E-Learning PCE Question Bank ENG.oct.2014

7/23/2019 E-Learning PCE Question Bank ENG.oct.2014

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Developed by Learning & Development Department, Life Sales Division. Version 2.1, July 2010. 1

Part A (1) - The Basic Of Insurance

Chapter 1 : Introduction to Insurance 4Chapter 2 : Nature of Risk and Risk Management 9Chapter 3 : The Basic Principles of Insurance

And An Introduction to Takaful 13

Chapter 4 : The Insurance Market 17Chapter 5 : Consumer Protection And Statutory Regulations 21Chpater 6 : The Insurance Contract 25Chapter 7 : Law of Agency 29Chapter 8 : Insurance Marketing and After-Sales Services 33

Part A (2) - Medical and Health Insurance

Chapter 9 : Introduction to Medical and Health Insurance 38Chapter 10 : Types of Medical and Health Insurance 41Chapter 11 : Underwriting Medical and Health Insurance 44Chapter 12 : Policy Administration 48Chapter 13 : Medical and Health Insurance Claims 52

Table of Content


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Part C - Life Insurance

Chapter 21 : Life Insurance Preliminaries 56Chapter 22 : Life Insurance Products and Family Takaful

Business 60Chapter 23 : Policy Conditions 68

Chapter 24 : Practice of Life Insurance: New Business -Selection of Lives and Other Issues 74

Chapter 25 : Practice of Life Insurance: New Business -Premium Rating 78

Chpater 26 : Practice of Life Insurance -Monitoring The Insurance Fund 82

Chpater 27 : Practice of Life Insurance - Policy Documents 86Chpater 28 : Practice of Life Insurance - Claims 90

Chapter 29 : Life Insurance - Some Mathematics 94Chapter 30 : Practice of Life Insurance -

Ethics and Code of Conduct 98

Mock Exam 102

Sample Answers 122

Table of Content


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Part (A1) - The Basics Of Insurance


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Chapter Overview

Important of Insurance

How Insurance Works

What Is Insurance?

Functions of Insurance?

Classes of Insurance

Historical Aspects of Insurance

The Role of an Insurance Agent

Chapter 1 - Introduction to Insurance


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Chapter 1: Introduction To Insurance

8. Which ONE of the following facts is NOTtrue about both life and generalinsurance?

A) Life insurance policies are subject to the principle indemnity whereas generalinsurance policies are not.

B) General insurance policies are subject to the principle of indemnity whereaslife insurance policies are not.

C) Life insurance policies and general insurance policies will both pay when aperson suffers permanent disablement due to an accident.

D) Life assurance is a long-term contract whereas general insurance is a yearlyrenewable contract.

9. Life insurance can be defined as a contract, which pays an agreed sum of money

upon a contingency event. Therefore, its contracts can be arranged to providecover against the following forms of risks, except

I- Sickness or disability.II- Personal bank loan.III- Loss of a continuous stream of income during retirement (i.e. old age)IV- Premature death.

A) II & IIIB) IIC) IIID) None of the above

10. To be an effective agent, one must be able to recognize the insuring needs of theclients. What is/are the role(s) of an insurance agent?

I- Bring financial relief in the event of property loss.II- Bring financial relief to aggrieved dependents of insured people who may

meet with an untimely death.III- Inculcate the discipline of savings amongst the working population.IV- Provide other forms of insurance related services to the public.

A) III onlyB) I & IIC) III & IVD) All of the above

11. The operation of the principle of the law of large numbers will ensure_________.

A) better prediction of future losses.B) better understanding of customers needs.C) A and B.

D) None of the above.


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Chapter 1: Introduction To Insurance

12. What is a loss-sharing arrangement?

A) Individual losses are shared by a group of people.B) Individual losses are shared by members of a group facing similar risk

exposures.C) Individual losses are shared by members of the same society.D) Individual losses are shared by certain companies which face similar risk

exposures.


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Chapter Overview

Concepts of Risk

Related Concepts

Basic Categories of Risk

Methods of Handling Risk

Risk Management

Characteristics of Insurable Risk

Chapter 2 - Nature of Risk and Risk Management


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Chapter 2: Nature of Risk and Risk Management

1. We live in a world where we are continually exposed to perils. When perils occur,there usually will be a cause of loss and invariably lead to financial losses. Below

are some examples of peril and the concepts of losses, EXCEPT:-

I- IllnessFuture Earnings.II- IllnessMedical expenses.III- NegligenceLegal Expenses.IV- NegligenceCourts Award.

A) I & IVB) II & IIIC) IVD) Non of the above

2. Which of the following is NOTa pure risk?

A) TheftB) FloodC) EarthquakeD) Operating a kindergarten

3. The risk management process involves the following steps :-

A) IdentificationEvaluationSelectionImplementationControl.B) IdentificationSelectionEvaluationControlImplementation.C) SelectionIdentificationEvaluationImplementationControl.D) IdentificationEvaluationImplementationSelectionControl.

4. Damages arise from earthquake, flood and loss arising out of war will affect theentire economy or large numbers of persons/ groups within the economy.Referring to the above statement, what type of risks are they referred to?

A) Speculative Risks.B) Fundamental Risks.

C) Particular Risks.D) Physical Risks.

5. Which of the following is CORRECT?

A) A catastrophic loss arises when a very small number of risks incur losses atthe same time or when one risk results in a little loss.

B) A fortuitous loss is one that is intentionally brought by the insured.C) Insurance is concerned only with pure risks because in pure risks one will

suffer a loss or incur no loss, thus there is no possibility of profiting.D) Risk transfer is the only way in risk management.


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6. Which of the following is a moral hazard?

A) A physical characteristic that increases the outcome of a loss.B) A character defect in a group of people that increases the outcome of a loss.C) A character defect in an individual that increases the outcome of a loss.D) A social illness that increases the outcome of a loss.

7. Which of the following is NOTa loss prevention and loss reduction technique inlife and health insurance?

A) Training employee in first aid.B) Avoiding cigarette smoking.C) Insuring a life for an amount in line with his financial standing in life.

D) Installing grills in windows of the house in which the life assured is living.

8. What are the main characteristics of insurable risk?

I- It must involve losses that can be measured financially.II- The loss must be fortuitous, which is accidental and unintentional.III- It must be concerned with only pure risks.IV- The premium must be slightly higher in relation to potential risk.

A) I, II and IIIB) II, III and IVC) I, III and IVD) All of the above

9. Which of the following is NOTa loss prevention and loss reduction technique infire insurance?

A) Training employees in fire prevention.B) Disposal of waste material in a proper manner and good housekeeping.C) Use of non-combustible materials in building construction.D) Installation of a burglar alarm system.

10. When a person stops playing football because he does not want to get hurt, therisk control method used is known as_____________.

A) Risk retentionB) Risk transferC) Risk avoidanceD) Risk prevention


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11. A condition that increases the chance of loss is a definition of _____________.

A) RiskB) LossC) PerilD) Hazard

12. Which of the following is/are NOTtrue about Risk Measurement?

A) Empirical probability is determined on the basis of historical data.B) Priori probability will be applied when the total numbers of possible events are

known.C) Judgmental probability will be applied when there is a lack of historical data or

credible statistics.D) None of the above.


