M9 - Chapter 14 (The Insurance Contract)
All insurance companies are required to include a free look provision in their contract. How many days are given to the policyholders to cancel by written request to the insurer? A. 14days B. 28days C. 7days D. 21days
A. 14days
What is true of a warranty and a representation? A. A warranty is a statement guaranteed to be true in all aspects, a representation need not be true in all respects but need only be true as to facts material to the risk. B. A representation is a statement guaranteed to be true in all aspects, a warranty need not be true in all respects but need only be true as to facts material to the risk. C. Warranty and representation has the effect of the insurer rescinding, whether or not the misrepresentation was material to the risk D. the basis clause is made of the warranty and representation
A. A warranty is a statement guaranteed to be true in all aspects, a representation need not be true in all respects but need only be true as to facts material to the risk.
Non forfeiture options are only granted on what kind of policies? A. Endowment Insurance B. Investment Linked Life Insurance Policies C. Term Insurance D. Reduce Paid Up Insurance
A. Endowment Insurance
Who can enter a contract? A. Handicapped B. Minor C. Drunkard D. Undischarged Bankrupt
A. Handicapped
Reinstatement is the process by which an insurer puts back into force a life insurance policy that has either been: I. Converted into Extended Term insurance or reduced to Paid-up policy II. Surrendered for cash value less than 1 year ago III. Lapsed due to non-payment of renewal premiums IV. Terminated due to deception A. I and III only B. I, III and IV only C. I, II and III only D. All of the above
A. I and III only Reinstatement - Reinstatement: the process by which an insurer puts back into force a life insurance policy that has either been: a) terminated because of non-payment of renewal premiums b) continued under the extended term or reduced paid-up insurance of the non-forfeiture options - The policy owner can reinstate a policy within a certain period of time (usually 12 to 36 months) after it has lapsed, provided that the following conditions are met: (i) the policy owner has submitted a reinstatement application form within the time frame stated in the reinstatement provision; (ii) the policy owner has provided the insurer with satisfactory evidence of the life insured's continued insurability i.e. a health warranty; and (iii) the policy owner has paid up all arrears of premiums with interest.
The Reinstatement Provision stated that a policy that has been lapsed could be reinstated provided the policyholder is able to meet following conditions: I. The policy lapsed for less than one year II. Policyholder paid up all the arrears of premium without interest. III. The policyholder submitted new medical evidence on his total permanent disability. IV. Policyholder submitted application for reinstatement after the time frame stated on the policy document. A. I only B. I, II only C. I, II and III only D. All of the above
A. I only The policy owner can reinstate a policy within a certain period of time (usually 12 to 36 months) after it has lapsed, provided that the following conditions are met: (i) the policy owner has submitted a reinstatement application form within the time frame stated in the reinstatement provision; (ii) the policy owner has provided the insurer with satisfactory evidence of the life insured's continued insurability i.e. a health warranty; and (iii) the policy owner has paid up all arrears of premiums with interest.
Life Insured stated that he is 40 instead of 42 years old in the application form. What can the insurer do? A. Reduce sum assured B. Increase sum assured C. Refund Premium without interest D. Pay more premium
A. Reduce sum assured
For mis-statement of age, what can the insurer do? A. Refund premium without interest B. Rescind contract C. Not pay sum assured D. Ask policy holder to pay more premium
A. Refund premium without interest
When the insurer discovered a misstatement of age, what can the insurer do? A. Refund premium without interest B. Rescind contract C. Not pay sum assured D. Ask policyholder to pay more premium
A. Refund premium without interest
Jenny's premium for her life policy was due on 1 Jan 2010. She did not receive any premium notices from the insurer. By the time she realized and paid the premium it was already 28 Feb 2010. What is likely to happen? A. She needs to pay interest on overdue premium calculated from premium due date. B. She needs to pay interest on overdue premium calculated from end of grace period. C. She needs not pay interest; only premium due as insurer did not sent her any notification to pay. D. She needs not pay any interest as it is still within the grace period.
