Chapter 3: Legal Concepts

At time of application

According to life insurance contract law, insurable interest exists

Promises made

According to the principle of Utmost Good faith, the insured will answer questions on the application to the best of their knowledge and pay the required premium, while the insurer will deal fairly with the insured and it's

Tom

Bob and Tom start a business. Since each partner contributes an important element to the success of the business, they decide to take life insurance policies out on each other, and name each other as beneficiaries. Eventually, they retire and dissolve the business. Bob dies 12 months later. The policies continue in force with no change. Both partners are still married at th same time of Bob's death. In this situation , who will receive Bob's policy proceeds

concealment

Intentional withholding of material facts that would affect an insurance policy's validity is called

Countersignature

Is not an element of a valid contract.

There must be legal reasons for entering into the contract

Legal purpose is a term used in contract law meaning

Law of Agency

The authority granted to licensed producer is provided via the

Apparent

The deeds and the action of a producer indicate what kind of authority?

Implied

The power given to an individual producer that is not specifically addressed in his/her contract is considered what type of authority

Aleatory

The term which describes the fact that both parties of a contract may not receive the same value is referred to as

the terms must be accepted or rejected in full.

Under a contract of adhesion,

Representation

What are an applicant's statements concerning occupation, hobbies, and personal health history regarded as?

Only the insurer is legally bound

What makes an insurance policy a unilateral contract?

Express Authority

When the principal gives the agent authority in writing, it's referred to as

Legal purpose

Which contact element is insurable interest a component of

A contract that requires certain conditions or acts by the insured individual

Which of the following BEST describes a conditional insurance contract?

Paid Premium

Which of the following is an example of the insured's consideration

Insurable intrest

Which of the following is present when an applicant stands to lose value if the insured dies?

Consideration Clause

Which type of clause describes the following statement: "We have issued the policy in consideration of the representations in your applications and payment of the first-term premium".

Insurance Carriers

Who is responsible for assembling the policy forms for insured's?

Errors and Omissions

a professional liability for which procedures can be sued for mistakes of putting a policy into effect is called

Claim forms

All of the following are elements of an insurance policy except

Insured

Ambiguities in an insurance policy are always resolved in favor of the

Contain an offer and acceptance

In order for a contract to be valid, it must

Business owner and business client

Insurable interest does NOT occur in which of the following relationships?

Statements made in the application and the premium

In an insurance contract, applicant's "consideration" is the

Consideration

In an insurance contract, the element that shows each party is giving something of value is called

Unilateral

In an insurance contract, the insurer is the only party legally obligated to perform. Because of this, an insurance contract is considered?