Ace the Washington Life & Health Insurance Test 2026 – Secure Your Success in Style!

Pure risk is defined specifically as a situation that presents the possibility of loss or no loss, with no opportunity for any financial gain. This contrasts sharply with speculative risks, which may involve a chance of loss or gain, such as investing in the stock market or starting a business. Pure risk is primarily related to scenarios where outcomes can only result in a negative impact or a neutral situation, such as the risk of fire damage to a property or health-related risks where the only potential outcomes are suffering a loss (like injury or illness) or experiencing no adverse effect.

In the context of insurance, understanding pure risk is essential since it forms the basis for insurable risks. Insurers can manage pure risks because they can assess and quantify the potential losses involved, allowing them to create policies that cover those specific risks. This fundamental characteristic makes option B the correct choice, as it encapsulates the essence of pure risk accurately.