1 TMTDA/PCE /PDF/ENG/DEC2015 PCE SAMPLE QUESTIONS 1) Upon diagnoses of one of the 36 critical illnesses, critical illness insurance will provide ________ of the sum assured. a. 50% of the sum assured b. lump sum cash payment c. lump sum cash payment with 20% cost of insurance d. 80% of the sum assured with 20% cost of insurance 2) A situation where more sub-standard risks are accepted for insurance resulting in a less favourable underwriting result is known as a. Anti reaction b. Contradiction c. Anti rejection d. Anti selection 3) The relative frequency of deaths in a specific population is ‘rate of death’ which is also termed as: a. Numbers of death b. Mortality rate c. Level of fatality d. Term of life 4) Which is not the example of moral hazard? a. Being careless as a doctor because you have malpractice insurance b. Installing a smoke alarm because you have fire insurance c. Taking big bets in a marketplace with your firm's capital because you have limited exposure to the downside but lots of exposure to the upside d. Car was not quite damaged enough to total, so he/she was going to damage it more and ask for an appeal 5) Participating life policy include the following, EXCEPT: a. Endowment b. Traditional c. Investment-Linked d. Whole Life
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TMTDA/PCE /PDF/ENG/DEC2015
PCE SAMPLE QUESTIONS
1) Upon diagnoses of one of the 36 critical illnesses, critical illness insurance will provide ________ of the sum assured. a. 50% of the sum assured b. lump sum cash payment c. lump sum cash payment with 20% cost of insurance d. 80% of the sum assured with 20% cost of insurance
2) A situation where more sub-standard risks are accepted for insurance resulting in a less favourable underwriting result is known as a. Anti reaction b. Contradiction c. Anti rejection d. Anti selection
3) The relative frequency of deaths in a specific population is ‘rate of death’ which is also termed as: a. Numbers of death b. Mortality rate c. Level of fatality d. Term of life
4) Which is not the example of moral hazard? a. Being careless as a doctor because you have malpractice insurance
b. Installing a smoke alarm because you have fire insurance
c. Taking big bets in a marketplace with your firm's capital because you have limited
exposure to the downside but lots of exposure to the upside
d. Car was not quite damaged enough to total, so he/she was going to damage it more and ask for an appeal
5) Participating life policy include the following, EXCEPT: a. Endowment b. Traditional c. Investment-Linked d. Whole Life
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6) Jack is a shareholder and policy holder in ABC Corporation. Last year he paid $10,000 in premiums for his life insurance policy. In November of that year he received a $500 check in return for extra premiums not used by the company. What type of policy is this considered? a. Participating b. Nonparticipating c. Return of Principal policy d. Variable-Dividend policy
7) Mr. A received a hospital bill worth RM3000 on the 20th of November. At the same time he is insured with a policy that provides a deductible of RM1000 and 20% co-payment. How much does he need to pay in total? a. 1600 b. 1800 c. 1400 d. 2400
8) In a fire policy it is required to provide the details as below, EXCEPT: a. Name of policy owner b. Situation of risk (Address) c. Sum insured d. Age of policy owner
9) What is composite insurance? General and life a. General insurance only b. Life insurance and Health insurance c. General insurance and Life insurance d. General insurance and theft insurance
10) What is deductible? a. A specified amount of money that the insured must pay before an insurance company will
pay a claim. b. A specified amount of money that the insured must pay after an insurance company pays a
claim. c. An amount of money payable to insurer after an insurance company pays a claim. d. An amount of money payable to insured after an insurance company pays a claim.
