Life insurance contracts Flashcards

1
Q

What gives you peace of mind in life insurance

A

The contract

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2
Q

Why are so many life insurance claims paid?

A

Because of the liberal interpretation of life insurance

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3
Q

What is the legally binding agreement in a life insurance contract

A

For the insurer to compensate the beneficiary

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4
Q

When is the last time you speak to your life insurer

A

Inception

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5
Q

Aleatory relationship

A

Based on the probability that something may or may not happen

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6
Q

What parts of a contract must be in place for it to be legally binding? (5)

A
  • Agreement
  • Consideration
  • ICLR
  • Formality
  • Capacity
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7
Q

When is agreement formed?

A

When the offer (proposal form) is accepted by the insurer

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8
Q

Consideration in a life insurance contract

A

Exchange money premium for promise of cover

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9
Q

Can court rule if consideration is adequate or not

A

No, consideration need not be adequate

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10
Q

Discuss ICLR in a lif insurance contract

A

Since it is a commercial contract ICLR is assumed and is assumed to be legally bound unless the intention is rebutted.

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11
Q

What are the requirements for consideration

A

Must be legal, cant be from the past and need not be adquet

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12
Q

What form must a life insurance contract take?

A

Written

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13
Q

Who does not have capacity to enter a life insurance contract

A
  • Person under 18 unless they need life insurance (married)
  • Convicts in prison or on parole
  • Drunk people
  • People of unsound mind
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14
Q

What is used to underweight clients?

A

Proposal form

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15
Q

How long can it take to get a quote back and why?

A

Up to 2 months because of how much checking they need to do

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16
Q

What must be in a life insurance contract?

A
  • Who is insured
  • What risks are covered
  • What is insured (life =, illness..)
  • Period or term
  • Consideration (premium)
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17
Q

Fraudulent misrepresentation

A

Intentional or lazy

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18
Q

Innocent misrepresentation

A

Left that blank by a mistake

19
Q

“I didn’t know I had to do that” is what type of misrepresentation?

A

Fraudulent

20
Q

Caveat emptor in life insurance

A

Doesn’t exist because you are not around to defend your self

21
Q

Do material facts include statements of opinion

A

no

22
Q

When does a misrepresentation result in a non-pay out?

A

When it is material

23
Q

When does your duty to disclose end?

A

Inception

24
Q

What are remedies for breach of a contract?

A

Rescind, Reformation, sue for damages

25
Q

Rescinding a contract

A

The contract is void from the start, only in very severe cases

26
Q

Reformation of a contract

A

If there was a mistake apply the contract retrospectively

27
Q

What could an insured sue for in a breach of contract?

A

Pain and suffering for the delay in indemnity

28
Q

What could an insurer sue for in a breach of contract?

A

Cost or damages that come from investigating fraud

29
Q

Entire contract clause

A

The agreement is the policy plus the application form

30
Q

Why does the entire contract clause exist

A

Protect insured and gives them peace of mind

31
Q

Ownership clause

A

The owner of the policy can sell it, cash in it and transfer the policy

32
Q

Beneficiary clause

A

Allows the holder to name somebody else as the primary or secondary beneficiary

33
Q

What is a secondary beneficiary and why might you have this

A

Second beneficiary is usually your kids in case you and your partner die

34
Q

Irrevocable beneficiary

A

Cant change beneficiary without their permission

35
Q

Revokable beneficiary

A

a BENEFICIARY YOU CAN CHANGE

36
Q

incontestable clause

A

The insurer cant revoke the policy after a certain amount of time unless the policy lapses or there was a fraudulent misrepresentation

37
Q

Misrepresentation of age clause

A

Incontestable clause of age does not apply because it is the main underwriting criteria in life insurance and it is usually known.

38
Q

Gracing period

A

If you stop paying premiums and the policy lapses, you repay premiums and with proof of health you can have the contract reinstated

39
Q

Suicide clause

A

Payout as long as it has been over 1 year from inception and policy was not taken out in contemplation of suicide

40
Q

What do life insurers do in terminal illness cases

A

If you have over one year on policy they will payout, if it is less then they race you to the end

41
Q

Disability waiver of premiums

A

If you suffer a specified disability that puts you out of work and you cant pay premiums you will still have cover

42
Q

Accidental death benefits

A

Double payments if you die accidentally

43
Q

Why would accidental death benefits be a good provision for a young person

A

Good for young people as they are more likely to die this way and would have children with a longer dependency period.