Legal Concepts of the Insurance Contract

Question 1

The authority granted to a licensed producer is provided via the

Answer 1

Law of Agency

Question 2

Insurable interests does NOT occur in which of the following relationships?
A) sister and brother
B) parent and children
C) business partners
D) business owner and business client

Answer 2

D) business owner and business client

Question 3

Who is responsible for assembling the policy forms for insureds?

Answer 3

insurance carriers

Question 4

According to life insurance contract law, insurable interest exists

Answer 4

at the time of application

Question 5

All of the following are elements of an insurance policy EXCEPT
A) definitions
B) other insurance
C) claim forms
D) conditions

Answer 5

C) claim forms

Question 6

____ is NOT an element of a valid contract
A) legal
B) consideration
C) competent parties
D) countersignature

Answer 6

D) countersignature

Question 7

When the principal gives the agent authority in writing, it is referred to as

Answer 7

express authority

Question 8

In an insurance contract, the element that shows each party is giving something of value is called

Answer 8

consideration

Question 9

According to the principal of Utmost Good Faith, the insured will answer questions on the application to the best of their knowledge and pay the required premium, while the insurer will deal fairly with the insured and its

Answer 9

promises made

Question 10

The deeds and actions of a producer indicate what kind of authority?

Answer 10

apparent

Question 11

Legal purpose is a term used in contract law meaning

Answer 11

there must be legal reasons for entering into the contract

Question 12

Ambiguities in an insurance policy are always resolved in favor of the

Answer 12

insured

Question 13

Which type of clause describes the following statement: “we have issued the policy in consideration of the representations in your applications and payment of the first-term premium”

Answer 13

consideration clause

Question 14

The power given to an individual producer that is not specifically addressed in his/her contract is considered what type of authority?

Answer 14

implied

Question 15

Which of the following BEST describes a conditional insurance contract?
A) a contract that requires a certain conditions or acts by the insured individual
B) a contract that has the potential for the unequal exchange of consideration for both parties
C) a contract where one party “adheres” to the terms of the contract
D) a contract where only one party makes any kind of enforceable contract

Answer 15

A) a contract that requires a certain conditions or acts by the insured individual