Legal Concepts of the Insurance Contract

Which of these do NOT indicate the presence of insurable interest in a life insurance contract? Lifelong friendship Marriage Blood-related Co-owning a business

Lifelong friendship

When must insurable interest exist for a life insurance contract to be valid? At the time of application Throughout the entire length of the contract When the insured dies During the Contestable period

At the time of application

Errors and omissions insurance would be used in which of the following situations? An applicant misstating their date of birth A producer's improper replacement of an insurance policy An application being declined A producer engaging in fraud

A producer's improper replacement of an insurance policy

What qualifies as acceptance of an insurance contract offer? A declined policy An issued policy The application and initial premium The initial premium only

An issued policy

Question 1 Select the correct answer All of these statements correctly describe an aleatory contract EXCEPT A legal wager is considered an aleatory contract Potential unequal exchange of value for both parties Only one party makes any kind of legally enforceable promise Element of chance is involved

Only one party makes any kind of legally enforceable promise

An insured is entitled to coverage under a policy that a prudent person would expect it to provide. This principle is called Adhesion Reasonable sensibility Reasonable expectations Insurable interest

Reasonable expectations

The payment of the first premium, the promise to pay a covered loss, and the agreement to abide by policy conditions are all examples of consideration legal purpose representation acceptance

consideration

The courts will normally interpret a policy in favor of the insured when the meaning of the policy is not clear. This is because an insurance policy is a(n) warranty contract aleatory contract contract of adhesion unilateral contract

contract of adhesion

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) extension endorsement sanction restriction

endorsement

An appointed producer's implied authority is derived from the NAIC express authority the insurer's Certificate of Authority evident authority

express authority

An arrangement where an individual is authorized to act on behalf of another person or company is sanctioned through estoppel the law of agency the law of adhesion an aleatory contract

the law of agency

An insurance company's voluntary refusal to enforce a contract's provision is called a(n) waiver warranty assignment concealment

waiver

An insurance company can be liable for a producer's unauthorized acts only when a felony is involved when the agency contract is vague concerning the authority given at anytime only if the agency contract is unilateral

when the agency contract is vague concerning the authority given