Chapter 3 Summary Legalitys

Question 1

There are ____ parties to an insurance contract: The _____ and the _______

Answer 1

two, the insured and the insurer

Question 2

parties The following four essential ________ must be contained in every contract for it to be legally valid and binding (enforceable):

Answer 2

elements, Offer and Acceptance, Consideration, Legal Purpose, Competent Parties

Question 3

When an offer is answered by a counter-offer, the first offer is _____

Answer 3

Void

Question 4

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.

Answer 4

Void, Voidable

Question 5

_____ means the contract is made null and void

Answer 5

Rescission

Question 6

Insruance contracts are ________. This means there is an element of chance and potential for unequal exchange of value or consideration for both parties.

Answer 6

aleatory

Question 7

An insurance contract is either a ____contract or an ______contract.

Answer 7

Value contract, indemnity contract.

Question 8

pays a stated sum regardless of the actual loss incurred.

Answer 8

Valued Contract

Question 9

A ____ contract is one that pays an amount equal to the loss.

Answer 9

Indemnity

Question 10

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

Answer 10

A policy

Question 11

______ ________ are required to make a full, fair, and honest disclosure of the risk to the agent and insurer.

Answer 11

Insurance Applicants

Question 12

______ ______ can be difined as the kind of financial interest a person must have in order to posses legally enforeable insurance coverage.

Answer 12

Insurable interest

Question 13

Insurance is acontract of _____ ______ ____-

Answer 13

Utmost Good faith

Question 14

A _____ _______ or endorsement is alegal attachment amending a policy.

Answer 14

Policy rider

Question 15

For a contract to be ____ And _____ It must contain 4 Elements _______ ______ ________ _______

Answer 15

Valid and Binding, Offere and acceptance, consideration, legal purpose, and competent parties.

Question 16

The applicant gives ______ in exchange for the insure’s promise to paay benefits

Answer 16

consideration

Question 17

For a contract to be enforceable, the contract must have a _____ _____

Answer 17

Legal Purpose

Question 18

Each state has its own laws governing the legality of minors and the mentally infrim entering into contracts of insurance.

Question 19

Insurance Contracts are ____

Answer 19

aleatory

Question 20

______ means there is apotential for unequal exchange of value or consideration for both parties

Answer 20

Aleatory

Question 21

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.

Answer 21

Adhesion

Question 22

Any ambiguities or confusing language in a contract of adhesion involve legal interpretations affecting contracts.

Question 23

The insurer is considered ______ if it has been licensed or authorized by the statein which it conducts business.

Answer 23

Competent

Question 24

Most insurance is considered to be a personal contract or personal agreement between the insurer and the insured.

Question 25

Insurance contracts are _____ this means that only one party (the insurer) makes any kind of enforceable promise.

Answer 25

Unilateral

Question 26

An insurance contract is ______ because the insure’s promise to pay benefits depend on the occurrence of an event covered by the contract.

Answer 26

Conditional

Question 27

As it relates to insurance, a ____ is a statement made by the applicant that is guaranteed to be true in every aspect

Answer 27

warranty

Question 28

A ______ is a statement made by the applicant that they consider to be true and accurate to the best of the applicant’s belief

Answer 28

Representation

Question 29

defined as the failure or neglect by the applicant to disclose a known material fact when applying for insurance

Answer 29

Concealment

Question 30

An ___ is a person who acts for another person or entity known as the ______ with regard to contractual arrangements with third parties.

Answer 30

Agent, Principle

Question 31

The authority a principal deliberately gives to its agent.

Answer 31

Express Authority

Question 32

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.

Answer 32

Implied Authority

Question 33

The appearance or assumption of authority based on the actions, words, or deeds of the principle.

Answer 33

Apparant authority

Question 34

A _____ is the voluntary giving up of a legal, given right.

Answer 34

Waiver

Question 35

The concept of ___ ____ is to privide full compensation for proved harm

Answer 35

tort law

Question 36

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.

Answer 36

Solicitor

Question 37

The failure to act in a reasonable or prudent manner.

Answer 37

Simple Negligence

Question 38

Involves a reckless disregard for the need to act in a reasonable manner regardless of the potential for harm

Answer 38

Gross Negligence

Question 39

Considered even more severe.

Answer 39

Willful and Wanton Negligence

Question 40

Transactions are life insurance arrangements where investors persuade individuals (typically seniors) to take out new life insurance.

Answer 40

Stranger-Originated Life Insurance (STOLI) transactions are life insurance arragements where investors persuade individuals (typically Seniors) to take out new life insurance