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5 Cards in this Set
- Front
- Back
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Insurance policies that give the policyowner the right to renew coverage but do not guarantee future rates are referred to as
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(B) guaranteed renewable
The answer is (B). (A) is incorrect because the insurer has the right to cancel a cancelable policy during the period for which premiums have been paid. (C) is incorrect because future rates are guaranteed in a noncancelable policy. (D) is incorrect because the insurer has a right to refuse to renew an optionally renewable policy. |
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King purchased an insurance policy that will pay $200 for each day he is hospitalized, regardless of the amount billed by the hospital. This insurance policy is considered which of the following?
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(C) a valued contract
The answer is (C). (A) is incorrect because insurance is a unilateral contract. (B) is incorrect because payments under a contract of indemnity reflect the amount of the loss. (D) is incorrect because insurance is a personal contract. |
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Jane, a restaurant critic on the staff of Local Newspaper, got a bad case of food poisoning while eating a tropical fruit salad at the Hungry Tiger restaurant she was reviewing. Because she was injured during the course of her employment, the insurance company providing Local Newspaper's workers' compensation insurance paid Jane's hospital expenses. That insurance company then sued Hungry Tiger, thereby exercising its legal rights of recovery under which of the following legal bases?
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(B) doctrine of subrogation
The answer is (B). (A) is incorrect because the doctrine, or principle, of indemnity refers to compensation that makes people whole following a loss.(C) is incorrect because the law of the jungle refers to unrestrained and ruthless competition. (D) is incorrect because the principle of adhesion deals with ambiguity in a contract. |
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Which of the following statements concerning the legal requirement of offer and acceptance in a life insurance contract is (are) correct? I. The offer can be made in the form of an oral request by the prospect to the agent. II. Acceptance typically occurs when the agent receives the offer and binds the coverage.
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(D) Neither I nor II
The answer is (D). I is incorrect because in life insurance the offer must be made in a written application. II is incorrect because in life insurance acceptance is held by most courts to occur when the applicant meets the normal underwriting standards of the insurer, including a medical examination if required. |
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Which of the following statements concerning the definitions of terms used in an insurance policy is (are) correct? I. Words or phrases defined in the policy typically appear in boldface type or quotation marks when they are used elsewhere in the policy. II. Words not defined in the policy are given their ordinary or normal meaning.
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(C) Both I and II
The answer is (C). Both I and II are correct |