A. She needs to pay interest on overdue premium calculated from premium due date.
Endorsements in an insurance policy becomes part of the insurance contract and they are__________. A. amendments B. confirmations C. non-forfeiture options D. incontestable
A. amendments
If a statement is a warranty it means that A. if there is any untruth in the statement, the contract can be rescinded B. the person is given a guarantee in the contract terms C. it need not be true in all respects D. if the statement is untrue but not material, the contract is allowed to stand
A. if there is any untruth in the statement, the contract can be rescinded Warranty - a statement guaranteed to be true in all respects - In early days of insurance, statements that an insurance applicant made were considered to be warranties - If a statement were untrue, the contract could be rescinded even though applicant didn't know the statement was untrue and the statement was not material - Proposer was required to warrant the truth of statement/facts given in the proposal form - Clauses which requires him to do so is a basis clause Representation - an applicant's statement of facts on which the insurer bases its decision to issue/not to issue the policy applied for - Unlike a warranty, a representation need not be true in all respects but need only be substantially true as to facts material to the risk In singapore, life insurance policies contain a provision declaring that, in the absence of fraud, all statements in the application shall be deemed representations and not warranties
"Inaccurate statements regarding a material fact, believing them to be true and yet has no intention to deceive" is describing __________________. A. innocent misrepresentation B. negligent misrepresentation C. fraudulent misrepresentation D. concealment
A. innocent misrepresentation
In the case of life insurance, the _________ constitutes an offer. A. proposal form completed by the proposer together with the first premium payment B. presentation of the product brochures and product summary by the insurer's representative or adviser C. sales presentation by the insurer's representative or adviser D. benefit illustration signed by the proposer
A. proposal form completed by the proposer together with the first premium payment
Which of the following explains the incontestable clause? A. the insurer will not contest the policy after a specified number of years, except for fraud or non-payment of premiums B. the insurer will not contest the policy as long premiums due are paid C. the insurer will not contest the policy if there are non-disclosure of material facts within the specified period D. the policy is incontestible from the date of issue
A. the insurer will not contest the policy after a specified number of years, except for fraud or non-payment of premiums incontestability clause - insurer undertakes not to dispute the validity of a life insurance contract and void it, after the policy has been in force for a specified period of time (normally 1-2 years) with the exception of fraud. - provision stops the insurer from repudiating (rejecting the validity of) its liability under a policy purely on grounds of breach of utmost good faith.
Under the insurance act, what is the minimum age that a child must attain before he can enter into a life insurance contact without the written consent of his parent? A. 10 years old B. 16 years old C. 18 years old D. 21 years old
B. 16 years old
Endowment Insurance Policies are suitable for: A. Retirement Purposes B. Children's Education C. Long term and permanent needs D. Investment purposes
B. Children's Education
In an Annuity policy contract, the common provisions are: A. Death benefit provision, surrender provision and automatic non-forfeiture provision. B. Death benefit provision, surrender provision and free-look provision. C. Death benefit provision, surrender provision and grace period provision. D. Death benefit provision, reinstatement provision and automatic non- forfeiture provision.
B. Death benefit provision, surrender provision and free-look provision.
A contract may not be valid, if a party is under coercion to consent by using actual harm or a threat to harm. This is an example of : A. Undue influence B. Duress C. Mistake D. Non Est Factum
B. Duress Duress (threats) - if a party is under coercion to consent, the contract may not be valid as the consent given is not genuine. - the threat must not be so trivial that a person with reasonable courage will not be coerced. - The threat must be illegal.
