When an insured makes truthful statements on the application for insurance and pays the required premium, it is known as which of the following?

The scenario described pertains to the concept of "consideration" in insurance contracts. Consideration refers to something of value that is exchanged between the parties involved in a contract. In this context, the insured provides truthful statements on the application and pays the premium, which constitutes their part of the agreement. The insurer, in return, agrees to provide coverage in accordance with the terms specified in the policy. This mutual exchange establishes a legally binding contract.

In the field of insurance, consideration is critical because it reflects the parties' commitment to uphold their respective obligations. Without this exchange, the insurance contract would lack the necessary legal enforceability. The insured's premium signifies payment for the insurer’s promise to indemnify the insured in case of covered losses, completing the cycle of consideration.

The other alternatives represent different concepts in insurance. "Legal purpose" relates to the requirement that an insurance contract must be for a legal reason, while "contract of adhesion" describes a scenario where the terms are set by one party and cannot be negotiated by the other. "Acceptance" pertains to the insurer agreeing to the terms of the contract, which follows the receipt of application and premium but does not encompass the broader notion of consideration.