11) In a regular premium policy, how many years do the policyholders has to pay continuously to acquire surrender value? a. 2 b. 3 c. 1 d. 0
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12) A printed policy document includes the following main sections, EXCEPT: a. Recital Clause b. Operative Clause c. Attestation d. Law of contract
13) In group policy, insurance claims of insurable interest is payable to? a. Employer b. Employee c. Employer and employee d. Company Fund
14) In the concept of contribution, if an individual bought more than one policy and met into an accident, he/she will be payable through? a. Ratio divided by companies b. Only from one company c. Once the payment has been made by one company, the rest of the companies will pay the
balance d. Policy owner makes to decision to choose which company to pay
15) The insurer will not be able to contest the validity (non-contestability) of the policy if life insurance policy has been in force for: a. A period of more than 2 years b. A period of less than 2 years c. A period of 1 year d. None of the above
16) What is FMB? a. Provide financial service providers only b. Settle disputes between financial consumers and financial service providers c. Help handling fraud cases d. A financial service provider which provides financial education to public
17) When insurer reduce the premium and refund overpayments due to misstatement of age, this means: a. Misstate age greater than original age b. Misstate age lower than original age c. Misstate age same as original age d. Misstate age was not informed to insurer
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18) Insured are able to withdraw their policy from insurer __ days after delivery of life policy?
a. 20 b. 30 c. 15 d. 10
19) Which of the minimum paid-up capital prescribed by the Act below is correct? a. RM 50 million for local/foreign direct insurers and local professional general reinsurers b. RM 20 million for local professional life reinsurers c. RM 100 million for local/foreign direct insurers d. RM 30 million for foreign professional life and general reinsurers
20) Which are some of the ways insurers handle adverse risks? i. Exclude a particular condition or impairment ii. Recommend an alternative insurance plan iii. Charge extra premiums or loading iv. Reduce the death benefit or sum assured
a. i & ii b. ii & iv c. iii & iv d. All of the above
21) What are the duties of an insurance agent to the principal? i. Obey principal’s instructions ii. To exercise proper care and skill iii. To collect monies from policy owner and place into agency’s account iv. To act in good faith towards the principals v. To perform duties personally
a. i & ii b. i, iii, & v c. i, ii, iv, & v d. All of the above
22) What is insurance? a. It is a risk transfer mechanism b. It prevent policyholders from any risk c. To make good the insured loss d. Involves risk management to reduce the probability of loss
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23) Policy owner can renew their policy as of the following, except: a. Annually b. Semi-annually c. Weekly d. Quarterly
24) Which are the five essential factors for the formation of a valid contract? i. Offer and acceptance ii. Capacity to contract iii. Legal form iv. Consideration v. Intention to create legal relationship
a. i & ii b. ii & iii c. i, ii, iii, & iv d. All of the above
25) What are the key regulatory objectives of Bank Negara Malaysia? i. Strive to protect the rights and interest of financial consumers ii. Promote monetary and financial stability conducive to sustainable growth of the economy iii. Keep a close watch on solvency and market conduct to enhance professional standards iv. Foster fair, responsible and professional business conduct of financial institutions v. Administer the national deposit insurance system aimed at protecting depositors in
commercial and Islamic banks
a. i & ii b. i, ii, & iii c. i, ii, iii, & iv d. All of the above
26) Which is the objective of Perbadanan Insurancs Deposit Malaysia (PIDM)? a. Help settle disputes between financial consumers and financial service providers who are
its members b. Administer the national deposit insurance system aimed at protecting depositors in
commercial and Islamic banks c. Regulate the processing of personal data in a commercial transaction d. Keep a close watch on solvency and market conduct to enhance professional standards
27) FSA replaces which of the existing Acts below? a. Takaful Act 1984 b. Islamic Banking Act 1983 c. Companies Act 1965 d. Insurance Act 1996
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28) After the premium paid by policy owner has been divided to management, commission then the rest of the money goes to? a. Investment b. Insurer c. Public trust fund d. Intermediary
29) Which of the following is not one of the three main ways through which the relationship between principal and agent may come about? a. Consent b. Authority c. Ratification d. Necessity
30) When making an offer or proposal to enter into a contract of insurance, it is not necessary for agents to disclose one of the following below: a. The name of the insurer b. The relationship with the insurer c. The premium charged by the licensed insurer d. The discount available
31) Which of the following is concerned by medical underwriting? a. Moral hazard b. Physical hazard c. Financial hazard d. Accidental hazard
32) Which of the following is the classification of risks? i. Standard risks ii. Sub-standard risks iii. Below average risks iv. Uninsurable risks v. Above average risks
a. ii & iii b. iii & v c. i, ii, iii, iv d. All of the above
33) Apparent authority/ostensible can arise in cases below, except: a. Agent perform acts which are usually performed by persons in the agent’s position b. Unknown to the third party, the authority of the agent has been terminated c. Apparent agent has never been appointed at all d. Principal has restricted the authority of a validly appointed agent
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34) Which of the following about Life-Annuity Plan is correct? a. Provide payment of the sum assured on death b. It provides pension for the lifetime of the annuitant c. Can be purchased for the right to a series of periodic payments at intervals of 2 years
under a contract with a life insurer d. It covers retirement and critical illness as well
35) Why is backdating available? a. To allow proposer to have more flexibility b. To correct any misstatement of age c. Proposer may benefit by paying a lower premium applicable to the lower age d. Proposer have to pay a higher premium applicable as age increases
36) Which of the following is the condition which increases chance of a loss?
