Rhode Island Life Insurance Practice Exam

In a life insurance contract, which party makes a legally enforceable promise?

1. Insured

2. Beneficiary

3. Insurer

4. Policyowner

The correct answer is: Insurer

In a life insurance contract, the insurer is the party that makes a legally enforceable promise. This promise typically involves the insurer agreeing to pay a specified death benefit to the beneficiary upon the death of the insured, provided all terms of the policy are met. The insurer's obligation is rooted in the premium payments made by the policyowner; when the policy is issued, it binds the insurer to fulfill its promise as outlined in the contract. The insured does not make a legally enforceable promise; rather, they are the individual whose life is covered under the policy. The beneficiary, while designated to receive the death benefit, does not hold any contractual responsibilities or promises in the life insurance arrangement. The policyowner, although they have rights related to the policy, primarily functions to manage the policy rather than serve as the party making the enforceable promise. Thus, it is the insurer that stands as the party bound by the contractual obligations of the insurance agreement.