Arkansas Life Insurance| Questions with 100% correct Answers | Verified

Adverse Selection - Insuring of risks that are more prone to losses than the average risk. Death Benefit - The amount paid upon the death of the insured in a life insurance policy. Insurance Policy - A contract between a policyowner/insured and an insurance company which agrees to pay the insured or the beneficiary for loss caused by specific events. Insured - Person covered by the insurance policy; may or may not be the policyowner Insurer (Principle) - The company who issues an insurance policy. Lapse - Policy termination due to nonpayment of premium. Life Insurance - Coverage on human lives. Policyowner - The person entitled to exercise the rights and privileges in the policy. Premium - The money paid to the insurance company for the insurance policy. Insurance transfers what? - The risk of loss from and individual to and insurance company. Elements of a Legal Contract - 1. Agreement (offer and acceptance) 2. Consideration 3. Competent Parties 4. Legal PurposeOffer and Acceptance - Offer happens when application is submitted. Acceptance takes place when an insurer's underwriter approves the application and issues a policy. Consideration - Binding force. Something of value that each party gives to the other. Competent Parties - Both parties be of legal age, mentally competent to understand the contract, and not under the influence of drugs/alcohol.