Chapter 2 Quiz questions

And insured pays $100 premium every month for his insurance coverage, yet the insurer promises to pay $10,000 for a covered loss. What characteristic of an insurance contract does this describe?

Aleatory In an aleatory contract, unequal amounts are exchanged between payments and benefits. In this instance, the insured receives a large benefit for a small price.

Which of the following is not a required element of an insurance contract?

Counteroffer Each contract must have the following four elements ( offer and acceptance), legal purpose, competent parties, and consideration. Counter offer, well sometimes used as part of the agreement, it's not required elements.

Which of the following is not the consideration in a policy?

The application given to a prospective insured Consideration is something of value that is transferred between the two parties to formal legal contract.

In forming an insurance contract, when does acceptance usually occur?

When an insurer's underwriter approves coverage

The proposed insured makes the premium payment on the new insurance policy. If the insured should die, then sure will pay the death benefit to the beneficiary if the policy is approved. This is an example of what kind of contract?

Condition

When an insured makes truthful statement on application for insurance and pays the required premium, it is known as which of the following?

Consideration

All of the following are reasons of an insured or an insured would have the right to rescind a policy at except

The amount of paid claims exceeds the premium paid. The injured party has the right to rescind the contract whenever there is a violation of a material warranty, intentional or unintentional concealment, or intentional or fraudulent omissions. The amount of paid claims would not rescind the policy.

And insured wants to transfer his personal insurance policy to a friend. And they were conditions will this be possible?

The insured will need a writing consent of the insurer. The personal Insurance contract is written between an insurance company and an individual, and the company is right to the side with whom it will and will not do business. And insured can transfer and insurance contract to another person, but here she must first obtained a written consent of the insurer.

Which of the following best describes the policy non-renewal?

Discontinuance of an insurance policy by the insured on the policy anniversary date. Non-renewal is the discontinuance of an insurance policy beyond the original term, usually on the policy anniversary of the premium due date.

Insurance policies or not drawn up through negotiations, and and insured has little to say about its provisions. What contract characteristic does this describe?

Adhesion

If found material for underwriting, miss representation

Can void contract A miss representation is a writing or oral declaration that is stated to intentionally distract, deceive or miss lead a party to a contract. If found material for underwriting, they can't void the contract.

What term best describes the act of withholding material information that would be crucial to another wedding decision?

Concealment Concealment occurs when a person withholds a material fact that is crucial to making a decision. In insurance, this involves the withholding information that would be important for making underwriting decisions.