AIC 301 STUDY GUIDE EXAM QUESTIONS AND VERIFIED ANSWERS
RECENT EXAM COMPLETE WITH 645 QUESTIONS GRADED A+
a clause that states the insurer cannot contest the policy after it has been in force
for a specified period, such as 2 years, during the insured's lifetime - ANS... -
incontestable clause
a period during which an insurer can challenge the validity of a life insurance
policy - ANS... -contestable period
any contract in which one party is put in a "take-it-or-leave-it" position and must
either accept the contract as written by the other party or reject the contract entirely
- ANS... -contracts of adhesion
if policy wording is ambiguous, a court will generally apply the interpretation that
favors the insured - ANS... -contra proferentem
a contract in which the insurer agrees in the event of a covered loss, to pay an
amount directly related to the amount of the loss - ANS... -contracts of indemnity
the principle that insurance policies should provide a benefit no greater than the
loss suffered by an insured - ANS... -principle of indemnity
a legally enforceable agreement between 2 or more parties - ANS... -contract
not all __________________ are legally binding contracts - ANS... -agreements
6 elements of a legally binding contract - ANS... -1) agreement
2) capacity
3) mutual assent
4) consideration
5) legal purpose
6) form required by law
party making a promise - ANS... -promisor
party to whom a promise is made - ANS... -promisee
,the relationship that exists between 2 parties to a contract - ANS... -privity of
contract
a party cannot sue for breach of contract without being in ______________ of
contract with the other party - ANS... -privity
a person who is not a party to a contract but who benefits from it and has a legal
right to enforce the contract if it is breached by either of the contracting parties -
ANS... -third-party beneficiary
the failure without legal excuse, to fulfill a contractual promise - ANS... -breach of
contract
must include an offer and its acceptance - ANS... -agreement
party making the offer - ANS... -offeror
party who makes a promise or acts in return for something offered by another party
- ANS... -offeree
offers must include _____________ terms and be communicated to and received
by the offeree - ANS... -definite
if the offeree requests changes to conditions of the offer - ANS... -counteroffer
all parties must be ______________ _________________ for a contract to be
legally binding - ANS... -mentally competent
the act of 2 or more parties deliberately negotiating all terms to achieve consensus
- ANS... -mutual assent
something of value that is given in return for a promise - ANS... -consideration
a contract must serve a legal purpose to be legally enforceable - ANS... -legal
purpose
contracts must be in a proper, legally stipulated form to be binding - ANS... -form
required by law
4 examples of contracts that have to be in writing - ANS... -1) sale of real estate
,2) agreements that can't be performed within 1 year
3) transactions > $500
4) agreements to pay a debt owed
a contract where each party promises to perform an act in exchange for an act by
the other party - ANS... -bilateral contract
a contract where one party promises to pay for the act of the other party - ANS... -
unilateral contract
contract where nothing more is required of either party to be fulfilled - ANS... -
executed contract
a contract that hasn't been fully executed - ANS... -executory contract
contract where terms and intentions are clearly stated - ANS... -express contract
contract where terms and intentions are indicated by the actions of the parties to
the contract and the surrounding circumstances - ANS... -implied contract
parties presumably intended, either by tacit understanding or by the assumption
that it already existed - ANS... -implied-in-fact contracts
an obligation that is not an actual contract but that is imposed by law because of
the parties' conduct or some special relationship between them or because one of
them would otherwise be unjustly enriched - ANS... -implied-in-law contracts
sometimes called "quasi-contracts" - ANS... -implied-in-law contracts
a contract that one of the parties can reject (avoid) based on some circumstances
regarding its execution - ANS... -voidable contract
the _______________ of one of the contracting parties can make a contract
voidable - ANS... -behavior
an agreement that despite that parties' intentions, never reaches contract status and
is therefore not legally enforceable or binding - ANS... -void contract
ex. agreement to commit a crime (what type of contract?) - ANS... -void contact
, 5 factors lacking for mutual assent - ANS... -1) fraud
2) mistake
3) duress
4) undue influence
5) innocent misrepresentation
an intentional misrepresentation resulting in harm to a person or an organization -
ANS... -fraud
2 remedies that can be sought if fraud is proven - ANS... -1) rescission
2) sue for damages
a legal act of cancelling something and making it void - ANS... -rescission
action taken if rescission can't make the plaintiff whole - ANS... -sue for damages
2 things insurers need to prove to establish fraudulent concealment - ANS... -1)
insured knew the fact concealed was material
2) insured concealed the fact with the intent to defraud
mistakes can be ______________ or _________________ - ANS... -unilateral;
bilateral
the use of restraint, violence, threats of violence, or wrongful pressure to compel a
party to act contrary to their wishes or interests - ANS... -duress
the improper use of power or trust to deprive a person of free will and substitute
another's objective, resulting in lack of genuine assent to a contract - ANS... -undue
influence
2 examples of undue influence - ANS... -1) gifts & wills
2) elderly persons suffering from physical ailments or dementia
when a person makes a false statement that they believes to be true - ANS... -
innocent misrepresentation
courts do not award monetary damages for _________________ misrepresentation
