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Life insurance as analogous to Covenant theology

Unilateral

Insurance contracts are unilateral in that only one party, the insurer, makes any kind of enforceable promise. Insurers promise to pay benefits upon the happening of a certain event, such as death or disability. The applicant makes no such promise — she does not even promise to pay premiums — and the insurer can’t require they be paid. A unilateral contract can be contrasted to a bilateral contract, in which each contracting party makes enforceable promises.

Life insurance is not a personal contract or a personal agreement between the insurer and the insured. The owner of the policy has no bearing on the risk the insurer has assumed. For this reason, people who buy life insurance policies are better described as policyowners rather than policyholders. These people actually own their policies and can give them away if they wish. Such a transfer of ownership is known as assignment. To assign a policy, a policyowner simply notifies the insurer in writing. The company then will accept the validity of the transfer without question. The new owner is then granted all of the rights of policyownership.

Most other insurance contracts are personal contracts. They constitute a personal agreement between the insured and the insurer, and they cannot be transferred to another person without the insurer’s approval. Because of this personal nature of most insurance contracts, they cannot be freely assigned by the policyholder to other parties. To permit a fire insurance contract to be assignable without the insurer’s approval, for example, would be unfair to the insurer. Only by knowing and investigating each applicant for insurance can an insurance company accurately appraise the risk it’s accepting.

In Scripture, we find vivid imagery of Christ — sometimes in types (Genesis 14:17-24) — in His conquest to reclaim His world for Himself, bringing in the spoils of war, calling in tithes and distributing them to the people of His Kingdom. Christ, who owns our eternal life insurance policy, has vouchsafed the manifold benefits of His redemptive program to us who are in covenant with Him (Psalm 2:7-8, cf. I Corinthians 6:2; Proverbs 13:22, Isaiah 53:12, Acts 20:32, Romans 8:17, Ephesians 1:11-18, Colossians 1:12, Revelation 5:9-10).

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