Which of the following is a requirement for an insurance policy to be effective?

For an insurance policy to be effective, one of the primary requirements is that the insured must pay the premium. The payment of premium is foundational to the insurance contract, as it represents the consideration provided by the insured in exchange for the risk coverage offered by the insurer. When the insured pays the premium, it activates the policy and ensures that the insurer is obligated to provide coverage for the risks specified in the policy.

The other options do not reflect necessary conditions for the effectiveness of an insurance policy. For instance, risk does not need to be avoidable for the policy to be effective; insurance is fundamentally about managing risk, including those risks that cannot be avoided. Additionally, policy benefits do not have to be unlimited; coverage limits are common and are typically outlined in the policy terms. Lastly, prior knowledge of claims by the insurer is not required for the policy to take effect; coverage is in place for future claims that arise during the policy period, not contingent on the insurer's prior knowledge of specific claims.