Legal Concepts of the Insurance Contract

Which of the following statements describes an insurable interest? * The policyowner must expect to benefit from the insured's death. * The policyowner must expect to suffer a loss when the insured dies or becomes disabled. (The policyowner must face the possibility of losing money or something of value in the event of the death or disability of the insured.) * The beneficiary, by definition, has an insurable interest in the insured. * The insured must have a personal or business relationship with the beneficiary.

The policyowner must expect to suffer a loss when the insured dies or becomes disabled. (The policyowner must face the possibility of losing money or something of value in the event of the death or disability of the insured.)

All of the following are considered to be typical characteristics describing the nature of an insurance contract EXCEPT * Bilateral * Unilateral * Aleatory * Adhesion

Bilateral

An agent is an individual that represents whom? * Insurer * Insured * Broker * Himself/Herself

Insurer (An agent is an individual who is authorized by an insurer to sell goods and services on its behalf. An agent is also the insurer's representative in dealing with the public.)

Which characteristic of an insurance contract means there is a potential for unequal exchange of value for both parties? * Aleatory * Adhesion * Unilateral * Conditional

Aleatory ( Insurance contracts are aleatory. Aleatory contracts are conditioned upon the occurrence of an event. The benefits provided by an insurance policy may or may not exceed the premiums paid.)

If the agency contract gives the producer the authority to solicit insurance but states nothing about the collection of premiums, the producer normally has authority to collect premiums based on * Implied authority * Express authority * Apparent authority * Licensee authority

Implied authority