Life Agent: Section 1 - Contract Law

Life

Health

Disability

Protects against the wrongful invasion of another person's rights giving rise to legal liabilities (lawsuits) that are settled in civil court.

Concerns itself with private (civil) wrongs that are independent of contract law and committed against individuals.

Concerns itself with public wrongs that are independent of contract law and committed against individuals.

Most torts are covered by liability insurance

Agreement, offer, and acceptance

Rejection

Competent parties

Legal purpose

Consideration

Insurer must adhere (is stuck) with insureds terms

Take or leave it, no negotiation, ambiguous or vague the courts will rule in favor of insured or beneficiary.

Insured must adhere (is stuck) with insurers terms.

Dependent upon the occurrence or happening of an uncertain event.

The chance for both insured or insurer and the dollar values exchanged may be equal.

The chance for both insured or insurer and the dollar values exchanged may not be equal.

Exchange of an act for a promise only made by the insured

Only the insurer makes a promise.

Where there is an exchange of an act (paying premium) for a promise

Exchange of a promise for a promise

A personal agreement between the insurer and the insured

The contract follows the property not the person

Cannot be assigned (transferred without insurer's consent

Broad principles which forms all insurance policies are Doctrine of Utmost Good Faith and the Doctrine of Reasonable Expectations.

A written instrument in which a contract of insurance is set forth, outlining the obligations and responsibilities of the insured and the insurer

An insurance policy protects the insured from financial losses

Act of deceit or misrepresentation of a material fact made knowingly, with the intention of having another person rely on the fact and consequently suffer a financial hardship.

When the insured unintentionally acts of deceit or misrepresentation of a material fact

An intentional and fraudulent omission, on the part of one insured, to communicate information of matters, proving or tending to prove the falsity of a warrant, entitles the insurer to rescind (void).

Both insurers and their agents, while they are investigating suspected fraud claims, shall have access to all relevant public records that are required to be open for inspection available to them under existing law.

Imprisonment for 1 year in county jail, or state prison for two, three, or five years.

Imprisonment for 1 year in county jail, or state prison up to four years.

Fine of 150,000 or double the value of fraud, whichever is greater

Both fine and imprisonment

Anyone who violates this law and who has prior conviction of this offense must serve two additional years for each prior conviction

Neglecting to communicate that which party knows and out to communicate

Concealment only has to be intentional to entitle the injured party or insurer to void insurance.

Can be intentional or unintentional to entitle the party to void.

Failure to fully disclose all pertinent information.

The importance of the information withheld.

Determined by the event of the insured and insurer

Determined by whether it is probably and reasonable to assume that the fact will influence the other parties estimate of the proposed contract's disadvantages or makes inquires about the contract.

Known information

Information that should be known

Information that is relevant to the risk

Information which the other party waives

Information that is not material to the risk

Can be expressed in writing or implied (not in writing).

A warranty can only be in writing

Representation in an insurance contract qualifies as an implied warranty

Found in property and casualty insurance only

Statements that guaranteed to be absolutely true.

Oral or written statements to the one's best belief or knowledge

Can only be written statements to the one's best belief or knowledge

Made at the time of application or before issuance.

Are implied warranties only

Could be considered a promise

Same as materiality of concealment

False when it fails to correspond with assertions.

Can be altered or withdrawn before the insurance is issued, but not after wards.

Cannot misrepresent policy terms, benefits or privilege, and future dividends payable under the policy.

A mislead in comparison that induces the person to take out a policy, refuse to accept a policy, or lapse, forfeit, or surrender a policy in order to purchase another policy from a different insurer. This is known as twisting

Misrepresentation can only be intentional.

Fine up to 25,000 or up to 3 times the amount of the victim's loss.

If its a misdemeanor than it will be 20,000 or up to 2 years in county jail.

If its a misdemeanor if the loss exceeds 10,000, or up to 1 year in county jail or both fine and imprisonment

Can have license suspended up to 3 years.

An insurer can have their certificate of authority suspended in that class of insurance

The parties between whom the contract is made

The property or life insured

The interest of the insured in property insured, if he/she is not the absolute owner

The financial rating of the insurer is requireed

The risks insured against

The period during which the insurance is continued

Either a statement of the premium or if the insurance is the type where the exact premium can only be determined upon termination of the contract, a statement of the basis, and rates upon which the final premium is to be determined and paid

Terminated or voided from the beginning and treated as if it had never existed

The revocation of a contract

Both parties can perform rescission at any time.

Intentional or unintentional

Committing an intentional or fraudulent omission to communicate information of matters proving or lending to prove the falsity of a warranty

Can only be intentional

When the time of the representation becomes false

Violation of a material warranty or other material provision of a policy

A written instrument known as the insurance contract or agreement between the insurer and the policyowner.

A written instrument known as the insurance contract or agreement between the insurer and the insured

The policy, including all riders, amendments or modifications, constitutes the entire contract of insurance

A supplemental agreement attached to the application

Added to a policy in order to add, modify, or delete policy provisions or coverage

A supplemental agreement attached to and made part of the policy.

Referred to as mid-term termination

Terminating an insurance policy before the end of the policy period.

Terminating an insurance policy before the start of the policy period

In variable and universal life policies, the depletion of cash value below the amount needed to keep the policy in force is also considered a lapse.

Termination of a policy because of failure to pay a premium within the grace period.

Termination of a policy because of failure to pay a premium after the grace period.

Continuance of an insurance policy beyond its original term.

Continuance of an insurance policy beyond its new term.

The payment of premiums after the first year of a policy or the agent's commissions on such second and subsequent years' premium are considered to be a renewal or renewals.

In life insurance it is normally 30-31 days.

The time period after the policy's due date in which a late payment may be made without penalty.

Life and health insurance are same 30 days.

In health insurance it may be 7 days for a week policy, 10 days for month, and 31 days for all other modes of payment.

The rate is the cost of a given amount of insurance

The rate is the cost of a given unit of insurance

In life insurance, it is generally the price per 1000 coverage.

In disability income insurance, it is usually the price of a 100 per monthly benefit

The premium is the rate multiplied by the number of units of insurance purchased, plus a policy fee if any, added to the initial premium payment

Paid by the policyowner to the insurer

Paid by the insured to the insurer

The periodic payment required by the insured, to receive policy benefits and keep the policy in force.

Depending on the type of cancellation the insurer keeps the earned premium and returns the unearned premium to the policyowner

The portion of the premium that has been used to pay for the protection or coverage provided by the insurer.

Depending on the type of cancellation the insurer keeps the earned premium and returns the unearned premium to the insured.

Reflects average exposures and fall into a normal range.

Reflects above average risk

Reflects the mortality and morbidity tables.

Ensure that consumer-reporting agencies (CRAs) exercise their responsibilities with fairness, impartiality, and a respect for consumers' rights.

Protects the insured from discrimination by the insurer.

Consumer can challenge information being inaccurate or incomplete and under the FCRA the consumer reporting agency must reinvestigate

Organized and is supported by Life insurance companies

Collects medical and mental impairment information

Collects credit reports for consumers.

Receives information obtained by underwriters during the underwriting process only.