a. Peril b. Hazard c. Loss d. Risk
37) Which of the following is not one of the risk handling methods? a. Retain b. Prevent c. Transfer d. Escape
38) Which of the following is insurable in insurance? a. Pure risk b. Speculative risk c. Fundamental risk d. Hazard risk
39) Which of the following are the characteristics of insurable risks? i. Insurable interest ii. Homogeneous exposures iii. Pure risk iv. Particular risk v. Fortuitous
a. i & ii b. i, iii, & iv c. iii, iv, & v d. All of the above
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40) A ‘prudent underwriter’ is to decide whether to accept or reject a risk, based on: a. Agent’s report b. Material fact c. Address of policy owner d. Policy owner monthly income
41) A policy owner who has attained the age of sixteen (16) years may nominate a person to receive the policy monies upon his/her death and such nomination shall be witnessed by: a. a person of sound mind; a person who has attained the age of 21 years b. a person of sound mind; a person who has attained the age of 18 years c. a person who is not a nominee named under the policy; a person who has attained the age
of 21 years d. a person who is a nominee named under the policy; a person who has attained the age of
18 years
42) Why is indemnity a principle in insurance contract? a. Allows the insurer to commence a recovery action before it pays a claim b. Allows insurer to take over the insured’s legal rights to recover from a negligent third party
responsible for the loss c. Requires insurer to restore the insured to the same financial position d. Ensure that the insured receive more than the loss
43) In what ways insurer would do to make good property lost or damaged? i. Cost of repair ii. Replacement iii. Reinstatement iv. Pay the total value of property
a. i & ii only b. i & iv only c. i, ii, iii only d. All of the above
44) For local/foreign direct insurers and local professional general reinsurers, the minimum paid-up capital or surplus of assets over liabilities should not be less than a. RM 20 million b. RM 50 million c. RM 100 million d. RM 150 million
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45) What is the role of risk-based capital? a. Determine the Capital Adequacy Ratio (CAR) b. Protect the rights and interest of financial consumers c. Promote financial stability in the economy d. Strengthened business conduct and consumer protection requirements
46) Insurance brokers, financial advisers and registered adjusters are incorporated as: a. Public companies b. Private companies c. Individual company d. International companies
47) What is the role of Perbadanan Insurans Deposit Malaysia (PIDM)? a. Protect personal data belonging to the public from misuse b. Protect the competitive process for the benefit of businesses, consumers and economy c. Preserves the valuation surplus of the participating life insurance fund d. Providing a safety net for depositors and insurance policy owners
48) What is considered as ethical for an agent to do? a. Holding in policy owner’s salary and weight information b. Holding in policy owner’s clinical information from insurer c. Sharing policy owner’s details to other agents d. Avoid informing policy owners the provisions of contract
49) Which of the below is not included in the policy? i. Schedule ii. Attestation iii. Operative clause iv. Proposal form v. Exclusions and conditions
a. ii & v b. i, ii, & iii c. iv d. ii & iii
50) What is not included in the schedule part of the policy? a. Sum insured b. Date of birth/age c. Service tax amount d. Conditions
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51) What will happen when the insured commit suicide within a stated period of time from the date of inception or reinstatement of the policy? a. Void, premium paid will be refunded. b. Void, premium paid will not be refunded. c. The insurer becomes liable and pays the claim. d. The policy becomes voidable and premium will be refunded.
