Contract Law/Terms

Question 1

A written request to an insurance company for insurance

Answer 1

Application

Question 2

Add-on provisions attached to a policy that increases insured’s premium

Answer 2

Riders

Question 3

Rate * Unit of Insurance = ?

earned vs. unearned

Answer 3

Premium

Question 4

Money that the company (insurer) earned

Answer 4

Earned Premium

Question 5

More used when a person pays ahead of time (i.e: 12 months)

Answer 5

Unearned Premium

Question 6

A written instrument, in which a contract of insurance is set forth (only once you qualify for the insurance)

Answer 6

Insurance Policy

Question 7

Private or civil wrong where legal action may be taken. (Means to Sue!)

• Intentional
• Unintentional

Answer 7

Tort

Question 8

Breach of contract

Answer 8

Intentional Tort

Question 9

Negligence

Answer 9

Unintentional Tort

Question 10

Untrue statements; a lie

i.e): lying on an application (a white lie… lying about your height, weight

Answer 10

Misrepresentation

Question 11

Something if discovered alters underwriting process

(ie): you lie about a medical condition; the company can then rescind/terminate your contract

Answer 11

***Material Misrepresentation

Question 12

Intentionally withholding “material” information/facts
(ie): You have a medical condition and when asked about it by the company (insurer), you brush it off and don’t want to give them much info about it

Answer 12

***Concealment

Question 13

Intentional misrepresentation for financial gain

Answer 13

Fraud

Question 14

All parties to contract to ALL information necessary to make an informed decision
- Both sides (potential insured & insurer) look each other up.

Answer 14

Materiality

Question 15

The revocation of a contract; (Due to Material Misrepresentation, Concealment)
-(When the company wants to cancel/terminate/revoke your policy)

Answer 15

Recession/Rescind

Question 16

Act of revoking/termination one’s insurance policy (Done by the insured)

Answer 16

Cancellation

Question 17

Termination due to “Non-payment” (because the payments were not made)

Answer 17

***Lapse

Question 18

A provision which will allow the insured to remain covered past the premium due date.

Answer 18

***Grace Period

Question 19

Statements believed to be true; implied warranties

- They are “believed” to be truths

Answer 19

Representation

Question 20

Absolute/Guaranteed; (something that is true)

-(ie) my name. (It can be proven true with documentation like Birth Certificate, DL, SSN, etc.)

Answer 20

Warranty

Question 21

1. Agreement
2. Consideration***
3. Competent Parties***
4. Legal Purpose
   (Must include all four to be qualified as a contract)

Answer 21

Elements of all Contracts

Question 22

Offer: Submit application; Initial Premium (Done by the proposed insured/applicant)
Acceptance: A policy is issued

Answer 22

Agreement

Question 23

Companies promise to pay

Answer 23

***Consideration

Question 24

NO Minors, Intoxicated, Mentally, Incompetent (MIMO)

Answer 24

***Competent Parties

Question 25

Contract must be done for legal reasons

Answer 25

Legal Purpose