Legal Concepts-3

Question 1

Life insurance

Answer 1

The insurance company agrees to pay a predetermined amount in exchange for the insureds premium

Question 2

Face amount

Answer 2

Predetermined amount that the insurance company agrees to pay

Question 3

Health insurance

Answer 3

The insurance company agrees to pay a percentage of the insureds medical bills in exchange for premiums

Question 4

4 Elements of the contract

Answer 4

Consideration
Legal purpose
Offer and acceptance
Competent parties

Question 5

Consideration

Answer 5

Something of value that each interested party gives to each other

Question 6

Legal purpose

Answer 6

And insurance contract must be legal and not in opposition of public policy

Question 7

Offer and acceptance

Answer 7

Offer is made when they submit an application and initial premium when is it accepted by the insurer it then becomes a policy

Question 8

Competent parties

Answer 8

They must be of legal age, mentally capable of understanding the terms, and not influenced by drugs or alcohol

Question 9

Contract of adhesion

Answer 9

Been prepared by an insurance company with no negotiation

Question 10

Aleatory contract

Answer 10

There is an unequal exchange:

• Consideration may be unequal
• The outcome depends on chance or uncertain event

Question 11

Unilateral contract

Answer 11

One sided agreement where only the insurer is legally bound

Question 12

Personal contract

Answer 12

Between the insurance company and insured person

Not transferable unless permission by company

Question 13

Conditional contract

Answer 13

Certain conditions must be met by all parties in the contract

Question 14

Valued vs. indemnity

Answer 14

Life insurance contracts are valued: they will pay a stated amount
Health insurance contracts are indemnity contracts and will only reimburse all medical costs

Question 15

Utmost good faith

Answer 15

Implies that there will be no attempt by either party to misrepresent conceal or commit fraud as it pertains to insurance policies

Question 16

Warranties

Answer 16

Statements made by the applicant guaranteed to be true regarding
Name
DOB
If lied about revoked contract

Question 17

Representations

Answer 17

Statements made by the applicant believed to be true
Height
Weight
Don’t matter

Question 18

Concealment

Answer 18

Withholding of info or facts by the applicant

Question 19

Insurable interest

Answer 19

Requires that an individual cares about their life or well being of the insured

Question 20

Reasonable expectations

Answer 20

A concept which states that the insured is entitled to coverage under a policy that a reasonable person would expect it to provide

Question 21

Stranger originated life insurance

Answer 21

A consumer purchases a life insurance policy with the agreement that a third party will purchase it for them and receive the proceeds when the consumer dies

Question 22

Authorized agent

Answer 22

A person who acts for another person or entity and has the power to bind the principal to contracts

Question 23

Types of agent authority

Answer 23

Express
Implied
Apparent

Question 24

Express authority

Answer 24

The explicit authority granted to the agent by the insurer as written in the agency contract

Question 25

Implied authority

Answer 25

Unwritten authority of a producer to perform incidental acts necessary to fulfill the purpose of the agency agreement

Question 26

Apparent authority

Answer 26

Deals with the relationship between the insurer, the agent, and the customer

Question 27

Fiduciary responsibility

Answer 27

When the agent handles money of the insured and the insurer

Question 28

Fraud

Answer 28

Intentional misrepresentation or concealment if material fact made by one party in order to cheat another party out of something of economic value

Question 29

Waiver

Answer 29

Voluntarily giving up of a known right

Question 30

Estoppel

Answer 30

Legal process of preventing one party from reclaiming a right that was waived

Question 31

parol evidence rule

Answer 31

Prevents parties in a contract from changing the meaning of a written contract

Question 32

Subrogation

Answer 32

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

Question 33

Void contract

Answer 33

Is an agreement that does not have legal effect and therefore is not a contract

Question 34

Voidable contract

Answer 34

is a Valid, binding contract which can be voided at the request of a party; can be rejected

Question 35

Cancellation

Answer 35

The voluntary act of terminating an insurance contract

Question 36

Endorsement

Answer 36

Written form attached to an insurance policy that alters the policies coverage, terms, or conditions

Question 37

Brokers

Answer 37

May represent a number of insurance companies under separate contractual agreements

Question 38

Professional liability insurance

Answer 38

Which Producers can be sued for mistakes of putting a policy into effect