"Amendments" is commonly found in which sections of a contract? A. Policy Schedule B. Endorsements C. Benefit Provisions D. General Provisions
B. Endorsements
What can you find in a Policy Schedule? A. Free Look Provision B. Endorsements C. Name and address of the insurer D. Grace period
B. Endorsements
Which of the following clause would benefit the insured more than the insurer? A. Principle of Utmost Good Faith B. Incontestability Clause C. Basis Clause D. Suicide Clause
B. Incontestability Clause
If there is any ambiguity in the policy contract between the insured and the insurer, contra proferentem rule will resolved in favour of the . A. Insurer B. Insured C. Beneficiary D. Proper Claimant
B. Insured
Underwriter from an insurer went ahead to issue a policy when one of the questions in the proposal form was unanswered. Insurer in this case: A. Need not pay B. Legally ned to pay C. Pro-rate payment as both parties are at fault D. Pay up to $150,000 maximum under constructive trust
B. Legally ned to pay
If a person can show that the document which he had signed was not the one he intended to sign and the mistake was NOT due to his carelessness, he may be able to avoid the contract based on____________. A. Duress B. Non Est Factum C. Void Ab Initio D. Mistake
B. Non Est Factum "non est factum" ="this is not my deed". - duress = threat - If policy is void for reasons of misrepresentation/mistake, policy is void ab initio (from the beginning)
If at the time of a claim, what will the insurance company do if they discovered that the insured had understated his age at inception time? A. Reduce the bonus payable on the policy to compensate for the loss of premium. B. Reduce the sum assured to such an amount as the premium paid would have purchased according to the rate of the true age. C. Deduct the amount of premium which the policyholder underpaid from the sum assured with interest and pay the rest to the beneficiary. D. Void the policy due to mis-statement and refund premium without interest.
B. Reduce the sum assured to such an amount as the premium paid would have purchased according to the rate of the true age. Age - if there is a understatement of age, insurer will reduce the sum assured to that which the premium paid would purchase. - if the age was overstated, the insurer will refund the excess premium paid without interest.
Upon activation of the free look provision for a Traditional Life Policy, Insurer have to: A. Refund all premiums paid without interest. B. Refund all premiums paid less medical fees incurred. C. Refund all premiums paid based on the prevailing market price of the fund. D. Refund all premiums after selling the units in the fund.
B. Refund all premiums paid less medical fees incurred.
A man bought a policy, payable monthly. After paying for 6 months, he died. How much should the insurer pay under this policy? A. The sum assured B. The sum assured less unpaid premium payable for a full policy year. C. The sum assured plus refund of premium paid for a full policy year. D. Nothing
B. The sum assured less unpaid premium payable for a full policy year.
To constitute an agreement, an offer must _________________. A. be conditionally accepted B. be unconditionally accepted C. be either conditionally or unconditionally accepted D. be conditionally accepted in the presence of a legal representative
B. be unconditionally accepted
A party made an offer to another party. This party then accepts the offer conditionally. This conditional offer is called . A. legal offer B. counter-offer C. invitation to treat D. meeting of minds
B. counter-offer
As a contract is an agreement, there must be between parties to the contract. A. valid agreement B. mutual agreement C. considerate agreement D. intentional agreement
B. mutual agreement
When the insurance company discovers an overstatement of age, the usual practice of the insurer is to A. adjust the cash value to the amount of premiums actually paid as if the age had been stated correctly B. refund the premiums paid in excess without interest C. void the policy on ground of misrepresentation D. disregard the mistake but repudiate any future claims made
B. refund the premiums paid in excess without interest understatement of age --> reduce sum assured overstatement --> refund excess premium paid without interest
Mr. Bong, your client is currently declared bankrupt, his policy taken 2 years ago would be: A. used to pay up the loan B. taken from him by the official assignee C. protected from creditors D. null and void
B. taken from him by the official assignee
When a life policy is converted into an Extended Term Insurance policy, it means that the policy cash value is used as a single premium to purchase an extended term policy while A. the sum assured and expiry date same as the original policy. B. the sum assured is same with the original policy but the period of coverage may expires earlier than the original policy due to the net cash value availability. C. the insurance period of coverage is the same as the original policy but the sum assured is reduced. D. none of the above
B. the sum assured is same with the original policy but the period of coverage may expires earlier than the original policy due to the net cash value availability. Contract Provisions in Life Insurance Policies (non-forfeiture options) - policy owner may use the cash value accumulation as a single premium to purchase a paid-up extended Term Insurance policy for a sum assured equal to that of the original policy. - the length of the term is dependent on the net cash value available (policy with a higher net cash value may purchase an extended Term Insurance coverage that can remain in force for a longer period of time.) - coverage will remain in force without him having to pay any further premium on the converted policy. - These options are useful to clients who may have financial difficulties and are not able to continue to pay the premium.
