UIIC AO Hindi Officer Mains Mock Test 01

1. Insurance works on a simple idea: many people share the risk of a loss that only a few of them will suffer. Each person pays a small amount, called a premium, into a common pool. When a member of the pool suffers a loss covered by the policy - a fire, an accident or an illness - the pool pays the claim. Nobody can predict who will suffer the loss, but the insurer can predict, from the experience of large numbers, roughly how many claims will arise in a year. That prediction is what makes the premium possible: it must be large enough to pay all the claims and the costs of running the business, yet small enough that people are willing to buy the cover. Insurance does not remove risk. A house can still burn down and a crop can still fail. What insurance removes is the financial ruin that would follow: the family does not have to bear the whole loss alone. For this reason, insurance is described as a contract of utmost good faith. The buyer must disclose every fact that could affect the risk, and the insurer must honour every genuine claim. When either side breaks that faith, the system stops working for everyone in the pool.

   Q1.According to the passage, the basic idea of insurance is that:

   • A.The government pays for every loss
   • B.Only rich people can buy insurance
   • C.Many people share the risk of a loss that only a few will suffer
   • D.The insurer removes all risk from life
   • E.Premiums are paid only after a loss occurs

2. Q2.What does the passage say the premium must be?

   • A.Equal to the value of the insured property
   • B.Fixed by the government for all
   • C.Paid only once in a lifetime
   • D.As large as the insurer wishes
   • E.Large enough to pay claims and costs, yet small enough to attract buyers

3. Q3.According to the passage, what does insurance NOT do?

   • A.Pool the premiums of many people
   • B.Protect families from financial ruin
   • C.Prevent the loss itself, such as a fire or a failed crop
   • D.Require disclosure of facts
   • E.Pay genuine claims

Start the test to answer these. Correct answers and explanations are shown after you submit.