Questions and Answers
Which of these is NOT a type of agent's authority?
A life insurance arrangement which circumvents insurable interest status is called?
What is the consideration given by an insurer in the consideration clause of a life policy?
At what point does an informal contract become binding?
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A life insurance policy would be considered a wagering contract WITHOUT?
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When third-party ownership is involved, applicants who also happen to be the stated primary beneficiary are required to have?
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Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements?
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What is warranty?
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Which of these require an offer, acceptance, and consideration?
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Q purchases a $500,000 life insurance policy and pays $900 in premiums over the first 6 months. Q dies and the beneficiary is paid $500,000. This exchange of unequal values reflects which of the following insurance contract features?
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Which of these is NOT considered to be an element of an insurance contract?
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Which of these is considered a statement that is assured to be true in every respect?
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All of the following are considered to be typical characteristics describing the nature of an insurance contract, EXCEPT:
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A policy of adhesion can only be modified by who?
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Study Notes
Agent Authority
- Types of agent authority include Express, Implied, Apparent; Principal is not a type.
Life Insurance Contracts
- Investor-Originated Life Insurance (LOLI) circumvents insurable interest by allowing an investor to persuade an individual to take a policy for resale.
- The investor pays premiums and benefits from the death benefit upon the insured's death.
Consideration Clause
- The insurer's consideration in a life policy is the Promise to pay a death benefit to the named beneficiary.
Informal Contracts
- An informal contract becomes binding when one party makes an offer and the other accepts the offer.
Wagering Contracts
- A life insurance policy is considered a wagering contract if it lacks Insurable interest.
- Insurable interest examples: spouses or employers on key employees; not childhood friends.
Third-Party Ownership
- In third-party ownership situations, the applicant who is also the primary beneficiary must possess insurable interest in the proposed insured.
STOLI Arrangements
- Stranger Originated Life Insurance (STOLI) violates the legal purpose of contracts due to non-compliance with insurable interest statutes.
Warranty Definition
- A Warranty is a statement that is guaranteed to be true in all respects.
Contract Essentials
- A Contract requires three elements: offer, acceptance, and consideration.
Insurance Contracts Features
- An insurance contract feature is Aleatory, indicating an exchange of unequal values (e.g., premiums paid vs. death benefit).
- Negotiating is not an essential element of an insurance contract.
Statement Assurance
- A Warranty is a statement that is assured to be true in every respect.
Characteristics of Insurance Contracts
- Characteristics include Unilateral, Aleatory, and Adhesion; Bilateral is not a typical feature.
Policy of Adhesion
- A policy of adhesion can only be modified by the insurance company.
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Description
Test your knowledge on agent authority types, life insurance contracts, and key concepts such as the consideration clause, informal contracts, and wagering contracts. This quiz covers essential definitions and principles that govern life insurance and contractual agreements.
