Unit 3: Insurance Law Flashcards
In a contract of ____, the parties have a duty to each other to disclose all material facts relating to the contract.
Utmost good faith
Since policy owners can give their contracts away by the use of an assignment, life insurance contracts are NOT considered to be ____ contracts.
Personal
Since the insurance company draws up the insurance contract and it is not negotiable, if it is found to be ambiguous the courts will interpret the contract against the party who prepared it. This is an example of Contract of ____.
Adhesion
One party may receive much more in value than he gives in value. Because insurance is dependent on chance or an uncertain outcome, it is considered an ____ contract.
Aleatory
A ____ contract is one in which there is an exchange of an act for a promise. Once the insured pays the premiums, the contract is no longer binding to the insured and cannot be held for breach of contract.
Unilateral
Insurance agents are appointed by A. The federal government B. The state department of insurance C. The insurance commissioner D. Insurance companies
D
Life and health insurance producers have the authority to bind an insurance company to a contract agreement
A. True
B. False
B
Ralph is a producer for Hoosier Insurance Company. His contract states he is allowed to put the company's logo on his business cards and the door of his office. This is an example of A. Express authority B. Implied authority C. Lingering implied authority D. Apparent authority
A. Express authority is authority the company gives to the producer in writing
Tom has always made a practice of having his policyholders mail their premium checks directly to his home address and forwarding them on to the insurer so that he is aware of anyone missing a payment and can contact policy owners directly if that should happen. His contract does not allow this practice, but the insurer is aware of the actions and has not asked him to stop. This practice is an example of A. Express authority B. Implied authority C. Lingering implied authority D. Apparent authority
D
Gina accepts the initial premium when she sells an insurance policy and sends it to the company with the application. Nothing in her contract mentions handling of initial premiums. This is an example of A. Express authority B. Implied authority C. Lingering implied authority D. Apparent authority
B
Albert's life insurance premium is due on the 10th. He gets paid at the end of the month, so he has always sent the premium in late. The insurer has been accepting his premium this way for 3 years when a new CEO comes in and decides to crack down on late payments, canceling Albert's policy. Albert contests this decision legally and gets the policy reinstated. The decision to reinstate is an example of A. Estoppel B. Waiver C. Contract of adhesion D. Express authority
A
Which element is NOT necessary for the formation of a valid contract A. Consideration B. Competent parties C. Written document D. Legal purpose
C
The initial premium payment sent with an application constitutes which part of the insurance contract A. Consideration B. Acceptance C. Offer D. Legal purpose
C
Life insurance contracts contain all of the following EXCEPT A. A policy folder B. An insuring clause C. Conditions D. Exclusions
A
Ken has paid only 4 premiums on his health insurance policy when he is hit by a car. The insurance company pays out nearly half a million dollars to cover his treatment. This is an example of A. Contract of adhesion B. Aleatory contract C. Unilateral contract D. Utmost good faith
B
