Core contract provisions: entire contract, insuring clause, free look, consideration, owner's rights

Correct answer: The policy, together with the application if a copy is attached when the policy is issued

Section 3203(a)(4) requires the policy to state that the policy, together with the application if a copy is attached when issued, constitutes the entire contract. Section 3204(a)(1) adds that nothing is incorporated by reference unless a copy is endorsed on or attached to the policy.

Correct answer: It has no effect, because only a writing signed by a person the insurer specifies in the policy can modify the policy or waive a requirement

Section 3204(a)(3) provides that the policy cannot be modified, and no rights or requirements can be waived, except in a writing signed by a person specified by the insurer in the policy. A producer's oral promise is not such a writing, so it does not change the contract.

Correct answer: The application is not admissible, because no true copy was attached to the policy when it was issued

Section 3204(a)(2) states that no application is admissible in evidence unless a true copy was attached to the policy when issued. Because the insurer did not attach it, the insurer cannot use the application in the dispute.

Correct answer: As representations, not warranties

Section 3204(c) provides that all statements made by or by the authority of the applicant for the issuance, reinstatement or renewal of a policy are deemed representations and not warranties.

Correct answer: The insuring clause

The insuring clause is the insurer's fundamental promise to pay the death benefit to the beneficiary upon due proof of the insured's death, subject to the policy terms. It sets the scope of coverage.

Correct answer: The completed application and payment of the initial premium

The applicant's consideration is the completed application together with the initial premium. The insurer's consideration is its promise to pay. Later premiums are conditions for keeping the policy in force, not the consideration for the contract.

Correct answer: Not less than ten days nor more than thirty days from the date the policy was delivered

Section 3203(a)(11) requires a provision allowing the owner to surrender the policy with a written request for cancellation during a period of not less than ten days nor more than thirty days from the date the policy was delivered, for a refund of premium.

Correct answer: Thirty days

Section 3203(a)(11) provides that a policy sold by mail order must contain a provision permitting the policy owner a thirty-day period to surrender the policy for a refund.

Correct answer: May 20, the delivery date

Section 3203(a)(11) measures the free look from the date the policy was delivered to the owner, so Maria's ten days run from May 20.

Correct answer: Dan, because he is the policyowner

The policyowner holds the contract rights, including the right to change a revocable beneficiary. The insured and the beneficiary have no control over the policy unless they are also the owner.

Correct answer: A person specified by the insurer in the policy, in a signed writing

Section 3204(a)(3) states that the policy cannot be modified, nor any rights or requirements waived, except in a writing signed by a person specified by the insurer in the policy.

Correct answer: Its promise to pay the benefits described in the policy

The insurer's consideration is its promise to pay the policy benefits. The applicant's consideration is the completed application and the initial premium.

Correct answer: They are conditions for keeping the policy in force, not consideration for the contract

The consideration for a life contract is the completed application plus the initial premium. Renewal premiums are conditions for continuing coverage. Because the owner never promised to pay them, stopping is not a breach; the policy lapses or applies its options under its terms.

Correct answer: The applicant's written consent to the insertion

Section 3204(d) bars anyone other than the applicant from inserting or altering anything in a written application without the applicant's written consent. The only exception is an insurer insertion for administrative purposes, clearly marked as not the applicant's.

Correct answer: Any premium paid for the policy, including policy fees and other charges

Section 3203(a)(11)(i) requires a refund of any premium paid for the policy, including any policy fees or other charges, when the policy is surrendered with a written request for cancellation during the free look period.

Correct answer: Jordan cannot change the beneficiary without the irrevocable beneficiary's consent

The owner's right to change the beneficiary applies unless the beneficiary was designated irrevocably. An irrevocable beneficiary has a vested interest, and the owner cannot remove or replace that beneficiary without the beneficiary's consent.

Correct answer: On the policy's face page

The insuring clause is usually on the face page of the policy, where it identifies the parties and the amount and states the insurer's promise to pay.

Correct answer: It can become part of the entire contract, because the insurer accepted it and returned a copy to the policyholder

Section 3203(a)(4) allows a policy whose death benefit or provisions can be changed by written application to provide that, once the insurer accepts the application and a copy is mailed or delivered to the policyholder at the last known address, it becomes part of the entire contract.

