUT:
insurable interest
Insurance policies are considered aleatory contracts because
performance is conditioned upon future occurrence
The Consideration clause of an insurance contract includes:
the schedule and amount of premium payments
Which of these arrangements allows one to bypass insurable interest laws?
Investor-Originated Life Insurance
Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called:
Representations
What is not an element of an insurance contract?
Negotiating
STOLI (Stranger Originated Life Insurance( is in violation of what contractual element?
Offer/Acceptance
All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT:
[x] Bilateral [__] Unilateral [__] Aleatory [__] Adhesion
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
