Chapter 4

Question 1

Life insurance is a _______ contract; subject to contract law.

Answer 1

written

Question 2

The branch of law that deals with contract disputes is called…?

Answer 2

contract law

Question 3

The branch of law that deals with civil disputes is called…?

Answer 3

tort law

Question 4

The idea of when one party makes an offer, the other party accepts its terms is called…?

Answer 4

agreement

Question 5

The idea of when both parties are legally able to extend/accept an offer is called…?

Answer 5

competent parties

Question 6

When both parties are within their legal bound, this is called…?

Answer 6

legal purpose

Question 7

When both parties have something of value in the contract, this is called…?

Answer 7

consideration

Question 8

The idea that the insurance company sets the terms and conditions of the policy and the customer agrees to them is called…?

Answer 8

contract of adhesion

Question 9

Insurance is an unequal exchange of money based on chance. One party may receive more value than the other based on uncertain future circumstances. This is called…?

Answer 9

aleatory

Question 10

When only one party makes a promise, this is called…?

Answer 10

unilateral

Question 11

When only pays out if some event actually happens, this is called…?

Answer 11

conditional

Question 12

When each party is acting in good faith and trusting that the other party is as well, this is called…?

Answer 12

utmost good faith

Question 13

When a policyholder must prove that they have a financial stake in whatever they are trying to insure, this is called…?

Answer 13

insurable interest

Question 14

The idea that insurance contracts are meant to compensate the insured (restore them back to where they were before the loss), not provide excess benefits, this is called…?

Answer 14

indemnity concept

Question 15

The maximum amount of money an insurer owes you if something happens is called…?

Answer 15

limit of liability

Question 16

What 3 components make up the entire contract?

Answer 16

1.) the policy itself
2.) a copy of the application
3.) any agreed-upon riders

Question 16

An intentional act to deceive for unlawful gain is called…?

Answer 16

fraud

Question 17

Material information is information that is important to the contract and could shape the insurer’s decision to offer coverage is called…?

Answer 17

materiality

Question 18

The neglecting to communicate what you know and ought to communicate is called…?

Answer 18

concealment

Question 19

A statement guaranteed to be absolutely true

Answer 19

warranty

Question 20

The 2 types of warranties are:

Answer 20

1.) express
2.) implied

Question 21

A statement, made to the best of one’s knowledge, given before a policy is issued is called

Answer 21

representation

Question 22

A misstatement of past or present facts

Answer 22

misrepresentation

Question 23

An intentional and voluntary surrender of a known right is called…?

Answer 23

waiver

Question 24

_______ prevents an insurer from reasserting a right previously waived.

Answer 24

Estoppel

Question 25

_______ means canceling a contract/making it void

Answer 25

Rescission

Question 26

_______ ______ is a contract that was never legally binding in the first place

Answer 26

Void contract

Question 27

______ ______is a contract that can be voided under certain circumstances

Answer 27

Voidable contract