Arkansas Life and Health Insurance Practice Exam

The _________ clause states what each party exchanges in the contract.

1. Consideration

2. Exclusions

3. Insuring

4. Waiting

The correct answer is: Consideration

The correct answer is A. Consideration. Consideration is a fundamental element of a contract that involves what each party gives and receives as part of the agreement. It is the exchange of something of value (such as money, goods, or services) between the parties entering into the contract. This clause outlines the promises made by each party and what they will receive in return, forming the basis of a binding contract. Exclusions (B), Insuring (C), and Waiting (D) are not relevant to describing what each party exchanges in a contract and are not directly related to the concept of consideration in contract law.