General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
A person already diagnosed with a terminal condition applies for a new health policy expecting to collect on the known illness. Which requirement of an ideally insurable risk is most clearly violated?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
An insurable loss must be fortuitous: accidental, unintentional, and beyond the insured's control. A loss that is certain to occur — such as a known terminal illness at application — is not fortuitous, so the arrangement would be a pre-funded payout rather than insurance. This fortuitousness requirement is the core protection against adverse selection and guaranteed-loss abuse.
Why the other options are wrong
- B) Measurability of the loss is satisfied — the illness's costs are quantifiable; the defect is that the loss is certain, not that it cannot be measured.
- C) The pool size is a practical concern of the insurer, but the disqualifying defect here is the certainty of the loss, not pool size.
- D) The applicant may well have an insurable interest; the problem is the lack of fortuitousness, not the interest.
Memory hook
Fortuitous = the loss must be a surprise. A known illness at application is a scheduled payout, not insurance.