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Chapter Overview

Principles of Insurance

Takaful

Shariah Supervisory Council

Takaful and Insurance

Principles of Takaful Operation

Aspects of Takaful Operation

Types of Takaful Business

Chpater 3 - The Basic Principles of Insurance And AnIntroduction to Takaful


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Chapter 3: The Basic Principles of Insurance And An Introduction to Takaful

1. Insurable interest is a basic principle of insurance that requires the personpurchasing insurance to have an interest in the insured item or life insured in that

the loss or damage to the item or life insured would result in a financial loss to theperson. Which of the following is TRUEabout the insurable interest?

A) The legal right to insure arising from the lifetime interest, which an insured hasin a subject matter of insurance.

B) The legal right to insure arising from the legitimate financial interest, which aninsured has in a subject matter of insurance.

C) Insurable interest is the subject matter of the insurance contract.D) The transfer of all insurable rights from one party to another new party.

2. Utmost good faith is one of the basic principles of insurance that essentially

requires the policyholder to disclose all the material facts to the insurancecompany when proposing a policy. This is in view that the insurance companynormally takes on the risk by relying on the information given by the policy ownerin the proposal form. And, the principle of utmost good faith is breached when:-

I- A proposer failed to disclose a matter that the insurer knows or in the ordinarycourse of his business ought to know.

II- A proposer who knows or is reasonably expected to know a material fact failsto disclose the material fact.

III- A proposer who knows or is reasonably expected to know a material factmisrepresents the material fact.

IV- The proposer failed to disclose a common knowledge.

A) II & IIIB) I, II & IIIC) I, II & IVD) III only

3. The principle of subrogation provides that an insurer who has indemnified aninsured for a loss may exercise the insureds rights to claim from the third party inrespect of the loss. Which of the following ways may arise in Subrogation:-

I- Arising out of tortII- Arising out of statuteIII- Arising out of the subject matterIV- Arising out of contract

A) I & III onlyB) I & IVC) II, III & IVD) All of the above


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4. Indemnity can be defined as a restoration of the claimant to the same financialposition immediately before a loss by payment, repair or replacement. The

objective of the principle of indemnity is to ensure that the insured _________.

A) can get more than his loss which is stated in the policy.B) will not get less than his loss after being indemnified.C) will be indemnified with his actual loss in accordance to the policy.D) after being indemnified, shall not be better off than before the loss.

5. Contribution will apply in the following conditions:

I- The policies must cover a specific peril which gives rise to the loss.II- The policies must cover a specific interest.

III- The loss involves a common subject.IV- Two or more policies of indemnity must be in force.

A) I and IIB) II and IVC) III and IVD) I, II and IV

6. The life assured is greatly depressed and throws himself over the balcony,resulting in his death. This happens within the 1st policy year. As a result of theexclusion in the suicide clause, the insurer is not liable for the death by suicide.This example describes _____.

A) excluded perils .B) uninsured perils.C) unknown perils.D) exception perils.

7. In case of breach of utmost good faith, the aggrieved party can______________.

A) sue for damages

B) waive the breachC) void the contractD) request for compensation

8. Takaful is a protection plan based on Shariah principles. It can be divided intofamily takaful business and general takaful business. And, it is a scheme that_______________.

A) upholds the principles of shared responsibility, mutual help and co-operation.B) upholds the principles of non-profit sharing responsibility, mutual help and co-

operation.

C) upholds the principles of seller responsibility, mutual help and co-operation.D) upholds the principles of individual interests, responsibility and wealth.


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9. Mr. Lau decided to transfer the rights and liabilities of his life policy to Mr. Lee,who is his brother-in-law. Mr.Lee has then the rights, either absolutely or

conditionally on Mr.Laus policy after being assigned by Mr.Lau. Who are theassignee and the assignor in this case?

A) Mr.Lee and Mr.Lau are both the assignee.B) Mr.Lees wife is the assignee; Mr.Lee is the assignor.C) Mr.Lau is the assignee; Mr.Lee is the assignor.D) Mr.Lee is the assignee; Mr.Lau is the assignor.

10. Which of the following is TRUE?

A) Tabarru means donation, gift or contribution and Mudharabah can also be

named Trustee Profit-Sharing.B) Tabarru means compensation, gift or contribution and Mudharabah can also

be named Entrepreneur Profit-Sharing.C) Tabarru means donation, gift or contribution and Mudharabah can also be

named Entrepreneur Profit-Sharing.D) Tabarru means compensation, gift or contribution and Mudharabah can also

be named Trustee Profit-Sharing.

11. For a life policy to be effective, insurable interest must be present ____________.

A) When claim occurs.B) Upon maturity of the policy.C) When the proposal is submitted to the underwriter for issuance.D) Both A and C.

12. Concept of Takaful is a scheme that upholds the principles of ______________.

A) Not helping the participant who suffered an unexpected lossB) Shared responsibility, mutual help and cooperationC) Individual responsibility and self ventureD) Contractual agreement between two parties not to share the profit

13.The definition of Material fact is_________.

A) A fact which will influence a prudent underwriter in deciding whether to acceptthe risk.

B) A fact which was known by the insurer after negotiation.C) A fact which was known by both the insurer and the insured.D) All of the above.


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Chapter Overview

The Insurance Market

Other Market Components

Organization Structure

Centralization Versus Decentralization

Insurance Supervisory Authority and

Mandatory Associations

Insurance Mediation Bureaus

Other Associations

Market Services

Insurance Educational Institutions

Chpater 4 - The Insurance Market


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Chapter 4: The Insurance Market

1. Which of the following is NOTtrue?

A) Buyers of insurance include individual persons, small business enterprisesand public enterprises.

B) Seller can be classified into 3 types, which are Life Insurer, Composite Insurerand General Insurer.

C) Intermediaries or middleman comprised of insurance agents and brokers.Their main function is to match the needs of buyers with the insuranceproduct offered by sellers.

D) Service specialists include loss assessor, reinsurer, lecturer and engineer.

2. What are the differences between insurance agents and insurance brokers?

I- Insurance agents represent an insurance company whereas insurance brokeracts on behalf of the insured.

II- Insurance agent is bound by the agency agreement whereas insurance brokeris licensed by Director General of Insurance (DGI).

III- Insurance agent is remunerated through payment of commission by theinsurer whereas insurance broker is through payment of brokerage.

IV- Insurance agent sells life insurance policies whereas insurance broker sellsgeneral insurance policies.

A) I, II & IIIB) I, III & IVC) I, II & IVD) All of the above

3. An organization that is not related to life insurance is ___________.

A) ASMB) PIAMC) NAMLIFAD) LIAM

4. Which of the following statements are TRUEof loss assessors?

I- They are generally employed by the insured to assess the extent of damageor loss settlement.

II- They frequently assist the insured in the preparation and negotiation of theclaim.

III- They carry on the adjusting business of investigating the cause andcircumstances of a loss and ascertaining the quantum of the loss either for theinsurer or the policyowner or both.

IV- They are independent parties appointed usually by an insurer when a lossoccurs.

A) I & II C) II & IIIB) III & IV D) All of the above.


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5. Insurers will share the burden of paying claims, particularly those involving largeamounts with ___________.

A) loss adjusterB) loss assessorC) actuaryD) reinsurers

6. As per below which of the following are the advantages of decentralization?

I- Better position in satisfying customers.II- Prompt services can be rendered to customers.III- Branches are granted authority to make decision.

IV- Duplication of resources, particularly when each branch performs all the basicfunctions.

A) I, II & IIIB) II , III & IVC) I, II & IVD) I, III & IV

7. Which of the following is NOTtrue about their objective?

A) PIAM - to promote the establishment of a sound insurance structure inMalaysia through co-operation and consultation with BNM.

B) LIAM - to promote public understanding and appreciation for life insurance &to improve the image of life insurance agents through self-regulation.

C) AMLA - to monitor and regulate its members to adhere to all articles and rulesof the association and to comply with the provisions of all laws in Malaysia,especially in insurance act.

D) NAMLIFA - to promoting monetary and financial system, stability and fosteringa sound and progressive financial sector to achieve sustained economicgrowth for the benefit of the nation.

8. Which of the following is NOTtrue about their departments function?

A) Actuarial - design and pricing of news products, calculation of surrendervalues and paid-up policy value.

B) EDP - serves others by establishing procedures and programs that enablethem to utilize computer in their work.

C) Account - to invest all available funds in a manner which ensures allinvestments yield sufficient returns, satisfy the companys liquidity andsecurity.

D) Agency - identification of field officers and recruitment of sales force.


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9. Which one of the following is NOTthe main objective of the Malaysian InsuranceInstitute (MII)?

A) To provide and maintain a central organisation for promotion of efficiency,progress and development in the insurance industry.

B) To establish a library for the institute.C) To undertake research in the fields of insurance and related subjects.D) To promote and represent the interests of the member companies and the

industry.

10. Which one of the following is NOTthe objective of the Malaysian ReinsuranceBerhad (MRB)?

A) to diversify the existing business in order to achieve a better portfolio mix andensure sustainable growth.

B) to continuously explore innovative ways of doing business by takingadvantage of the latest in Information Technology.

C) to make rules, regulations and by-laws in accordance with Articles inconsultation with Bank Negara Malaysia.

D) to increase employment and training opportunities, particularly for bumiputera.

11. Which one of the following is NOTthe objective of the Life Insurance Associationof Malaysia (LIAM)?

A) to improve the image of the life insurance industry through self-regulation.B) to enhance the professionalism of staff and agents through continuous

training and education.C) to support the regulatory authorities in developing a strong and healthy

industry.D) None of the above.

12. Which one of the following is NOTthe objective of the Persatuan Insurance AmMalaysia (PIAM)?

A) to make rules, regulations and by-laws in accordance with these Articles inconsultation with Bank Negara Malaysia.B) to take note of events, statements and expressions of opinion affecting

members, to advice and represent their interests by expression of viewsthereon on behalf as may be deemed necessary and expedient.

C) to support the regulatory authorities in developing a strong and healthyindustry.

D) None of the above


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Chapter Overview

Insurance Industry and the Consumer

Self-Regulation

Statutory Regulation

The Companies Act, 1965

Chapter 5 - Consumer Protection And StatutoryRegulations


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Chapter 5: Consumer Protection And Statutory Regulations

6. The minimum solvency margin (which is the surplus of assets over liabilities foreach class of business is ___________.

A) RM 10 millionB) RM 50 millionC) RM 100 millionD) RM 150 million

7. In simple terms, the solvency margin can be defined as:

A) claims over first year collectionB) gross premium over net premiumC) liabilities over assets

D) surplus assets over liabilities

8. BNM currently does NOTlicense___________.

A) agentsB) brokersC) loss adjustersD) insurance companies

9. According to the Company Act, 1965, insurance companies are required to fulfillthe following, EXCEPT:

A) Preparation and submission of annual accountsB) Methods of valuing assets and the provision for depreciationC) Restriction on investment instrumentD) Method of valuing liabilities

10. A takaful insurance broker is required to maintain a minimum paid-up capital of________.

A) RM 100,000

B) RM 300,000C) RM 500,000D) RM 600,000

11. The Code of Ethics and Conducts of LIAM deals with life insurance selling and_______________.

A) life insurance annual reportB) life insurance practiceC) life insurance controlling lawD) life insurance profit sharing law


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Chapter 5: Consumer Protection And Statutory Regulations

12. Self-regulation has been introduced by the insurance industry with the objectivesto ____________.

A) instill discipline and promote healthy competition in the industry.B) provide some element of protection to insurance agents.C) increase the profit of the industry.D) A and B.


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Chapter Overview

Law of Contract

Chapter 6 - The Insurance Contract


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Chapter 6: The Insurance Contract

1. Contract can be defined as _______________.

A) a non-legally binding agreement made between two or more partiesB) a legally binding agreement made between two or more partiesC) a commercial agreement, which has essential commercial requirementsD) a commercial agreement, which is legally binding between buyer and seller

2. Certain essential requirements have to be satisfied before the insuranceagreement can be legally binding. These essential requirements are:-

I- offer and acceptanceII- intention to create legal relationshipIII- consent - consensus ad idem

IV- consideration

A) I, II & IIIB) I, II & IVC) I & IVD) All of the above

3. Part XIII Section 153 of the Insurance Act 1996 provides that a minor who hasattained the age of _____ may affect a life policy on his own life.

A) 15B) 19C) 18D) 16

4. In some instances, the insurer may not accept a proposal on its original terms butmay offer to provide insurance on different terms. This is called _____________.

A) offer and acceptanceB) counter offer from the insurerC) counter acceptance

D) counter offer from the insured

5. In general and life insurance contracts, the insureds consideration is _________.

A) to pay or promise to pay premiumB) to promise to accept the policyC) to submit the proposal formD) to promise to accept the loss


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6. If the agreement is to commit robbery and share the loot, or an insurance policyeffected on a ship engaged in smuggling or a person insuring on the life of

another for wagering; these contracts are:

A) Void contractsB) Voidable contractsC) Unenforceable contractsD) illegal contracts

7. A general contract may be described as _________.

I- An agreement made between two or more persons.II- Enforceable by law.

III- An evidence of business.

A) I and IIB) I and IIIC) II and IIID) All of the above

8. Section 153 of the Insurance Act 1996 provides that a minor aged __________can effect a life policy on his own life or on the life of another in which he has aninsurable interest as well as may assign the life policy on his own life with thewritten consent of his parent or guardian.

A) 18 and aboveB) 10 to 18 years oldC) 10 to 16 years oldD) Below 18 years old

9. Which of the following is NOTtrue about void contracts?

A) The law holds them to be no contracts at all, a nullity from the beginning.B) They are totally invalid and are nothing more than mere agreements.

C) Void contracts are not enforceable in a court of law.D) They are contracts which have consideration.

10. The best definition for an insurance contract would be as follows:

A) A legally binding agreement between two or more parties that can beenforced by law.

B) A legally binding contract that is legally binding but not recognized in any way.C) A form of agreement between two or more parties with sound frame of mind.D) A form of agreement between the proposer and the insurer.


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11. Stated below are the legal requirements of insurance contracts, EXCEPT:-

A) Offer and acceptanceB) ConsiderationC) Utmost Good FaithD) Intention to create legal relationship

12. A life insurance policy is a contract between _________________.

A) insurer and insured.B) insurer and beneficiary.C) insurer, insured and beneficiary.D) insurer, insured and agent.


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Chapter Overview

Legal Provisions Governing the Law of Agency

Duties of an Agent

Rights of an Agent

Obligations of the Principal

Termination of Agency

Characteristics of Insurance Agents

Conclusion

Chapter 7 - Law of Agency


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Chapter 7: Law of Agency

1. Which of the following is NOTtrue?

A) Special agent - appointed to carry out a specific act or transaction.B) General agent - he/she will do anything for his principal within the limits of a

general authority conferred upon him.C) Universal agent - he/she has unlimited authority, and can do anything for

his/her principal which he/she has the competency to do so.D) Professional agent - acts within the expressed authority granted to him.

2. Which of the following(s) has/have an agency relationship?

I- Relationship between principal and agent.II- Relationship between agent and third party.

III- Relationship between agency and third party.IV- Relationship between principal and a third party.

A) I, II & IIIB) I, III & IVC) I, II & IVD) II, III & IV

3. Some of the duties imposed on an agent are as follow, EXCEPT:-

I- To render accounts to the principal as required.II- To delegate duties to a sub-agent without authority, expressed or implied.III- Not to disclose confidential information obtained during the course of his

duties.IV- Not to let his own interest conflict with his obligations to principal.

A) I & IIIB) I onlyC) I & IVD) II only

4. The rights of an agent are as follow:-

I- The right to receive payment in the form of commission.II- The right to perform his duties in the manner which he considers to be

appropriate.III- Entitled to reimbursement of moneys, which he has expanded, with the

expressed authority of his principal.IV- Right to reject any attempt by his principal to control the manner in which he

works.

A) I, II & III C) I, II & IV

B) II, III & IV D) All of the above


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Chapter 7: Law of Agency

9. The relationship between the insurer and the agent may be created in thefollowing ways:

I- By expressed appointment.II- By implication of the law.III- By subsequent ratification of an unauthorized act.IV- By statute.

A) I, II & IIIB) II, III & IVC) I, II & IVD) All of the above.

10. Which of the following is NOTtrue about the Premium Warranty?

A) The insured is required to pay the premiums charged for the insurance within60 days from the effective date of insurance cover.

B) If the premium is not paid by the 60thday, the insurance cover will becancelled on the 61stday.

C) The insurer shall be entitled to short period premium for the period they havebeen on risk.

D) Any payment received by the appointed agent shall be deemed to be receivedby the insurer.

11. Which of the following is NOTthe responsibility of an agent towards principal?

A) Responsible for receiving money / premium on behalf of his principal.B) Diligence when performing his / her work and not letting his/her own interest

conflict with his / her obligation to his/her principal.C) Comply with his principals instructions.D) To assure principal that claims proceed would not happen.

12. An agency may be terminated by the following act, EXCEPT:-

A) Expiration of the period stipulated in the contract of agency.B) Mutual agreement.C) Death of the principal or agent.D) Ratification.


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Chapter Overview

Sales

After-Sales Service

General Features of General InsuranceRenewal Process

Policy Register

Chpater 8 Insurance Marketing And After-SalesServices


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Chapter 8: Insurance Marketing And After-Sales Services

1. Marketing is defined as:-

A) The management process responsible for identifying, anticipating andsatisfying customer requirements in a profitable manner.

B) Satisfy the needs of customers and at the same time make a profit.C) Distributing policies with the objective of satisfying customers requirement.D) Developing products that meet customers needs.

2. Why is a sales plan important?

A) It allows an agent to make sales decision.B) It allows an agent to perform the function of planning and controlling.C) It allows an agent to satisfy customers needs.

D) It allows an agent to identify and select suitable channels for distributingpolicies to customers.

3. An agent engages in personal selling requires skills of:-

I- Product knowledgeII- Promotional techniquesIII- Selling techniquesIV- Market knowledge

A) I, II & IIIB) II, III & IVC) All of the aboveD) I, III & IV

4. It is important for the agents to understand consumers buying decision process.The five stages of consumers buying decision process are:-

A) Problem recognition Information Search Evaluation of AlternativePolicies PurchasePost-Purchase Evaluation.

B) Information Search Problem recognition Evaluation of Alternative

Policies

Purchase

Post-Purchase Evaluation.C) Problem recognition Evaluation of Alternative Policies InformationSearchPurchasePost-Purchase Evaluation.

D) Information Search Evaluation of Alternative PoliciesPurchasePost-Purchase EvaluationProblem recognition.


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Chapter 8: Insurance Marketing And After-Sales Services

10. Under what circumstances would the agent use the creative selling technique?

A) When the customer is unaware of his or her needs.B) In a situation where the customer is able to recognize his needs immediately.C) Where selling is done indirectly by establishing good will between the agent

and his customer.D) When the customer may want time to think the idea over, or may not agree

with the price.

11. Which of the following should be considered the basic marketing decision(s) forinsurance agents?

A) The class of business to develop.

B) The category of customer to cultivate.C) The realistic sales quota to set.D) All of the above.

12.At what stage of the consumers buying decision process does the consumerbecome aware of the threat of risks and feel the need for insurance to protecthimself from financial difficulties?

A) The evaluation of alternatives stage.B) The information search stage.C) The problem recognition stage.D) The purchase stage.


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Part (A2) - Medical and HealthInsurance


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Chapter Overview

Introduction to Medical and Health Insurance

(MHI)

Principles and Practices Applicable to Medical

and Health Insurance

Legislation and Regulations Applicable to

Medical and Health Insurance

The Duty of Disclosure

Categories of Medical and Health Insurance

Non-Termination of Coverage with Claim

Payment

Increase of Risk with Time in Medical and

Health Insurance

Cost Containment Measures

Cashless Hospital Admission

Chapter 9 - Introduction To Medical And HealthInsurance


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Chapter 10: Types of Medical and Health Insurance

1. Some insurers may extend their medical expenses insurance policies to coverthe following, EXCEPT:-

A) Disability Income Insurance.B) Clinical Insurance.C) Dental InsuranceD) Maternity Insurance

2. Which of the following are the benefits provided by a hospital and surgicalinsurance policy?

I- Intensive Care Unit.II- Ambulance Fees.

III- Pre-Hospitalisation Diagnostic Tests.IV- Operating Theatre Fees.

A) III onlyB) I & II onlyC) All of the aboveD) None of the above

3. The followings are correct about Group Medical and Health Insurance, EXCEPT:-

I- All eligible members can be covered by a group policy, regardless of age orphysical condition.

II- Contributory group medical and health insurance requires the participation ofat least 75% of the eligible members of the group.

III- Unless specifically exempted, government tax is applicable to group policies.IV- The benefits, rights and obligations of insured group are stated in a master

policy issued by the insurer to a single entity, the policyholder.

