General Insurance PrinciplesQuestion 187 of 315
An insurance contract is described as aleatory because:
a.Both parties exchange equal dollar amounts
b.Only the insurer makes an enforceable promise
c.The dollar amounts exchanged are unequal and depend on chance
d.It must be in writing to be enforceable
Explanation
Aleatory means that the amounts exchanged are unequal and depend on chance: an insured may pay one premium and the insurer must pay the full face amount, or the insured may pay for decades and never collect. Equal exchange is the opposite of aleatory.
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