Completing the Application, Underwriting, Delivering Policies, Contract Law
Which statement best explains why a life insurance policy is legally considered a conditional contract?
Answer and explanation
Answer: B. A conditional contract makes performance depend on stated conditions. Insurance liability and claim payment depend on compliance with policy conditions and occurrence of a covered event.Source: South Carolina Department of Insurance — Prelicensing Education Topic Outline — Life, Accident and Health Topic Outline pages 12–13, formation and unique features of insurance contracts; premium receipts
More completing the application, underwriting, delivering policies, contract law questions
- 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?
- The home office proposes changing an application from preferred to standard class and reducing the face amount. What is required before those changes are effective on the application?
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