New York State Life Insurance Exam Questions Practice Question
An insurer is obligated to pay legitimate claims, but the policyowners are NOT obligated to pay insurance premiums. This characteristic implies which type of contract?
Correct Answer: C
Rationale: In this context, the type of contract being described is unilateral. A unilateral contract involves one party (the insurer) making a promise to pay claims, while the other party (the policyowner) is not legally bound to pay premiums unless they choose to do so.
Option A, aleatory, refers to contracts where the outcome is contingent on uncertain events, which doesn’t directly address the obligations of the parties.
Option B, adhesion, pertains to contracts that are drafted by one party and accepted by another without negotiation, not focusing on the obligations involved.
Option D, conditional, describes contracts that depend on certain conditions being met, which does not capture the essence of the one-sided obligation present here.
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