Life & Health Insurance Practice Exam 2025 - Free Practice Questions and Study Guide

An essential feature of an insurance contract is that typically only the insurer makes an enforceable promise. In an insurance contract, the insurer guarantees to pay a specific benefit (such as death benefits, disability benefits, or covered medical expenses) in exchange for the premiums paid by the policyholder. This promise is enforceable as long as the policyholder adheres to the terms of the contract, such as keeping up with premium payments and complying with any other conditions set forth in the policy.

The contract is structured such that while the policyholder may make representations or statements (like providing accurate personal and health information), it is predominantly the insurer who has the obligation to provide the coverage and benefits specified in the policy. Thus, the enforceability of the insurer’s promise is a cornerstone of insurance agreements, as this creates the basis for the policyholder's trust in the insurance system.

In contrast, the other options imply a misunderstanding of the contractual structure. While the applicant may express intentions or complete applications, and negotiations can occur regarding terms, it is primarily the insurer's promise to pay that is legally binding and enforceable.