Primerica focused exam (warranty)

12 When would a misrepresentation on the insurance application be considered fraud?

If it is intentional and material

2 All of the following are reasons an insurer or an insured would have the right to rescind a policy EXCEPT

The amount of paid claims exceeds the premiums paid.

2 If found material for underwriting, a misrepresentation

Can void a contract.

The act of revoking or terminating an insurance policy is called

Cancellation.

What is a material misrepresentation?

A statement by the applicant that, upon discovery, would affect the underwriting decision of the insurance company. A material misrepresentation is a statement that, if discovered, would alter the underwriting decision of the insurance company.

In insurance policies, the insured is not legally bound to any particular action in the insurance contract, but the insurer is legally obligated to pay losses covered by the policy. What contract element does this describe?

unilateral. In a unilateral contract, the insured is not legally bound to do anything. The insurer, however, must pay losses covered by the policy.

The violation of a material warranty or other material provision of a policy allows

Both the insurer and the insured to rescind.

Because an insurance policy is a contract between the insurer and the insured, it must conform to the state laws governing contracts which require all of the following elements EXCEPT

Conditions. Conditions are part of the policy structure. Consideration is an essential part of a contract.

2 According to the California Insurance Code, any agent violating the regulations relating to misrepresentation will be charged with a

Misdemeanor, a fine not to exceed $25,000, and/or a possible 1-year imprisonment.

Concealment as defined by the California Insurance Code is

Neglect on the part of insured to communicate all information known to be material to the insurer.

In insurance, an offer is usually made when

the application is submitted

Representations in insurance contracts qualify as

Implied warranties.

The written instrument, in which a contract of insurance is set forth, is known as the

Policy.

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

Counteroffer. Each contract must have the following 4 elements: agreement (offer and acceptance), legal purpose, competent parties, and consideration. Counteroffer, while sometimes used as part of the agreement, is not a required element.

In insurance, an offer is usually made when

The completed application is submitted In insurance, the offer is usually made by the applicant in the form of the application. Acceptance takes place when an insurer's underwriter approves the application and issues a policy.

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

The amount of paid claims exceeds the premiums 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.

If found material for underwriting, a misrepresentation

Can void a contract. A misrepresentation is a written or oral declaration that is stated to intentionally distract, deceive or mislead a party to a contract. If found material for underwriting, it can void a contract.

When applying for an individual life insurance policy, an applicant states that he went to the doctor for nausea, but fails to mention that he was also having severe chest pains. This is an example of

Concealment.

Which of the following would qualify an implied warranty in an insurance contract.

An oral representation by the applicant A warranty is a statement considered to be guaranteed to be true and becomes part of the contract. Representations in insurance contracts qualify as implied warranties.

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

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

Because an insurance policy is a contract between the insurer and the insured, it must conform to the state laws governing contracts which require all of the following elements EXCEPT

Conditions.