Correct answer: A table or schedule of rates, premiums or other payments on file with the superintendent

Section 3204(b) provides that the entire contract requirements of subsection (a) do not apply to a table or schedule of rates, premiums or other payments that is on file with the superintendent for use with the policy.

Correct answer: In the policy or in a notice attached to it

Section 3203(a)(11) requires that a provision granting the free look right appear in the policy or in a notice attached to it.

Correct answer: Fifteen days

Section 3204(e) requires the insurer, within fifteen days after receiving a written request at its home office or any branch office, to deliver or mail a copy of a reinstatement, renewal or change application, or option notice, to the insured, beneficiary or assignee who asked.

Correct answer: Once three full years' premiums have been paid

Section 3203(a)(8)(A) requires a policy not in default, where three full years' premiums have been paid, to entitle the policyholder to a loan up to the loan value, with the sole security being an assignment or pledge of the policy.

Correct answer: Lowering the premium stated in the consideration clause by written notice

The owner controls the contract through the rights it grants: changing a revocable beneficiary, assigning, borrowing, surrendering, and choosing nonforfeiture, dividend and settlement options. The owner cannot rewrite the contract's terms; any modification requires a writing signed by a person the insurer specifies.

Correct answer: The initial premium

The applicant's consideration is the completed application plus payment of the initial premium. This applicant has supplied only the application, so the initial premium is the missing part. Insurers normally collect the first premium, often when the policy is delivered, before coverage takes effect.

Correct answer: The free look has expired, so the request is not a free look cancellation and a full refund is not owed

Section 3203(a)(11) requires a free look of not less than ten nor more than thirty days from delivery. An insurer may choose ten days for a policy not sold by mail order. Here the window closed on June 11, so the free look refund right is gone; the owner's remaining choices are those the policy offers, such as surrender.

Correct answer: The owner is protected from hidden terms, because the insurer generally cannot incorporate outside documents by reference or use an unattached application against them

Under sections 3203(a)(4) and 3204(a), the contract is the policy plus documents endorsed on or attached to it, nothing else is incorporated by reference, and an unattached application is inadmissible in evidence. Section 3204(b) exempts a table or schedule of rates, premiums or other payments on file with the superintendent, but otherwise the owner is protected from hidden terms.

Correct answer: The policy is not voided automatically for an inaccuracy; only a material misrepresentation could affect it

Section 3204(c) deems applicant statements representations, not warranties. A warranty would have to be exactly true, so any error could void the contract. Under the standard treatment of representations, only a misrepresentation that is material, meaning it would have changed the insurer's decision, can affect the policy.

Correct answer: The policyowner

The policyowner controls the contract while the insured is alive, including the right to surrender it for cash value. Beneficiaries do not hold that right. A revocable beneficiary has no control during the insured's life, and an irrevocable beneficiary can at most withhold consent to a surrender but cannot surrender the policy.

Correct answer: It does not modify the policy, because the general agent is not a person the insurer specified in the policy

Section 3204(a)(3) requires a writing signed by a person specified by the insurer in the policy. A writing alone is not enough; it must be signed by the specified person, here the president or secretary.

Correct answer: Nonforfeiture, dividend, and settlement options

Electing nonforfeiture, dividend and settlement options is among the policyowner's rights. Underwriting class, credited rates and mortality tables are set by the insurer under the policy terms and the law.

Correct answer: Surrender the policy to the insurer together with a written request for cancellation

Section 3203(a)(11) gives the refund upon surrender of the policy, together with a written request for cancellation, to the insurer during the free look period.

Correct answer: They define, limit, or add to the promise stated in the insuring clause

The insuring clause states the insurer's basic promise and sets the scope of coverage; it is made subject to the policy's terms. The other provisions define, limit, or add to that promise.

Correct answer: The consideration clause

The consideration clause states the premium amount and frequency, tying the insurer's promise to the payment of premiums.

Correct answer: None; the beneficiary only receives the proceeds at the insured's death

Control of the policy belongs to the owner. A revocable beneficiary has no rights to control the contract and only receives the proceeds when the insured dies.

Correct answer: Seven days is shorter than the required minimum of ten days from delivery

Section 3203(a)(11) requires a free look period of not less than ten days nor more than thirty days from delivery, and the provision must appear in the policy or an attached notice. Seven days falls short of the minimum.