General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
Which type of risk is generally considered to be insurable?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Pure risk involves only the possibility of loss or no loss — the insured cannot gain from a loss event. Sickness, disability, and death are pure risks. Speculative risks, such as investments or business ventures, carry the chance of gain, which would give the insured a profit motive inconsistent with insurance. Because insurance should restore, not enrich, only pure risks are generally insurable.
Why the other options are wrong
- B) Speculative risk offers a chance of gain, and insurance is designed for losses only; profiting from a policy would violate the principle of indemnity.
- C) A business venture with profit potential is speculative and therefore not a proper subject for insurance.
- D) Market investments fluctuate with the chance of gain and are speculative risks, not pure risks.
Memory hook
Pure = lose or break even — insurable. Speculative = win or lose — for gamblers, not insurers.