Legal Concepts
An agreement is reached when an insurance contract is formed. Which of the following is not considered to be an element of agreement?
Equity
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 to produce to the right to collect premiums?
Implied authority
And insurance contract may be voided if a misrepresentation found on the application is determined to be
Material
Greg applies for insurance and makes a false statement on the applications that will influence whether or not the insurer will accept the risk. Greg's false statement is called a(n)
Material misrepresentation
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
Which of the following would not have a restricted ability to enter into a contract?
Small employer
Under the law of agency, the principal is considered to be
The insurer
When a producer acts within the scope of his/her contractual authority, which of the following is legally responsible for these actions?
The insurer
Which element of a contract constitutes a definite and unqualified proposal by one party to another?
to offer
Giving up a known right on a voluntary basis is called a(n)
waiver
The following are all elements of a valid contract except
written evidence
What is the insurer responsible for one of her daughter is acting within the scope of authority granted in the agency contract?
Responsible for acts by the producer that are authority only
During the application process, a statement made by an applicant that becomes part of the contract is considered to be a(n)
Warranty
A contract is considered void in all of the following situation EXCEPT
When consideration is unequal
Voluntarily terminating an insurance policy is also known as
cancellation
Which situation would not require the insureds 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
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
Ambiguities in insurance contracts are typically interpreted in favor of the insured. This rule is referred to as
Reasonable expectations
Which of the following relationships demonstrates insurable interest in the absence of economic interest?
marriage partners
An agent whose actions exceed the authority granted by contract is
not backed by the insurer
An insurance company's failure to enforce a contract's provision is called a(n)
Waiver
Which of these is true regarding the exchange of consideration online parties involved in an insurance contract?
Can be unequal
The insurers obligation to pay a claim depends on whether the insured or beneficiary has complied with all policy conditions. This makes the policy a(n)
Conditional contract
An insurance application requires an application to make a full, accurate disclosure of the risk factor involved. Using this criteria, and insurance policy is considered what type of contract?
Contract of utmost good faith
Christopher is issued an insurance policy that contains an attached agreement which alters the term of the policy? This attached agreement is called a(n)
Endorsement
The powers directly given to a producer and an agent contract are called
Express
And appointed producer's implied authority is derived from
Express authority
When must insurable interest exist for a life insurance contract to be valid?
Inception of the contract
What happens when an initial offer is answered with a counter offer?
Initial offer is void
In what way are insurance policies said to be aleatory?
Involves the potential for the unequal exchange of value
An arrangement where an individual is authorized to act on behalf of another person or company is established through
Law of Agency
Which of these do not indicate the presence of insurable interest in life insurance contract?
Lifelong friendship
And insured is entitled to coverage under a policy that a prudent person would expect it to provide. This principle is called
Reasonable expectations
Statements made by an insured on an accidental and health insurance application are considered to be
Representations
And insurance company can be liable for a producers unauthorized ask
When the agency contract is unclear concerning the authority given
A producer working for an insurance company may be personally liable for
acts performed which are prohibited in the agency contract
Use of XYZ Insurance Company brochures, business cards, and rating guides is an example of
apparent authority
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
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
The unwritten authority given to a producer to carry out necessary incidental acts of the agency agreement is called
implied authority