Florida Life and Health Insurance License Practice Test 2025 - Free Insurance Practice Questions and Study Guide

An insurance contract is based on the concept of risk transfer where the insured pays a small premium in exchange for the insurer's promise to provide a larger payout in case of a covered loss. This unequal exchange of values is known as a "gamble" and is a defining feature of insurance contracts, making option A, Aleatory, the correct answer. Option B, Adhesion, refers to the unequal bargaining power between the insurer and the insured, which is not related to the exchange of values. Option C, Conditional, refers to the conditions under which the insurer will provide coverage or pay out a claim, but does not relate to the unequal exchange of values. And option D, Unilateral, refers to the fact that only one party, the insurer, makes a legally enforceable promise in the contract, rather than the unequal exchange of values.