A health insurance policy is described as a personal contract, which means that it:

Why A is correct

Insurance is a personal contract because the insurer underwrites the specific insured's risk — age, health, occupation, and habits are personal to that individual. Because the risk is personal, the policy generally cannot be assigned to another person without the insurer's consent; transferring coverage to a different person would substitute an ununderwritten risk. This personal nature distinguishes insurance from contracts tied to fungible property that can be freely transferred.

Why the other options are wrong

• B) Free transfer without consent is precisely what a personal contract forbids, because the new person's risk was never underwritten.
• C) Delivery requirements are about how the policy is issued and accepted, not about the personal nature of the contract.
• D) A personal contract can still cover dependents under family coverage provisions; it is the underwriting of the named insured's risk that makes it personal.

Memory hook

Personal contract = coverage follows the underwritten person, not the paperwork.

Why A is correct

Insurance contracts are personal contracts: they are tied to the individual insured's risk characteristics — age, health, occupation, and lifestyle — which the insurer evaluated in issuing the policy. Because underwriting is personal, the insured cannot transfer the policy to someone else without the insurer's consent; to do so would place a different risk on the insurer than it accepted. Transferring or assigning a policy without consent is therefore generally impermissible in personal health and disability coverage.

Why the other options are wrong

• B) The policy is not freely transferable like ordinary property; the insurer underwrote a specific person's risk.
• C) Signing the policy over does not transfer it; the insurer's consent is required to substitute a different insured.
• D) Paying premiums by a third party does not cure the problem — the coverage would still rest on a risk the insurer never accepted.

Memory hook

Personal contract = written for this person's odds. You cannot gift it to a stranger's risk profile.