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In this video tutorial, the legal concepts of insurance contracts are reviewed. Insurance policies are deemed legal contracts, defined by contract law as binding agreements between parties exchanging promises for benefits. For an insurance contract to be valid, it must contain four essential elements: offer and acceptance, consideration, legal purpose, and competent parties. The offer occurs when the applicant submits an insurance application, and acceptance follows the insurance company's underwriting approval. Consideration involves each party providing something of value—typically, the insured pays a premium while the insurance company promises to cover potential losses.