Life Agent: Section 1 - Contract Law

44 Questions | Total Attempts: 44

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Contract Law Quizzes & Trivia

Questions and Answers
  • 1. 
    Which one is not a binder?
    • A. 

      Life

    • B. 

      Health

    • C. 

      Disability

  • 2. 
    What is a contract law?
    • A. 

      Insurance policies are legal contracts - personal contracts between the insured and the insurer

    • B. 

      Insurance policies are legal contracts - personnel contracts between the policyowner and the insurer

    • C. 

      Insurance policies are legal contracts - personal contracts between the policyowner and the insurer

  • 3. 
    What is a tort law?
    • A. 

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

    • B. 

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

    • C. 

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

    • D. 

      Most torts are covered by liability insurance

  • 4. 
    What are the elements of a contract?
    • A. 

      Agreement, offer, and acceptance

    • B. 

      Rejection

    • C. 

      Competent parties

    • D. 

      Legal purpose

    • E. 

      Consideration

  • 5. 
    What is contract of adhesion?
    • A. 

      Insurer must adhere (is stuck) with insureds terms

    • B. 

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

    • C. 

      Insured must adhere (is stuck) with insurers terms.

  • 6. 
    What is a conditional contract?
    • A. 

      Certain conditions must me bet by the policyholder or beneficiary in order to make the contract enforceable.

    • B. 

      Certain conditions must me bet by the insured or beneficiary in order to make the contract enforceable.

    • C. 

      Certain conditions must me bet by the insurer or beneficiary in order to make the contract enforceable.

  • 7. 
    What is an aleatory contract?
    • A. 

      Dependent upon the occurrence or happening of an uncertain event.

    • B. 

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

    • C. 

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

  • 8. 
    What is a unilateral contract?
    • A. 

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

    • B. 

      Only the insurer makes a promise.

    • C. 

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

    • D. 

      Exchange of a promise for a promise

  • 9. 
    What is a personal contract?
    • A. 

      A personal agreement between the insurer and the insured

    • B. 

      The contract follows the property not the person

    • C. 

      Cannot be assigned (transferred without insurer's consent

  • 10. 
    What is utmost good faith?
    • A. 

      Each party has a reasonable expectation that the other is attempting to conceal, disguise, or conceal relevant information and material facts.

    • B. 

      Each party has a reasonable expectation that the other is not attempting to conceal, disguise, or conceal relevant information and material facts.

    • C. 

      Each party already know every information about each other and does not need any further information

  • 11. 
    What is indemnity?
    • A. 

      Pays amount less than the loss

    • B. 

      Pays amount in excess of the loss

    • C. 

      Pays amount equal to the loss

  • 12. 
    What is a valued contract?
    • A. 

      Pays a stated sum, regardless of the actual loss incurred, when a covered loss occurs.

    • B. 

      Pays a stated sum, only if the actual loss is incurred.

    • C. 

      Pays 75% sum, regardless of the actual loss incurred, when a covered loss occurs

  • 13. 
    What is executory contract?
    • A. 

      Promises described in the insurance contract are to be executed in the future, and only after the actual event has occur

    • B. 

      Promises described in the insurance contract are to be executed in the future, regardless if a certain events occur

    • C. 

      Promises described in the insurance contract are to be executed in the future, and only after certain events (losses) occur.

  • 14. 
    What is an insurance policy?
    • A. 

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

    • B. 

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

    • C. 

      An insurance policy protects the insured from financial losses

  • 15. 
    What is fraud?
    • A. 

      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.

    • B. 

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

    • C. 

      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).

    • D. 

      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.

  • 16. 
    What is the punishment for fraud?
    • A. 

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

    • B. 

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

    • C. 

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

    • D. 

      Both fine and imprisonment

    • E. 

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

  • 17. 
    What is concealment?
    • A. 

      Neglecting to communicate that which party knows and out to communicate

    • B. 

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

    • C. 

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

    • D. 

      Failure to fully disclose all pertinent information.

  • 18. 
    What is materiality?
    • A. 

      The importance of the information withheld.

    • B. 

      Determined by the event of the insured and insurer

    • C. 

      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.

  • 19. 
    Which information does not need to be communicated?
    • A. 

      Known information

    • B. 

      Information that should be known

    • C. 

      Information that is relevant to the risk

    • D. 

      Information which the other party waives

    • E. 

      Information that is not material to the risk

  • 20. 
    What is a warranty?
    • A. 

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

    • B. 

      A warranty can only be in writing

    • C. 

      Representation in an insurance contract qualifies as an implied warranty

    • D. 

      Found in property and casualty insurance only

    • E. 

      Statements that guaranteed to be absolutely true.

  • 21. 
    What is materiality?
    • A. 

      The rule used to determine the importance of a misrepresentation.

    • B. 

      The rule used to determine the importance of a fraud

    • C. 

      The rule used to determine the importance of a concealment

  • 22. 
    What are representations?
    • A. 

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

    • B. 

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

    • C. 

      Made at the time of application or before issuance.

    • D. 

      Are implied warranties only

    • E. 

      Could be considered a promise

    • F. 

      Same as materiality of concealment

    • G. 

      False when it fails to correspond with assertions.

    • H. 

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

  • 23. 
    What is misrepresentation?
    • A. 

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

    • B. 

      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

    • C. 

      Misrepresentation can only be intentional.

  • 24. 
    What is the penalties for misrepresentation or twisting?
    • A. 

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

    • B. 

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

    • C. 

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

    • D. 

      Can have license suspended up to 3 years.

    • E. 

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

  • 25. 
    What are the requirements for policies?
    • A. 

      The parties between whom the contract is made

    • B. 

      The property or life insured

    • C. 

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

    • D. 

      The financial rating of the insurer is requireed

    • E. 

      The risks insured against

    • F. 

      The period during which the insurance is continued

    • G. 

      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