What are speculative risks? - ANSWER Risks that involve three outcomes: loss, gain, or no change
What are pure risks? - ANSWER Risks that involve no possibility of gain
What risks are insurable? - ANSWER Only pure risks
LOMA
281(2024
LATEST
UPDATE)CORRE
CT 100%
What are speculative risks? - ANSWER Risks that involve three outcomes: loss, gain, or no change
What are pure risks? - ANSWER Risks that involve no possibility of gain
What risks are insurable? - ANSWER Only pure risks
, Speculative risks involve the possibility of gain so they cannot be insured
What is a retention limit? - ANSWER The maximum amount of risk the insurer is willing to carry at its
own risk
What is a commutative contract? - ANSWER The parties agree to exchange specified items or services
that are equal in value
What is an aleatory contract? - ANSWER One party exchanges something of value for the other party's
conditional promise
Is a life insurance policy a commutative or aleatory contract? - ANSWER Aleatory
Are life insurance contracts bargaining contracts? - ANSWER No, they are contracts of adhesion. The
insurance company sets the terms and the applicant can either accept or reject
Are insurance contracts formal or informal? - ANSWER Informal
What are the requirements of a valid contract? - ANSWER Mutual assent
Legally adequate consideration
Lawful purpose
Contractual capacity
Which relatives automatically satisfy the requirement of insurable interest? - ANSWER Spouses, children,
parents, siblings, grandparents, and grandchildren
What is ROP insurance? - ANSWER A form of term life insurance that provides a death benefit if the
insured dies during the term of coverage and promises a return of premiums if the insured does not die
during the term of coverage.
What are the two main elements of cash value life insurance that term life does not have? - ANSWER
Lifetime coverage
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