Insurance

S is close to retiring And would like to purchase a policy that will yield greater gains than bonds, but will still protect the principle with a minimum level or risk. Which product would S be advised to purchase? (Equity index insurance) (Endowment) (Graded whole life policy) (Return of premium policy)

Equity index insurance yields greater gains then bonds but will still protect the principle with a minimum of risk.

E and F our 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) (The dissolved partnership) (E's family) (E,s estate)

In this situation, the proceeds from E's Life insurance policy will go to F.Insurable interest only needs to exist at the time of application.

When must insurable interest be present in order for a life insurance policy to be valid? (When the insured dies) (Within the incontestability period) (When the application is made) (Before the insured dies)

Insurable interest must exist when the application is made for it to be valid.

Statements made on an insurance application That are believed to be true to the best of the applicants knowledge are called: (Representations) (Consideration) (Warranties) (Guarantees)

Representations

Life and health insurance policies are: (Multi-lateral contracts) (Bilateral contracts) (Unilateral contracts) (Non-lateral contracts)

Life and health insurance policies are considered unilateral contracts because one party makes a promise, and the other party can only except by performance.

Which of these is NOT considered to be an element of an insurance contract? (The offer) (Acceptance) (Negotiating) (Consideration)

The elements of an insurance contract do not include negotiating.

All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT: (Bilateral) (Unilateral) (Aleatory) (Adhesion)

Unilateral, aleatory, and adhesion are all special features of insurance contracts. Bilateral is not.

What is the consideration given by an insurer in the consideration clause of a life policy? (Promise to never cancel coverage) (Promise to pay a death benefit to a named beneficiary) (Promise to not raise premiums) (Promised to accept an insured's assignment of benefits)

Consideration is given by the insurer by promising to pay a death benefit to a named beneficiary.

Which of these require an offer, acceptance, and consideration? (Warranty) (Estoppel) (Contract) (Representation)

Contract

Insurance policies are considered aleatory contracts because? (They are take it or leave it contracts) (Both parties consent to the contract) (Performance is conditioned upon a future occurrence) (The contract is voidable upon proof of fraud)

Insurance contracts are aleatory. This means there is an element of chance And potential for unequal exchange of value or consideration for both parties. An aleatory contract is conditioned upon the occurrence of an event.

At what point does and in formal contract become binding? (When one party makes an invitation and the other makes an offer) (When an offer is made by one party and the other party rejects the offer and makes a counter offer) (When one party makes an offer and the other party accepts that offer) (When one party makes the required payment)

The correct answer is "When one party makes an offer and the other party accepts that offer". And in formal contract becomes binding when one party makes an offer and the other party accept that offer.

Who makes the legally enforceable promises in a unilateral insurance policy? (Beneficiary) (Insurance company) (Insured) (Applicant)

Under a unilateral insurance policy, the insurance company makes the legally enforceable promises.

A life insurance arrangement which circumvents insurable interest statutes is called: (A contract of adhesion) (An indemnity contract) (Key person insurance) (Investor-Originated life insurance)

Investor-originated life insurance (Or IOLI), Is used to circumvent state insurable interest statutes.

Which of these is NOT a type of agent authority? (Express) (Implied) (Principal) (Apparent)

The correct answer is "Principal". Agent authority is what an agent is authorized to do on behalf of his company. The three types of agents authority includes express, implied, and apparent authority.

A policy of adhesion can only be modified by whom? (The agent) (The applicant) (The primary beneficiary) (The insurance company)

A policy of adhesion is best described as a policy which only the insurance company can modify.

Insurance policies are offered on a "Take it or leave it" basis, Which makes them: (Conditional contracts) (Aleatory contracts) (Unilateral contracts) (Contracts of adhesion)

Because insurance policies are offered on a "take it or leave it" basis, they are referred to as Contracts of Adhesion.

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

In third-party ownership, an applicant who is also the stated primary beneficiary must have an insurable interest in the proposed insured.

In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this? (Estoppel) (Aleatory) (Adhesion) (Unilateral)

Insurance contracts are unilateral. This means the only one party (The insurer) makes any kind of enforceable promise.

Which of these arrangements allows one to bypass insurable interest laws? (Concealment) (Indemnity contract) (Contract of adhesion) (Investor-Originated Life Insurance)

Investor-Originated Life Insurance (or IOLI), sometimes called Stranger-Originated life Insurance (STOLI) is used to circumvent state insurable interest statutes. This is done when an investor (or stranger) Persuades an individual to take out life insurance specifically for the purpose of selling the policy to be investor. The investor compensates the insured and makes the premiums then collects the death benefit when the insured dies

Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements? (Consideration) (Competent parties) (Offer/acceptance) (Legal purpose {Insurable interest})

Legal purpose {Insurable interest} (A STOLI Arrangement is used to circumvent state insurable interest statutes.)

A life insurance policy would be considered a wagering contract WITHOUT: (Insurable interest) (Premium payment) (Agent solicitation) (Constructive delivery)

Without insurable interest, a life insurance policy would be considered a wagering contract.

What is a warranty? (Guarantees that an insurance company will pay a benefit) (Is a statement believe to be true to the best of one's knowledge) (Cannot be used to void the contract) (Is a statement guaranteed to be true)

A warranty is a statement guaranteed to be true.

The consideration clause of an insurance contract includes: (The buyer's guide) (A summary of the coverage provided) (The name beneficiaries) (The schedule and amount of premium payments)

The consideration clause of a life or health policy includes the schedule and amount of premium payments.

Which of these is considered a statement that is assured to be true in every respect? (Estoppel) (Warranty) (Guarantee) (Representation)

Warranty

Insurance contracts are known as _______ because certain future conditions or acts must occur before any claims can be paid. (Consideration) (Unilateral) (Aleatory) (Conditional)

The correct answer is "conditional". Because certain future conditions or acts must occur before any claims can be paid, insurance contracts are known as conditional.