MII AMII AAII SUBJECT 301
PRACTICE TEST MALAYSIA
100 QUESTIONS
Question 1: Which type of risk is generally suitable for insurance?
Choices:
1) A risk involving only the possibility of loss or no loss 2) A risk o�ering equal chances of pro�t and loss 3) A deliberate business gamble on commodity prices 4) A speculative investment in shares
Correct Answer: A risk involving only the possibility of loss or no loss
Explanation: Insurance is primarily designed for pure risks, where the possible outcomes are loss or no loss rather than a chance of pro�t.Page 1
Question 2: A warehouse catches �re after an electrical short circuit. In insurance terminology, the �re is best described as what?
Choices:
1) A hazard 2) A peril 3) An exposure unit 4) A retention
Correct Answer: A peril
Explanation: A peril is the direct cause of loss, such as �re, theft, or �ood. A hazard is a condition that increases the chance or severity of a loss.Question 3: A factory stores �ammable liquids beside an unprotected heat source.What type of hazard is this?
Choices:
1) Physical hazard 2) Moral hazard 3) Legal hazard 4) Financial hazard
Correct Answer: Physical hazard
Explanation: A physical hazard is a tangible condition that increases the probability or severity of loss. Flammable materials near heat increase the physical likelihood of �re.Page 2
Question 4: An applicant deliberately hides a history of staged claims when applying for insurance. This behaviour most directly indicates which hazard?
Choices:
1) Physical hazard 2) Moral hazard 3) Morale hazard 4) Catastrophe hazard
Correct Answer: Moral hazard
Explanation: Moral hazard involves dishonesty or intentional conduct that increases the likelihood of loss, such as concealing fraudulent claims history.Question 5: A policyholder becomes careless about locking a vehicle because it is fully insured. This is an example of which concept?
Choices:
1) Morale hazard 2) Physical hazard 3) Speculative risk 4) Fundamental risk
Correct Answer: Morale hazard
Explanation: Morale hazard refers to carelessness or indi�erence to loss because insurance exists, rather than deliberate dishonesty.Page 3