Consideration

The premium payments and the statements made in the application — Consideration is what each party gives up to bind the contract. The insured gives the premium and the statements in the application — both are bargained-for value. The insurer gives its promise to pay covered claims. Without consideration on both sides, there is no enforceable contract. The agent's commission is paid by the insurer and is not the insured's consideration.

National insurance concept

Payment of the premium and promises to comply with the policy terms — Consideration is the bargained-for exchange that makes a contract enforceable. The insured's consideration is the premium paid plus the promises and statements made in the application, while the insurer's consideration is its promise to pay covered benefits. A guarantee of continued good health is impossible to perform, property transfer is not part of a health contract, and the face amount is the insurer's obligation rather than anything the insured gives.

National insurance concept