L&HFloridamedium
An insurance policy is described as a unilateral contract. What does this characterization mean?
AOnly one party signs the policy at delivery
BThe insured is the only party who can cancel the contract
Only one party — the insurer — makes a legally enforceable promise once the premium is paid
DBoth parties make mutual, simultaneous promises of performance
Why this is the answer
A unilateral contract is one in which only one party makes a legally enforceable promise. In insurance, after the insured pays the initial premium, only the insurer has any continuing obligation — to pay claims if covered events occur. The insured is not legally obligated to continue paying premiums; nonpayment simply ends coverage. This is the opposite of a bilateral contract, in which both parties exchange continuing promises. Signing and cancellation rights are not the meaning of 'unilateral.' Per the Florida Agent's Health & Life Exam Content Outline §II.D.2.b.
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