Why is a life insurance policy considered a unilateral contract?

A life insurance policy is considered a unilateral contract because it exemplifies a situation in which only one party makes a binding promise. In this context, the insurer promises to pay a specified sum to the beneficiary upon the occurrence of a certain event, such as the death of the insured, provided the premium payments are maintained. The promise made by the insurer is enforceable, while the insured does not make any reciprocal promise; the insured's role largely involves paying premiums rather than creating an obligation for the insurer.

Other options present different interpretations of contractual relationships. In a bilateral contract, both parties would make binding promises to each other, which does not apply to life insurance where the obligation primarily rests on the insurer. Also, the idea that only the insured can change the terms or that both parties must fulfill the terms equally does not accurately capture the nature of a unilateral contract, as the essence lies in the insurer's unilateral obligation to pay when a claim arises, assuming the insured has adhered to the policy conditions.