Law and the insurance contract

Question 1

In order for a contract to be valid it must contain four elements:

Answer 1

Offer and acceptance
Consideration
Legal purpose
Competent parties

Question 2

This is when the applicant submits the application and submits the premium. When it is approve this is called the

Answer 2

Offer and Acceptance

Question 3

This Is the value given (premium) in exchange for insurance coverage (death benefit)

Answer 3

Consideration.

Question 4

The contract entered into must be legal

Answer 4

Legal purpose

Question 5

Both parties (the insurer and the applicant) must be what at the time of the application. The applicant is considered what with three exceptions:
1. Minors
2. Mentally challenged
3. Those under the influence of drugs or alcohol

Answer 5

Competent parties

Question 6

this contract is an agreement that both parties of the contract (insurer and insured) must perform certain actions upon the occurrence of an event or loss.

Answer 6

Aleatory

Question 7

They can’t decide later that they meant something else; the policy will be interpreted in the way that is most favorable to insured. The insured is favored because they had less bargaining power than the carrier when the contract was written.

Answer 7

Adhesion

Question 8

Condition when an applicant withholds important information from the agent or insurer. An insurer may void a contract if important information has been concealed.

Answer 8

Concealment

Question 9

Contracts are what on the insured doing something. For example, making payments on time to ensure continuation of the contract, or providing proof of death or disability

Answer 9

Conditional

Question 10

A person that will suffer a financial loss has this. Life & Health must exist at the time of issuing the policy and must be between the applicant (the future policyholder) and the insured. When the applicant is not the named insured, consent of the person to be insured is required before the policy is issued.

Answer 10

Insurable interest

Question 11

Statements made by the applicant which he/she believes to be true

Answer 11

Representations

Question 12

In this contract, only one party makes a promise to perform (insurer). In insurance contracts, the carrier is the only one making a promise to pay claims.

Answer 12

Unilateral

Question 13

Condition in which there has been no attempt by either party to conceal, disguise, or deceive

Answer 13

Utmost Good Faith

Question 14

This type of contract pays a specified amount regardless of the actual loss. and This type of contract pays an amount equal to the loss.

Answer 14

Valued or Indemnity