Kentucky Life Insurance Test
Insurance - Answer-Means for spreading the result of financial loss among many persons so the cost to
any one person is small
Assessment - Answer-System of paying losses by requiring a contribution from each family covered by
the plan
Principle of Life Insurance - Answer-Life insurance is a means of spreading among many persons the
financial loss resulting from an individual's death so that the cost for each individual is small
Necessary procedures to make system of life insurance operate efficiently - Answer-1. Sell insurance to
those desiring it
2. Collect the money due for the insurance
3. Handle the administrative details
4. Pay those persons named to collect the insurance proceeds after the death of the person whose life is
insured
Elements of a contract - Answer-1. Competent parties - contract must be between two people
considered competent under the law
, 2. Legal Purpose- contracts enforceable only if they are made in pursuit of some legal purpose
3. Offer and Acceptance- One party who makes the offer, and one party who accepts the offer
4. Consideration- The thing of value exchanged for the performance promised in the contract (Premium
paid in exchange for insurance is the consideration)
Waiver - Answer-Voluntary giving up of a known right or privilege
-Express waivers- intentionally written and included with an insurance policy in the form of a rider that is
added to the policy
-Implied waiver- result because the agent or the insurer has permitted something to occur or be
overlooked, either intentionally or inadvertently
Estoppel - Answer-A person is prohibited by virtue of his own past actions (Waiver) from claiming a right
that would work to the detriment of another who relied on the past conduct
-if a company or person gives up a right, they are stopped, or estopped from asking for it back at a later
time
Parol Evidence Rule - Answer-When parties agree to a written contract any previous oral agreements
must be included in the written agreement
-Once both parties have signed the written agreement, oral agreements will not be considered
Personal - Answer--Most insurance contracts are personal in nature (agreement between insurer and
insured that cannot be transferred)
-HOWEVER, life insurance is not personal (it is owned by the insured and can be transferred)
Insurance contracts are aleatory - Answer--Meaning equal value is not given by both parties to the
contract
-The insured may receive a great deal more from the insurance company than the total premiums paid
Contracts of Adhesion - Answer--Prepared by one side of the contract
Insurance - Answer-Means for spreading the result of financial loss among many persons so the cost to
any one person is small
Assessment - Answer-System of paying losses by requiring a contribution from each family covered by
the plan
Principle of Life Insurance - Answer-Life insurance is a means of spreading among many persons the
financial loss resulting from an individual's death so that the cost for each individual is small
Necessary procedures to make system of life insurance operate efficiently - Answer-1. Sell insurance to
those desiring it
2. Collect the money due for the insurance
3. Handle the administrative details
4. Pay those persons named to collect the insurance proceeds after the death of the person whose life is
insured
Elements of a contract - Answer-1. Competent parties - contract must be between two people
considered competent under the law
, 2. Legal Purpose- contracts enforceable only if they are made in pursuit of some legal purpose
3. Offer and Acceptance- One party who makes the offer, and one party who accepts the offer
4. Consideration- The thing of value exchanged for the performance promised in the contract (Premium
paid in exchange for insurance is the consideration)
Waiver - Answer-Voluntary giving up of a known right or privilege
-Express waivers- intentionally written and included with an insurance policy in the form of a rider that is
added to the policy
-Implied waiver- result because the agent or the insurer has permitted something to occur or be
overlooked, either intentionally or inadvertently
Estoppel - Answer-A person is prohibited by virtue of his own past actions (Waiver) from claiming a right
that would work to the detriment of another who relied on the past conduct
-if a company or person gives up a right, they are stopped, or estopped from asking for it back at a later
time
Parol Evidence Rule - Answer-When parties agree to a written contract any previous oral agreements
must be included in the written agreement
-Once both parties have signed the written agreement, oral agreements will not be considered
Personal - Answer--Most insurance contracts are personal in nature (agreement between insurer and
insured that cannot be transferred)
-HOWEVER, life insurance is not personal (it is owned by the insured and can be transferred)
Insurance contracts are aleatory - Answer--Meaning equal value is not given by both parties to the
contract
-The insured may receive a great deal more from the insurance company than the total premiums paid
Contracts of Adhesion - Answer--Prepared by one side of the contract
