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Insurance > Contract Law > Flashcards

Contract Law Flashcards

1
Q

The insurer organized to return a profit to the stockholders is what type of insurer?

A

Stock company

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2
Q

If an insurer meets the state’s financial requirements and is approved to transact business in the state, it is considered what type of insurer?

A

Authorized or admitted

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3
Q

When agents act within the scope of their contract, their actions will be assumed to be the acts of whom?

A

Insurer

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4
Q

In insurance, when is the offer usually made on a contract?

A

When the insurance application is submitted

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5
Q

What is a warranty in an insurance contract?

A

An absolutely true statement upon which the validity of the insurance contract is based.

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6
Q

Insurers are classified according to their domicile. What are the three types of insurers?

A

Domestic, foreign and alien.

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7
Q

What are the four(4) elements of an insurance contract?

A

Agreement (offer and acceptance), consideration, competente parties, and legal purpose.

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8
Q

What is the best way to handle incomplete insurance applications?

A

Return the application to the applicant for completition.

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9
Q

When a change needs to be made on the application for insurance, which is the best method for correcting the information?

A

Complete a new application or ask the applicant to initial the correction on the original application.

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10
Q

If an applicant fails to obtain the applicants signature on the insurance application, what must the insurer do?

A

Send the application back to the applicant for signature.

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11
Q

The requirement that agents must account for and promptly remit all insurance funds collected is knows as what type of agent responsibility?

A

Fiduciary

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12
Q

In forming an insurance contract, when does an acceptance usually occur?

A

When the insurer approves a prepaid application.

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13
Q

Whose responsibility is it to determine that all questions on an insurance application are answered?

A

The agent’s.

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14
Q

What two elements are necessary for a life insurance contract to have a legal purpose?

A

Insurance interest and consent.

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15
Q

Who owns stock companies?

A

Stockholders

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16
Q

When would a misrepresentation on and insurance application be considered fraud?

A

When it is intentional and material.

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17
Q

Whom does an insurance agent represent?

A

Insurance company.

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18
Q

If and applicant does not receive his or her insurance policy, who would be held responsible?

A

The agent.

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19
Q

What entities make up the medical information bureau?

A

Insurers.

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20
Q

When does an insurance policy go into effect?

A

When the policy is delivered and the premium is paid.

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21
Q

According to law of agency, a principal is represented by whom?

A

Agent or producer.

22
Q

When risks with higher probability of loss are seeking insurance more often than other risks, this is knows as what?

A

Adverse selection

23
Q

What are the three types of agent authority?

A

Express, implied and apparent.

24
Q

A person who does not lock the doors to his or he house shows an indifferent attitude. This person presents what type of hazard?

A

Morale.

25
Q

What are the strategies used by underwriters to prevent adverse selection?

A

Restriction of coverage, refusal to accept a risk, and accepting a risk at a higher rate.

26
Q

Conditions that increase the chance of a loss are known as what?

A

Hazards.

27
Q

An insurance company is domiciled in California and transacts insurance in Nevada. What is this insurer’s classification in Nevada?

A

Foreign.

28
Q

In the agent/insurer relationship, who is considered the principal?

A

Insurer.

29
Q

What document is required for an insurance company to transact insurance?

A

Certificate of authority.

30
Q

For the purpose of insurance, what is risk?

A

Uncertainty of loss.

31
Q

What type of insurer is formed under the laws of another country?

A

Alien.

32
Q

What do individuals use to transfer their risk of loss to a larger group?

A

Insurance.

33
Q

What are the five characteristics of an ideally insurance risk?

A

Loss must be

1) due to chance,
2) definite and measurable,
3) statistically predictable,
4) not catastrophic, and
5) coverage cannot be mandatory.

34
Q

The reduction, decrease, or disappearance of value of the person or property insured in a policy is know as what?

A

Loss.

35
Q

What type of risk is insurance?

A

Pure.

36
Q

Insurance is a contract that protects the insured from what?

A

Loss.

37
Q

The insurer organized to return a profit to the stockholder is what type of insurer?

A

Stock company,

38
Q

An applicant conceals relevant health information on the application. The applicant presents what type of hazard?

A

Moral.

39
Q

Wagering on a sporting event is know as what type of risk?

A

Speculative.

40
Q

What are the three types of hazard?

A

Physical, moral and morale.

41
Q

An insurance policy paid a no taxable dividend to the insured one year, and nothing the next. From what type of insurer did the insured purchase the policy?

A

Mutual.

42
Q

The type of insurance company organized to return any surplus money to its policyholders is know as what?

A

Mutual company.

43
Q

A situation in which a person can only experience a loss and no gain presents what type of risk?

A

Pure risk.

44
Q

What is the term for the causes of loss insured against in an insurance policy?

A

Peril.

45
Q

An insurance company that is formed under the laws of another state is know as what type of insurer?

A

Foreign.

46
Q

In calculating the amount of life insurance needed, what is the needs approach based on?

A

The predicted needs of a family after the premature death of the insured.

47
Q

What are the personal users of life insurance?

A

Survivor protection, estate creation and conservation, cash accumulation and liquidity.

48
Q

What type of insurance creates an immediate estate?

A

Life insurance.

49
Q

All other factors being equal, which premium payment mode will require an overall higher premium: monthly or annual?

A

Monthly.

50
Q

If an insured changes his payment plan from monthly to annually, what happens to the total premium?

A

It will decrease.

51
Q

What are the three main instances when insurance interest exists in life insurance?

A

Insuring your own life, the life of a family member, or the life of a business partners or someone who has a financial

Insurance (8 decks)

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