52) ____________ is the cause of loss. a. Risk b. Hazard c. Peril d. Subrogation
53) What are the categories of risk?
a. Fundamental & Speculative Risk b. Particular & Speculative Risk c. Particular & Pure Risk d. Fundamental & Particular Risk / Pure & Speculative Risk
54) In life insurance, insurable interest must exist: -
a. At the time of loss. b. During the currency of the policy. c. At the time of effecting the insurance contract. d. At the inception of the contract and at the time of loss.
55) The principle of Utmost Good Faith has to be observed by:
a. The insured b. The insurer c. Both the insurer and the insured d. The proposer
56) Which of the followings are the code of ethics and conduct that an intermediary shall maintain? i. Ensure the policy proposed is suitable to the needs of the prospective policy owner. ii. Give advice only on those matters in which he is competent to deal with. iii. Share information supplied by the prospective policy owner to other agents for clarification. iv. Attempt to persuade a prospective policy owner to cancel any existing policies that are clearly unsuited for the policy owner’s needs.
a. i only b. i and i i c. i i and i i i d. i i i and iv
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57) Which of the followings are the functions of Bank Negara Malaysia?
i. Promote the monetary and financial system stability. ii. Fostering a sound and progressive financial sector. iii. Achieve sustained economic growth. iv. Responsible for the resolution of complaints against insurers.
a. i only b. i, ii and iii c. i, iii and iv d. All of the above
58) The authority of an agent may be:
a. Expressed b. Implied c. Apparent d. All of the above
59) The rights of an agent include:
i. To receive payment for his service. ii. Entitle to reimbursement of money that he has expanded with the express authority of his principal. iii. To perform his duties in a manner which he consider appropriate. iv. Delegate his duties to sub-agent.
a. i and ii b. i, ii and iv c. i, ii and iii d. All of the above
60) Which of the following is NOT termination of agency?
a. Notice of revocation b. Lapse of time c. Mutual agreement d. Ratification
61) An agent who engages in personal selling requires:
a. Product knowledge b. Market knowledge c. Selling techniques d. All of the above
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62) ______________ is an admission to a panel hospital by the issuance of a letter of guarantee that eliminates the hospital deposit.
a. Co-payment hospital admission b. Deductibles hospital admission c. Cashless hospital admission d. Hospitalization cash benefit admission
63) ______________ pays a pre-agreed amount to the insured for each day the insured is hospitalized. a. Hospitalization cash benefit insurance b. Critical illness benefit insurance c. Medical expenses benefit insurance d. Disability income insurance
64) The underwriting decision can be classified under: a. Standard issue and sub-standard issue b. Standard issue and decline c. Standard issue, decline and sub-standard issue d. Standard issue, deferred and sub-standard issue
65) Which of the following is TRUE about anti-selection? a. More sub-standard risks are accepted for insurance resulting in a less favourable
underwriting result. b. More sub-standard risks are accepted for insurance resulting in a more favourable
underwriting result. c. More standard risks are accepted for insurance resulting in a less favourable underwriting
result. d. More standard risks are accepted for insurance resulting in a more favourable underwriting
result.
66) Which of the following is NOT TRUE about term insurance? a. The policy offers non-forfeiture option to the policyholder. b. The policy can be renewed without evidence of insurability. c. The premium payable is cheaper compare to whole life policy. d. The policy contains no cash value.
