Legal Concepts for Insurance Practice
Exam ACTUAL QUESTIONS AND
CORRECT ANSWERS
What are the essential elements that must be contained in every contract for it to be legally
valid and binding or enforceable - CORRECT ANSWERS✅✅Offer and acceptance
consideration
legal purpose
competent parties
Who is considered to be exempt to enter into a contract - CORRECT ANSWERS✅✅Minors
Insane or mentally ill individual
Individuals who are under the influence of alcohol or drugs at the time of application
Person forced or coerced into a contract
Enemy aliens
Convicts
What is the Laws of Agency - CORRECT ANSWERS✅✅Describe the companies insurance
policies to prospective buyers and explain conditions under which the policies can be
obtained, soliciting applications for insurance, collecting premiums for policyowner, and
rendering service to prospects and to those wo have purchased policies from the company
What are the Principals of Agency Law - CORRECT ANSWERS✅✅The authorized acts of
an agent are acts of he principal, a contract completed by an agent on behalf of the principal
is a contract of the principal, payments made to a agent on behalf of the principal are
payments to the principal, and knowledge of the agent regarding the business of the principal
is presumed to be knowledge of the principal
What are he three types of neglect regarding Tort Law - CORRECT ANSWERS✅✅Simple
negligence, gross negligence, and willful and wanton negligence
What are the insurance errors and omissions insurance types - CORRECT
ANSWERS✅✅Life agents
, Accident and Health Agents
property and Casualty agents
What are the typical losses covered - CORRECT ANSWERS✅✅Not providing coverage
when an agent was suppose to, administrative errors, premium calculation errors, misstating
insurance coverage, not effecting the policy change requested by a customer, not accurately
explaining the policy provisions, incorrect identification of client loss exposures, forwarding
inaccurate or incomplete information about client to carrier, failing to recommend coverage
and not handling a claim properly
What are the typical E & O exclusions - CORRECT ANSWERS✅✅Criminal acts
Illegal acts
Dishonest acts
Malicious acts
Libel
Slander
Intentional violation of any law, regulation, statute, or ordinance
What must an insurance applicant disclose - CORRECT ANSWERS✅✅Make a full, fair,
and honest disclosure of the risk to the agent and insurer
What is the consideration given by an insurer in the consideration clause of a life policy -
CORRECT ANSWERS✅✅Promise to pay a death benefit to a named beneficiary
Life and health insurance policies are - CORRECT ANSWERS✅✅Unilateral contracts
When third-party ownership s involved, applicants who also happen to be the stated primary
beneficiary are required to have - CORRECT ANSWERS✅✅Insurable interest in the
proposed insured
The Consideration clause of an insurance contract includes - CORRECT ANSWERS✅✅The
schedule and amount of premium payments
Exam ACTUAL QUESTIONS AND
CORRECT ANSWERS
What are the essential elements that must be contained in every contract for it to be legally
valid and binding or enforceable - CORRECT ANSWERS✅✅Offer and acceptance
consideration
legal purpose
competent parties
Who is considered to be exempt to enter into a contract - CORRECT ANSWERS✅✅Minors
Insane or mentally ill individual
Individuals who are under the influence of alcohol or drugs at the time of application
Person forced or coerced into a contract
Enemy aliens
Convicts
What is the Laws of Agency - CORRECT ANSWERS✅✅Describe the companies insurance
policies to prospective buyers and explain conditions under which the policies can be
obtained, soliciting applications for insurance, collecting premiums for policyowner, and
rendering service to prospects and to those wo have purchased policies from the company
What are the Principals of Agency Law - CORRECT ANSWERS✅✅The authorized acts of
an agent are acts of he principal, a contract completed by an agent on behalf of the principal
is a contract of the principal, payments made to a agent on behalf of the principal are
payments to the principal, and knowledge of the agent regarding the business of the principal
is presumed to be knowledge of the principal
What are he three types of neglect regarding Tort Law - CORRECT ANSWERS✅✅Simple
negligence, gross negligence, and willful and wanton negligence
What are the insurance errors and omissions insurance types - CORRECT
ANSWERS✅✅Life agents
, Accident and Health Agents
property and Casualty agents
What are the typical losses covered - CORRECT ANSWERS✅✅Not providing coverage
when an agent was suppose to, administrative errors, premium calculation errors, misstating
insurance coverage, not effecting the policy change requested by a customer, not accurately
explaining the policy provisions, incorrect identification of client loss exposures, forwarding
inaccurate or incomplete information about client to carrier, failing to recommend coverage
and not handling a claim properly
What are the typical E & O exclusions - CORRECT ANSWERS✅✅Criminal acts
Illegal acts
Dishonest acts
Malicious acts
Libel
Slander
Intentional violation of any law, regulation, statute, or ordinance
What must an insurance applicant disclose - CORRECT ANSWERS✅✅Make a full, fair,
and honest disclosure of the risk to the agent and insurer
What is the consideration given by an insurer in the consideration clause of a life policy -
CORRECT ANSWERS✅✅Promise to pay a death benefit to a named beneficiary
Life and health insurance policies are - CORRECT ANSWERS✅✅Unilateral contracts
When third-party ownership s involved, applicants who also happen to be the stated primary
beneficiary are required to have - CORRECT ANSWERS✅✅Insurable interest in the
proposed insured
The Consideration clause of an insurance contract includes - CORRECT ANSWERS✅✅The
schedule and amount of premium payments
