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NJ HEALTH AND ACCIDENT INSURANCE
EXAM
CORRECT SOLUTIONS.
In order for insurance contracts to be legally binding, they must
have 4 essential elements: - correct answer- 1. agreement
- Consideration
- Competent parties
- legal purpose
consideration - correct answer- The binding force in a contract that requires something of value to be exchanged for the transfer of risk. The consideration on the part of the insured is the representations made in the application and the payment of premium; the consideration on the part of the insurer is the promise to pay in the event of loss.
conditional contract - correct answer- Certain conditions must be met by all parties to the contract when a loss occurs in order for the contract to be legally enforceable.
unilateral contract - correct answer- only one of the parties to the contract is legally bound to do anything; the insurer is legally bound to pay losses covered by a policy force 1 / 2
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contract of adhesion - correct answer- prepared by the insurer and accepted or rejected by the other party
warranty - correct answer- An absolutely true statement upon which the validity of the insurance policy depends.
representations - correct answer- statements believed to be true to the best of one's knowledge
Material Misrepresentation - correct answer- A statement that, if discovered, would alter the underwriting decision of the insurance company.
Fair Credit Reporting Act - correct answer- established procedures that consumer-reporting agencies must follow in order to ensure that records are confidential, accurate, relevant, and properly used
Medical Information Bureau - correct answer- owned by member insurance companies. It is a nonprofit trade organization that receives adverse medical information from
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