Who has the capacity to enter into a legal contract? A. A university student who is mentally disturbed. B. A college student who just turn 20 years of age C. A retiree D. A manager whose assets was vested in the Official assignee due to bankruptcy
C. A retiree Capacity to Contract - A person of legal age, without metal or other incapacity, is legally competent to enter into a contract - exclusions: 1. Minors 2. Persons suffering legal disability 3. Drunken persons 4. Undischarged bankrupts
Who does not have the capacity to enter into an insurance contract? A. A 11 years old boy who had seek his mother's consent. B. A student who just turn 16 years of age C. A supervisor who is an undischarged bankrupt. D. None of the above.
C. A supervisor who is an undischarged bankrupt. Capacity to Contract - A person of legal age, without metal or other incapacity, is legally competent to enter into a contract - Exclusions 1. Minors - Section 58(1) of the Insurance Act: "Notwithstanding any law to the contract, a person over the age of 10 years shall not, by reason only of his age, lack the capacity to enter into a contract of insurance. But a person under the age of 16 years shall not have the capacity to enter into such a contract except with the consent in writing of his parent/guardian" 2. Persons suffering legal disability 3. Drunken persons 4. Undischarged bankrupts
Commonly, when a participating life insurance policy has accumulated some cash value, should the policyholder fail to pay premium, the policy is protected by the following non-forfeiture options: I. Surrender for Cash value II. Reduced to a paid-up policy III. Convert policy into a Extended term insurance IV. Waiver of premium option A. I, II only B. III and IV C. I, II and III only D. All of the above
C. I, II and III only Non-forfeiture Options - only granted to traditional permanent insurance policies (e.g. Whole Life and Endowment Insurance) that accumulate cash values. 1. Cash Value Option - The policy owner can receive the cash value which has been accumulated under his policy, if he decides to surrender his policy after 2-3 years. - the amount which the insurer pays the policy owner is the cash value under the policy less any indebtedness (e.g. policy loan), and if applicable, administrative fee for terminating the policy. - Once the payment is made, the insurance protection terminates, and the insurer has no further obligation under the policy. 2. Reduced Paid-up Insurance Option - The policy owner can also use the cash value under the policy to purchase a single-premium paid-up policy, at the attained age (i.e. the age at the time of exercising this option), for a reduced amount of cover. - To exercise this option, the policy owner only needs to notify the insurer in writing. - the sum assured after the conversion can be small as compared to the original sum assured - paid-up policy is on a non- participating basis. 3. Extended Term Insurance Option - policy owner may use the cash value accumulation as a single premium to purchase a paid-up extended Term Insurance policy for a sum assured equal to that of the original policy. - the length of the term is dependent on the net cash value available (policy with a higher net cash value may purchase an extended Term Insurance coverage that can remain in force for a longer period of time.) - coverage will remain in force without him having to pay any further premium on the converted policy. - These options are useful to clients who may have financial difficulties and are not able to continue to pay the premium.
What constitutes acceptance in an insurance contract? A. The proposal form given by the agent to the client. B. Insured accepts the terms in the contract. C. Insurer accepts the proposal's form and issues the policy document. D. Insured fills up the proposal form with the premium.
C. Insurer accepts the proposal's form and issues the policy document.
Which of the following describes the "doctrine of waiver "? A. It is the intentional relinquishment of a known right. It must be an express and not an implied waiver B. It is the unintentional relinquishment of a known right. It must be an express and not an implied waiver. C. It is the intentional relinquishment of a known right. It can be either an express or an implied waiver D. It is the unintentional relinquishment of a known right. It can be either an express or an implied waiver
C. It is the intentional relinquishment of a known right. It can be either an express or an implied waiver
What is the earliest age a minor can give a valid discharge for policy money payable to him? A. Over the age of 10years B. Over the age of 16years C. Over the age of 18 years D. Over the age of 21 years
C. Over the age of 18 years
Policyowner remembers to pay his premium after the grace period. What will happen? A. Policyowner needs to pay the outstanding premium due, no interest is charged. B. Policyowner needs to pay the outstanding premium due, interest on overdue premium is charged, calculated from end of grace period. C. Policyowner needs to pay the outstanding premium due, interest on overdue premium is charged, calculated from premium due date. D. Policyowner's policy will lapsed, since payment is made after the grace period.
