General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
A health insurance policy is described as a personal contract, which means that it:
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Answer & full 3-part explanation (select an option above, or peek)
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.