Chapter 3

Question 1

Describes a contract that has been prepared by one party ( the insurance company) with no negotiation between the applicant and insurer. The applicant adheres to the terms of the contrac on a “take it or leave it” basis when accepted

Answer 1

Adhesion

Question 2

Represents themselves and the insurer at the time of application.

Answer 2

Agent

Question 3

Contract presents the potential for an enequal exchange of value or consideration between both parties. Contracts are conditioned upon the occurance of an event.

Answer 3

Aleatory

Question 4

Is the appearance of the insurer providing the agent authority to perform unspecified tasks based on the agent-insurer relationship

Answer 4

Apparent Authority

Question 5

Represents themselves and the insured (i.e., the client or customer) at the time of the application.

Answer 5

Broker

Question 6

Is one who is capable of understanding the contract being agreed to. All parties must be of legal competence, meaning they must be of legal age, mentally capable of understanding the terms and not influenced by drugs or alcohol

Answer 6

Competent party

Question 7

is the failure of the applicant to dislcose a known material fact when applying for insurance.

Answer 7

Concealment

Question 8

Policy describes the insurer’s promise to pay benefits depends on the occurrence of an event covered by the contract

Answer 8

Conditional

Question 9

is the part of an insurance contract setting forth the amount of initial and renewal pemiums and frequency of future payments.

Answer 9

Consideraton

Question 10

Provide the insurer with a completed application and initial premium as consdieration for insurance.

Answer 10

Applicants

Question 11

is the legal impediment to one party denying the consequences of its own actions or deeds if such actions or deeds result in another party acting in a specific manner or if certain conclusions are drawn.

Answer 11

Estoppel

Question 12

is the explicit authority granted to the agent by the insurer, as wirtten in the agency contract

Answer 12

Express Authority

Question 13

The responsibility an insurance producer has to account for all premiums collected and provide sound financial advice to clients. Is in a position of turst with regrds to the funds of their clients and the insurer.

Answer 13

Fiduciary

Question 14

Includes the deliberate knowledge of the intentional deceit to make false statements to be compensated by an insurnce company.

Answer 14

Fraud

Question 15

is an authority not explicitly granted to the agent in the contract of agency, but which common sense dictates the agent has. it enables the agent to carry out routine responsibilities.

Answer 15

Implied Authority

Question 16

Attempt to return the insured to their original financial position

Answer 16

Indemnity contract

Question 17

is the financial, economic, and emotional impact associated with a person experiencing a specified loss. A person has an insurable interest in a loss if they have more to gain by not suffering the loss.

Answer 17

insurable interest

Question 18

is a written contract in which one party promises to indemnify another against loss that arises from an unknown event

Answer 18

Insurance Policy

Question 19

means an insurance contract must be legal in nature and not in opposition to public policy

Answer 19

Legal purpose

Question 20

is a false statement made by an applicant that would influence an insurer in determining whether or not to accept the risk

Answer 20

Material misrepresentation

Question 21

involves parties put their agreement in writing, all previous verbal statements come together in that writing, and a written contract cannot be changed or modified by parol (oral) evidence.

Answer 21

Parole Evidence rule

Question 22

is an amendment added to an insurance contract that overrides terms in the original policy; endorsements may add or remove coverages, change deductibles, or revise any other policy feature.

Answer 22

Policy rider or endorsement

Question 23

means the insured is entitled to coverage under a policy that an sensible and prudent person would expect it to provide

Answer 23

Reasonable expectations

Question 24

are statements made by the applicant that they consider to be true and accurate to be the best of the applicant’s belief

Answer 24

Representations

Question 25

Is the right for an insurer to pursue a third party that caused an insurance loss to the insured

Answer 25

Subrogation

Question 26

contract mean only one party, the insurer, makes any kind of enforceable promise.

Answer 26

Unilateral

Question 27

involves the belief that both the policyowner and the insurer must know all material facts and relevant informaiton, and as such, they will provide each other with all material facts and relevant information

Answer 27

Utmost Good Faith

Question 28

pays a stated sum regardless of the actual loss incurred. Life insurance contracts are valued contracts

Answer 28

Valued contract

Question 29

is an agreement that, for a reason satisfactory to the court, may be set aside by one of the parties in the contract.

Answer 29

Voidable Contract

Question 30

is the voluntary giving up of a legal, given right

Answer 30

Waiver

Question 31

Is a statement made by the applicant that is guaranteed to be true in every respect. It becomes part of the contract and, if found to be untrue, can be grounds for revoking the contract

Answer 31

Warranty