Legal Concepts

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

insurable interest in the proposed insured

The consideration clause of an insurance contract includes?

the schedule and amount of premium payments

The part of a life insurance policy guranteed to be true is called an?

warranty

When must insurable interest be present in order for a life insurance policy to be valid?

When the application is made

A contract where one party either accepts or rejects the terms of a contract written by another party is called a contract of?

Adhesion

Q purchases a $500,000 life insurance policy and pays $900 in premiums over the first six months. Q dies suddenly and the beneficiary is paid $500,000. This exchange of unequal values reflects which of the following insurance contract features?

Aleatory

All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT?

Bilateral

Insurance contracts are known as ______ because certain future conditions or acts must occur before any claims can be paid?

Conditional

Which of the following consists of an offer, accept

Contract

Which of the following consists of an offer, acceptance, and consideration?

Contract

Which of these require an offer, acceptance, and consideration?

Contract

Insurance policies are offered on a "take it or leave it" basis, which make them?

Contracts of Adhesion

E and F are 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 (Insurable interest only needs to exist at the time of application.

Taking receipt of premiums and holding them for the insurance company is an example of?

Fiduciary responsibility

In regards to representations or warranties, which of these statements is TRUE?

If material to the risk, false representations will void a policy?

When must insurable interest exist for a life insurance contract to be valid?

Inception of the contract

A life insurance policy would be consideration a wagering contract WITHOUT?

Insurable interest

Who makes the legally enforceable promises in a unilateral insurance policy?

Insurance company

If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of?

Insured

A life insurance arrangement which circumvents insurable interest statutes is called?

Investor-Originated Life Insurance

Which of these arrangements allows one to bypass insurable interest laws?

Investor-Originated Life Insurance

Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements?

Legal Purpose (Insurable Interest)

Which of these is NOT considered to be an element of an insurance contract?

Negotiating

Insurance policies are considered aleatory contracts because?

Performance is conditioned upon a future occurrence

Which of these is NOT a type of agent authority?

Principle

What is the consideration given by an insurer in the Consideration clause of a life policy?

Promise to pay a death benefit to a named beneficiary.

Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called?

Representations

Which of the following BEST describes a warranty?

Statement guaranteed to be true

A policy of adhesion can only be modified by whom?

The insurance company

In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this?

Unilateral

Life and health insurance policies are?

Unilateral contracts

Which of these is considered a statement that is assured to be true in every repect?

Warranty

At what point does an informal agreement become a binding contract?

When consideration is provided by one of the parties to the contract