C. Policyowner needs to pay the outstanding premium due, interest on overdue premium is charged, calculated from premium due date
Your client stated that he is 30 years old instead of 35 years old in the proposal form. What will the insurer do? A. Ask client to pay more premium B. Refund excess premium paid without interest C. Reduce sum assured D. Increase sum assured
C. Reduce sum assured
What is the Incontestability provision introduced for? A. To allow the insurer to void the life insurance contract within one year when they discover that there was a unintentional concealment. B. To disallow the insurer to void the life policy when a fraud is discovered after the incontestability period. C. To provide greater assurance to the public that relatively innocent mis- statements made by them would not be pursued by the insurer after the incontestability period. D. To provide assurance to the public that if they had innocently misstated their material fact, the insurer would not dispute the claim if it happens within one year.
C. To provide greater assurance to the public that relatively innocent mis- statements made by them would not be pursued by the insurer after the incontestability period. Incontestability Clause - insurer undertakes not to dispute the validity of a life insurance contract and void it, after the policy has been in force for a specified period of time (normally 1-2 years) with the exception of fraud. - provision stops the insurer from repudiating (rejecting the validity of) its liability under a policy purely on grounds of breach of utmost good faith.
The wife bought a policy on the husband's life. Subsequently the wife went bankrupt, what will happen to the policy? A. Goes back to the husband B. Vested with the Public Trustee C. Vested with Official Assignee D. Goes to pay the creditors
C. Vested with Official Assignee
The intentional relinquishment of a known right is a: A. Incontestability clause C. Waiver C. Discharged of bankruptcy D. Estoppels
C. Waiver Waiver - Intentional and voluntary relinquishment (giving up/forgoing) of a known right - Can be based on a written/oral statement that specifically relinquishes a right (express waiver) or it can be implied by misleading conduct (implied waiver) - E.g. insurer may choose to issue a life policy, even though one of the medical questions in proposal form may not have been answered (Insurer will be deemed to have waived its right to obtain the answers) Estoppel - Arises when an insurance professional intentionally/unintentionally creates the impression that a certain fact exists when it does not and an innocent third party relies on that impression and suffers damage as a result - The insurer will be stopped (prevented) from denying this fact - E.g. if a claims officer indicates by his actions that a claim will be paid, insurer will be estopped from denying the liability
If the insured committed suicide within the specified time of one year as stated in the Suicide Clause from the date of reinstatement, the insurer A. Will not pay the sum assured but will refund interests earned B. Will pay the sum assured only if the insured is insane at the time of suicide. C. Will refund the total premium received without interest D. Will pay the sum assured regardless of whether the insured is sane or insane.
C. Will refund the total premium received without interest Contract Provisions in Life Insurance Policies (General Provisions - Suicide) - if the life insured commits suicide within a specified period of time (usually 1 year) from the issue date of the policy or the date of reinstatement of the policy, the policy will be void, and the insurer is not liable to pay any claim. - The insurer may refund all the premiums paid from the effective date or date of reinstatement. - The insurer usually does not pay any interest on the premium refunded, because the interest earned is used to offset part of the costs that the insurer incurred in issuing the policy. - However, once the specified period expires, the insurer will have to pay the claim, even if the life insured has died as a result of suicide. - provision applies regardless of whether the life insured was sane or insane at the time that he committed suicide.
For a contract to be valid, there must be A. a cooling-off period of 14 days for the respective parties B. a good offer C. a consideration D. an executrix appointed
C. a consideration Elements of a Valid Insurance Contract (a) offer and acceptance; (b) consideration; (c) capacity to contract; (d) insurable interest; and (e) parties of the same mind (consensus ad idem).
In the case of life insurance, when the insurer accepts the proposer's proposal form and issues the policy document, constitutes a/an_______. A. offer B. counter-offer C. acceptance D. consideration
C. acceptance
In a life insurance contract, the premium paid is the consideration for the promise_________. A. by the policy-owner to forgo all rights under a policy of insurance. B. to the life agent for representing the insurer. C. contained in the policy. D. to pay a sum assured.