A) I, II & IIIB) II, III & IVC) I, III & IV

D) None of the above

4. Which of the insurance below may be sold as a stand-alone policy or as a rider toa life insurance policy?

I- Hospitalisation Cash benefit Insurance.II- Disability income Insurance.III- Critical Illness insurance.IV- Major Medical Expenses Insurance.

A) II, III & IV only C) I, II & IV only

B) I, III & IV only D) I, II & III only


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Chapter 10: Types of Medical and Health Insurance

5. Comprehensive hospitalization and surgical insurance policies are also called ascharged policies in Malaysia. Which of the following coverage item that is not

based on as charged basis?

A) Government hospital cash allowance benefit.B) Pre-hospitalization diagnostic services.C) Reimbursement of government service tax.D) Emergency outpatient sickness treatment.

6. The following items are covered under hospital and surgical policy, EXCEPT:-

A) Extra bed.B) X-ray, electrocardiograms and ordinary laboratory test.

C) Cost of obtaining medical report.D) Physician daily visits of non-surgical disability.

7. The following categories will be excluded from medical expenses coverage,EXCEPT:-

A) Congenital deformities and war.B) Dental related treatment, normal pregnancy and related treatment.C) Government tax and ambulance fees.D) Long-term care and drug or alcohol abuse treatment.

8. The premium for individual medical and health insurance policies is usually_______.

A) Age banded and increase with ageB) Age specified and decrease with ageC) Age banded and decrease with ageD) Age specified and increase with age

9. _____ keeps the cost of insurance within the reason by elimination of those risksthat are within the insureds control.

A) Contributory planB) Stop loss provisionC) Elimination periodD) Exclusion

10. Which of the following is NOTthe deductible method?

A) A fixed amount.B) A fixed limit.C) A percentage.

D) A combination of percentage and fixed amount.


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Chapter Overview

The Purpose of Underwriting

Anti-Selection

Adequacy of Premiums

The Risk Selection Process

Medical Underwriting

Sources of Underwriting Information

Underwriting Decisions

Issuing Modified Coverage

Renewal of Medical and Health Insurance

Payment of Premium

Termination of Policy

Chapter 11 - Underwriting Medical and HealthInsurance


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Chapter 11: Underwriting Medical and Health Insurance

1. Underwriting can be defined as ________.

A) a process of assessment and selection of risks, and the determination ofpremium, terms and conditions.

B) determining the amount and level of appropriate insurance coverage required.C) evaluation of risks primarily by estimating the probable influence of current

impairments and previous medical histories and claims.D) underwriter selecting those risks that are within the insurers range of

acceptability.

2. Which of the following are the CORRECTrisk selection statement thatunderwriters consider:-

I- Medical Factorsdisability and medical expenses coverage.II- Financial Factorsdisability income coverage.III- Occupational Factorsassist to determine premium rate on disability,

accident and medical expense.IV- Age and Sexmedical and health insurance coverage.

A) I, II & IIIB) I, III & IVC) II, III & IVD) All of the above

3. The underwriting decisions include the following, EXCEPT:-

I- Standard.II- Sub-standard.III- Declined.IV- Ignore.

A) I & II only.B) I & III only.C) II & IV only.

D) IV only.

4. The disadvantages of using exclusion endorsements are as follow, EXCEPT:-

I- It permits coverage for an applicant with a known serious impairment.II- The excluded condition presenting the greatest threat to persons health and

security is not covered.III- Exclusion may not be fully understood by the insured resulting in

policyholders dissatisfaction.IV- Loss of goodwill, increased cost of claim administration and discontinuance of

policy.

A) I only C) II onlyB) III only D) IV only


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5. Which of the below are types of policies commonly available for renewal?

I- Optional Renewable PoliciesII- Guaranteed Renewal PoliciesIII- Conditional RenewalIV- Non-cancelable Policies

A) III only.B) I & II only.C) All of the above.D) None of the above.

6. Anti-selection refers to a situation where__________________.

A) More standard risks are accepted for insurance resulting in a less favorableunderwriting result.

B) More sub-standard risks are accepted for insurance resulting in a lessfavorable underwriting result.

C) More standard risks are accepted for insurance resulting in a more favorableunderwriting result.

D) More sub-standard risks are accepted for insurance resulting in a morefavorable underwriting result.

7. In order to ensure that sufficient funds will be available to pay claims, the insurerwill_________.

I- Increase premium rate yearly.II- Present the lower acceptance insured rate.III- Guard against anti-selection.IV- Charge a premium that commensurate with the risk transferred.

A) I & IVB) II & IIIC) I & II

D) III & IV

8. Applicants ____________ and ___________ are the first indicators of presentphysical condition.

A) family history, medical examination results.B) medical examination results, applications statement.C) application statement, financial factors.D) financial factors, family history.


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9. The most drastic underwriting action of a medical and health insuranceunderwriter is_________.

A) To accept a risk as sub-standard.B) To decline acceptance of a risk.C) To offer premium loading.D) To issue modified coverage.

10. Which of the following statement is FALSE?

A) Guaranteed renewable policy is limited to the rescission of the policy duringcontestable period.

B) Cancelable policy grants the insurer the right to terminate the individual policy

at any time for any reason.C) Non-cancelable policy is guaranteed to be renewable but allows increasing

premium rates for one or more specific reasons.D) Conditionally renewable policy grants an insurer a limited right to refuse to

renew a health policy at the end of payment period.


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Chapter Overview

Overview of Medical and Health Insurance

Policy Administration

The Proposal Form

The Policy Form

Endorsements

Renewal Notices

Documents for Tax Relief for Medical and

Health Insurance Premium Payments

Chapter 12 - Policy Administration


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Chapter 12: Policy Administration

1. ____________ provides for control by and the lodgement of proposal forms,policies and brochures of insurers with Bank Negara Malaysia.

A) Section 149, Insurance Act 1996B) Section 152, Insurance Act 1996C) Section 174, Insurance Act 1996D) Section 157, Insurance Act 1996

2. Which of the following statement is INCORRECT?

A) The policy register serves as an official record of policies issued by theinsurer.

B) In the absence of expressed conditions, the contract of insurance would be

subject only to implied conditions.C) Both the endorsement and policy constitute the evidence of contract.D) Policy conditions which require the insured to inform the insurers of any

changes or alterations in the risk are conditions precedent to contract.

3. A proposal form is a document drafted by the insurer in the form ofquestionnaires for each class of insurance to assist the insurer in gatheringinformation required to assess a risk being proposed. What is the purpose of theproposal forms containing a declaration clause?

I- Warrant the answers are true.II- Warrant that the information is complete.III- Agree that the proposal becomes the basis of contract.IV- Accept the usual form of policy for that class of business.

A) IB) I & IIC) I, II & IIID) All of the above

4. The operative or insurance clause is playing the essential role of the contract in

the scheduled policy form. Which of the following is NOT true of the policy form?

A) It represents the written evidence.B) It is considered as contract of insurance once the insured signs.C) It has to be stamped; otherwise it cannot be used as evidence in the court.D) Scheduled type of policy forms are frequently used by insurers.

5. Implied conditions relate to the following, EXCEPT:-

A) Duty of utmost good faith.B) Subrogation condition.

