CARD Q012
Which feature makes an insurance policy a unilateral contract?
- Only one person signs the application
- Only one premium may be paid
- The policy has only one beneficiary
- The insurer makes the enforceable promise to pay covered claims
The insurer makes the enforceable promise to pay covered claims
The policyowner generally is not legally compelled to keep paying premiums. Coverage can lapse if required premiums are not paid.
Why each choice is right or wrong
A. Only one person signs the application
Incorrect. The number of signatures does not define unilateral insurance contracts.
B. Only one premium may be paid
Incorrect. Policies can permit recurring premiums and still be unilateral.
C. The policy has only one beneficiary
Incorrect. The number of beneficiaries is unrelated.
D. The insurer makes the enforceable promise to pay covered claims
Correct. The policyowner generally is not legally compelled to keep paying premiums. Coverage can lapse if required premiums are not paid.
Review the related terms
Use these lessons to revisit the concepts and try additional practice questions.