67) Which of the following is TRUE about decreasing term insurance? a. It provides surrender and maturing value. b. There will be payment of premium paid upon maturity date. c. Policies are not subjected to strict underwriting. d. Lower cost of premium due to the progressive reduction of sum assured.
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68) A joint life annuity is: a. A contract that provides a specific amount of income for two or more persons named in the
contract with the annuity ceasing on first death among covered lives. b. A contract that provides a specific amount of income for two or more persons named in the
contract with the annuity ceasing of last death among covered lives. c. A contract provides that the annuity payments continue as long as either of two or more
person lives. d. A contract that provides guaranteed payments over a fixed period and thereafter until
death.
69) An annuity contract that continues to provide payment until the last death of a joint life is: a. Joint life annuity b. Deferred annuity c. Last survivor d. Annuity certain
70) Standard Mortality tables are derived from: a. Combined mortality experience of life insurers operating in the same territory. b. Mortality experiences of only the life insurers. c. It is derived from economic, political, and social factors. d. It is derived from the rate of investment returns factor.
71) Which of the following is TRUE about the distribution of surplus? a. Simple reversionary bonus b. Maturity bonus c. Interim bonus d. All of the above
72) What are the main sources of surplus? i. Interest ii. Mortality iii. Expense iv. Miscellaneous sources
a. iv only b. i, ii and iii c. ii, iii and iv d. All of the above
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73) Surplus is distributed through: a. Simple compound reversionary bonus b. Compound reversionary bonus c. Compound simple reversionary bonus d. Yearly compounded reversionary bonus
74) The policyholders’ share of surplus can be distributed in the following ways, EXCEPT:
a. Cash bonus b. Maturity/Terminal bonus c. Dividend bonus d. Interim bonus
75) Name, age, sex, occupation and address of the life assured are contained in:
a. The preamble b. The schedule c. The heading d. Attestation
76) Which of the following is the principles underlying the guidelines on the code of ethics and conduct?
i. To avoid conflict of interest ii. To avoid misuse of position iii. To prevent misuse of information iv. To avoid competition with agents
a. i, ii and iii b. ii, iii and iv c. i, iii and iv d. All of the above
77) To discontinue a policy or to have a policy made paid-up and then to affect a new one in another company or the same company is known as:
a. Changing b. Twisting c. Replacing d. Substitute
78) Why is utmost good faith important in an insurance contract?
a. Insurer knows the proposed risk b. Insured knows the proposed risk c. Insured can decide rates and terms to be applied d. Insured and insurer decide the rates and terms to be applied.
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79) Which of the following is true about gross premium for participating policies?
a. Net premium plus loading for expenses plus loading for profits and contingencies. b. Net premium plus loading for expenses. c. Present value of benefit payable plus present value of expenses less present value of
future premium receivable. d. None of the above
80) In the Marine Insurance, the insurable interest: a. Must exist only at the beginning. b. Must exist only at the time of loss occur. c. Must exist at the time of inception and at the time of loss. d. The general rule does not apply to Marine insurance.
81) The present value of benefits payable plus the present value of expenses less the present value of the future premium receivable is valuation of: -
a. Asset b. Liabilities c. Expenses d. Future value
82) John at the date of submission of proposal is 30 years and 7 months and he is non-smoker. The premium rate would be based on:
a. 29 years b. 29 years and non-smoker discount c. 31 years d. 31 years and non-smoker discount
83) For an insurance agent, how many general insurance companies can he/she represent?
a. Not more than 1 b. Not more than 2 c. Not more than 3 d. Only 1
84) The principal and agent relationship may be terminated by act of parties or act of law as follows, EXCEPT:
a. Written notice b. Notice of revocation c. Notice of renunciation d. Lunacy
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85) Which of the following statement is NOT TRUE about the duties of an insurance agent?
a. Avoid conflict of interest b. Not to accept any secret profit c. Delegate his duties to his new recruit d. Comply with principle’s instruction and to notify him when compliance becomes impossible.
