Questions and Answers
Which of these arrangements allows one to bypass insurable interest laws?
What is the consideration given by an insurer in the Consideration clause of a life policy?
Promise to pay a death benefit
When must insurable interest be present in order for a life insurance policy to be valid?
At the time of application
If a contract of adhesion contains questionable language, to whom would the interpretation be in favor of?
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When third-party ownership is involved, what are applicants required to have?
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Which of these is NOT considered to be an element of an insurance contract?
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The part of a life insurance policy guaranteed to be true is called what?
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Which of these is NOT a type of agent authority?
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The three types of agent authority include express, implied, and apparent authority.
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Where will the proceeds from E's life insurance policy be directed to after his death?
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The policy of adhesion can only be modified by whom?
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Insurance policies offered on a 'take it or leave it' basis are considered what?
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Who makes the legally enforceable promises in a unilateral contract?
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When must insurable interest exist for a life insurance contract to be valid?
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Study Notes
Insurance Concepts and Terms
- Investor-Originated Life Insurance (IOLI) allows arrangements that bypass insurable interest laws.
- Consideration Clause of a life policy involves the insurer's promise to pay a death benefit.
- Insurable Interest must be present at the time of application for the life insurance policy to be valid.
- In contracts of adhesion with ambiguous language, the interpretation favors the insured.
- In cases of third-party ownership, applicants who are also the primary beneficiary must demonstrate insurable interest in the proposed insured.
Insurance Contract Elements
- Negotiation is not considered an element of an insurance contract.
- A warranty is the portion of a life insurance policy guaranteed to be true.
- Types of agent authority include express, implied, and apparent authority, while principal is not recognized as a type.
Legal and Contractual Considerations
- In a scenario where business partners E and F have policies on each other, the insurer proceeds will still go to F, even though insurable interest no longer exists after business termination.
- A contract of adhesion is modified only by the insurance company.
- Policies offered on a “take it or leave it” basis are classified as Contracts of Adhesion.
- The insurer makes legally enforceable promises in a unilateral contract.
- Insurable interest must exist at the inception of the contract for life insurance to be valid.
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Description
Test your knowledge with these flashcards on life insurance concepts from Chapter 2. Explore key terms related to insurable interest and the consideration clause in life policies. Perfect for students preparing for exams in insurance studies.
