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my life ins basics

life insurance basics and legal concepts

A unilateral contract is: A contract that makes a promise or promises in exchange for a performance
An individual medical plan is usually a: A contract of adhesion
define contract of adhesion places significant restrictions on one party to the contract while allowing the other party freedom to "walk away"
A one-sided agreement whereby you promise to do (or refrain from doing) something in return for a performance (not a promise) is what type of contract a unilateral contract
promise of benefits
Kathy is filling out an insurance application. Her broker has explained to her that the statements made in the application are held to a principle of _______________, which means they are not guaranteed to be true. representations
What gives the insurance company the right to assume rights of the insured in order to sue a responsible third party when damages are inflicted on the insured subrogation
Simon has applied for insurance by completing an application and paying the initial premium. This is considered which of the following? a consideration and an offer to buy
Ben is making application for a health insurance policy. He has been treated for heart problems in the past, but he answers no to" Have you ever had heart problems". Ben is guilty of concealment
In an insurance contract, which concept refers to the fact that the value given by the two parties is unequal aleatory
Which of the following concepts refers to the option that one party can set aside a contract: -Aleatory -Unilateral -Voidable -Both Unilateral and Voidable Both Unilateral and Voidable
What essential element of the contract is violated by an agent who solicits to sell to an individual who has difficulty understanding what the agent is selling competent parties
Sometimes the values given by two parties are unequal. This is called: aleatory
What happens when you combine the principles of waiver and estoppel a known right is voluntarily relenquished
Insurance policies are legal contracts. How do life and/or health insurance contracts differ from other insurance contracts They are contestable for up to two years and The producer does not have the authority to bind the insurer
Because insurance policies are legal contracts, they are subject to the general law of contracts. What element is not necessary for the formation of a valid contract under the law? insuring clause
All of the following are among the five main areas commonly used by the court when reviewing contracts EXCEPT: -Conditions -Entire Contract -Plain Language and Word Definitions -Interpretation in Favor of Valid Contract conditions
When looking at insurance contract characteristics, it is important to know that an exchange of a promise for a promise is called bilateral
Because she gets paid on the 15th, Julia routinely pays her insurance premium (due on the 5th) late. Her policy was cancelled for nonpayment of premium. Does Julia have a legal leg to stand on to contest the decision by the insurer to cancel her policy yes, because the insurer previously accepter her late payments
T or F in regards to the Utmost Good Faith characteristic of an insurance contract both parties are entitled to rely on the representations of each other to conceal and deceive false
Unlike other types of insurance contracts, life insurance is not a personal contract
Mark was afraid that he might fail the physical exam that was required for his insurance policy, so he had his brother Robert, a marathon runner, take the exam for him. This is an example of false pretenses
If an insurance matter goes to court for interpretation, health insurance contracts are held to the principle of indemnity. This means They reimburse the insured for the amount of financial loss, but the insured cannot profit from the loss.
Which of the following could result in an insurance contract being voided? -Concealment -Fraud -Recission -All of the above all of the above
t or f Parol (oral) Evidence Rule limits the impact of waiver and estoppel by disallowing oral evidence made before the contract was created and oral evidence is not admissible in court to change or contradict an existing contract True
true or false: Contractual rights are the basis for private insurance, statues/laws are the basis for government insurance. true
true or false Private insurance is focused on coverage for private buyers, government insurance strives to provide benefits for all people. true
true or false Government insurance provides benefits and coverage for individuals that private insurers cannot cover - for financial reasons usually. true
Many different types of people are involved in the process of selling insurance. Which of the following is not involved in the selling of insurance? -Insurance commissioner -Insurance producer -Insurance solicitor -Insurance agent, broker insurance commissioner
An insurance policy is a legal contract between 2 or more parties. Every contract contain: A legal purpose An agreement consideration competent parties
A contract of adhesion provides a contract clearly in favor of one party
An aleatory contract is a contract that: Provides a benefit for a fortuitous event in return for a cash payment
personal contract can be any of the following types of contracts EXCEPT: An ambiguous contract A partnership agreement A promise to pay a loan A sale of individual property ambiguous contract
T or F A unilateral contract has all the features EXCEPT: -issuer is bound by the terms 100% -issuer will list the terms of the agrmnt in full -contract is commonly used by life ins comp true
A conditional contract depends on An agreement between two parties that is enforceable by law
