South Carolina Life and Health Practice Exam 2025 – 400 Free Practice Questions to Pass the Exam

An insurance contract is considered unilateral because it involves obligations that are primarily one-sided. In this type of contract, only the insurer is bound to fulfill certain promises, such as paying out claims and providing coverage under the policy. The policyholder, while responsible for paying premiums, does not have similar obligations to the insurer; their rights in the contract largely pertain to receiving the benefits as outlined once they fulfill the premium payments.

This characteristic of unilateral contracts is significant in distinguishing them from bilateral contracts, where both parties have mutual obligations to each other. In the context of insurance, once the policyholder pays the premium, the insurer is compelled to provide the agreed-upon coverage, but the policyholder is not required to maintain the contract beyond the payment of premiums.

The other options touch on aspects of the insurance process but do not capture the essence of why the contract itself is classified as unilateral.