CARD Q011
A small premium can lead to a much larger payment if a covered event occurs. Which characteristic explains this unequal exchange?
- Adhesion
- Aleatory
- Estoppel
- Assignment
Aleatory
An aleatory contract exchanges values that depend on an uncertain event and may be unequal.
Why each choice is right or wrong
A. Adhesion
Incorrect. Adhesion concerns standardized wording and bargaining power.
B. Aleatory
Correct. An aleatory contract exchanges values that depend on an uncertain event and may be unequal.
C. Estoppel
Incorrect. Estoppel prevents certain inconsistent conduct after reliance; it does not describe the uncertain exchange.
D. Assignment
Incorrect. Assignment transfers policy rights.
Review the related terms
Use these lessons to revisit the concepts and try additional practice questions.