Completing the Application, Underwriting, Delivering Policies, Contract Law
A life insurance policyowner may stop paying premiums at any time without legal penalty, but the insurer is legally bound to pay the death benefit if the insured dies while the policy is in force. This situation best illustrates which legal characteristic of an insurance contract?
Answer and explanation
Answer: B. Insurance is unilateral because the insurer makes the enforceable promise to pay according to the contract. The owner is not compelled to continue premiums, although nonpayment can cause lapse.Source: South Carolina Department of Insurance — Prelicensing Education Topic Outline — Life, Accident and Health Topic Outline page 12, Unique Features of Insurance Contract > Unilateral
More completing the application, underwriting, delivering policies, contract law questions
- Which of the following facts most directly establishes an individual's legal capacity to enter into a life insurance contract?
- Which statement best explains why a life insurance policy is legally considered a conditional contract?
- Which statement correctly separates the aleatory character of a life policy from its conditional character?
- Who must sign a life insurance application when an adult purchases insurance on their own life?
- Why does the law require a life insurance contract to have a legal purpose?
- Why is a life insurance contract void if issued to a policyowner who has no insurable interest in the insured?
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