An insurance contract is considered unilateral because which party is the only one legally obligated to perform?

• A. The insurer
• B. The applicant
• C. The plan administrator
• D. The producer

Answer: (A)

An insurance contract is unilateral because only one party makes a legally binding promise: the insurer promises to pay benefits if the covered event occurs, in exchange for premiums. The insured isn’t promising to perform any action that would trigger payment; their role is to pay premiums to keep the policy in force, but that doesn’t create a binding promise to pay benefits themselves. If the insured stops paying, the policy can lapse, but the insurer’s promise to pay upon a covered loss remains the enforceable obligation. The other roles listed don’t carry the core promise to pay benefits, so they’re not the party obligated to perform.