Rules of Construction - ANSWER Help to identify and establish the intent of the parties to
the contract
Utmost good faith - ANSWER Each party is entitled to rely on the representation of the
other, and each party should have a reasonable expectation that the other is acting in good
faith without attempts to conceal or deceive.
Aleatory Contract - ANSWER A contract under which one party's performance is
contingent on an uncertain event.
property and casualty agent - ANSWER has the power to bind the insurer
Adhesion Contract - ANSWER Insurance company drafts contract and the insured adheres
to it. Any ambiguity resolved in favor of the insured.
Unilateral contract - ANSWER Insured has completed paying the premium, only one party
of the contract is legally required to do something. Insured promises to pay the death
benefit in the event of loss. Can not be held for breach of contract.
Conditional contract - ANSWER This type of contract is conditional because the company
only pays on condition of a loss.
Personal Contract - ANSWER The contract is between the insured and the insurer
warranty - ANSWER guarantee; assurance by seller. Any breach provides grounds for
voiding the contract.
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,representation - ANSWER a statement believed to be true to the best of one's
knowledge.
false pretenses - ANSWER When an uninsurable individual applying for insurance may ask
another person to substitute for him to take the physical examination.
Misrepresentation - ANSWER A false statement or lie that can render the contract void.
concealment (n) - ANSWER The failure to disclose material facts. Grounds for recission by
either party.
Material Information or facts - ANSWER Something crucial to acceptance of the risk.
fraud (n) - ANSWER An intentional act designed to deceive and induce another party to
part with something of value.
Parol Evidence Rule - ANSWER Rule of law disallowing oral evidence which disputes a
written agreement.
Voidable Contract - ANSWER A contract that may be legally avoided at the option of one
or both of the parties.
Void Contract - ANSWER an agreement of no legal effect.
Implied Authority - ANSWER Authority that is given not in writing but that is necessary
for the agent to transact insurance.
2
, Apparent Authority - ANSWER A third party's reasonable belief that an agent has
authority to act on the principal's behalf.
Express Authority - ANSWER the authority of an agent, stated in the document or
agreement creating the agency.
Lingering implied authority - ANSWER means that the agent carries "signs or evidences of
authority.
Estoppel - ANSWER A legal impediment to denying a fact or restoring a right that has
been previously waived.
Valid Contract (Legal Contract) - ANSWER one that meets all of the requirements of a
binding contract. Competent parties, legal purpose, and consideration, not an actual written
document.
Policyfolder - ANSWER Important documents with a custom folder.
Plan Sponsors - ANSWER Policyholder responsible for administering pan and making
premiums to insurance company.
Employee or individual employer group - ANSWER Employer is the policy-owner and
establishes eligible class of employees to be covered under group policy.
Multiple employer group - ANSWER Several employers forming a trust to combine their
workers for life insurance eligibility.
Multiple Employer Trust (MET) - ANSWER A legal entity of small business owners grouped
together to buy life insurance.
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the contract
Utmost good faith - ANSWER Each party is entitled to rely on the representation of the
other, and each party should have a reasonable expectation that the other is acting in good
faith without attempts to conceal or deceive.
Aleatory Contract - ANSWER A contract under which one party's performance is
contingent on an uncertain event.
property and casualty agent - ANSWER has the power to bind the insurer
Adhesion Contract - ANSWER Insurance company drafts contract and the insured adheres
to it. Any ambiguity resolved in favor of the insured.
Unilateral contract - ANSWER Insured has completed paying the premium, only one party
of the contract is legally required to do something. Insured promises to pay the death
benefit in the event of loss. Can not be held for breach of contract.
Conditional contract - ANSWER This type of contract is conditional because the company
only pays on condition of a loss.
Personal Contract - ANSWER The contract is between the insured and the insurer
warranty - ANSWER guarantee; assurance by seller. Any breach provides grounds for
voiding the contract.
1
,representation - ANSWER a statement believed to be true to the best of one's
knowledge.
false pretenses - ANSWER When an uninsurable individual applying for insurance may ask
another person to substitute for him to take the physical examination.
Misrepresentation - ANSWER A false statement or lie that can render the contract void.
concealment (n) - ANSWER The failure to disclose material facts. Grounds for recission by
either party.
Material Information or facts - ANSWER Something crucial to acceptance of the risk.
fraud (n) - ANSWER An intentional act designed to deceive and induce another party to
part with something of value.
Parol Evidence Rule - ANSWER Rule of law disallowing oral evidence which disputes a
written agreement.
Voidable Contract - ANSWER A contract that may be legally avoided at the option of one
or both of the parties.
Void Contract - ANSWER an agreement of no legal effect.
Implied Authority - ANSWER Authority that is given not in writing but that is necessary
for the agent to transact insurance.
2
, Apparent Authority - ANSWER A third party's reasonable belief that an agent has
authority to act on the principal's behalf.
Express Authority - ANSWER the authority of an agent, stated in the document or
agreement creating the agency.
Lingering implied authority - ANSWER means that the agent carries "signs or evidences of
authority.
Estoppel - ANSWER A legal impediment to denying a fact or restoring a right that has
been previously waived.
Valid Contract (Legal Contract) - ANSWER one that meets all of the requirements of a
binding contract. Competent parties, legal purpose, and consideration, not an actual written
document.
Policyfolder - ANSWER Important documents with a custom folder.
Plan Sponsors - ANSWER Policyholder responsible for administering pan and making
premiums to insurance company.
Employee or individual employer group - ANSWER Employer is the policy-owner and
establishes eligible class of employees to be covered under group policy.
Multiple employer group - ANSWER Several employers forming a trust to combine their
workers for life insurance eligibility.
Multiple Employer Trust (MET) - ANSWER A legal entity of small business owners grouped
together to buy life insurance.
3
