Example: A client or producer applies this rule in a policy situation. The correct concept is Adhesion. Insurance policies are contracts of adhesion because the insurer drafts the form and the applicant generally accepts or rejects it as written.

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Example: A client or producer applies this rule in a policy situation. The correct concept is Unilateral. Insurance is unilateral because the insurer promises performance if covered conditions are met; the insured is not legally forced to keep paying premiums.

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Example: A client or producer applies this rule in a policy situation. The correct concept is Aleatory. Insurance is aleatory because the values exchanged can be unequal and depend on an uncertain event.

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Example: A client or producer applies this rule in a policy situation. The correct concept is Conditional. Insurance contracts are conditional because the insurer's duty to perform depends on compliance with policy conditions.

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Example: A client or producer applies this rule in a policy situation. The correct concept is It insures the applicant's individual risk rather than transferring the policy automatically with property. Life insurance is based on personal characteristics and insurability; it is not a property contract that automatically follows ownership of an asset.

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Example: A client or producer applies this rule in a policy situation. The correct concept is At policy inception. For life insurance, insurable interest is generally required when the policy is issued, not necessarily at the insured's death.

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Example: A client or producer applies this rule in a policy situation. The correct concept is Representations. Application answers are generally representations rather than absolute guarantees.

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Example: A client or producer applies this rule in a policy situation. The correct concept is Concealment. Concealment is the intentional failure to disclose a material fact relevant to underwriting.

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Example: A client or producer applies this rule in a policy situation. The correct concept is Consideration. Consideration is what each party gives in exchange; for the applicant it includes premium and application representations.

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Example: A client or producer applies this rule in a policy situation. The correct concept is Subrogation. A valid contract requires agreement, consideration, competent parties, and legal purpose. Subrogation is not a basic formation element.

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