Offer and acceptance: in life insurance, the applicant usually makes the offer by submitting a signed application with the initial premium; the insurer accepts by issuing the policy as applied for. If the insurer changes the terms, that is a counteroffer the applicant can accept or reject.

Consideration: the value each side gives. The applicant gives the premium and the statements in the application; the insurer gives its promise to pay. Consideration does not have to be equal.

Competent parties: of legal age and sound mind. Someone who is intoxicated or mentally incapacitated cannot form a valid contract. California exception: a minor under 18 is not treated as incompetent to contract for life insurance just because of age; if under 16, a parent or guardian must give written consent (Ins. Code §10112).

Legal purpose: the contract cannot be for an illegal purpose.