Legal Concepts of the Insurance Contract
All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT
Bilateral
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 representation will void a contract.
When must insurable interest exist for a life insurance contract to be valid?
Inception of the contract
A life insurance policy would be considered wagering without
Insurable Interest
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
Conditional Contract
Insurance Contracts are conditional because certain conditions must be met by all parties in the contract.
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 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 because
Performance is conditioned based on a future occurence
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
Who makes the legally enforceable promises in a unilateral contract?
The insurance company
Life and Health insurance polices are what type of contract?
Unilateral Contracts
At what point does an informal agreement become a binding contract?
When consideration is provided by one of the parties to the contract.
When must insurable interest be present in order for a life insurance policy to be valid?
When the application is made
A policy of adhesion can only be modified by whom?
insurance company
Which of these is NOT a type of agent authority?
principal
Representations
Statements made on an insurance application that are true or believed to be true to the best of the applicants knowledge
Warranties
Statements made by the applicant guaranteed to be true
Aleatory Contract
there is an exchange of unequal amounts or values. The premium paid by the insured is small in relation to the amount that will be paid by the insurer in the event of loss.
A contract where one party either accepts or rejects the terms of a contract written by another party is called a contract of
Adhesion
Contracts consist of
An offer, acceptance, and consideration
The Consideration clause of an insurance contract includes
The schedule and amount of premium payments
In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this?
Unilateral