In a unilateral insurance contract, which party has the obligation to perform?

• A. The insured
• B. The agent
• C. The beneficiary
• D. The insurer

Answer: (D)

In a unilateral contract, only one party is legally bound to perform. For a life insurance policy, the insurer makes the binding promise to pay the death benefit if the insured dies while the policy is in force. The insured’s side is mainly to pay premiums to keep the policy active; that obligation exists to keep the coverage, but it doesn’t create a mutual promise to pay—the key performance is the insurer’s obligation to provide the death benefit when the insured dies. If premiums are kept current and the event occurs, the insurer must pay; if premiums lapse, there’s no obligation to pay. The beneficiary and the agent don’t carry the contract’s ongoing obligation to perform. Therefore, the party with the obligation to perform is the insurer.