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Florida Life & Health Insurance Exam > Legal Concepts of the Insurance Contract > Flashcards

Legal Concepts of the Insurance Contract Flashcards

1
Q

a feature of insurance contracts where there is an element of chance for both parties and that the dollar given by both parties, the policyholder’s premiums and the insurer benefits, may not be equal.

A

aleatory

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2
Q

the appearance of authority based on the agent-insurer relationship

a situation in which the insurer gives the customer reasonable belief that an agent has the power and authority to bind the principal

A

apparent authority

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3
Q

a person who is capable of understanding the contract being agreed to

must be of legal age, capable of comprehending the terms, and not under the influence

A

competent party

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4
Q

a concept stating that in order for the contract to be enforceable, certain conditions must be met by all parties in the contract

A

conditional contract

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5
Q

the failure of the insured to disclose to the company a fact material to the acceptance of the risk at the time application is made

A

concealment

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6
Q

something of value that each interested party gives to each other, such as premium payment or a promise to pay the benefit

A

consideration

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7
Q

an insurance contract that’s been prepared by an insurance company with no negotiation

A

adhesion contract

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8
Q

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

A

express authority

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9
Q

a legal obligation stating that a person in a position of trust (an agent or producer) must act in his client’s best interest, particularly with premiums collected and other assets

A

fiduciary responsibility

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10
Q

indemnity contracts that will only reimburse the actual cost of the loss related to sickness or accidental bodily injury

A

health insurance contracts

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11
Q

authority not specifically granted to the agent in the contract of agency, but which common sense dictates the agent has

A

implied authority

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12
Q

the person acquiring the contract must be subject to loss upon the death, illness, or disability of the person being insured

A

insurable interest

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13
Q

the legal relationship between two people where one person (the client) gives the other person (the agent) the authority to act on their behalf

A

law of agency

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14
Q

the requirement that an insurance contract must be legal and not in opposition of public policy

A

legal purpose

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15
Q

a product-specific insurance contract that is valued (aka will pay a stated amount)

A

life insurance contract

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16
Q

an offer that may be made by the applicant by signing the application and paying the first premium

may also require submitting to a physical exam

A

offer and acceptance

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17
Q

a written contract between two parties in which one party (the agent) promises to indemnify (aka compensate) another against loss that arises from an unknown event

A

policy

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18
Q

a legal attachment amending a policy; it can add or reduce benefits

A

policy rider

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19
Q

a statement made by the applicant on their applications for insurance that they represent as being substantially true to the best o ftheir knowledge and belief, but that are not warranted as exact in every detail

A

representation

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20
Q

a life insurance arrangement where an investor persurades a consumer to take out a new life insurance policy with the investor named as the beneficiary
* investors loan money to the insured to pay the premiums for a defined period
* investor receives death benefit when the insured dies
* insured receives additional financial benefits

A

Stranger-Originated Life Insurance (STOLI)

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21
Q

a one-sided agreement where only the insurer is legally bound

A

unilateral contract

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22
Q

a concept stating there will be no attempt by either party to misrepresent, conceal, or commit fraud as it pertains to insurance policies

A

utmost good faith

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23
Q

a contract between one or more parties that could become voidd on a variety of legal grounds

