Tuesday Class

Question 1

Consideration

Answer 1

Value given in the exchange for the promise to pay the benefit

Question 2

Insurable Interest

Answer 2

a financial interest in the life of another person. MUST EXIT AT TIME OF APPLICATION

Question 3

Adhesion Contract:

Answer 3

a contract offered on a “take it or leave it” basis by an insurer

Question 4

Aleatory contract

Answer 4

contract in which both participating parties exchange unequal amounts

Question 5

Conditional Contract

Answer 5

agreement in which both parties must perform certain duties and follow rules of conduct to make the contract enforceable

Question 6

Unilateral Contract

Answer 6

contract which legally binds only one party to contractual obligations after the premium is paid

Question 7

Buy Sell (Agreement)

Answer 7

contract establishing what will be done with a business in the event that an owner or partner dies

Question 8

Indemnify

Answer 8

Restore the insured the same condition as prior to loss with no intent of loss or gain

Question 9

Utmost Good Faith

Answer 9

both parties must want the contract to work

Question 10

Representations

Answer 10

statements believed to be true to the applicant’s best knowledge

Question 11

misrepresentation

Answer 11

a lie

Question 12

concealment

Answer 12

hiding the truth, failure to disclose material facts

Question 13

warranties

Answer 13

absolute truth

Question 14

fraud

Answer 14

a lie for financial gain

Question 15

underwriting

Answer 15

the process

Question 16

proof of insurability

Answer 16

evidence of a persons physical or mental health, used in assessing whether to accept the persons risk

Question 17

how premium is decided

Answer 17

Coverage
Health
Aage

Question 18

Human life Value approach

Answer 18

probable future earnings of the insured using Wages, Inflation, Time value of $$, Years to retirement

Question 19

Needs of Approach

Answer 19

the predicted needs of the family using DIME
Debt, Income, Mortgage, Expenses

Question 20

Parts of the application

Answer 20

1. General Information
2. Medical
3. Agents Report

Question 21

Risk Classifications

Answer 21

• Preferred
• Standard
• Substandard

Question 22

Preferred

Answer 22

healthier than the standard risk, usually issues policies at a discounted rate

Question 23

Standard

Answer 23

a normal or average risk, no special conditions are required in the policy

Question 24

Substandard

Answer 24

a higher risk, requires special conditions included in the policy or policy issued with higher premiums