C. contained in the policy.
Which of the following statements are TRUE? i. all agreements are contracts ii. life insurance is a contract is a legally binding agreement between insurer and policy owner iii. insurance agreement is set forth in a policy and its endorsements iv. consideration must be valued in monetary terms A. i and ii only B. i and iii only C. ii and iii only D. i and iv only
C. ii and iii only
if there is any ambiguity in the contract, the contra proferentum rule dictates that A. the contract is void ab initio B. it will be in favour of the party who prepared the contract C. it will be against the party who prepared it D. both parties will have to honor it
C. it will be against the party who prepared it Ambiguous Questions - Any doubts will be resolved in the insured's favour, as the insurer was the one who was responsible for preparing the proposal form. - contra proferentum rule: where there is ambiguity in the terms of an insurance contract, the contra proferentem rule dictates that the term is to be construed against the party who prepared the contract.
At common law, in order for a contract to be invalidated, it must be shown that the misrepresentation: A. was a statement about a promise in the future B. was immaterial C. made by a party to the contract D. was false statement, but the other party did not rely on it to enter the contract
C. made by a party to the contract At common law, in order for a contract to be invalidated, it must be shown that the misrepresentation or false statement a) was a statement of fact as opposed to a statement of opinion, law or belief. b) was made by a party to the contract. c) was material, d) induced the other party to enter into the contract. e) caused some detriment or disadvantage to the party who relied on it.
Which statement is NOT TRUE of the Reduced Paid-Up Insurance Option? A. the cash value is used as a single premium to buy a reduced amount of the original sum assured B. the paid-up policy is non-participating C. the premium for the paid-up policy is reduced D. the premium for the paid-up policy is based on the attained age at conversion
C. the premium for the paid-up policy is reduced non-forfeiture options 1. cash value option - policy owner can receive the cash value which has been accumulated under his policy, if he decides to surrender his policy after 2-3 years. - amount which the insurer pays the policy owner is the cash value under the policy less any indebtedness (e.g. policy loan), and if applicable, administrative fee for terminating the policy. - Once the payment is made, the insurance protection terminates, and the insurer has no further obligation under the policy. 2. reduced paid-up option - policy owner can also use the cash value under the policy to purchase a single-premium paid-up policy, at the attained age (i.e. the age at the time of exercising this option), for a reduced amount of cover. - policy owner only needs to notify the insurer in writing. - sum assured after the conversion can be small as compared to the original sum assured - paid-up policy is on a non- participating basis.
Which one of the following statements is not true? A. A person of 'legal age' 18 has the capacity to enter into a contract. B. The interest of a policy owned by a bankrupt will be vested in the Official Assignee. C. A person of aged 17 can buy a policy in his own name, but cannot give valid discharge of policy money paid to him. D. A person over the age of 10 years and 16 years can buy a life policy without the consent of his parent or guardian.
D. A person over the age of 10 years and 16 years can buy a life policy without the consent of his parent or guardian.
At what age can a person purchased a policy without the written consent of his parent or guardian? A. Below 16 years of age B. Below 18 years of age C. Above 18 years of age D. Above 16 years of age
D. Above 16 years of age
At what earliest age can a person purchased a policy without the written consent of his parent or guardian? A. Below 16 years of age B. Below 18 years of age C. Above 18 years of age D. Above 16 years of age
D. Above 16 years of age
Under the contract provisions in life insurance policies, which of the following documents make up the entire contract? A. Proposal Form B. Policy Contract C. Endorsements attached to the policy D. All of the above
D. All of the above
Which of the following is NOT legally competent to enter a contract? A. A minor of age 10 B. An undischarged bankrupt C. A lunatic D. All of the above
D. All of the above
The rule, that states where there is ambiguity in terms of an insurance contract, it will be construed against the party who prepare the contract. This rule or principle is: A. Principle of Utmost GoodFaith B. Principle of Estoppel C. Basis Clause Rule D. Contra Proferentem Rule
D. Contra Proferentem Rule
A claims officer advises a policyholder that under certain situations, his claims will be paid. Insurer has to honour payment in this situation. This is an example of ________________. A. Doctrine of Ratification B. Doctrine of Incontestability C. Doctrine of Waiver D. Doctrine of Estoppel
D. Doctrine of Estoppel
Which of the following describes omission to disclose a material fact inadvertently or because the party thought it was not material? A. Concealment B. Negligent Misrepresentation C. FraudulentMisrepresentation D. Innocent Non-Disclosure
D. Innocent Non-Disclosure
What are the elements of a valid contract? A. Intention to create legal relationship, offer and acceptance B. Intention to create legal relationship and offer of consideration, and the capacity to contract C. Intention to create legal relationship, capacity to contract, offer and acceptance D. Intention to create legal relationship, capacity to contract, consideration, offer and acceptance
D. Intention to create legal relationship, capacity to contract, consideration, offer and acceptance Elements of a Valid Insurance Contract (a) offer and acceptance; (b) consideration; (c) capacity to contract; (d) insurable interest; and (e) parties of the same mind (consensus ad idem).
