Completing the Application, Underwriting, Delivering Policies, Contract Law
A policy is arranged at inception solely so an unrelated investor can wager on the insured's death. Which required element of a legal contract is most directly missing or violated?
Answer and explanation
Answer: A. A valid contract must have a legal purpose. Investor-originated coverage designed as a wager and promoted for immediate settlement conflicts with insurable-interest and anti-STOLI public policy.Source: Texas Legislature — Texas Insurance Code Chapter 1111A — § 1111A.017, Prohibited Practices
More completing the application, underwriting, delivering policies, contract law questions
- If an application is submitted WITHOUT premium, when does coverage officially take effect upon policy delivery?
- If an insurer issues a policy based on an incomplete application containing unanswered questions, what legal doctrine prevents the insurer from denying a claim later based on those missing answers?
- If an MIB report indicates a medical impairment that was not disclosed on the application, what action must the underwriter take under MIB rules?
- In a life insurance contract, which elements most directly represent the consideration exchanged by the parties?
- In the formation of a legal contract, how is 'consideration' best defined?
- No premium accompanies an application, and no temporary coverage applies. The insurer issues the policy, but the owner has not accepted delivery or paid the first premium. What is the status under the application agreement?
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