Chapter 3 Legal Concepts of Insurance of the Insurance Contract

Which of the following BEST describes a conditional insurance contract?

A contract that requires certain conditions or acts by the insured individual This means that the insurer's promise to pay benefits depends on the occurrence of an event covered by the contract.

Which of the following is an example of the insured's consideration?

A paid premium

According to life insurance contract law, insurable interest exists

at the time of application

Ambiguities in an insurance policy are always resolved in favor of the

insured

What are an applicant's statements concerning occupation, hobbies, and personal health history regarded as?

representation

In a life or health insurance contract, "consideration" would be the

statements made in the application and the premium

Legal purpose is a term used in contract law meaning

there must be legal reasons for entering into the contract

In an insurance contract, the insurer is the only party legally obligated to perform. Because of this, an insurance contract is considered

unilateral

Which type of clause describes the following statement: "We have issued the policy in consideration of the representations in your applications and payment of the first-term premium".

Consideration clause

Who is responsible for assembling the policy forms for insureds?

Insurance carriers

The authority granted to a licensed producer is provided via the

Law of Agency According to the Law of Agency, the producer/agent represents the principal/insurer and is granted actual, implied and apparent authority to act on behalf of the insurer. The Law of Agency makes the principal responsible for these acts of the agent.

Intentional withholding of material facts that would affect an insurance policy's validity is called a(n)

concealment

In an insurance contract, the element that shows each party is giving something of value is called

consideration

A professional liability for which producers can be sued for mistakes of putting a policy into effect is called

errors and omissions

When the principal gives the agent authority in writing, it's referred to as

express authority