XCEL Chapter 3: Legal Concepts of the Insurance Contract
An insurance contract may be voided if a misrepresentation found on the application is determined to be
Material
Which situation would not require the insured's consent when a life insurance policy is issued?
A policy is purchased by a parent for a minor child
Use of XYZ Insurance Company brochures, business cards, and rating guides is an example of
Apparent authority
An appointed producer's implied authority is derived from
Express authority
When must insurable interest exist for a life insurance contract to be valid?
Inception of the contract
What happens when an initial offer is answered with a counteroffer?
Initial offer is void
Which of the following situations would an insurance agent need to guard against liability for professional errors and omissions?
Making a recommendation to a potential insured to replace existing coverage
Which element of a contract constitutes a definite and unqualified proposal by one party to another?
Offer
All of these statements correctly describe an aleatory contract EXCEPT
Only one party makes any kind of legally enforceable offer
Statements made by an insured on an accident and health insurance application are considered to be
Representations
Under the Law of Agency, the principal is considered to be
The insurer
Giving up a known right on a voluntary basis is called a(n)
Waiver
What qualifies as acceptance of an insurance contract offer?
An issued policy
The payment of the first premium, the promise to pay a covered loss, and the agreement to abide by policy conditions are all examples of
Consideration
The powers directly given to a producer in an agency contract are called
Express
The unwritten authority given to a producer to carry out necessary incidental acts of the agency agreement is called
Implied authority
XYZ Insurance Company gives direct authority to its producers to sell insurance through an agency contract, but nothing is stated regarding the collection of premiums. Which authority grants the producer the right to collect premiums?
Implied authority
In what way are insurance policies said to be aleatory?
Involves the potential for the unequal exchange of value
Insurable interest involves what assumption?
One person benefits from another person's continued life
What is the insurer responsible for when a producer is acting within the scope of authority granted in the agency contract?
Responsible for acts by the producer that are authority only
An arrangement where an individual is authorized to act on behalf of another person or company is established through
The law of agency
During the application process, a statement made by an applicant that becomes part of the contract is considered to be a(n)
Warranty
Christopher is issued an insurance policy that contains an attached agreement which alters the terms of the policy. This attached agreement is called a(n)
Endorsment
An agreement is reached when an insurance contract is formed. Which of the following is NOT considered to be an element of an agreement?
Equity
