1. A company seeks life insurance on its founder. Insurable interest exists because:

The firm would suffer a financial loss at the founder's death

Insurable interest exists where the policyowner would suffer a genuine financial loss from the insured's death, as a firm would for its founder.

2. Because the insurer drafts the policy and the applicant generally must accept it as written, an insurance policy is a contract of:

Adhesion

An insurance policy is a contract of adhesion because one party writes it and the other generally takes it or leaves it.

3. An insurance policy is described as a unilateral contract because:

Only the insurer makes a legally enforceable promise

In a unilateral contract only the insurer makes a legally enforceable promise; the insured is not legally compelled to keep paying.

4. After paying a health claim caused by a negligent third party, an insurer's right to recover its payment from that party is called:

Subrogation

Subrogation lets the insurer pursue the responsible third party to recover amounts it paid on the insured's behalf.