This chapter is from the book
Exam Prep Answers
- A is correct. Express authority is spelled out in an agent's
- D is correct. Apparent authority is the authority an agent appears
to have because of past actions that have not been challenged by the insurance
- B is correct. Implied authority is not expressly stated
in an agent's contract but it is actual authority related to common business
practices, such as accepting premiums for the insurer.
- A is correct. Under the principal of estoppel, a pattern of past
behavior may prevent the insurer from exercising a right it might have had if it
had exercised it earlier.
- B is correct. A producer has a duty to act with a reasonable
degree of care when representing an insurer.
- C is correct. Valid contracts do not need to be in writing. Oral
contracts are legally binding.
- A is correct. The premium is the consideration given by
the insured in exchange for the insurer's promise to pay if a loss
- A is correct. All life insurance policies include an insuring
clause, conditions, and exclusions. There is no requirement for a policy
- B is correct. An aleatory contract is one that depends on chance
or an uncertain outcome. Ken may have received far more in benefits than he paid
as premiums, but others who pay premiums may never have a loss and never receive
even a dollar in benefits.
- B is correct. The act of submitting an application with a premium
payment is an offer that is still subject to acceptance by the insurer.
- D is correct. By not accepting the initial offer and offering
alternative terms, the insurer has made a counter offer.
- B is correct. The failure to disclose known facts is concealment.
Intentionally giving false answers or misstating facts would be
misrepresentation, and possibly fraud.