Which is true of the Doctrine of Waiver? A. It is a non intentional relinquishment of a known right. B. It can be based on an express waiver. C. It can be based on an implied waiver. D. It can be both express and implied waiver
D. It can be both express and implied waiver
What is a contract? A. It is an agreement between 2 or more parties B. It is an agreement not enforceable by law C. It is an agreement between 2 friends to dine D. It is an agreement that give rise to rights which the law will protect and obligations which the law will enforce.
D. It is an agreement that give rise to rights which the law will protect and obligations which the law will enforce.
Which of the following illustrates the Reduced Paid-up Option? A. Mr Lee has a policy with a cash value of $1000 which he is unable to continue paying. He informed the insurance company to converts his policy to term insurance for the same sum assured as his original policy. B. Mr Ang is temporary unable to pay for his policy which has a cash value of $2000. He surrenders the policy bonuses to pay up the outstanding premium of the policy. C. Mr Lim, who is facing financial difficulties, decides to cash out the policy cash value in one lump sum to pay up his policy loan of another policy. D. Mr Tan is unable to continue paying for his Endowment policy which has accumulated $2000 in cash value. He wrote to insurance company to use the cash value to purchase a single premium non- participating policy with a lesser face value but covering for the same period as the original policy.
D. Mr Tan is unable to continue paying for his Endowment policy which has accumulated $2000 in cash value. He wrote to insurance company to use the cash value to purchase a single premium non- participating policy with a lesser face value but covering for the same period as the original policy. Reduced Paid-up insurance Option - The policy owner can also use the cash value under the policy to purchase a single-premium paid-up policy, at the attained age (i.e. the age at the time of exercising this option), for a reduced amount of cover. - To exercise this option, the policy owner only needs to notify the insurer in writing. - the sum assured after the conversion can be small as compared to the original sum assured - paid-up policy is on a non- participating basis. - Some insurers also show the paid-up value for each anniversary year in a table form in the policy contract.
Which of the following describes omission to disclose a material fact inadvertently or because the party thought it was not material ? A. Concealment B. Negligent Misrepresentation C. Fraudulent Misrepresentation D. Non Disclosure
D. Non Disclosure - Innocent Non-Disclosure Omission: to disclose a material fact inadvertently (unintentionally) or because the party thought it was not material - Fraudulent Non-Disclosure/Concealment: Intentional suppression of a material fact - Innocent misrepresentation: Inaccurate statements regarding a material fact, believing them to be true or are made without any intention to mislead - Negligent misrepresentation: Statements made carelessly/recklessly where the insured has no reasonable basis to believe it to be true and yet has no intention to deceive - Fraudulent misrepresentation: Statements made with the intention to deceive and known by the person making them to be false
A man bought a policy several years ago. When he committed suicide, he was insane. Insurer should: A. Pay nothing B. Refund premium with interest C. Refund premium without interest D. Pay sum assured
D. Pay sum assured
Underwriter from an insurer approves a policy, subsequently the client went to enquire from the claims officer regarding some claims issues, the claims officer indicates by his actions that such claims will be paid. Insurer will be prevented from denying liability. This is an example of: A. Uberrima Fides B. Principle of Utmost Good Faith C. Principle of Waiver D. Principle of Estoppel
D. Principle of Estoppel Estoppel - Arises when an insurance professional intentionally/unintentionally creates the impression that a certain fact exists when it does not and an innocent third party relies on that impression and suffers damage as a result - The insurer will be stopped (prevented) from denying this fact - E.g. if a claims officer indicates by his actions that a claim will be paid, insurer will be estopped from denying the liability Utmost Good Faith - Uberrima Fides
After being retrenched, Mrs Lim is temporarily unable to pay further premium for her 10 year old endowment policy, what advice would you give her? A. To convert her policy into an Extended term policy B. To convert her policy into a Reduced Paid-up policy C. To surrender her policy for cash value D. To request for automatic premium loan.
