Chapter 3 Summary Legalitys Flashcards
There are ____ parties to an insurance contract: The _____ and the _______
two, the insured and the insurer
parties The following four essential ________ must be contained in every contract for it to be legally valid and binding (enforceable):
elements, Offer and Acceptance, Consideration, Legal Purpose, Competent Parties
When an offer is answered by a counter-offer, the first offer is _____
Void
A _______ contract is simply an agreement without legal effect. A ______ contract is an agreement that, for reason satisfactory to the court, may be set aside by one of the parties to the contract.
Void, Voidable
_____ means the contract is made null and void
Rescission
Insruance contracts are ________. This means there is an element of chance and potential for unequal exchange of value or consideration for both parties.
aleatory
An insurance contract is either a ____contract or an ______contract.
Value contract, indemnity contract.
pays a stated sum regardless of the actual loss incurred.
Valued Contract
A ____ contract is one that pays an amount equal to the loss.
Indemnity
is a written contract in which one party promises to indemnify another against loss that arises from an unknown event.
A policy
______ ________ are required to make a full, fair, and honest disclosure of the risk to the agent and insurer.
Insurance Applicants
______ ______ can be difined as the kind of financial interest a person must have in order to posses legally enforeable insurance coverage.
Insurable interest
Insurance is acontract of _____ ______ ____-
Utmost Good faith
A _____ _______ or endorsement is alegal attachment amending a policy.
Policy rider
For a contract to be ____ And _____ It must contain 4 Elements _______ ______ ________ _______
Valid and Binding, Offere and acceptance, consideration, legal purpose, and competent parties.
The applicant gives ______ in exchange for the insure’s promise to paay benefits
consideration
For a contract to be enforceable, the contract must have a _____ _____
Legal Purpose
Each state has its own laws governing the legality of minors and the mentally infrim entering into contracts of insurance.
Insurance Contracts are ____
aleatory
______ means there is apotential for unequal exchange of value or consideration for both parties
Aleatory
Inruance contracs are contracts of _______because the ocntract has been prepared by one party (the insurance company) with no negotiation between the applicant and the insurer.
Adhesion
Any ambiguities or confusing language in a contract of adhesion involve legal interpretations affecting contracts.
The insurer is considered ______ if it has been licensed or authorized by the statein which it conducts business.
Competent
Most insurance is considered to be a personal contract or personal agreement between the insurer and the insured.
Insurance contracts are _____ this means that only one party (the insurer) makes any kind of enforceable promise.
Unilateral
An insurance contract is ______ because the insure’s promise to pay benefits depend on the occurrence of an event covered by the contract.
Conditional
As it relates to insurance, a ____ is a statement made by the applicant that is guaranteed to be true in every aspect
warranty
A ______ is a statement made by the applicant that they consider to be true and accurate to the best of the applicant’s belief
Representation
defined as the failure or neglect by the applicant to disclose a known material fact when applying for insurance
Concealment
An ___ is a person who acts for another person or entity known as the ______ with regard to contractual arrangements with third parties.
Agent, Principle
The authority a principal deliberately gives to its agent.
Express Authority
The unwritten authority that is not expressly granted, but which the agent is assumed to have in order to transact the business of the principal.
Implied Authority
The appearance or assumption of authority based on the actions, words, or deeds of the principle.
Apparant authority
A _____ is the voluntary giving up of a legal, given right.
Waiver
The concept of ___ ____ is to privide full compensation for proved harm
tort law
A ______ has the authority to seek insurance applicants for a company but does not have any authroity to bind coverage on behalf of a company to a customer.
Solicitor
The failure to act in a reasonable or prudent manner.
Simple Negligence
Involves a reckless disregard for the need to act in a reasonable manner regardless of the potential for harm
Gross Negligence
Considered even more severe.
Willful and Wanton Negligence
Transactions are life insurance arrangements where investors persuade individuals (typically seniors) to take out new life insurance.
Stranger-Originated Life Insurance (STOLI) transactions are life insurance arragements where investors persuade individuals (typically Seniors) to take out new life insurance
