Ch 2 Legal concepts
Taking receipt of premiums and holding them for the insurance company is an example of -commingling -misappropriation -theft -fiduciary responsibility
Fiduciary responsibility
When must insurable exist for a life insurance contract to be valid? -inception of the contract -throughout the entire length of the contract -when the insured dies -during the contestable period
Inception of the contract
Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements? -consideration -competent parties -offer/acceptance -legal purpose (insurable interest)
Legal Purpose (Insurable Interest)
Which of these is not considered to be an element of an insurance contract? -the offer -acceptance -negotiating -consideration
Negotiating
What is the consideration given by an insurer in the Consideration clause of a life policy? -promise to never cancel coverage -promise to pay a death benefit to a named beneficiary -promise to not raise premiums -promise to accept an insured's assignment of benefits
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
The Consideration clause of a Life or Health policy includes the -buyer's guide -a summary of the coverage provided -the named beneficiaries -the schedule and amount of premium payments
Schedule and amount of premium payments
When must insurable interest be present in order for a life insurance policy to be valid? -when the insured dies -within the incontestability period -when the application is made -before the insured dies
When the application is made
A life insurance arrangement which circumvents insurable interest statutes is called -a contract of adhesion -an indemnity contract -key person insurance -investor-originated life insurance
Investor-Originated Life Insurance
In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this? -estoppel -aleatory -adhesion -unilateral
Unilateral
A statement that is considered guaranteed to be true? -estoppel -warranty -guarantee -representation
Warranty
Offer, acceptance, and consideration are all elements of a? -warranty -estoppel -contract -representation
Contract
In a contract of adhesion, any confusing language would be interpreted in the favor of the? -insurer -beneficiary -reinsurer -insured
Insured
Insurance policies are considered aleatory contracts because? -they are "take it or leave it" contracts -both parties consent to the contract -performance is conditioned upon a future occurrence -the contract is voidable upon proof of fraud
performance is condition upon a future occurrence
Because certain future conditions or acts must occur before any claims can be paid, insurance contracts are known as -consideration -unilateral -aleatory -conditional
Conditional
