Life Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
In a life insurance contract, the consideration given by the policyowner consists of:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The consideration clause identifies what each party gives to make the contract binding. The policyowner's consideration is the payment of the premium, usually the first premium paid with the application and subsequent premiums as they come due, plus the statements and representations made in the application. In exchange, the insurer promises to pay the death benefit under the policy's terms. The application and the premium together form the consideration that makes the agreement a valid contract.
Why the other options are wrong
- B) The beneficiary makes no promise and gives no consideration; a beneficiary merely receives the proceeds.
- C) Agent servicing promises are not part of the consideration between the owner and the insurer.
- D) The physician's certification is underwriting evidence, not consideration given by the policyowner.
Memory hook
Consideration = premium paid plus application answers. You buy the promise with both.