State RegulationsCA specific✓ Verified · outline & fact-checked · Sep 2026Difficulty 2/5
A critical illness policy pays a lump sum upon diagnosis of a covered cancer. Under CIC Section 250, the diagnosis functions as:
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under Section 250, the insurable event is the event whose occurrence determines the insurer's liability. In a critical illness policy, the diagnosis of a covered condition is exactly that event: when it occurs, the insurer must pay the lump-sum benefit. The diagnosis is neither consideration, which is what the insured gives, nor a hazard, which is a condition increasing the chance of loss, nor the insurer's own exposure; it is the contractual trigger for payment.
Why the other options are wrong
- A) Consideration is what the insured gives, such as premium and promises, not the event that triggers payment.
- B) A hazard is a condition increasing the chance of loss; the diagnosis is the loss event itself.
- D) The loss exposure belongs to the insured, who faces the financial risk of the illness.
Memory hook
Diagnosis occurs, and the insurer's obligation switches on.