C) Existence of insurable interest.D) Identification of subject matter of insurance.


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6. In order for the health insurance policies premium to qualify for tax relief, ______.

I- The coverage should be for a period of 12 months or more.II- The coverage should be related to the treatment or payment resulting from

disease or accident.III- A copy of the insurance premium receipt issued by the insurance company

must be submitted to IRB.IV- The total of premium paid from life insurance policies and EPF contribution

does not exceed RM6,000 and education or medical insurance does notexceed RM 3,000.

A) I & IIB) II & III

C) III & IVD) I & IV

7. Which of the following statements is NOT TRUEabout proposal form?

A) A proposal form is a document drafted by the agent in the form ofquestionnaires for each class of insurance to assist in gathering ofinformation.

B) Enables the insurer to consider the application regarding the risk in a speedyand accurate manner.

C) Frequently used in relation to simple risks where information can be furnishedin a structured format.

D) To assist in gathering of information required to assess a risk being proposed.

8. The clause that specifies the perils insured under the policy and thecircumstances in which the insurer will become responsible to make payment isknown as _________.

A) the operative or insurance clauseB) the recital clauseC) the exclusion clause

D) the attestation clause

9. ____________ are policy conditions which require the insured to inform theinsurers of any changes or alterations in the risk.

A) Conditions precedent to contractB) Conditions precedent to liabilityC) Condition subsequent to contractD) Conditions subsequent to liability


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10.An offer under medical and health insurance is typically the _____________.

A) Submission of a completed Request for Change form and signed by the lifeassured

B) Submission of a completed Medical Questionnaire and signed by the lifeassured

C) Submission of a completed Disclosure Statement form and signed by theproposer

D) Submission of a completed proposal form and signed by the proposertogether with the initial premium consideration


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Chapter Overview

Notification of Loss

Proof of Loss/Claim

Checking Coverage

Claim Investigation

Medical and Health Insurance Claim Forms

Settlement of Medical and Health Insurance

Claims

Repudiation of Liability by Insurers

Disputes

Claims Example

Chapter 13 - Medical and Health Insurance Claims


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Chapter 13: Medical and Health Insurance Claims

1. Insurance policies require the policyholder to inform the insurer in writing of anyclaim between _________.

A) Between 14 days to 30 days.B) Between 14 days to 60 days.C) Between 14 days to 90 daysD) Between 14 days to 120 days

2. When a dispute arises, it may be resolved through the following channel.

A) PIAMB) FMBC) AMLA

D) ASM

3. Which of the following determines the validity of claims?

I- The existence of loss.II- Loss is caused by a peril insured under the policy.III- The person making the claim is the rightful claimant.IV- Loss does not fall within the scope of an exclusion of the policy.

A) III onlyB) I & II onlyC) All of the aboveD) None of the above

4. The notification of loss must be ________.

I- In written notice of claims.II- Gone through a preliminary check by the physician.III- Furnished by the qualified medical practitioner.IV- Within 30 days or as soon as possible after the occurrence of loss.

A) I & IIIB) I & IVC) II & IIID) All of the above

5. Claim investigation involves ascertaining the following, EXCEPT:-

A) The person making the claim is related to the claimant.B) Loss is caused by a peril insured under the policy.C) Existence of loss.D) Loss does not fall within the scope of an exclusion of the policy.


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Chapter 13: Medical and Health Insurance Claims

6. Conditions for a Valid Claim included:

I- Is the policy in force?II- Has been paid premium?III- Is the loss caused by an insured peril?IV- Has notice of loss been given with undue delay?

A) I, III & IVB) I, II & IVC) I, II & IIID) All of the above

7. When a claim dispute arises, it may be resolved through the following

Channels______________.

A) Negotiation and Compromise SettlementB) LitigationC) Arbitration and MediationD) All of the above

8. ______________usually results where a substantial question exists about thedegree of disability or result in the insurer paying something more than itsinterpretation of the facts would warrant and the claimant accepting payment forless than that claimed.

A) A Compromise SettlementB) LitigationC) ArbitrationD) Medication

9. Health insurance policy is NOT automatically terminated ______.

A) On the death of an insured personB) On the policy anniversary of the insureds maximum eligibility age

C) Total benefits paid exceed the maximum limitD) On the first occurrence of accident and resulting in a serious loss

10. Which of the following statement regarding to the claim form is FALSE?

A) Claim form is the document that enables insurer to gather information relevantto assessing claims.

B) The issue of a claim form constitutes an admission of liability on the part ofthe insurers.

C) The claim form is to seek information to identify the circumstances of loss andextent of loss.

D) Ordinary health insurance claim form consists of insureds statement and theattending physicians statement.


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Chapter Overview

Introduction

Characteristics of Life Insurance Products

Basic Principles of Insurance as Applied to Life

Insurance

Risks Covered by Life Insurance Policies

Chapter 21 - Life Insurance Preliminaries


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Chapter 21: Life Insurance Preliminaries

1. For life insurance policies, which of the following is required to exist at the time ofinception of insurance?

A) Indemnity.B) Subrogation.C) Insurable interest.D) Contribution.

2. The following are the risks covered by life insurance, EXCEPT:-

A) Premature death.B) Permanent disability.C) Old Age.

D) Financial loss.

3. A life insurance is a contract of Uberrima Fides and this term is referring to___________.

A) Insurable interestB) ClaimC) Utmost good faithD) Underwriting

4. Insurable interest exists in all the following situations, EXCEPT:-

A) A parent in the life of a child.B) A creditor in the life of the debtor.C) A man in the life of his brother-in-law.D) An employer in the lives of its key personnel.

5. Which of the following will be taken into account by the Insurer when determiningthe premium rate:-

A) Tax.

B) Expenses.C) Rate of investment returns.D) All of the above.

6. A contract where one party provides something of value to another party inexchange for a promise that the other party will perform a stated act if a specified,uncertain event occurs is called a/an __________.

A) business contractB) aleatory contractC) offering contract

D) investment contract


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7. Section 152 of the Insurance Act, 1996 elaborates on the principle of _________.

A) equitableB) insurable interestC) uberrima fidesD) subrogation

8. In life insurance, with the exception of permanent health insurance policies, thesettlement of a claim will ______________.

A) revise the contractB) terminate the contractC) extend the term of the contract

D) Increase the premium of the contract

9. The first case of life insurance was found in England in year 1583 on the life of_____________.

A) Edward GybbonB) William GybbonC) William CybbonD) William Edward

10. ______________is defined as the method of changing a uniform premiumthroughout the duration of the policy irrespective of the increase in risk due toincrease in the age of the life assured.

A) Level premium systemB) Level payment systemC) Level term systemD) Increasing premium system

11. Life insurance policies which were issued on a short-term basis in the past hadmany disadvantages. What was/were they?

A) Premium tended to increase with duration of time.B) Cover was often denied when it was most needed.C) All of the above.D) None of the above.


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12. The following are characteristics of life insurance contracts, EXCEPT:-

I- These are aleatory contracts.II- These are long-term contract.III- The life companies cannot cancel these contracts unilaterally.IV- The mortality risk will increase with age and the duration of the contract.

