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