Harvey has a major medical plan. Harvey requires a liver transplant, but the insurance company refuses to pay the claim. The policy does not specifically exclude this operation, but they don' include it either. What is the court likely to do in this case? Order the insurance company to pay full benefits due to the ambiguous wording in the policy
Life insurance has a number of uses. An important factor in determining how much insurance one should carry is called the Needs Approach. This approach primarily focuses on - how much money the survivor needs
human life value approach considers all of the following EXCEPT: Illness and funeral costs Annual salary of the insured Number of years until retirement Future value of current dollars illness and funeral costs
Premiums are determined after the underwriters have classified the risk based on a variety of factors. Once the individual has been classified - there are ________ factors used to determine premiums. 3 mortality/morbidity, expense, interest
Illstrtns are sub to all rules EXCEPT: -must include the insurer's name and producer's name -must clearly define any dividend options or non-guaranteed elements -must state the insured's marital status -must contain the insured's name, age and sex Illustration must state the insured's marital status and employment status
A producer is required to do all EXCEPT: Determine if the policy is a replacement -Obtain a written statement only if a replacement is involved -Provide applicant with policy comp statement -Provide insurer with copy of the policy comp statement Obtain a written statement only if a replacement is involved
Shelly filled out an application, paid the first premium and handed it to her agent on July 10th. The agent then submitted the application to the insurer on July 12th. The insurer issued the policy on July 15th. what is the effective date of the policy when policy is delivered
The underwriters utilize a variety of resources to aid the evaluation process. All of the following are used for underwriting EXCEPT: -Health history -Overall physical appearance -Smoking status -Family origins family origins
Amelia is 55 years old, 5'4" tall and weighs 235 lbs. She has diabetes and high blood pressure, both associated with her weight. How is a life insurance company likely to rate Amelia's risk? substandard
When an agent is field underwriting they should know: -That the application contains 3 main parts -That he should correct any errors on the app in the presence of the applicant -That he/she should collect the first premium -All of the above. all of the above
Jeremy's agent issued a receipt that provides coverage from the date of the application, even if Jeremy turns out to be uninsurable. This receipt is called a binding receipt
An individual who is a felon involving dishonesty, breach of trust or insurance crimes wishing to get a license to transact insurance business may submit an exemption request to - state insurance commissioner
what is the penalty for lying on an application to becoming an insurance producer revoke, and a 7,000 fine
define needs based approach Calculating the amount of funds necessary to provide for a family based on their immediate need upon the death of the insured.
true or false Premiums for nonparticipating policies are usually lower than those for participating policies
When a company or another person seeks to take out an insurance policy on a person, they must prove insurable interest exists at what time when the application is made
________ authority gives an agent the right to operate in a normal business manner doing typical business practices implied
The estimation of the amount of life insurance needed as a dollar valuation by discounting net future earnings of the insured at a reasonable rate of interest is known as: human life approach
A __________ is a plan to purchase a deceased partner's share of a business, funded by life insurance buy-sell agreement
An agent talked Martha into replacing an existing policy from another company with one from his own company, even though the replacement was of no financial advantage to Martha. The agent is guilty of which of the following twisting
Which of the following is true regarding life insurance and health insurance? -Health insurance is considered a valued contract, life is reimbursement -Life insurance is considered a valued contract, health a reimbursement contract Life insurance is considered a valued contract, health a reimbursement contract
The Mayflower Insurance Company is a stock insurance company. What is its operating objective to make a profit for its stock holders
An item that insurers look at that would constitute additional risk for the insurer is the moral hazard. Does the insured lifestyle contribute to the moral hazard consideration? yes
Does the insured health, occupation, and physical condition contribute to the moral hazard consideration? no
Which of the following would be a common use of the proceeds from a life insurance policy? Creation of an estate when the insured dies Funds for funeral expenses Income for survivors of the insured All of the above all of the above
The insurance companies look at actuarial tables and thereby know what reserves need to be on their balance sheet to cover: future liabilities
The fact that women live longer than men means that women's premiums should be lower
Austin is covered by his employer under a key employee insurance policy. Who is usually the beneficiary on this type of policy the business
Which life insurance approaches states that the value is determined by discounting estimated future income human life value approach
Which of the following is NOT an element that contributes to the gross premium for a life insurance policy? Mortality costs Morbidity costs Interest Expenses morbidity