A) I, II & IIIB) None of the aboveC) II, III & IVD) All of the above


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Chapter Overview

Introduction

Types of Life Insurance Policies

Description of Life Insurance Contracts

Types of Family Takaful Business

Chapter 22 - Life Insurance Products and FamilyTakaful Business


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Chapter 22: Life Insurance Products and Family Takaful Business

1. In life insurance, there are mainly three kinds of life insurance contracts and theproducts offered by insurer can be broadly categorized further into two types.

They are__________________.

A) ordinary life, home service & group insurance with protection and bonusB) ordinary life, home service & group insurance with participating and non-

participatingC) ordinary life, short-term & group insurance with protection and bonusD) ordinary life, short-term & group insurance with participating and non-

participating

2. Which of the following is/are NOT TRUE of the difference between home-services insurance and ordinary life insurance:-

A) Premium for home-services insurance is usually collected at a more frequentinterval than ordinary life insurance.

B) The agent of home-service is usually directly employed by the insurerwhereas in ordinary life insurance, the agent is not employed by the insurer.

C) Premium for home-services policies are usually collected at the home of thepolicyholders.

D) Home-services insurance can only be underwritten as term insurance.

3. Which of the following statement is TRUEabout participating contracts?

A) Participating contracts are mainly for protection purpose.B) The benefit is generally made up of guaranteed benefit, regular bonuses and

a final bonus.C) The main benefit is generally guaranteed.D) These contracts are often simple and easily compared, which means

competition on premium rates is keen.

4. Participating policies can only be bought with the following types of life policies?

I- Whole life.

II- Endowment.III- Term.

A) I and IIB) I and IIIC) II and IIID) All of the above


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5. One of the term insurance products is level term insurance, which is the earliestand simplest form of life insurance. And, the following is/are the feature of Term

Insurance, EXCEPT?

I- It can convert the policy into permanent assurance like whole life orendowment assurance without evidence of insurability but subject to properadjustment in the premium charged.

II- It can be renewable for a limited number of periods at the option of theassured.

III- It provides cheap guaranteed protection.IV- It provides guaranteed payment of sum assured on death within the term of

the contract.

A) I & IIB) II & IVC) None of the aboveD) All of the above

6. Your client borrows RM 50,000 from the bank for 10 years (repayable by equatedinstallments) and wants to assure payment of the loan should death occur duringthe 10 years period. What type of policy would you recommend your client?

A) Limited-payment whole life.B) Endowment.C) Level term assurance.D) Decreasing term assurance.

7. Term insurance provide _____________.

A) Surrender valueB) Loan valueC) All of the aboveD) None of the above

8. Which of the following is a life insurance?

A) Personal Accident Policy.B) Workman Compensation Policy.C) Endowment Policy.D) None of the above.


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9. Which of the following is/are the feature of whole life assurance?

I- Premiums are not reviewable.II- Usually a minimum guaranteed surrender value is available after 3 years.III- Policy will be eligible for the benefits of non-forfeiture regulations, cash

surrender value, loan and etc.IV- Premiums might cease at a certain age or after a certain term. This helps to

reduce premium collection costs.

A) I, II & IIIB) II, III & IVC) All of the aboveD) None of the above

10. By purchasing a continuous-premium whole life insurance policy instead of acomparable limited-payment whole life policy, a policyholder gains the advantageof ____________________.

A) a longer grace periodB) a cheaper annual premiumC) guaranteed renewableD) guaranteed payment of total sum assured on death

11. The sum assured is payable only upon death, but premiums are payable for alimited number of years only, after which the policy become paid-up for its fullamount. The above statement best described:

A) Whole life endowment policy .B) Annuity policy.C) Limited payment whole life policy.D) Joint life policy .

12. ___________ policy provides not only the payment of the face value of the policyupon the death of the life assured during a fixed term of years, but also the

payment of the full face amount at the end of the said term if the life assured isliving.

A) Whole life endowmentB) AnnuityC) EndowmentD) Term


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13. An endowment policy is suitable for a person who_____________, EXECEPT:-

A) wishes to prepare his/her retirement fundB) is opening a business and needs to make a large initial investment in the

businessC) is paying off a mortgage on the new home by periodic paymentsD) has small income as a protection plan

14. An advantage provided by endowment if compared with term assurance is ____.

A) an automatic conversion of the policy, if the insured is still living at the end ofthe period of coverage

B) no cash value at any time during the period of coverageC) a payment of the full face amount, if insured is still living at the end of the

coverage periodD) an affordable premium for the small income group

15. Which of the following is NOT TRUEabout Annuity contract?

A) A periodic payment made during a fixed period of time or for the duration ofthe survival of a designed life (the annuitant) or lives.

B) Annuities are mainly bought by older people seeking to convert capital from,e.g. a gratuity fund, and policy-maturing benefit into income for life.

C) All of the above.D) None of the above.

16. An agreement under which life office, in return for the payment of a certain sumof money known as the purchase price, makes a series of payment at regularintervals from a fixed date until the death of the annuitant or at some otherspecified time is known as _________________.

A) a government schemeB) an annuity

C) a family income benefitD) an endowment insurance

17. En. Ali Bin Mohamad is self-employed and has no EPF savings. But, En. Aliwants to begin planning for his retirement. He wants to a guaranteed fixed andperiodic income when he retires. Therefore, the most suitable choice for hisretirement planning is _______________.

A) a government bondB) an annuityC) a family income benefit

D) an endowment insurance


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18. Which of the following is NOT TRUEabout Permanent Health Insurance?

A) It provides income during periods of sickness or disability on a long-termbasis.

B) Policies normally do not acquire a surrender or maturity benefit.C) All of the above.D) None of the above.

19. Which of the following is NOT TRUEabout dread disease plan?

A) It provides a lump sum of ready cash to the policyholder for seekingtreatments and health recovery purposes.

B) It may provide an acceleration of all or part of any death benefit.

C) It may be a stand-alone benefit.D) None of the above.

20. Investment-linked policies premium is divided into the following components:-

I- Expense related II - Mortality and /or Morbidity cost related.II- Investments related IV - Single premium.

A) I, II & IIIB) II & IVC) None of the aboveD) All of the above

21. The maximum amount allowed as basic insurance premium for protection underthe investment-linked policy is limited to __________ a year for eachpolicyholder.

A) RM 4,000B) RM 5,000C) RM 6,000D) RM 7,000

22. Which of the following is NOT TRUEof the difference between contributory andnon-contributory in Group Insurance?

A) 100% vs. 75% of all full-time employees must join the plan.B) Employer and employee share the cost vs. employer pays all the cost.C) All of the above.D) None of the above.


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23. Powertech Sdn Bhd purchased a group insurance for its 12 full time staffsbetween ages 16 and 55 on Jan 2008. But, Steven, one of the staff tendered his

resignation with effect from Jun 2008. Therefore, is the policy still valid and arethere any changes of the premium?

A) Policy is not valid and the premium will be fully refunded.B) Policy is valid and the premiums remain unchanged.C) Policy is valid and the premium will be decreased.D) Policy is valid and the premium will be increased.

24. Which of the following is NOT TRUEabout Supplementary Benefits?

A) These are benefits or riders attached to the basic policies subject to the

payment of extra premium.B) It included surgical and nursing fees benefit.C) It included saving benefit.D) None of the above.

