Chapter 36 - Insurance - Chapter 36 Insurance I. The...

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Chapter 36 – Insurance I. The Insurance Contract a. Insurance: i. Plan of security against risks by charging the loss against a fund created by the payments made by policyholders b. The Parties: i. The promisor in an insurance contract is called the insurer or underwriter ii. The person to whom the promise is made is the insured or the policyholder c. Insurable Interest: i. A person obtaining insurance must have an insurable interest in the subject matter insured 1. If not, the insurance contract cannot be formed ii. Insurable Interest in Property: 1. A person has an insurable interest in property whenever the destruction of the property will cause a direct pecuniary loss to that person a. Doesn’t matter whether the insured is the owner of the legal or equitable title, a lienholder, or merely a person in possession of the property iii. Insurable Interest in Life: 1. A person who purchases life insurance can name anyone as beneficiary regardless of whether that beneficiary has an insurable interest in the life of the insured a. The insurable interest must exist at the time the policy is obtained i. Immaterial that the interest no longer exists when the loss is actually sustained d. Antilapse and Cancellation Statutes and Provisions i. If the premiums are not paid on time, the policy under ordinary contract law would lapse because of nonpayment
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1. With life insurance, the insured is allowed a grace period of 30 or 31
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This note was uploaded on 04/24/2011 for the course MGMT 354 taught by Professor Staff during the Spring '08 term at Purdue University-West Lafayette.

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Chapter 36 - Insurance - Chapter 36 Insurance I. The...

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