Primerica Session A Chapter 2 Contract Law (Chapter Quiz, Snap Shots, and review questions)

Who acts on behalf of the principal?

Agent

To prevent people from taking advantage of minors or the mentally incompetent, a contract must have what element?

Competent parties

An applicant failed to disclose a material fact on an application. What is he guilty of?

Concealment

Any areas of ambiguity in an insurance contract are decided in favor of the insured because the contract is an (a)

Contract of adhesion

the difference between contract law and tort law

Contracts are written agreements that are legally enforceable by law. A tort is a private, civil, noncontractual wrong for which a remedy through legal action may be sought.

In an insurance contract, consideration refers to:

Exchange of something of value by both parties

Describe the aleatory nature of an insurance contract?

Exchange of unequal values

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

If it is intentional and material

Under what circumstances may a party of an insurance contract rescind the policy?

If one party has concelead material information, if there is intentional, fraudulent omissions , material representation by either party, violations of a material provision or a material warranty.

A life insurance policy has a legal purpose if both of these following elements exist?

Insurable interest and consent

A deliberate act that causes harm to another person regardless of whether the offending party intended to injure the aggrieved party is a

Intentional tort

Which of the following terms refers to an unintentional tort?

Negligence

Does the insurer's financial rating need to be identified in an insurance policy?

No

An insurance contract must contain all of the following elements to be considered legally binding:

Offer and acceptance Competent parties Consideration

The consideration involved in an insurance contract on the part of the insured refers to the

Payment of the first premium and statements made on the application

Statements in the application for insurance that must be true to the best of the applications knowledge are called

Representations

Difference between representation and a warranty

Representations are statements believed to be true to the best of one's knowledge. A warranty is an absolutely true statement upon which the validity of the insurance policy depends.

In insurance contracts, a warranty is a

Statement that must be true

What are the 6 required elements of an insurance policy?

The parties to the contract the persons or property being insured A statement of the insurance interest that exists if the insured is not the owner The risks insured against; The time period during which the policy will be in force or continue The state annual, semi annual, quarterly, or monthly premium or a statement of the manner in which a premium rate and total premium will later be calculated, if it can only be determined at the termination of expiration of the contract. Parties Persons Statement Time period Rate time table

The price of insurance for each unit of exposure is known as

`Rate

Explain the concept of materiality

materiality is based on the idea that all parties to a contract are entitled to all information necessary to make an informed decision about the quality or nature of the contract.