A

voidable contract

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24
Q

an agreement without legal effect: an invalid contract

A

void contract

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25
a statement made on an application for insurance that is guaranteed to be true and exact in every detail ## Footnote rare for insurance applications; usually indicates fraud
warranty
26
an agreement waivering the company's liability for a certain type or types of risk ordinarily covered in the policy ## Footnote a voluntary giving of a legal, given right
waiver
27
the transfer of policy ownership from the original policyowner to someone else
assignment
28
an agreement where the insurer's promise to pay benefits depends on the occurrence of an event covered by the contract
conditional contract
29
an agreement that pays a stated sum regardless of the actual loss incurred
valued contract
30
an agreement that pays an equal amount to the loss, and attemps to return the insured back to their original financial position ##Footnote an agreement that attempts to make the insured whole again
indemnity contract
31
an entity that solicits and accepts applications for insurance and then places the coverage with an insurer
broker
32
a rule stating that when parties put their agreement in writing, all previous verbal statements are incorporated into that contract ## Footnote a written contract cannot be changed by oral evidence after being finalized
parol evidence rule
33
a legal principle stating that an insured is entitled to coverage under a policy that a **sensible and prudent** person would **expect** it to provide
reasonable expectations
34
aleatory
a feature of insurance contracts where there is **an element of chance for both parties** and that **the dollar given by both parties**, the policyholder’s premiums and the insurer benefits, **may not be equal.**
35
apparent authority
the appearance of authority based on the agent-insurer relationship a situation in which the insurer gives the customer reasonable belief that an agent has the power and authority to bind the principal
36
competent party
a person who is capable of understanding the contract being agreed to ##Footnote must be of legal age, capable of comprehending the terms, and not under the influence
37
conditional contract
a concept stating that in order for the contract to be enforceable, certain conditions must be met by all parties in the contract
38
concealment
the failure of the insured to disclose to the company a fact material to the acceptance of the risk at the time application is made
39
consideration
something of value that each interested party gives to each other, such as premium payment or a promise to pay the benefit
40
adhesion contract
an insurance contract that’s been prepared by an insurance company with no negotiation ##Footnote “take it or leave it” contract
41
express authority
the explicit authority granted to the agent by the insurer as written in the agency contract
42
fiduciary responsibility
a legal obligation stating that a person in a position of trust (an agent or producer) must act in his client's best interest, particularly with premiums collected and other assets
43
health insurance contracts
indemnity contracts that will only reimburse the actual cost of the loss related to sickness or accidental bodily injury
44
implied authority
authority not specifically granted to the agent in the contract of agency, but which common sense dictates the agent has
45
insurable interest
the person acquiring the contract must be **subject to loss** upon the death, illness, or disability of the person being insured
46
law of agency
the legal relationship between two people where one person (the client) gives the other person (the agent) the authority to act on their behalf
47
legal purpose
the requirement that an insurance contract must be legal and not in opposition of public policy
48
life insurance contract
an insurance contract that is valued (aka will pay a stated amount)
49
offer and acceptance
an offer that may be made by the applicant by signing the application and paying the first premium ## Footnote may also require submitting to a physical exam
50
policy
a written contract between two parties in which one party (the agent) promises to indemnify (aka compensate) another against loss that arises from an unknown event
51
policy rider
a legal attachment amending a policy; it can add or reduce benefits
52
representation
a statement made by the applicant on their applications for insurance that they represent as being substantially true to the best o ftheir knowledge and belief, but that are not warranted as exact in every detail
53
Stranger-Originated Life Insurance (STOLI)
a life insurance arrangement where an investor persurades a consumer to take out a new life insurance policy with the investor named as the beneficiary * investors loan money to the insured to pay the premiums for a defined period * investor receives death benefit when the insured dies * insured receives additional financial benefits
54
unilateral contract
a one-sided agreement where only the insurer is legally bound
55
utmost good faith
a concept stating there will be no attempt by either party to misrepresent, conceal, or commit fraud as it pertains to insurance policies
56
voidable contract
a contract between one or more parties that could become voidd on a variety of legal grounds
57
void contract
an agreement without legal effect: an invalid contract
58
warranty
a statement made on an application for insurance that is guaranteed to be true and exact in every detail ## Footnote rare for insurance applications; usually indicates fraud
59
waiver
an agreement waivering the company's liability for type(s) of risk ordinarily covered in the policy
60
assignment
the transfer of policy ownership from the original policyowner to someone else
61
conditional contract
an agreement where the insurer's promise to pay benefits depends on the occurrence of an event covered by the contract
62
valued contract
an agreement that pays a stated sum regardless of the actual loss incurred
63
indemnity contract
an agreement that pays an equal amount to the loss, and attemps to return the insured back to their original financial position
64
broker
an entity that solicits and accepts applications for insurance and then places the coverage with an insurer
65
parol evidence rule
a rule stating that when parties put their agreement in writing, all previous verbal statements are incorporated into that contract ## Footnote a written contract cannot be changed by oral evidence after being finalized

Florida Life & Health Insurance Exam (6 decks)

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