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Georgia Insurance License > Legal Concepts > Flashcards

Legal Concepts Flashcards

1
Q 
A  life Insurance arrangement which circumvents insurable interest status is called?
A. Contract of adhesion
B. Indemnity contract
C. Key person insurance
D. Investor-Originated  life insurance
A

Investor-Originated Life Insurance

This is done with an investor persuades an individual to take out life insurance specifically for the purpose of selling the policy to the investor. The investor compensates the insured and makes the premiums, then collect the death benefit when the insured dies.

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2
Q 
Insurance contracts are known as \_\_\_\_ because certain future conditions or acts must occur  before any claims can be paid. 
A. Consideration
B. Unilateral
C. Aleatory 
D. Conditional
A

Conditional

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3
Q 
What type of contract will only reimburse the actual cost of the loss?
A. Life Insurance 
B. Indemnity 
C. Personal
D. Valued
A

Indemnity

The principle of indemnity is to restore the insured to the same financial condition as that which existed prior to the loss

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4
Q 
An insurance contract, the insurer is the only party who makes a legally enforceable promise? 
A. Estoppel 
B. Aleatory 
C. Adhension
D. Unilateral
A

Unilateral

Insurer only party that makes any kind of enforceable promise

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5
Q 
If a contract of adhesion contains complicated language, to whom with the interpretation be in favor of?
A. Insurer
B. Beneficiary
C. Reinsurer
D. Insured
A

Insured

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6
Q

What is a warranty?
A. Guarantees that an insurance company will pay benefit
B. Is a statement believe to be true to the best of ones knowledge
C. Cannot be void contract
D. Is this statement guaranteed to be true

A

Is a statement guaranteed to be true

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7
Q

At what point does an informal contract become binding?
A. When one party makes an imitation and the other makes an offer
B. When an offer is made by one party and the other party rejects the offer & makes a counteroffer
C. When one party makes an offer in the other party except the offer
D. When one party makes require payment

A

When one party makes an offer and the other party accept that offer

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8
Q 
A life insurance policy would be considered a wavering contract without? 
A. Insurable interest
B. Premium payment
C. Agent solicitation
D. Constructive delivery
A

Insurable interest

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9
Q

When must insurable interest exist for a life insurance contract to be valid?
A. Inception of the contract
B. Throughout the entire length of the contract
C. When the insured dies
D. During the contestable period

A

Inception of the contract

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10
Q 
E & F are  business Partners. Each takes out a $500,000 life insurance policy on the other naming himself as primary beneficiary. E & F terminate their business, four months later E dies. Although E was married with three children at the time of death, the primary beneficiary is still F. However an insurable interest no longer exist. Where will the proceeds from ease life insurance policy be directed to?
A. F
B. Dissolved partnership
C. E’s family 
D. E’s estate
A

F

In this situation, the proceeds will go to F because insurable interest only needs to exist at the time of application

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11
Q 
Which of these is Not A type of agent authority?
A. Express
B. Implied
C. Principal
D. Apparent
A

Principal

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12
Q

Types of agent authority:

  1. EXPRESS- by insurer to solicit applications & collect premiums
  2. IMPLIED - implied that you were authorized to set appointments
  3. APPARENT - relationship with agent-insurer, & customer. Insurer gives customer reasonable belief agent has power & authority to bind the principal. relationship with customer.
A

3 types of agent authority?

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13
Q 
Which of these arrangements allows one to bypass insurable interest laws?
A. Concealment
B. Indemnity  contract
C. Contract of adhesion
D. Investor- originated life insurance
A

Investor-originated life insurance

Sometimes called a stranger-originated insurance to circumvent state insurable interest. Investor persuade an individual to take out life insurance especially for the purpose of selling the policy to the investor. The investor compensates the insured and makes the premiums and then collect the death benefit when insured dies.

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14
Q 
When must  insurable interest be present in order for a life insurance policy to be valid?
A. When insured dies
B. Within incontestability period
C. When the application is made
D. Before the insured dies
A

When the application is made.

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15
Q

Insurance policies are considered Aleatory contract because:
A. They are “take it or leave it “contracts
B. Both parties consent to the contract
C. Performance is condition upon a future occurrence
D. The contract is voidable upon proof of fraud

A

Performance is conditioned upon future occurrence

This means there’s an element of chance & potential for Unequal exchange of value for both parties.

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16
Q 
Q purchases a $500 life insurance policy and pays $900 in premiums over for six months. Q suddenly dies and the beneficiary is paid $500,000. This exchange of an equal values reflects filing insurance contract feature?
A. Aleatory 
B. Adhension
C. Unilateral
D. Consideration
A

Aleatory

Are unequal amounts paid

17
Q 
Where of these is Not considered to be an element of an insurance contract? 
A. The offer
B. Acceptance
C. Negotiating
D. Consideration
A

Negotiating

18
Q

What is the consideration given by an Insurer in the consideration clause of a life policy?
A. Promise to never cancel coverage
B. Promise to pay the death benefit to a named beneficiary
C. Promise to not raise premiums
D. Promise to accept an insured assignment of benefits

A

Promise to pay the death benefit to a named beneficiary

19
Q 
Insurance policies are offered on a  “take it or leave it” basis, which make them:
A. Conditional contract
B. Aleatory contract 
C. Unilateral contract
D. Contracts of adhesion
A

Contracts of adhesion

20
Q 
Part of the life insurance policy guaranteed to be true is called?
A. Representation
B. Exclusion
C. Warranty
D. Waiver
A

Warranty

Considered to be literally true

21
Q

The consideration clause of a insurance contract includes:
A. The buyers guide
B. A summary of the coverage provided
C. The named beneficiaries
D. Schedule & amount of premium payments

A

The schedule and amount of premium payments

Georgia Insurance License (10 decks)

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