Insurance 3
An agent whose actions exceed the authority granted by contract is
not backed by the insurer
Under the Law of Agency, the principal is considered to be
the insurer
An arrangement where an individual is authorized to act on behalf of another person or company is established through
the law of agency
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
What qualifies as acceptance of an insurance contract offer?
An issued policy
Use of XYZ Insurance Company brochures, business cards, and rating guides is an example of
Apparent authority
Which of these is true regarding the exchange of consideration among parties involved in an insurance contract?
Can be unequal
The insurer's obligation to pay a claim depends on whether the insured of beneficiary has complied with all policy conditions. This makes the policy a(n)
Conditional contract
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
Which of the following situations would an insurance agent need to guard against liability for professional errors and omissions?
Making a recommendation to a potential insured to replace existing coverage
Which of the following relationships demonstrates insurable interest in the absence of economic interest?
Marriage partners
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
An insured is entitled to coverage under a policy that a prudent person would expect it to provide. This principle is called
Reasonable expectations
Which of the following would NOT have a restricted ability to enter into a contract?
Small employer
A contract is considered void in all of the following situations EXCEPT
When consideration is unequal
Voluntarily terminating an insurance policy is also known as
cancellation
The payment of the first premium, the promise to pay a covered loss, and the agreement to abide by policy conditions are all examples of
consideration
An appointed producer's implied authority is derived from
express authority
The unwritten authority given to a producer to carry out necessary incidental acts of the agency agreement is called
implied authority
During the application process, a statement made by an applicant that becomes part of the contract is considered to be a(n)
warranty
