Legal Concepts Questions and Answers 2023
When must insurable interest be present in order for a life insurance policy to be
valid?
When the application is made
What is the consideration given by an insurer in the Consideration clause of a life
policy?
Promise to pay a death benefit to a named beneficiary
The Consideration clause of an insurance contract includes
the schedule and amount of premium payments
A life insurance arrangement which circumvents insurable interest statutes is
called
Investor-Originated Life Insurance
Investor-originated life insurance (or IOLI) is used to circumvent state insurable interest
statutes. This is done when an investor (or stranger) persuades an individual to take out
life insurance specifically for the purpose of selling the policy to the investor. The
investor compensates the insured and makes the premiums, then collects the death
benefit when the insured dies.
When third-party ownership is involved, applicants who also happen to be the
stated primary beneficiary are required to have
Correct. An applicant who is also the designated primary beneficiary must have an
insurable interest in the proposed insured.
Which of these require an offer, acceptance, and consideration?
Contract
The part of a life insurance policy guaranteed to be true is called a(n)
warranty.
Warranties are statements that are considered literally true. A warranty that is not
literally true in every detail, even if made in error, is sufficient to render a policy void.
E and F are business partners. Each takes out a $500,000 life insurance policy on
the other, naming himself as primary beneficiary. E and F eventually terminate
their business, and four months later E dies. Although E was married with three
children at the time of death, the primary beneficiary is still F. However, an
insurable interest no longer exists. Where will the proceeds from E's life
insurance policy be directed to?
F.
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.
A life insurance policy would be considered a wagering contract WITHOUT
insurable interest.
Without insurable interest, a life insurance policy would be considered a wagering
contract.
All of the following are considered to be typical characteristics describing the
nature of an insurance contract EXCEPT
When must insurable interest be present in order for a life insurance policy to be
valid?
When the application is made
What is the consideration given by an insurer in the Consideration clause of a life
policy?
Promise to pay a death benefit to a named beneficiary
The Consideration clause of an insurance contract includes
the schedule and amount of premium payments
A life insurance arrangement which circumvents insurable interest statutes is
called
Investor-Originated Life Insurance
Investor-originated life insurance (or IOLI) is used to circumvent state insurable interest
statutes. This is done when an investor (or stranger) persuades an individual to take out
life insurance specifically for the purpose of selling the policy to the investor. The
investor compensates the insured and makes the premiums, then collects the death
benefit when the insured dies.
When third-party ownership is involved, applicants who also happen to be the
stated primary beneficiary are required to have
Correct. An applicant who is also the designated primary beneficiary must have an
insurable interest in the proposed insured.
Which of these require an offer, acceptance, and consideration?
Contract
The part of a life insurance policy guaranteed to be true is called a(n)
warranty.
Warranties are statements that are considered literally true. A warranty that is not
literally true in every detail, even if made in error, is sufficient to render a policy void.
E and F are business partners. Each takes out a $500,000 life insurance policy on
the other, naming himself as primary beneficiary. E and F eventually terminate
their business, and four months later E dies. Although E was married with three
children at the time of death, the primary beneficiary is still F. However, an
insurable interest no longer exists. Where will the proceeds from E's life
insurance policy be directed to?
F.
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.
A life insurance policy would be considered a wagering contract WITHOUT
insurable interest.
Without insurable interest, a life insurance policy would be considered a wagering
contract.
All of the following are considered to be typical characteristics describing the
nature of an insurance contract EXCEPT
