Question: If the agency contract gives the producer the authority to solicit insurance but states nothing about the collection of premiums, the producer normally has authority to collect premiums based on

• Implied authority

• * Express authority

• * Apparent authority

• * Licensee authority

• Answer: Implied authority

• Question: Which characteristic of an insurance contract means there is a potential for unequal exchange of value for both parties?

• * Aleatory

• * Adhesion

• * Unilateral

• * Conditional

• Answer: Aleatory ( Insurance contracts are aleatory. Aleatory contracts are conditioned upon the occurrence of an event. The benefits provided by an insurance policy may or may not exceed the premiums paid.)

• Question: An agent is an individual that represents whom?

• * Insurer

• * Insured

• * Broker

• * Himself/Herself

• Answer: Insurer (An agent is an individual who is authorized by an insurer to sell goods and services on its behalf. An agent is also the insurer’s representative in dealing with the public.)

• Question: All of the following are considered to be typical characteristics describing the nature of an insurance contract EXCEPT

• * Bilateral

• * Unilateral

• * Aleatory

• * Adhesion

• Answer: Bilateral

• Question:

• Answer: The policyowner must expect to suffer a loss when the insured dies or becomes disabled. (The policyowner must face the possibility of losing money or something of value in the event of the death or disability of the insured.)

• Question: The authority of an agent which is spelled out in the written words of the agency contract between the agent and the insurer is called

• implied authority

• apparent authority

• presumed authority

• expressed authority (Express authority is the authority a principal deliberately gives to its agent. Express authority is granted by means of the agent’s contract, which is the principal’s appointment of the agent to act on its behalf.)

• Answer:

• Question: In life insurance, an insurable interest in the life of the insured must exist

• Only at the inception of the contract (Insurable interest must only exist at the time of application.)

• Only at the death of the insured

• During the first two years of the contract

• Throughout the period of the contract

• Answer:

• Question:

• Answer:

• Question: Which of the following best describes the concept that the consideration is not equal in contract law?

• Adhesion

• Warranty

• Subrogation

• Aleatory (Insurance contracts are aleatory. This means there is an element of chance and potential for unequal exchange of value for both parties. An aleatory contract is conditioned upon the occurrence of an event. Consequently, the benefits provided by an insurance policy may or may not exceed the premiums paid.)

• Answer:

• Question: Which of the following is an example of legal consideration?

• Politeness

• Application and initial premium (Consideration can be defined as something of value given in exchange for the promises sought. In an insurance contract, consideration is given by the applicant in the form of paying premiums in exchange for the insurer’s promise to pay benefits.)

• Legal purpose

• Offer and acceptance

• Answer: