Does health insurance involve pure risk or speculative risk for the in

QUESTION

Does health insurance involve pure risk or speculative risk for the insured? Explain.

What will be an ideal response?

ANSWER

Answer: Health insurance involves pure risk for the insured. Pure risk involves a chance for either loss or no loss; there is no possibility of gain. The insured pay their premiums whether they are healthy or sick. They never gain anything by paying health insurance.
Explanation: Most people who have health insurance get it through their employer.