General Insurance✓ Verified · outline & fact-checked · Sep 2026Difficulty 1/5
An insured is diagnosed with cancer and incurs extensive medical bills. In this scenario, the peril is the:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
The peril is the disease itself — cancer — because it is the event that produces the financial loss, namely the medical bills and related costs. In health insurance, illness and injury are the perils insured against; the policy pays when a covered peril causes a loss. Identifying the peril matters because coverage is defined by the perils that are included and excluded, and the peril must be the cause that triggers indemnification.
Why the other options are wrong
- B) The cost of treatment is the amount or severity of the loss, not the cause of the loss; the peril precedes the bill.
- C) Delaying screenings is a behavioral condition that increases the chance of loss — a hazard — not the peril that caused the loss.
- D) The policy is the instrument of indemnification; it does not cause the loss and is not the peril.
Memory hook
The disease is the peril; the bill is the loss; the delay is the hazard.