General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
Which of the following is an example of a pure risk that health or disability insurance is designed to cover?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A pure risk offers only the possibility of loss or no loss — no chance of gain. Unexpected illness and disability fit this definition: the insured either suffers the covered loss or does not, and there is no opportunity for financial gain from the event. Pure risks are the types of risk insurance is designed to handle. The other choices are speculative risks, which include the possibility of gain and are generally not insurable under standard principles.
Why the other options are wrong
- B) A business venture carries the chance of both gain and loss, making it a speculative risk that is generally not insurable.
- C) Investment performance is speculative risk; insurance is not designed to protect against market fluctuations.
- D) A lottery wager is a speculative risk with a chance of gain, and it creates rather than covers a risk of loss.
Memory hook
Illness can only hurt (pure). Ventures and lotteries can also win (speculative) — insurance skips those.