86) John and his twin sister purchase a whole life insurance plan. The premium varies for both of them, why?
a. Morbidity rate b. Mortality rate c. Gender rate d. All of the above
87) Name : Mary
Age : 47 and married
Occupation : Freelance
Spouse : Unemployed
What is the insurance that best suit Mary?
i. Dental insurance ii. Whole life insurance iii. Maternity insurance iv. Critical illness insurance
a. i, ii and iv b. ii and iv c. ii, iii and iv d. ii and iii
88) Which of the following is/are categories of health insurance?
a. Indemnity policies and Benefit policies b. Benefit policies and Critical Illness policies c. Benefit Policies d. Indemnity policies
89) The policy is issued on the life of one of the parents. The child is designated as the beneficiary and the policy moneys are payable on the child attaining a specified age mentioned in the policy. This policy refers to:
a. Joint life insurance b. Children deferred assurance c. Protected education policies d. Whole life endowment policies
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90) The selling process in personal selling involves five basic steps, what is the missing step? i. Locating the prospective customer ii. Creating a sales presentation iii. Conducting the sales interview iv. _________________________ v. Closing the sales
a. Conduct customer background b. Post-approach c. Ask for referral d. Handling objection
91) Gross premium for participating policies are computed based on the corresponding element, they are:
i. Bonus loading ii. Mortality iii. Interest iv. Expenses
a. II and III b. II, III and IV c. I, II and III d. All of the above
92) Which of the following department evaluates the risk and determine the premium for new business and renewal?
a. Actuarial department b. Underwriting department c. Agency department d. Product development department
93) The principle of subrogation has been developed to prevent the insured from getting more ___________, when he has two or more avenues to recover his loss.
a. Indemnity b. Contribution c. Indemnity and contribution d. None of the above
94) The department that handle & processes claims on policies is:
a. Customer service department b. Finance department c. Claims department d. All of the above
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95) Endowment insurance is use as a:
i. Convenient and easy means of providing for old age. ii. Means of hedging against the possibilities of untimely death. iii. Means of accumulating fund. iv. Incentive to save in a systematic way.
a. i and iii b. i, iii and iv c. ii, iii and iv d. All of the above
96) For non-participating policies, the premium charged is computed after taking into account the elements of mortality, interest, and expenses is called:
a. Net premium b. True premium c. Gross premium d. Loading for expenses
97) “The premium payments cease on death and no deduction is made from the claim amount as with instalment premiums.” The above statement refers to:
a. Level premium b. Annual premium c. Instalment premium d. True premium
98) ____________________ is a policy that requires the policyholder to pay a pre-agreed amount first before the eligible expenses are reimbursed.
a. Co-payment b. Co-sharing c. Claim-expense policy d. Deductibles
99) ___________________ is a sharing of expenses between policyholder and the insurer.
a. Co-payment b. Co-sharing c. Co-payable d. Co-insurance
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100) Which of the following statement is true about insurable interest?
a. It is the transfer of legal rights and liabilities to beneficiaries. b. It is a legal right to ensure arising from the legitimate financial interest that an insured
has on the subject matter of the insurance. c. It is a legal right to ensure arising from the legitimate financial interest that an insured
has on the subject matter of the insurance contract. d. It is a legal right to ensure arising from the legitimate emotional interest that an insured
has on the subject matter of the insurance contract.
101) The member of MIB contributes _____________ to MIB funds. a. 1 Million b. 2 Million c. 3 Million d. 4 Million
102) Insurable interest exists in the following group, EXCEPT: a. Husband and wife b. Brother and sister c. Creditor and debtor d. Father and son
103) Which of the following statement is TRUE about “concealment”? a. Insured fails to disclose material fact and the breach of utmost good faith. b. Insurer has waived any requirement for disclosure. c. Insurer knows or in the ordinary course of his business ought to know. d. A material fact that will influence a prudent underwriter in deciding the acceptance of
the risk.
104) What is the primary function of insurance? a. