Chapter 3

A producer working for an insurance company may be personally liable for..?

Acts performed which are prohibited in the agency contract

Voluntarily terminate in an insurance policy is also known as..?

Cancellation

The insurers obligation to pay a claim depends on whether the insured or beneficiary has complied with all policy Conditions. This makes the policy a(n)..?

Conditional contract

And insurance application requires an applicant to make a fool, accurate disclosure of the risk factor involved. Using this criteria, and insurance policy is considered what type of contract?

Contract of utmost good faith

Christopher is issued an insurance policy that contains an attached agreement which alters the terms of the policy. This attached agreement is called a(n)..?

Endorsement (rider)

In a pointed producers implied authority is derived from...?

Express authority

The powers directly given to a producer in an agency contract are called..?

Express authority

XYZ insurance company gives direct authority to its producers to sell insurance through an agency contract, but nothing is stated regarding the collection of premiums. Which authority grants the producer the right to collect premiums? OK

Implied authority

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

Inception of the contract

In what way are insurance policies said to be aleatory?

Involves the potential for the unequal exchange of value

Which of these do not indicate the presence of insurable interest in a life insurance contract?

Lifelong friendship

And insurance contract may be voided if a misrepresentation found in the application is determined to be..?

Material

Greg applies for insurance and makes a false statement on the application that will influence whether or not the insurer will except the risk. Greg's false statement is called a(n)..?

Material misrepresentation

Which element of a contract constitutes a definite an unqualified proposal by one party to another?

Offer

Insurable interest involves what assumption?

One person benefits from another person's continued life

Ambiguities in insurance contracts are typically interpreted in favor of the insured. This rule is referred to as..?

Reasonable expectation

And insured is entitled to coverage under the policy that a prudent person would expect it to provide. This principle is called..?

Reasonable expectations

During the application process, a statement made by an applicant that becomes part of the contract is considered to be a(n)

Representation

Which of the following would not have a restricted ability to enter into a contract?

Small employer

What happens when an initial offer is answered with a counter offer?

The initial offer is void

An arrangement where an individual is authorized to act on behalf of another person or company is established through?

The law of agency

And insurance company can be liable for producers unauthorized acts..?

When the agency contract is unclear concerning the authority given

The following are all elements of a valid contract EXCEPT..?

Written evidence