IRDAI AGENT EXAM PREP
PRACTICE TESTS INDIA
COMPLETE 50 QUESTIONS
Question 1: A large number of people each pay a relatively small premium into a
common fund so that losses su�ered by a few can be paid from that fund. Which insurance mechanism does this best illustrate?
Choices:
1) Risk pooling 2) Speculation 3) Arbitrage 4) Self-insurance
Correct Answer: Risk pooling
Explanation: Risk pooling combines contributions from many exposed units so that covered losses su�ered by a relatively small number can be �nanced from the common pool.Page 1
Question 2: Which situation is the best example of a pure risk?
Choices:
1) A trader buys shares hoping their price will rise 2) A homeowner may su�er a loss if the house is damaged by �re 3) A business enters a new market seeking higher pro�t 4) A person buys gold expecting appreciation Correct Answer: A homeowner may su�er a loss if the house is damaged by �re Explanation: Pure risk involves the possibility of loss or no loss, but no prospect of gain from the event itself. Accidental �re damage is therefore a pure risk.Question 3: A factory stores �ammable solvent beside an open welding area. In insurance terminology, the storage arrangement is primarily what type of factor?
Choices:
1) A peril 2) A physical hazard 3) A moral hazard 4) A deductible
Correct Answer: A physical hazard
Explanation: A physical hazard is a tangible condition that increases the probability or severity of loss. Keeping �ammable material near welding increases the chance of �re.Page 2
Question 4: When an individual buys life insurance on his or her own life, when must insurable interest exist?
Choices:
1) Only when a claim occurs 2) At the inception of the policy 3) Only after the �rst premium is paid 4) Only at policy maturity
Correct Answer: At the inception of the policy
Explanation: For life insurance on one's own life, insurable interest exists naturally and must be present when the contract is entered into. It is not required to be re-proved at death.
Question 5: A proposer knows about a serious medical condition that would
in�uence an insurer's decision but intentionally omits it from the proposal form.Which principle is most directly breached?
Choices:
1) Contribution 2) Utmost good faith 3) Subrogation 4) Indemnity
Correct Answer: Utmost good faith
Explanation: Insurance contracts require disclosure of material facts. Deliberately withholding a fact that would in�uence underwriting breaches the duty of utmost good faith.Page 3