Legal Concepts Flashcards
Which of the following consists of an offer, acceptance and consideration?
Contract
Insurance polices are offered on a “take it or leave it” basis, which make them:
Contracts of Adhesion
If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of?
Insured
A life insurance policy would be considered a wagering contract WITHOUT:
Insurable interest
A policy of adhesion can only be modified by whom?
The insurance company
What is the consideration given by an insurer in the Consideration clause of a life policy?
Promise to pay a death benefit to a named beneficiary
Which of these is NOT a type of agent authority?
Express
Implied
PRINCIPAL
Apparent
The three types of agent authority includes express, implied and apparent authority
Which of these require an offer, acceptance, and consideration?
Contract
Q purchases a $500,000 life insurance policy and pays $900 in premiums over the first six months. Q dies suddenly and the beneficiary is paid $500,000. This exchange of unequal value reflects which of the following insurance contract features?
Aleatory
At what point does an informal contract become binding?
When one party makes an offer and the other party accepts that offer
Which of these arrangements allows one to bypass insurable interest laws?
Investor-Originated Life Insurance
Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements?
Legal Purpose (Insurable Interest)
A STOLI arrangement is used to circumvent state insurable interest statutes
A policy of adhesion can only be modified by whom?
The insurance company
Which of these is NOT considered to be an element of an insurance contract?
The offer
Acceptance
NEGOTIATING
Consideration
Negotiating is not an element
In regards to representation or warranties, which of these statements is TRUE?
If material to the risk, false representation will void a pllicy
E and F are business partners. Each takes out a $500,000 life insurance policy on the other, naming himself as primary beneficiary. E and F eventually terminate their business and 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 exists. Where will the proceeds from E’s life insurance policy be directed to?
F
Insurable interest only needs to exist at the time of application.
Life and health insurance policies are:
Unilateral contracts
What is a warranty?
Is a statement guaranteed to be true
When must insurable interest be present in order for a life insurance policy to be valid?
When the application is made
When must insurable interest exist for a life insurance contract to be valid?
Inception of the contract
All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT:
BILATERAL
Unilateral
Aleatory
Adhesion
Unilateral, Aleatory, and Adhesion are all special features of insurance contracts.
The part of a life insurance policy guaranteed to be true is called:
Warranty
Which of these is considered a statement that is assured to be true in every respect?
Estoppel
WARRANTY
Guarantee
Representation
Insurance contracts are known as _____ because certain future conditions or acts must occur before any claims can be paid.
Conditional
