General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
A health insurance policy is a conditional contract because:
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
A conditional contract is one in which the insurer's obligation to perform depends on the occurrence of stated conditions: the premium must be paid, the loss must be covered, and the insured must comply with provisions such as giving timely notice. If the conditions are not met, the insurer is not obligated to pay. This distinguishes insurance from contracts where performance is unconditional, and it shapes how claims are processed.
Why the other options are wrong
- A) Cancellation rights describe the renewal or termination feature, not the conditional nature of the contract.
- B) Premium changes are a pricing matter, not what conditional means.
- D) A policy covering one condition would be a limited or specified-disease policy; it is not the definition of conditional.
Memory hook
Pay claims only if the policy's conditions are satisfied.