An insurance contract arranged to further an illegal purpose would most likely be:

Why A is correct

Every valid contract requires four elements: agreement, consideration, competent parties, and legal purpose. If the contract's purpose is illegal — such as insuring a wager on another's health or furthering unlawful conduct — the contract is void or unenforceable because courts will not enforce agreements that violate the law or public policy. Paying a premium cannot cure the defect; legality is judged at formation and is essential to enforceability.

Why the other options are wrong

• B) A higher premium cannot make an illegal arrangement enforceable; the defect lies in the legality of the purpose itself.
• C) Payment of the premium does not cure an illegal purpose; legal purpose is a required element independent of payment.
• D) There is no mechanism by which an illegal private contract is converted into a government-administered policy.

Memory hook

Legal purpose is element four. An illegal deal is dead on arrival, no matter the premium.

Why A is correct

Every valid contract must have a legal purpose — an objective the law permits. A policy that would indemnify losses from planned criminal conduct encourages wrongdoing and violates public policy, so the contract lacks legal purpose and is unenforceable. Agreement, consideration, and capacity may all be present, but an illegal objective voids the contract.

Why the other options are wrong

• B) Agreement (offer and acceptance) can exist even for an illegal arrangement; it is the purpose that fails.
• C) Premium can be exchanged, but consideration cannot cure an illegal purpose.
• D) The parties may be competent adults yet still lack legal purpose.

Memory hook

The law will not insure a crime. Legal purpose is the contract's seal of approval.