A health policy covers only losses that are fortuitous. This means the loss must be:

Why A is correct

Fortuitous means occurring by chance; the loss must be accidental and unintended. The fortuity requirement is essential to insurance because it prevents insureds from creating losses to collect benefits, which would destroy the mathematical basis of risk pooling. A known or certain event is not an insurable risk, and intentional losses are excluded by public policy and by the language of most policies. Fortuity is therefore a cornerstone of what makes a loss insurable.

Why the other options are wrong

• B) A deliberately caused loss is the opposite of fortuitous and is excluded from coverage.
• C) A loss known to the insurer before issuance would lack contingency and would not be insurable.
• D) A guaranteed loss is a certainty, not a risk, and cannot be the subject of insurance.

Memory hook

Fortuitous means oops by accident, never something done on purpose.

Why A is correct

Insurable losses must be fortuitous — accidental, unexpected, and beyond the insured's control. If the loss were intentional or certain, the arrangement would be a wager or a guaranteed payment rather than insurance. Health insurers rely on fortuity because it prevents the moral hazard of insureds creating losses to collect benefits.

Why the other options are wrong

• B) Intentional losses are excluded by policy and by law; they are not fortuitous.
• C) A certain loss is uninsurable because there is no contingency to insure against.
• D) Speculative ventures involve a chance of gain and are outside insurable pure-risk losses.

Memory hook

Fortuity = accidents only. If you planned it, the insurer will not pay for it.

Why A is correct

Insurance covers only fortuitous (accidental, chance) losses. An intentional loss — an insured deliberately setting fire to property to collect proceeds — lacks the element of chance and is excluded; it is also insurance fraud. Accidental events such as lightning, wind, and burglary are fortuitous and are exactly the losses insurance is designed to cover. The fortuity requirement keeps insurance from becoming a tool for gambling or deliberate loss-making.

Why the other options are wrong

• B) Lightning is an accidental, uncontrollable event and is a classic fortuitous loss.
• C) Windstorm damage is accidental and beyond the insured's control, satisfying the fortuity requirement.
• D) Theft is a fortuitous event; the insured does not intend the loss when it occurs.

Memory hook

Fortuitous = accidental. Deliberate arson is not an accident; it is a crime, and no policy pays for it.

Why A is correct

For a risk to be insurable, the loss must be fortuitous — accidental and beyond the insured's control, so that neither the fact nor the timing of the loss is certain. Here the death is virtually certain and imminent, so there is no contingency or unknown event to insure against; issuing coverage would create a guaranteed, immediate payout, which violates the fundamental requirement that insurable events be contingent or unknown. The insurer should therefore decline or heavily restrict the risk. The applicant's honesty does not make a certain loss insurable, and pricing an imminent death at standard rates would be actuarially unsound and unfair to the rest of the risk pool.

Why the other options are wrong

• B) Honesty is commendable but irrelevant to insurability; the fortuitous-loss requirement asks whether the event is accidental and uncertain, not whether the applicant disclosed it.
• C) Standard premiums assume a pool of similar, uncertain risks; pricing a nearly certain, imminent death at standard rates would be actuarially unsound and unfair to other policyholders.
• D) A physician's statement would only confirm what is already known — a certain, imminent loss — and no medical documentation can create the uncertainty the insurer requires.

Memory hook

Fortuitous means a real gamble. If the loss is a certainty, it is not insurable — honesty cannot save a sure thing.