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Pure protection contracts

Contracts that are a sub-category of long-term insurance contracts, e.g. critical illness and income protection, in respect of which: (a) the benefits are payable only on death or in respect of incapacity due to injury, sickness or infirmity; (b) the benefits are payable on death (other than accidental death) only where death occurs within 10 years of the date on which the person in question was first insured, or where death occurs before that person attains a specified age not exceeding 70 years; (c) the contract has no surrender value, or the consideration consists of a single premium and the surrender value does not exceed the premium; (d) the contract makes no provision for conversion or extension causing it not to comply with (a), (b) or (c); and (e) the contract is not one of reinsurance. These contracts are governed by the Insurance: Conduct of Business rules. Long-term care is regulated as an investment product and therefore excluded from the definition.

Pure risk

A risk that is not beneficial to the insurer, as loss is the only foreseeable outcome.
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A situation where unknown future outcomes involve only losses. Contrast with “Speculative Risk.”
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Pure risks are events the occurrence of which results in either loss to the individual or organization concerned. Pure risk holds out no prospect of gain which is what distinguishes it from speculative risk, where the prospect of either gain or loss exists.
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MEDICAL,USA: Situation that involves a chance of a loss or no loss, with no chance of gain.
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The only consideration is the possibility of loss or no loss but not making a profit. Contrast with Speculative risk.
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The uncertainty of a peril that can produce only a loss, should the event occur.
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UK:Uncertainty as to whether a loss will occur. With a pure risk there is no possibility of gain; the outcome is loss or no change. Such risks are static and inherent in the environment, e.g. fire, but can be minimised by risk management. Compare with speculative risk.

Put option

Gives the buyer/holder the right, but not the obligation, to sell to the issuer the underlying instrument or, in the case of a weather derivative, the cash value of a weather data index such as degree days. Put options are also called floors or weather floors.