Life & Health Insurance — Basics & Contract Law flashcards
10 of 77 cards free to study here · 5 topics · the whole deck is built into Willys
Risk, hazards, insurable interest and reinsurance; insurer types and producer authority; contract elements and characteristics; applications, underwriting and receipts; replacement, unfair trade practices and anti-money-laundering rules.
Learn deck · part of Life and health insurance producer licence (national portion) · written against: Life, accident and health concepts common to state producer exams; NAIC model provisions; federal law as of 2026; state law excluded. Updated 2026-10-10.
Study the free sample
10 cards from the deck as they are. Flip, rate yourself, filter by topic; your progress stays in this browser.
Tap the card or press Space to flip
The 10 sample cards as a list
-
In insurance terms, how does pure risk differ from speculative risk?Pure risk holds only the chance of loss or no loss; speculative risk also holds a chance of gain.Insurance Basics
Why: only pure risk is insurable; investing and gambling are speculative. -
An applicant who skydives every weekend dies when his parachute fails. In insurance terms, which is the peril and which is the hazard?The parachute accident is the peril (the cause of loss); skydiving is a hazard, a condition that makes a loss more likely.Insurance Basics
Watch out: a peril causes the loss; a hazard only raises its chance or severity. -
Who owns a stock insurer, and who owns a mutual insurer?A stock insurer is owned by its shareholders; a mutual insurer is owned by its policyowners.Insurers & Producers
Why: mutuals typically issue participating policies that may pay dividends; stock insurers typically issue nonparticipating policies. -
What features set a fraternal benefit society apart from other insurers?It is a nonprofit organization with a lodge system and representative government, and it sells insurance only to its members.Insurers & Producers
-
Which four elements must an insurance contract have to be legally binding?Agreement (offer and acceptance), consideration, competent parties and a legal purpose.Contract Law
-
An applicant completes a life application and pays the first premium with it. Who has made the offer, and how is it accepted?The applicant makes the offer; the insurer accepts by issuing the policy as applied for.Contract Law
Watch out: if no premium was paid with the application, the insurer's issued policy is the offer, and the applicant accepts by paying at delivery. -
Who must sign an application for life insurance?The proposed insured, the policyowner if a different person, and the producer.Application & Underwriting
Watch out: for a minor, a parent or guardian usually signs; the age at which a minor may sign varies by state. -
Before submitting an application, the producer notices that the applicant answered a question wrongly. How should it be corrected?Cross out the wrong answer, write in the correct one and have the applicant initial the change, or complete a new application.Application & Underwriting
Watch out: never use correction fluid, and never change an answer without the applicant's initials. -
A producer persuades a client to drop a policy with another insurer by exaggerating its faults and buy a new one. What unfair practice is this?Twisting: inducing someone to lapse, surrender or replace a policy through misrepresentation or an incomplete comparison.Ethics & Unfair Practices
-
A producer keeps replacing his clients' policies with new ones from the same insurer, using their cash values, mainly to earn new first-year commissions. What is this?Churning: replacement that serves the producer's commissions rather than the client.Ethics & Unfair Practices
Watch out: twisting typically involves another insurer's policy; churning is often within the same insurer.
Unlock the whole deck
You are studying a free 10-card sample. All 77 cards of Life & Health Insurance — Basics & Contract Law, the other 6 Life and health insurance producer licence (national portion) decks, and spaced-repetition scheduling are built into Willys. 14-day free trial, then $14.99 a year.
In Willys, tap Exam Library at the top of your Decks (or Browse Exam Library… under the + button), find the exam on its shelf or by search, tick it and tap Add.
More Life and health insurance producer licence (national portion) decks
← All Life and health insurance producer licence (national portion) decks, with the study guide and topic outline.
About these cards
Review status: Second-reader reviewed, with corrections applied.
Checked against:
- Checked against the NAIC Uniform Individual Accident and Sickness Policy Provision Law and NAIC model laws and regulations on life insurance replacement, unfair trade practices and annuity suitability, as commonly adopted; state versions vary.
- Federal items checked against the Fair Credit Reporting Act, the Genetic Information Nondiscrimination Act, the Gramm-Leach-Bliley Act, 18 U.S.C. 1033 and the FinCEN anti-money-laundering rule for insurance companies (31 CFR 1025); public domain U.S. government sources.
- State-law and practice points (insurable interest, consent to insure, application changes, representations, backdating, premium funds, sliding, fraternal societies, credit insurance) checked against sample state insurance codes (Florida, Texas, Virginia, Washington, Hawaii), the NAIC Producer Licensing and Consumer Credit Insurance model acts, FinCEN's 2005 insurance AML questions and answers, MIB's consumer pages and an insurer's published new-business application rules.
- General insurance principles written from author knowledge; no textbook, prep-course or question-bank text copied. National content only: state insurance law, fees and figures indexed yearly are excluded.
These are independent study notes written for Willys. They are not official exam material, may contain mistakes, and are no substitute for your course, your teacher or the exam owner's own publications. Found an error? Tell us — corrections ship as a new version of the deck.
Not insurance or legal advice. These cards cover the national portion of the producer licensing exam only. State insurance law and your state's exam content are not included; check your state's insurance department and its candidate handbook.
Use of these pages is covered by our Terms of Use.