Question

1. in her insurance policy, tracy discovers a number of provisions that she thinks should be worded more clearly and asks her insurance agent to change them. the agent explains that changes to the wording are not generally permitted because the insurance policy is a(n):

○ a. aleatory contract
○ b. conditional contract
○ c. contract of adhesion
○ d. personal contract

1. although the policyholder must pay premiums to keep an insurance policy in force, the policy is considered a unilateral policy because:

○ a. both the policyholder and the insurer make enforceable promises
○ b. neither the policyholder nor the insurer makes an enforceable promise
○ c. only the insurer makes an enforceable promise
○ d. the policyholder is making an enforceable promise

1. when completing an insurance application, dusty intentionally lied about his age in order to obtain a lower rate. what is dustys lie technically considered?

Explanation:

• Question 14: An insurance policy is a contract of adhesion. In such a contract, one party (the insurer) prepares the terms, and the other party (the insured like Tracy) has little to no ability to negotiate the terms. This explains why changes to the wording are not generally permitted.
• Question 15: A unilateral policy means only one party makes an enforceable promise. In an insurance policy, the insurer makes the enforceable promise (to pay claims under the policy). The policyholder's payment of premiums is a condition to keep the policy in force, but the key is the insurer's promise.
• Question 16: When Dusty intentionally lied about his age to get a lower rate, this is a misrepresentation. A misrepresentation is a false statement (in this case, about age) made by an applicant (Dusty) to an insurer, which can affect the insurance contract.

Answer:

1. c. contract of adhesion
2. c. only the insurer makes an enforceable promise
3. a misrepresentation