- ANS... -innocent
RECENT EXAM COMPLETE WITH 645 QUESTIONS GRADED A+
a clause that states the insurer cannot contest the policy after it has been in force
for a specified period, such as 2 years, during the insured's lifetime - ANS... -
incontestable clause
a period during which an insurer can challenge the validity of a life insurance
policy - ANS... -contestable period
any contract in which one party is put in a "take-it-or-leave-it" position and must
either accept the contract as written by the other party or reject the contract entirely
- ANS... -contracts of adhesion
if policy wording is ambiguous, a court will generally apply the interpretation that
favors the insured - ANS... -contra proferentem
a contract in which the insurer agrees in the event of a covered loss, to pay an
amount directly related to the amount of the loss - ANS... -contracts of indemnity
the principle that insurance policies should provide a benefit no greater than the
loss suffered by an insured - ANS... -principle of indemnity
a legally enforceable agreement between 2 or more parties - ANS... -contract
not all __________________ are legally binding contracts - ANS... -agreements
6 elements of a legally binding contract - ANS... -1) agreement
2) capacity
3) mutual assent
4) consideration
5) legal purpose
6) form required by law
party making a promise - ANS... -promisor
party to whom a promise is made - ANS... -promisee
,the relationship that exists between 2 parties to a contract - ANS... -privity of
contract
a party cannot sue for breach of contract without being in ______________ of
contract with the other party - ANS... -privity
a person who is not a party to a contract but who benefits from it and has a legal
right to enforce the contract if it is breached by either of the contracting parties -
ANS... -third-party beneficiary
the failure without legal excuse, to fulfill a contractual promise - ANS... -breach of
contract
must include an offer and its acceptance - ANS... -agreement
party making the offer - ANS... -offeror
party who makes a promise or acts in return for something offered by another party
- ANS... -offeree
offers must include _____________ terms and be communicated to and received
by the offeree - ANS... -definite
if the offeree requests changes to conditions of the offer - ANS... -counteroffer
all parties must be ______________ _________________ for a contract to be
legally binding - ANS... -mentally competent
the act of 2 or more parties deliberately negotiating all terms to achieve consensus
- ANS... -mutual assent
something of value that is given in return for a promise - ANS... -consideration
a contract must serve a legal purpose to be legally enforceable - ANS... -legal
purpose
contracts must be in a proper, legally stipulated form to be binding - ANS... -form
required by law
4 examples of contracts that have to be in writing - ANS... -1) sale of real estate
,2) agreements that can't be performed within 1 year
3) transactions > $500
4) agreements to pay a debt owed
a contract where each party promises to perform an act in exchange for an act by
the other party - ANS... -bilateral contract
a contract where one party promises to pay for the act of the other party - ANS... -
unilateral contract
contract where nothing more is required of either party to be fulfilled - ANS... -
executed contract
a contract that hasn't been fully executed - ANS... -executory contract
contract where terms and intentions are clearly stated - ANS... -express contract
contract where terms and intentions are indicated by the actions of the parties to
the contract and the surrounding circumstances - ANS... -implied contract
parties presumably intended, either by tacit understanding or by the assumption
that it already existed - ANS... -implied-in-fact contracts
an obligation that is not an actual contract but that is imposed by law because of
the parties' conduct or some special relationship between them or because one of
them would otherwise be unjustly enriched - ANS... -implied-in-law contracts
sometimes called "quasi-contracts" - ANS... -implied-in-law contracts
a contract that one of the parties can reject (avoid) based on some circumstances
regarding its execution - ANS... -voidable contract
the _______________ of one of the contracting parties can make a contract
voidable - ANS... -behavior
an agreement that despite that parties' intentions, never reaches contract status and
is therefore not legally enforceable or binding - ANS... -void contract
ex. agreement to commit a crime (what type of contract?) - ANS... -void contact
, 5 factors lacking for mutual assent - ANS... -1) fraud
2) mistake
3) duress
4) undue influence
5) innocent misrepresentation
an intentional misrepresentation resulting in harm to a person or an organization -
ANS... -fraud
2 remedies that can be sought if fraud is proven - ANS... -1) rescission
2) sue for damages
a legal act of cancelling something and making it void - ANS... -rescission
action taken if rescission can't make the plaintiff whole - ANS... -sue for damages
2 things insurers need to prove to establish fraudulent concealment - ANS... -1)
insured knew the fact concealed was material
2) insured concealed the fact with the intent to defraud
mistakes can be ______________ or _________________ - ANS... -unilateral;
bilateral
the use of restraint, violence, threats of violence, or wrongful pressure to compel a
party to act contrary to their wishes or interests - ANS... -duress
the improper use of power or trust to deprive a person of free will and substitute
another's objective, resulting in lack of genuine assent to a contract - ANS... -undue
influence
2 examples of undue influence - ANS... -1) gifts & wills
2) elderly persons suffering from physical ailments or dementia
when a person makes a false statement that they believes to be true - ANS... -
innocent misrepresentation
courts do not award monetary damages for _________________ misrepresentation
- ANS... -innocent
