Unit 1: Introduction to Life Insurance Flashcards
insurance:
means for spreading the result of financial loss among many persons so the cost to any one person is small
assessment:
system of paying losses by requiring contribution from each family covered by the plan
life insurance:
means of spreading among many persons the financial loss resulting from an individual’s death so that the cost for each individual is small
life insurance procedures must be designed to
pay those persons named to collect the insurance proceeds after the death of the person whose life is insured
contract:
legal agreement between two or more parties promising a certain performance in exchange for a valuable consideration
a contract may be written or oral, but life insurance contracts are virtually always
written
unilateral contract:
one sided as regards performance
insurance contracts my exhibit certain characteristics
-competent parties
-legal purpose
-offer and acceptance
-consideration
competent parties
to be valid contract must be between people who are considered competent under the law
legal purpose:
contracts are enforceable only if they are made in pursuit of some legal purpose
offer and acceptance:
contracts involve two parties; one party who makes an offer and another who accepts
in an insurance transaction…
the person desiring the insurance makes the offer and the insurance company accepts by issuing the insurance policy
consideration:
thing of value exchanged for the performance promised in the contract
waiver:
voluntary giving up of a known right or privilege
express waiver:
waivers that are intentionally written and included with an insurance policy in the form of a rider or endorsement that is added to the policy
implied waiver:
agent or insurer has permitted something to occur or to be overlooked, either intentionally or inadvertently
estoppel:
person is prohibited by virtue of his own past action from claiming a right that would work to the detriment of another who relied on the past conduct
most insurance contracts are ___ in nature
personal
aleatory:
equal value is not given by both parties to the contract
contracts of adhesion:
one sided as regard preparation
contract of utmost good faith
the parties have an affirmative duty to each other to disclose all material facts relating to the contract; that is, not just a duty not to lie but also a duty to speak up. Failure to do this usually gives the other party grounds to void the contract.
executory contract:
contract that is not completed immediately
law of large numbers:
the larger the number of people and deaths recorded, the more reliably one can predict how many will die at a specific age
mortality table
records required to produce precise results - statistically deceased at 100
