Ch. 3 Legal Concepts of The Insurance Contract

Consideration

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

Business owner and business client

Insurable interest does NOT occur in which of the following relationships? Sister and brother Parent and children Business partners Business owner and business client

Apparent

The deeds and actions of a producer indicate what kind of authority? Express Apparent Implied Conditional

Contain and offer and an acceptance

In order for a contract to be valid, it must Be filed with the state Be signed and witnessed by an attorney Be in writing Contain an offer and an acceptance

Concealment

Intentional withholding of material facts that would affect an insurance policy's validity is called a(n) Estoppel Concealment Adhesion Misrepresentation

Implied

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

Only the insurer is legally bound

What makes an insurance policy a unilateral contract? Only the insured pays the premium Only the insured can change the provisions Only the insurer is legally bound Only the insured is legally bound

A paid premium

Which of the following is an example of insured's consideration? Insurer's promise to pay benefits A paid premium Legal purpose Intent

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" Premium Clause Consideration Clause Adhesion Clause Contestability Clause

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 the time of Bob's death. In this situation, who will receive Bob's policy proceeds? Toms Spouse Bobs estate Bobs spouse Tom

Unilateral

In an insurance contract, the insurer is the only party legally obligated to perform. Because of this, an insurance contract is considered Voidable Conditional Aleatory Unilateral

Aleatory

The term which describes the fact that both parties of a contract may NOT receive the same value is referred to as Apparent Estoppel Aleatory Unilateral

Errors and omissions

A professional liability for which producers can be sued for mistakes of putting a policy into effect are Fiduciary bond Errors and omissions Fiduciary trust Errors and oversights

There must be legal reasons for entering into the contract

Legal purpose is a term used in contract law meaning There must be an offer and acceptance The contract must be aleatory There must be legal reasons for entering into the contract The contract must be a contract of adhesion

The terms must be accepted or rejected in full

Under a contract of adhesion, There is the potential for an unequal exchange value The insurer's obligations are dependent upon certain acts of the insured individual The terms must be accepted or rejected in full Only one party makes any kind of enforceable promise

Representation

What are an applicants statements concerning occupation, hobbies, and personal health history regarded as? Warranty Guarantee Representation Collateral

Authority that is not specifically given to an agent in the agency contract, but that an agent can reasonably assume to carry out his/her duties

What is implied authority defined as? Authority given in writing to an agent in the agency agreement Authority that is not specifically given to an agent in the agency contract, but that an agent can reasonably assume to carry out his/her duties Authority given to handle claims and process payments Authority given to an agent to act outside the scope of the agency agreement

Express authority

When the principal gives the agent authority in writing, its referred to as Express authority Implied authority Apparent authority Imposed authority