chapter 2

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

At the time of application

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

Insured

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

Investor-Originated Life Insurance

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

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

Inception of the contract

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

Promise to pay a death benefit

the part of life insurance policy guaranteed to be true is called an?

warranty

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

which of these is NOT a type of agent authorty ?

principal

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

negotiation

the policy of adhesion can only be modified by whom?

the insurance company

Who makes the legally enforceable promises in a unilateral contract?

insurer

Insurance policies offered on a "take it or leave it" basis are considered what?

Contracts of Adhesion