25. In childrens deferred insurance, should the child die before reaching the vestingage ________?

A) The sum assured of the policy become payable.B) Only the cash value is payable.C) Only refund of the premium paid.D) The insurer will refund Compound Interest plus premium paid.

26. An education policy must satisfy the following conditions so as to eligible for thetax relief, EXCEPT:-

A) The beneficiary should be the parent.B) If the insured is the child, the life of the payor must be covered.C) If the insured is the parent, the child must be the nominee.D) Maturity benefits must be payable when the child is at aged 13 to 25.

27. Family Takaful benefits are divided into three main portion EXCEPT:-

A) Disability benefitB) Death benefitC) Maturity benefitD) Surrender value

28. Family Takaful plan participants may elect to incorporate any of the followingsupplementary benefits EXCEPT:-

A) Dread disease benefit.

B) Permanent total disability.C) Personal accident.D) Hospitalisation benefit.


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29. The main function of the Participants Special Account in Takaful Insurance is for__________.

A) savingB) saving and InvestmentC) the intention of tabarukD) the intention of mudharabah

30. Family Takaful plan benefits shall be paid to participants depending on thefollowing cases, EXCEPT:-

A) The participants die before the term of the Takaful plan.B) The participants survive until the end of the full term of the Takaful plan.

C) The participants terminate the contract.D) The participants withdraw the plan within 15 days.


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Chapter Overview

Definition of Life Policy

Privileges and Conditions

Policy Transactions

Policy Alterations

Chapter 23 - Policy Conditions


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Chapter 23: Policy Conditions

1. Which of the following is TRUEabout life policy:-

A) A legally binding agreement made between two or more parties.B) To restore the insured to the same financial position he had enjoyed before

the loss.C) Any instrument by which the payment of money is assured on death or the

happening of any contingency dependent on human life, or any instrumentevidencing a contract which is subject to payment of premiums for a termdependent on human life.

D) To protect the interests of the assured who has omitted to pay premium orwho is temporarily unable to pay under a permanent insurance policy.

2. Which of the following regarding days of grace is NOT TRUE?

A) Coverage continues during the days of grace for half of the sum assured only.B) If renewal premium is not paid within the days of grace, the policy ceases to

have any further cover, subject to any non-forfeiture provisions.C) The days of grace for yearly, half-yearly, quarterly and monthly premiums are

the same.D) It is usually a period of 30 days after the premium due date.

3. The grace period refers to:-

A) The applicant is required to go for medical check up.B) The policyholder is required to pay the premium when due so as to keep the

policy in force.C) The policyholder is required to submit any claim.D) The insurer must settle any claim upon request.

4. Section 155 of the Insurance Act, 1996 regulates the basis of surrender values.Accordingly, when a policy has been in force for ______ years or more, theordinary policy becomes entitled to a surrender value.

A) 2

B) 3C) 4D) 5

5. The following plans are generally in use as non-forfeiture provisions, EXCEPT:-

A) Extended Term Insurance and Paid-Up Policy.B) Automatic Premium Loan.C) Policy Loans.D) None of the above.


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6. A provision in a life insurance policy which states that any premium not paid bythe end of the grace period would be automatically paid by the policy loan if there

is sufficient cash value is called ____________.

A) Automatic Paid-UpB) Automatic Premium LoanC) Automatic Policy LoanD) Automatic Protection Loan

7. Which of the following is NOT TRUEabout policy loan?

A) Loans are granted up to 92% of the acquired cash value of a policy.B) The governing rate of interest on the loan shall be fixed by the company

granting the loan. Normally, the interest rate is higher than fixed deposit rate.C) The policyholder can apply for the loan anytime.D) The amount of loan available will be quoted on application to the company.

8. Which of the following is/are NOT TRUEabout Automatic Premium Loan?

A) It provides for a continuation of the insurance cover when the assured fails topay premium.

B) The assured must provide evidence of insurability when bringing the policyback to its original status.

C) Premium is paid automatically as it falls due after the grace period, by thecreation of a loan which, interest becomes a lien upon the insurance untilpaid.


9. A policy under which the cash value is available for use as a single premium toprovide for insurance on the original terms but reduces sum assured is known as

A) A paid-up policy.A) An extended policy.B) An Automatic premium loan policy.

C) An assignment policy

10. Which of the following policies do not have the non-forfeiture provision?

A) Whole life policy .B) Endowment policy.C) Term policy.D) Education policy.


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16. Which of the following is/are TRUE?

I- Surrender value is granted if a policy has been in force for three years ormore.

II- Surrender value is granted if a policy has been in force for five years or more.III- If the insured commits suicide within one to two years from the date of

inception or reinstatement of the policy, the policy becomes void and theinsurer is not liable to pay the claim except to refund all premium paid.

IV- If the insured commits suicide within three to four years from the date ofinception or reinstatement of the policy, the policy becomes void and theinsurer is not liable to pay the claim except to refund all premium paid.

A) I and III

B) I and IVC) II and IIID) II and IV

17. According to section 147(4) of the insurance act 1996, the insurer cannot denyliability on a policy after 2 years of its issue on the grounds of misrepresentationof non-disclosure alone unless he/she can prove that such misrepresentation ornon-disclosure was made fraudulently by the insured.The above statement refers to:

A) Reinstatement clause.B) Suicide clause.C) Incontestability clause.D) Contestability clause.

18. Which of the following documents are generally acceptable as proof of age by lifeoffices in Malaysia?

I- International Passport.II- Certified extract from Baptism Register.III- School leaving certificate from Government or Government aided school.

IV- Extract from service record of Government, Semi-Government, Public Sectorundertakings and reputable commercial firms.

A) I, II, IIIB) I, II, IVC) I, III, IVD) All of the above


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19. Which section of the Insurance Act 1996 states that an insurer shall not disputeliability by reason only of a misstatement of the age of the life assured?

A) Section 145(1)B) Section 146(1)C) Section 147(1)D) Section 148(1)

20. Which of the following is/are NOT TRUEabout Assignment?

A) An agreement that Mr. Life Assured does not have any rights to his policyexcept to pay the premium is known as absolute assignment.

B) An agreement that assignor can revoke all the rights if the assignee dies

before the payment of the policy money becomes due is known as aconditional assignment.

C) It must be in writing and may be affected by an endorsement or a separatedeed.


21. According to BNM JPI: 2/2005, any transaction involving the purchase of lifeinsurance policy is construed as a replacement of policy if within 12 monthsbefore or after a new policy is effected if the existing policy is in the followingsituation, EXCEPT:-

I- Continued as extended term insurance or automatic premium loan.II- Lapsed, surrendered or partially surrendered.III- Changed or modified into the form of non-forfeiture benefit.IV- Reduced in the amount of premium paid arising from the reduction of sum

insured and/or rider or removal of rider.

A) II & IIIB) IC) III & IVD) None of the above


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Chapter Overview

Introduction

Risk Management

New Business Premium Accounting

Life Insurance and Income Tax

Chapter 24 - Practice of Life Insurance: New Business- Selection of Lives and Others Issues


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