Aleatory Contract
A contract in which the values exchanged are unequal and depend on chance. A small premium may buy a large death benefit, or nothing at all if no loss occurs.
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Practice This Concept
A disability policy requires the insured to pay premiums when due, give timely notice of claim, and submit proof of loss. Because the insurer's duty to pay depends on these steps, the policy is described as:
A conditional contract — An insurance policy is a conditional contract: the insurer's obligation to pay is conditioned on the insured's performance of specified requirements - paying premiums, giving notice of claim, and submitting proof of loss. If a condition is not met, the insurer may not be obligated to perform. This is distinct from an aleatory contract (unequal values exchanged on a chance event), a personal contract (attached to a specific person), and adhesion (drafted by one party).
National insurance concept
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