Questions and Answers
A life insurance policy would be considered a wagering contract without what?
insurable interest
Which of the following best describes a warranty?
Statements guaranteed to be true
A policy of adhesion can only be modified by whom?
The insurance company
Insurance contracts are known as ______ because certain future conditions or acts must occur before any claims can be paid.
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A contract where one party either accepts or rejects the terms of a contract written by another party is called a contract of what?
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Which of these is not a type of agent authority?
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Taking receipt of premiums and holding them for the insurance company is an example of what?
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Which of these is not considered to be an element of an insurance contract?
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Life and health insurance policies are classified as what?
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The part of a life insurance policy guaranteed to be true is called a what?
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If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of?
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Which of these is considered a statement that is assured to be true in every respect?
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Insurance policies are considered aleatory contracts because?
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At what point does an informal contract become binding?
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A life insurance arrangement which circumvents insurable interest statutes is called what?
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What is the consideration given by an insurer in the Consideration clause of a life policy?
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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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Statements made on an insurance application that are believed to be true to the best of the applicant's knowledge are called what?
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Which of the following consists of an offer, acceptance, and consideration?
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In regards to representations of warranties, which of these statements is true?
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Study Notes
Life Insurance and Contracts
- A life insurance policy requires insurable interest to avoid being classified as a wagering contract.
- Warranties are statements in a contract that are guaranteed to be true.
- Insurance contracts are termed conditional as claims are contingent upon future events or conditions.
Types of Contracts
- A contract of adhesion allows one party to either accept or reject the offered terms written by another party; modifications can only be made by the insurance company.
- Life insurance policies are classified as unilateral contracts since only one party (the insurer) is obligated to uphold the contract.
- Investor-Originated Life Insurance (IOLI) circumvents insurable interest laws in life insurance arrangements.
Roles and Responsibilities
- Fiduciary responsibility involves handling premiums and holding them for the insurance company.
- Agents exercising authority must not be categorized as principals as this is not a type of agent authority.
Elements and Characteristics of Insurance Contracts
- Typical characteristics of insurance contracts exclude being bilateral.
- Insurance policies are considered aleatory contracts due to their performance being dependent on uncertain future events.
- Statements made on an insurance application that the applicant believes to be true are identified as representations.
Contract Validity and Interpretation
- An informal contract becomes binding when one party makes an offer and the other accepts that offer.
- In cases where a contract of adhesion features complicated language, interpretation will favor the insured.
- Consideration in a life policy refers to the insurer's promise to pay a death benefit to the designated beneficiary.
True Statements about Representations and Warranties
- If a false representation is material to the risk, it has the potential to void the policy.
- The part of an insurance policy that's guaranteed to be true is referred to as a warranty.
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Description
Test your knowledge on life insurance policies and their contractual elements. This quiz covers topics such as insurable interest, types of contracts, and the roles of agents within these agreements. Understand the intricacies of life insurance to enhance your expertise in the field.
