Introduction to Life Insurance

Spreading the result of financial loss among many so that the cost is small to any one person describes: Page 4

Suppose a person pays a specified amount of money into a fund on a predetermined, fixed interval basis. The amount is based on the person’s age. When this person dies, his family will be paid a specified amount of money. Which of the following has taken place? Page 4

Under the principle of life insurance, many pay for the actual losses of a few because: Page 5

Life insurance spreads among many the financial loss resulting from an individual’s death so that the cost to each individual is: Page 5

A legal agreement between two or more parties promising certain performance in exchange for valuable consideration is: Page 5

Why are life and health insurance policies considered unilateral contracts? Page 6

Under the terms of a valid insurance contract, the policyowner’s consideration is the premium paid and the application as part of the contract. Which of the following represents the insurance company’s consideration? Page 6

All of the following are characteristics of a legally enforceable contract except: Page 6

Generally, which of the following could be a party to a valid contract? Page 6

Which of the following contracts could be considered valid? Page 6

Offer and acceptance being a characteristic of a legally enforceable contract, in an insurance transaction, which party makes the offer and which accepts? Page 6

Which of the following best describes the thing of value exchanged for the performance promised in a contract? Page 6

The voluntary giving up of a known right or privilege is termed a: Page 7

ABC Insurance Company knew that an insured, when applying for coverage, had misstated his age and had denied that he had heart problems. The company issued a life insurance policy anyway. When the insured died of a heart attack shortly thereafter, the company denied coverage claiming fraud and misrepresentation on the part of the insured. Which of the following legal concepts allowed the family to collect the death benefit? Page 7

When an insurance contract is referred to as aleatory, this means: Page 7

Why are insurance contracts considered adhesion contracts? Page 7

A contract that is not completed immediately is termed: Page 8

The recipient of life insurance or annuity proceeds is call the: Page 8

XYZ Insurance Company must rely on statistical probabilities of death in a large population of insureds. The key to this system is: Page 8

Which of the following is a correct statement about the reliability of predictions about how many will die at a specific age in the entire population of insureds of that age? Page 9

For purposes of predicting mortality, insurance companies typically ignore statistically those over: Page 9