Insurance Contracts Are Known As Because Certain Future

Question: Insurance policies are considered aleatory contracts because?

(They are take it or leave it contracts)

(Both parties consent to the contract)

(Performance is conditioned upon a future occurrence)

(The contract is voidable upon proof of fraud)

Answer: Insurance contracts are aleatory. This means there is an element of chance And potential for unequal exchange of value or consideration for both parties. An aleatory contract is conditioned upon the occurrence of an event.

Question: Which of these require an offer, acceptance, and consideration?

(Warranty)

(Estoppel)

(Contract)

(Representation)

Answer: Contract

Question: A life insurance arrangement which circumvents insurable interest statutes is called:

(A contract of adhesion)

(An indemnity contract)

(Key person insurance)

(Investor-Originated life insurance)

Answer: Investor-originated life insurance (Or IOLI), Is used to circumvent state insurable interest statutes.

Question: Statements made on an insurance application That are believed to be true to the best of the applicants knowledge are called: (Representations)

(Consideration)

(Warranties)

(Guarantees)

Answer: Representations

Question: Stranger Originated Life Insurance (STOLI) has been found to be in violation of which of the following contractual elements? (Consideration)

(Competent parties) (Offer/acceptance)

(Legal purpose {Insurable interest})

Answer: Legal purpose {Insurable interest} (A STOLI Arrangement is used to circumvent state insurable interest statutes.)

Question:

Answer: In this situation, the proceeds from E’s Life insurance policy will go to F.Insurable interest only needs to exist at the time of application.

Question: Which of these is considered a statement that is assured to be true in every respect?

(Estoppel)

(Warranty)

(Guarantee)

(Representation)

Answer: Warranty

Question: A policy of adhesion can only be modified by whom?

(The agent)

(The applicant)

(The primary beneficiary)

(The insurance company)

Answer: A policy of adhesion is best described as a policy which only the insurance company can modify.

Question: What is a warranty?

(Guarantees that an insurance company will pay a benefit)

(Is a statement believe to be true to the best of one’s knowledge)

(Cannot be used to void the contract)

(Is a statement guaranteed to be true)

Answer: A warranty is a statement guaranteed to be true.

Question: In an insurance contract, the insurer is the only party who makes a legally enforceable promise. What kind of contract is this?

(Estoppel)

(Aleatory)

(Adhesion)

(Unilateral)

Answer: Insurance contracts are unilateral. This means the only one party (The insurer) makes any kind of enforceable promise.