Legal Concept

Question 1

General law of contracts, it is enforceable by law. Life insurance, the insurer binds itself to pay a certain amount of money when the person dies. But for a contract to be legally valid it must contain what?

Answer 1

Offer and acceptance, consideration, legal purpose, and competent parties

Question 2

Offer and acceptance means what?

Answer 2

It must be made with a definite, unqualified offer by one party and the acceptance of its exact terms by the other. In most cases it’s the applicant that purposes the offer.

Question 3

Consideration means what?

Answer 3

The value given in exchange for the promises sought. It’s given by the applicant in exchange for the insurers promise to pay benefits… also contains schedule and amount of premium payments

Question 4

Legal purpose is what?

Answer 4

The object of the contract and the reason the parties enter into agreement must be legal.

Question 5

Competent parties is?

Answer 5

The applicant unless proven otherwise is presumed to be competent with three exceptions, Minors, the mentally retarded, those under the influence of drugs or alcy

Question 6

Aleatory is what?

Answer 6

There is a chance and potential for unequal exchange of value or consideration for both parties. It’s conditioned upon the occurrence of an event… i.e. If a chick has disability insurance and she’s not disabled until later in life, she won’t get benefits until she’s actually disabled.. but will pay premiums at that point on

Question 7

What’s adhesion?

Answer 7

The contract has been prepared by one party (insurance company) with no negotiation between the applicant and insurer. “Take it or leave it”, also any confusing language in a contract of adhesion would be in favor for the insured. Insurance company can also modify.

Question 8

What’s unilateral?

Answer 8

Only one party (insurer) makes any kind of enforceable promise. As in Aflac promises to pay benefits upon something happening to the insured such as disability or death, but insured doesn’t promise to pay premiums.

Question 9

Personal contract is?

Answer 9

It’s between insurer and insured. And the owner of the policy can give them away if they wish.

Question 10

Conditional is what?

Answer 10

The insurers promise to pay benefits depends on the occurrence of an event covered by the contract. If it doesn’t happen nothing is paid. So if the insured doesn’t pay premiums then the insurer is relived of its obligations to pay a death benefit

Question 11

Valued contract?

Answer 11

A valued contract pays a stated sum regardless of the actual loss incurred. So if it says 500,000 payable at death there is no attempt to value that person to get more.

Question 12

Indemnity contract?

Answer 12

It’s a contract that pays an amount equal to the loss. Like if an insured person has a contract for fire or flooding for 50k and suffers a 5k loss due to fire, they will only get 5k.

Question 13

Utmost good faith is?

Answer 13

Both policy owner and the insurer must know all material facts and relevant info. There can be no attempt by either side to deceive or conceal. Also insurance applicants are required to make a full and honest disclosure of the risk to the agent and insurer… related concepts are warranties, representations, and concealment. There are what the insurer might seek to avoid payment under contract

Question 14

Warranty is a way for what?

Answer 14

A statement made by the applicant that is guaranteed to be true in every respect. It becomes part of the contract. If it’s found untrue the contract can be revoked.

Question 15

Representation is a statement that what?

Answer 15

Is made by the applicant that they consider to be true and accurate to the best of the applicants belief. It’s used by the insurer to evaluate whether or not to issue a policy. They are not part of the contract. If someone lies its considered a material misrepresentation.

Question 16

Concealment is defined as what?

Answer 16

Failure by the applicant to disclose a known material fact when applying for insurance… most life insurers only have 2 years to uncover false warranties, misrepresentations, or concealments.

Question 17

Insurable interest is what

Answer 17

The person acquiring the contract must be subject to loss upon the death. An individual muse have a reasonable expectation of benefiting from the other persons continued life.

Question 18

Stranger originated life insurance (STOLI)

Answer 18

Investors persuade individuals (typically seniors) to take out new life insurance naming the investors as beneficiary.

Question 19

What is principles of agency?

Answer 19

An agent is someone who acts for another person or entity (known as the principal) with regard to contractural arrangements with third parties.

Question 20

Principles of agency law?

Answer 20

Acts of the authorized agent, are the acts of the principal. A contract completed on behalf of the principal is the contract of the principal. Everything the agent does on behalf of the principal is to the principal.

Question 21

Agent authority

Answer 21

Authority given by and insurer to a licensee to transact insurance on their behalf (aka me :) )

Question 22

Three types of agent authorities are?

Answer 22

Express, implied, and apparent

Question 23

Express authority

Answer 23

Authority a principal deliberately gives to its agent.

Question 24

Implied authority

Answer 24

Is the unwritten authority that is not expressly granted, but which the agent is assumed to have I. Order to transact the business of the principal. So not every single detail of the agents authority can be spelled out, it should just be known

Question 25

Apparent authority

Answer 25

Is the appearance or assumption of authority based on the actions, words, or deeds of the principal. It can also exists because of circumstances the principal created.

Question 26

Purpose of authority is so it can bind the company to the acts of the agents.

Answer 26

Yup

Question 27

What’s fiduciary?

Answer 27

It governs the activity of the agent, so if someone gives you a premium and you accept it sense it is considered a persons financial security it’s called fiduciary capacity

Question 28

Brokers?

Answer 28

They legally represent the insureds. They solicits and accepts applications for insurance and then places the coverage with an insurer.

Question 29

Professional liability insurance (E&O)

Answer 29

Errors and omissions, professional liability insurance.

Question 30

Waiver?

Answer 30

Is the voluntary giving up of a legal, given right. If an insurer fails to enforce (waives) a provision of a contract, it cannot later deny a claim based on a violation of that provision .

Question 31

Endorsement?

Answer 31

Written form attached to an insurance policy that alters the policy’s coverage, terms, or conditions. Called rider

Question 32

Estoppel?

Answer 32

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

Question 33

Parol evidence rule

Answer 33

Is oral or verbal evidence, or that which is given verbally In A court of law. As in if your write a contract it is presumed that all the verbal talking was put into the writing of the contract

Question 34

Reasonable expectations

Answer 34

Legal principle that reinforced the rule that ambiguities in insurance contracts should be interpreted in favor of the policyholder.

Question 35

Renewability classifications

Answer 35

Cancellable, optional, renewable, conditionally renewable, guaranteed renewable, and non cancellable.

Question 36

Reserves

Answer 36

Set aside by insurance company, and designated for the payment of future claims

Question 37

Subrogation

Answer 37

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

Question 38

Business overhead expense insurance

Answer 38

Designed to reimburse a business for business expenses and payroll In the event the business owner becomes disabled

Question 39

Disability buy out agreement, but-sell plans

Answer 39

Plan that’s sets forth terms for selling or buying a partners share of business in the event of disability and is no longer able to participate in the business

Question 40

Key person disability insurance

Answer 40

Pays monthly benefit to a business to cover expenses for additional help outside services when an essential person is disabled

Question 41

Who is group health insurance between?

Answer 41

Insurance company and employer, a master POlicy is issued to employer

Question 42

How do you determine the minimum number of employees on group health insurance?

Answer 42

It’s a state by state basis

Question 43

Shared funding arrangement

Answer 43

Allows the employer to self fund health care expenses up to a certain limit.

Question 44

Minimum premium arrangement

Answer 44

The employer to self-insure the normal and expected claims up to a given amount and the insurer funds only the excess amounts

Question 45

Retrospective premium arrangement

Answer 45

Insurer agrees to collect a provisional premium but may collect additional premium or make a premium refund at the end of the year based on the actual incurred losses

Question 46

Self-funding arrangement

Answer 46

Large employers may elect to fully self-fund or may self-fund - plan. It contract for administrative services only (aso)

Question 47

Underwriting practices

Answer 47

The insurer evaluates the group as a whole instead of each individual

Question 48

HIPAA stands for what?

Answer 48

Health Insurance Portability and Accountability Act

Question 49

What does hipaa do?

Answer 49

Provides ability to transfer and continue health insurance coverage for millions of workers and families when they change or looks their jobs.

Question 50

HIPAA privacy rule?

Answer 50

Provides federal protection for an persons health info and gives them an array of rights

Question 51

What’s HIPAA security rule?

Answer 51

Provides safeguards to assure the confidentiality, integrity, and availability of electronic health info

Question 52

HIPAA requirements?

Answer 52

20 or more employees

Question 53

HIPAA portability rules…

Answer 53

Allow individuals who change from one group med plan to another to reduce or eliminate and pre-existing conditions excluded under new plan

Question 54

Pre-exsisting conditions under HIPAA are defined as what?

Answer 54

Health issues that existed, were treated or diagnosed within 6 months prior to employment. May be excluded for up to 12 months

Question 55

Creditable coverage?

Answer 55

Previous coverage under another group or individual plan when there has not been a break In Coverage of 63 days

Question 56

Pregnancy discrimination act of 1978

Answer 56

Employers treat pregnancy the same manner as disability for any other med reason…

When med bens are offered, pregnancy must be covered the same as illness
Complications arising from abortion are covered only if the life of the women is endangered

Question 57

Group health insurance contacts providing coverage for employees in more then one state are usually controlled by the laws of the state

Answer 57

Yut

Question 58

Working people Over 65 are offered the same health bens as younger employees

Answer 58

Yup

Question 59

COBRA

Answer 59

Consolidated ominous budget reconciliation act of 1985

Question 60

What does cobra do?

Answer 60

Required employers with 20 or more employees to continue group medical expense coverage for terminated workers and families for up to 18months following termination

Question 61

The terminated employee or surviving dependents are responsible to pay the premium which may be up to 102% of the premium

Answer 61

Ight