Life insurance contracts

Question 1

What gives you peace of mind in life insurance

Answer 1

The contract

Question 2

Why are so many life insurance claims paid?

Answer 2

Because of the liberal interpretation of life insurance

Question 3

What is the legally binding agreement in a life insurance contract

Answer 3

For the insurer to compensate the beneficiary

Question 4

When is the last time you speak to your life insurer

Answer 4

Inception

Question 5

Aleatory relationship

Answer 5

Based on the probability that something may or may not happen

Question 6

What parts of a contract must be in place for it to be legally binding? (5)

Answer 6

• Agreement
• Consideration
• ICLR
• Formality
• Capacity

Question 7

When is agreement formed?

Answer 7

When the offer (proposal form) is accepted by the insurer

Question 8

Consideration in a life insurance contract

Answer 8

Exchange money premium for promise of cover

Question 9

Can court rule if consideration is adequate or not

Answer 9

No, consideration need not be adequate

Question 10

Discuss ICLR in a lif insurance contract

Answer 10

Since it is a commercial contract ICLR is assumed and is assumed to be legally bound unless the intention is rebutted.

Question 11

What are the requirements for consideration

Answer 11

Must be legal, cant be from the past and need not be adquet

Question 12

What form must a life insurance contract take?

Answer 12

Written

Question 13

Who does not have capacity to enter a life insurance contract

Answer 13

• Person under 18 unless they need life insurance (married)
• Convicts in prison or on parole
• Drunk people
• People of unsound mind

Question 14

What is used to underweight clients?

Answer 14

Proposal form

Question 15

How long can it take to get a quote back and why?

Answer 15

Up to 2 months because of how much checking they need to do

Question 16

What must be in a life insurance contract?

Answer 16

• Who is insured
• What risks are covered
• What is insured (life =, illness..)
• Period or term
• Consideration (premium)

Question 17

Fraudulent misrepresentation

Answer 17

Intentional or lazy

Question 18

Innocent misrepresentation

Answer 18

Left that blank by a mistake

Question 19

“I didn’t know I had to do that” is what type of misrepresentation?

Answer 19

Fraudulent

Question 20

Caveat emptor in life insurance

Answer 20

Doesn’t exist because you are not around to defend your self

Question 21

Do material facts include statements of opinion

Answer 21

no

Question 22

When does a misrepresentation result in a non-pay out?

Answer 22

When it is material

Question 23

When does your duty to disclose end?

Answer 23

Inception

Question 24

What are remedies for breach of a contract?

Answer 24

Rescind, Reformation, sue for damages

Question 25

Rescinding a contract

Answer 25

The contract is void from the start, only in very severe cases

Question 26

Reformation of a contract

Answer 26

If there was a mistake apply the contract retrospectively

Question 27

What could an insured sue for in a breach of contract?

Answer 27

Pain and suffering for the delay in indemnity

Question 28

What could an insurer sue for in a breach of contract?

Answer 28

Cost or damages that come from investigating fraud

Question 29

Entire contract clause

Answer 29

The agreement is the policy plus the application form

Question 30

Why does the entire contract clause exist

Answer 30

Protect insured and gives them peace of mind

Question 31

Ownership clause

Answer 31

The owner of the policy can sell it, cash in it and transfer the policy

Question 32

Beneficiary clause

Answer 32

Allows the holder to name somebody else as the primary or secondary beneficiary

Question 33

What is a secondary beneficiary and why might you have this

Answer 33

Second beneficiary is usually your kids in case you and your partner die

Question 34

Irrevocable beneficiary

Answer 34

Cant change beneficiary without their permission

Question 35

Revokable beneficiary

Answer 35

a BENEFICIARY YOU CAN CHANGE

Question 36

incontestable clause

Answer 36

The insurer cant revoke the policy after a certain amount of time unless the policy lapses or there was a fraudulent misrepresentation

Question 37

Misrepresentation of age clause

Answer 37

Incontestable clause of age does not apply because it is the main underwriting criteria in life insurance and it is usually known.

Question 38

Gracing period

Answer 38

If you stop paying premiums and the policy lapses, you repay premiums and with proof of health you can have the contract reinstated

Question 39

Suicide clause

Answer 39

Payout as long as it has been over 1 year from inception and policy was not taken out in contemplation of suicide

Question 40

What do life insurers do in terminal illness cases

Answer 40

If you have over one year on policy they will payout, if it is less then they race you to the end

Question 41

Disability waiver of premiums

Answer 41

If you suffer a specified disability that puts you out of work and you cant pay premiums you will still have cover

Question 42

Accidental death benefits

Answer 42

Double payments if you die accidentally

Question 43

Why would accidental death benefits be a good provision for a young person

Answer 43

Good for young people as they are more likely to die this way and would have children with a longer dependency period.