Life & Health Insurance Practice Exam 2026 - Free Practice Questions and Study Guide

A peril is defined as a condition or situation that results in danger or a risk that can lead to loss. In the context of insurance, perils refer to events or factors that can cause damage or result in a claim. Examples of perils include natural disasters like floods or fires, accidents, theft, and other situations that pose a risk to property, life, or health.

When considering the other options:

The first option describes a situation where there is no chance of loss, which does not align with the definition of peril, as a peril inherently involves the potential for loss.

The second option describes a risk that guarantees a loss, which is not accurate because not all risks guarantee a loss; some may have uncertain outcomes.

The fourth option mentions a financial investment, which does not relate to the concept of peril in the context of insurance.

Thus, the definition of peril as a condition resulting in danger or risk accurately captures its role in insurance and reinforces why it is the correct choice.