Statistics have proven that our greatest need for income is which of the following when children are growing up
What is the major difference between a participating policy and a comparable nonparticipating policy Participating policies have higher premiums
The contract that an agent has with his/her agency grants the agent all of the following types of authority EXCEPT: Expressed authority Formal authority to change the policy if it benefits the insured Apparent authority Implied authority Formal authority to change the policy if it benefits the insured
When a company opts to self-insure, this is an example of risk ___________. retention
In order to take out a life policy on another person, you must demonstrate that you have an insurable interest. Which of the following could have an insurable interest in another person? Spouse and Employer Neighbor Only Spouse Friend spouse and employer
All of the following are true about elements of insurable risk EXCEPT: The loss must be catastrophic The loss must be predictable The loss must occur to chance The loss must be chosen randomly the loss must be catastrophic
Which of the following is NOT a factor used in determining both life and health premiums? Age Morbidity Expense factor Interest factor morbidity only refers to health insurance. mortality refers to life ins
The Swanson Company has 5 partners. How many policies will they need if they buy a partnership cross-purchase plan? 20
Which of the following factors is NOT important when selling insurance following the needs approach? Disability income Monies for an education fund A final expense fund Future income future income
what are common approaches used in determining the amount of insurance that is needed by a family? human life value and needs approach
John has opted to purchase a participating life insurance policy. What would be higher than if John had chosen a comparable nonparticipating life policy? the premiums
Charlie is changing his lifestyle to minimize a known risk. This is an example of risk reduction
Which of the following categories of authority allows an agent to use materials provided by his/her company? Apparent Permanent Implied Actual apparent
Which of the following are required in order for a risk to be insurable? A reasonably predictable and definite loss A certain and catastrophic loss A reasonably predictable and catastrophic loss A definite and catastrophic loss reasonably predictable and definite loss
What is the basic difference between what a general agent does as compared to a PPGA ppga's mainly sell insurance
Jeff's employer is domiciled (has its home office) in another state. When the company is authorized to do business in this state, it is called a(n) ________ company foreign
Which of the following are uses of life insurance? Investment management and Estate Creation Survivor Protection Charitable contributions All of the Above all of the above
When the Acme Corporation purchased life insurance on its partners, what was this called entity plan
Agents have a variety of duties and responsibilities. The agent can be fined for all of the following actions EXCEPT: Converting premiums for personal use Defamation Acting as a fiduciary Twisting acting as a fiduciary
___________ occurs when an agent converts the premium he collects for his personal use? embezzlement
An attitude or state of mind that causes indifference to a hazard resulting in a loss is called which of the following morale
What is the major difference between career general agents and PPGA's Career general agents primarily recruit and train, while PPGA's primarily sell.
How is the cost basis determined for accumulated cash values in a policyowner's life insurance policy The total premiums paid - less loans received, dividends and premiums paid for supplementary benefits
Self-insurance is a form of which of the following risk retention
t or f An insurable interest must exist between the policy owner and the insured at the time of the claim false. must be at time of application
t or f Sisters and brothers can have an insurable interest in each other A person can have an insurable interest in themselves A creditor can have an insurable interest in a debtor, but the interest is limited to the amount of the indebtedness true
Risk involves the chance of loss. Only _________ is insurable. pure risk
Which of the following is NOT a type of insurance company that may be approved to operate in nearly all states? Lloyds of London Mutual insurance companies Fraternal insurance companies Stock insurance companies Lloyds of London is not an insurance company
Life insurance policies are considered to be _________ contracts because the insurance contract pays a stated amount valued
An applicant's addiction to drugs is considered what kind of hazard moral
Jacob is an agent who writes controlled business. How much of his business must he write to the public? half If the agent is selling in a "controlled" environment, at least half of the agent's business must be from other sources
The insurance company can accommodate substandard life insurance risks with a provision that is made for the expected higher death rate. What does this provision entail? charging a higher premium
If ___ did not have an insurable interest, insurance would be unenforceable and considered a wager the owner
The Globo Insurance Company is based in Utah and has an office in Ohio. In Ohio, Globo is referred to as which of the following foreign
Which of the following are considered in the needs approach? Monthly income Disability income Final expense fund All of the above all of the above
Created by: 100000819223738
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