Completing the Application, Underwriting, Delivering Policies, Contract Law
An insured pays a single monthly premium and dies the next week, and the insurer pays the full face amount. Which contract characteristic does this illustrate?
Answer and explanation
Answer: D. Aleatory refers to the unequal exchange of value that depends on an uncertain event. A small premium producing a large benefit is the classic illustration.Source: NAIC Life Insurance Buyer's Guide — The policy as a contract: aleatory nature of insurance
More completing the application, underwriting, delivering policies, contract law questions
- Which arrangement most closely describes stranger-originated life insurance?
- Which individual would be deemed legally INCOMPETENT to enter into a binding life insurance contract?
- Which of the following facts most directly establishes an individual's legal capacity to enter into a life insurance contract?
- Which statement best explains why a life insurance policy is legally considered a conditional contract?
- Which statement correctly separates the aleatory character of a life policy from its conditional character?
- Who must sign a life insurance application when an adult purchases insurance on their own life?
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