Quiz 3

What happens when an initial offer is answered with a counteroffer?

Initial offer is void

In what way are insurance policies said to be aleatory?

Involves the potential for the unequal exchange of value

Contract of utmost good faith

Offer

An insurance company's failure to enforce a contract's provision is called a(n)

waiver

What qualifies as acceptance of an insurance contract offer?

An issued policy

Which of these do NOT indicate the presence of insurable interest in a life insurance contract?

Lifelong friendship

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

The courts will normally interpret a policy in favor of the insured when the meaning of the policy is not clear. This is because an insurance policy is a(n)

contract of adhesion

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

An insurance application requires an applicant to make a full, accurate disclosure of the risk factor involved. Using this criteria, an insurance policy is considered what type of contract?

Contract of utmost good faith

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

When must insurable interest exist for a life insurance contract to be valid?

Inception of the contract

The unwritten authority given to a producer to carry out necessary incidental acts of the agency agreement is called

implied authority

An insurance contract may be voided if a misrepresentation found on the application is determined to be

material

Which of the following would NOT have a restricted ability to enter into a contract?

Small employer

Which of these is true regarding the exchange of consideration among parties involved in an insurance contract?

Can be unequal

Insurable interest involves what assumption?

One person benefits from another person's continued life

All of these statements correctly describe an aleatory contract EXCEPT

Only one party makes any kind of legally enforceable offer

Voluntarily terminating an insurance policy is also known as

cancellation

The powers directly given to a producer in an agency contract are called

express

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

An insurance company can be liable for a producer's unauthorized acts

when the agency contract is unclear concerning the authority given

The following are all elements of a valid contract EXCEPT

written evidence