G2

If a court were to decide your insurance policy was written in an ambiguous or unclear fashion the special characteristic of an insurance policy that will prompt the court to rule in factor is: A) Adhesion B) Unilateral C) Negligence D) Aleatory

A) Adhesion

What is the written instrument called in which the insurance contract is set forth? A) The provisions B) The warrantees C) The policy D) The risk

C) The policy The policy is the written agreement which puts insurance coverage into effect.

"Consideration," as it applies to a life insurance contract, is defined as: A) $50.00 minimum b) The"face value" on any contract anniversary date C) What the insurance company gives your application during the underwriting process D) The premium payment

D) The premium payment "Consideration" includes premium, information and the promises made by the insurer.

According to the CA Insurance Code, an insured's policy must specify all of the following, except: A) the risks insured against b) the financial rating of the insurer c) the property of life being insured d) the policy period

b) the financial rating of the insurer Although important, the financial rating of the insurer is not found in the policy.

Which of the following is required to be included in the writing of an insurance contract? A) The parties between whom the contract is made b) The risks insured against c) The period in which the insurance is to continue d) all of the above

d) all of the above Contract law spells out all pertinent information, including all of the items listed.

There are four core components that are required in all contracts, including insurance policies. Three are Agreement, Consideration, and Valid Legal Purpose. Would Competent Parties be the fourth? T/F

TRUE These are the four core components that are required in all contracts.

The doctrine of "utmost good faith" applies to the business of transacting insurance. Which of the following is an example of its application? A) Each party is entitled to rely upon the representations of the other party. b) Answers to applications questions are provided to the best of one's knowledge. c) Each party to a contract must give valuable consideration. d) Any unclear or ambiguous statement in a contract of insurance is decided in favor of the insured.

A) Each party is entitled to rely upon the representations of the other party. The key phrase is "rely upon the other" and this part of the definition of utmost good faith.

Certain principles apply to the business of insurance. One of them is the concept of insurance issued as an "aleatory" contract. What does aleatory mean here? A) The contract must be adhered to if put in writing and signed by applicant. B) Actions only have to be performed by one of the parties of a contract. C) Performance depends on an uncertain future event. d) Oral contracts have no basis in a court of law.

C) Performance depends on an uncertain future event. <--definition

According to the Code, insurance contracts made with a minor child have the same degree of validity as those made with a mentally incompetent adult. T/F

True In order for a contract to be valid, the parties must be mentally competent and of legal age.

Which of the following is true regarding an aleatory contract? a) it can be perceived as gambling. b) The insured could pay nothing. c) If there were a loss, the insurer would pay out considerably more compared to the insured's premium. d) the insured and insurer pay equal amounts.

c) If there were a loss, the insurer would pay out considerably more -->Aleatory contracts, such as insurance contracts, are based upon an unequal exchange (e.g. small premium vs. large death benefit) between the parties. Furthermore, performance under the contract (e.g. payment of a policy's death benefit) is based on a contingent or uncertain future event (e.g. death of insured).

Which of the following is not characteristic of life insurance? a) an incompetent adult may not enter into a contract. b) it creates an immediate estate. c) It does not have to be paid for at once. d) It may be based strictly on an oral agreement.

d) It may be based strictly on an oral agreement. *Life insurance policies are written contracts only.