Life & Health Insurance Practice Exam 2025 – Your All-in-One Guide to Exam Success!

Pure risk is best described as an insurable risk with no opportunity for gain. This type of risk involves situations where only the possibility of loss exists and there is no potential for profit. Typical examples include risks related to natural disasters, accidents, or death. Insurance is primarily designed to manage pure risks, as it helps individuals and organizations to mitigate the financial consequences of unforeseen losses.

In the context of the other options, risk with potential for profit represents speculative risks, where there is a chance to gain as well as the chance to lose, which does not align with the characteristics of pure risk. Risk with zero chance of loss indicates a situation that is entirely safe and does not qualify as risk at all, thus making it irrelevant in discussions of insurable risks. Finally, risk associated with speculative ventures pertains to activities intended for profit, further emphasizing that such risks encompass both potential losses and gains rather than the fundamental definition of pure risk.