FFL Life Course Legal Concepts of the Insurance Contract
Negotiating is part of the process but not a formal element of a contract. The key elements of an insurance contract are offer, acceptance, consideration, and legal purpose.
Which of these is NOT considered to be an element of an insurance contract?
<>Negotiating
<>The offer
<>Consideration
<>Acceptance
Which of these is NOT considered to be an element of an insurance contract?
<>Negotiating
<>The offer
<>Consideration
<>AcceptanceNegotiating is not an element
Elements of an insurance contact:
1. Offer and acceptance
2. Consideration
3. Legal purpose
4. AcceptanceKey Terms
Which of these is NOT considered to be an element of an insurance contract?
<>Negotiating
<>The offer
<>Consideration
<>AcceptanceNegotiating is not an element
Elements of an insurance contact:
1. Offer and acceptance
2. Consideration
3. Legal purpose
4. AcceptanceA life insurance policy would be considered a wagering contract WITHOUT:
<> Constructive delivery
<> Insurable interest
<> Agent solicitation
<> Premium paymentInsurable intrest
~ Without insurable interest, a life insurance policy would be considered...
Statements made on an insurance application that are believed to be true to the best of the applicant’s knowledge are called:
Representations
~ Statements made on an insurance application that are believed to be true ...
Stranger Originated Life Insurance(STOLI) has been found to be in violation of which of the following contractual elements?
<> Consideration
<> Legal Purpose (Insurable Interest)
<> Competent Parties
<>Offer/AcceptanceLegal Purpose
~ A STOLI arrangement is used to circumvent state insurable interest statues<...
Who makes the legally enforceable promises in a unilateral insurance policy?
Insurance company
~ Under a unilateral insurance policy, the insurance company makes the le...
Which of these is considered a statement that is assured to be true in every aspect?
<> Warranty
<> Estoppel
<> Representation
<> GuaranteeWarranty
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| Term | Definition |
|---|---|
| |
| Insurable intrest ~ Without insurable interest, a life insurance policy would be considered a wagering contract |
Statements made on an insurance application that are believed to be true to the best of the applicant’s knowledge are called: | Representations ~ Statements made on an insurance application that are believed to be true to the best of the applicant’s knowledge |
| Legal Purpose ~ A STOLI arrangement is used to circumvent state insurable interest statues |
Who makes the legally enforceable promises in a unilateral insurance policy? | Insurance company ~ Under a unilateral insurance policy, the insurance company makes the legally enforceable promises |
| Warranty |
In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contact is this? | Unilateral ~ Insurance contracts are unilateral. This means that only one party (the insurer) makes any kind of enforceable promise |
| Contact ~ Offer, acceptance, and consideration are all elements of a contract |
Insurance policies are offered on a “take it or leave it” basis, which make them: | Contracts of Adhesion ~ Because insurance policies are offered on a “take it or leave it” basis, they are referred to as Contacts of adhesion |
| Express |
A life insurance arrangement which circumvents insurable interest statues is called: | Investor-Originated Life Insurance |
| Bilateral ~ Unilateral, aleatory, and adhesion are all special features of insurance contacts. Bilateral is not. |
The part of a life insurance policy guaranteed to be true is called a(n) | Warranty |
A policy of adhesion can only be modified by whom? | The insurance company ~ A policy of adhesion is best described as a policy which only the company can modify. |
| Aleatory |
| Investor-Originated Life insurance |
At what point does an informal contract become binding? | When one party makes an offer and the other party accepts that offer |
Insurance policies are considered aleatory contacts because | Performance is conditioned upon future occurrence |
When third-party ownership is involved, applicants who also happen to be stated primarily beneficiary are required to have: | Insurable interest in the proposed insure |
Taking receipt of premiums and holding them for the insurance company is an example of: | Fiduciary responsibility ~ Taking receipt of premiums and holding them for the insurance is an example of fiduciary responsibility. |
If a contract of adhesion contains complicated language, to whom would the interpretation be in favor of? | Insured |
The consideration clause of an insurance contract includes: | The schedule and amount of premium payments ~ The consideration clause of a Life or Health policy includes the schedule and amount of premium payments |
When must insurable interest be present in order for a life insurance policy to be valid? | When the application is made ~ Insurable interest must exist when the application is made for it to be valid. |
E and F are business partners. Each takes out a $500,000 life insurance policy on the other, naming himself as the primary beneficiary. E and F eventually terminate their business, and four months later E dies. Although E was married with three children at the time of death, the primary benefiary is still F. However, an insurable interest no longer exists. Where will the proceeds from E’s lide insurance policy be directed to? | F |
| Unilateral contacts |
| Is a statement guaranteed to be true |
What is the consideration given by an insurer in the Consideration clause of a life policy? | Promise to pay a death benefit to a named beneficiary | ~ Consideration is given by the insurer by promising to pay a death benefit to a named beneficiary |