D. To request for automatic premium loan. Automatic Premium Loan (APL) provision - insurer will advance the cash value under the policy as a loan to pay the outstanding premium, thus keeping the policy in force. - if the policy has a cash value equal to or greater than the premium in default, any premium unpaid beyond its grace period will be paid by the APL. - once the cash value under the policy is insufficient to pay for the full outstanding premium, the policy will lapse.
The incontestability clause in an insurance contract stipulates that life insurer cannot dispute the validity of the contract A. once the policy is in force B. after the policy has been in force for a certain minimum number of years C. after a period of one year from the date of issue of the policy D. after a certain period from the date of issue or reinstatement of the policy, with the exception of fraud
D. after a certain period from the date of issue or reinstatement of the policy, with the exception of fraud incontestability clause insurer undertakes not to dispute the validity of a life insurance contract and void it, after the policy has been in force for a specified period of time (normally 1-2 years) with the exception of fraud.
What is the main difference between free look provision of an ILP and a Traditional Life Policy ? A. The free look period differs B. Only Traditional Life Policy offers free look provision C. Premium refunded less medical fees applies to traditional life policy only D. amount refunded under ILP policy depends on the prevailing market price of the underlying assets of the fund
D. amount refunded under ILP policy depends on the prevailing market price of the underlying assets of the fund
Which of the following is NOT found under the Policy Schedule A. types of riders B. sum assured of basic plan C. premium of the riders D. cash value of the policy
D. cash value of the policy Policy Schedule - policy number; - commencement date of the policy (date at which the policy becomes effective); - expiry / maturity date of the policy; - issue date (date at which the policy is issued); - currency in which the policy is being issued; - name, age, gender and NRIC number of the policy owner and life insured; - name of basic plan; - types of riders (if any); - sum assured of basic plan and riders; - term of coverage for basic plan and riders; - premium for the basic plan and riders; and - special provisions / endorsements indicating the types of endorsements attached to the policy (not common for all insurers).
If the non-disclosure on the part of one party led the other party to enter into a contract, ___ is said to have taken place A. innocent misrepresentation B. estoppel C. waiver D. inducement
D. inducement Prudent Insurer - The test of "prudent insurer" entails that the opinion of the insured is irrelevant - Even if insured believes that he had acted in good faith, he may still fail to discharge the duty of disclosure - The Courts looks at the prudent insurer from an objective standpoint, but the opinion of the insurer concerned is relevant as evidence, even though it may not necessarily be decisive Inducement - There must be a causal link between the misrepresentation or non-disclosure and the decision to enter into a contract - A case law established that the insured for misrepresentation or non-disclosure must show not only that the circumstance was material to the risk (prudent insurer's test) but also that the misrepresentation or non-disclosure in question induced him to enter into a contract of insurance Waiver - Intentional and voluntary relinquishment (giving up/forgoing) of a known right - Can be based on a written/oral statement that specifically relinquishes a right (express waiver) or it can be implied by misleading conduct (implied waiver) Estoppel - Arises when an insurance professional intentionally/unintentionally creates the impression that a certain fact exists when it does not and an innocent third party relies on that impression and suffers damage as a result - The insurer will be stopped (prevented) from denying this fact
The display of goods and the putting up of a tender are examples of A. offers B. considerations C. consensus ad item D. invitations to treat
D. invitations to treat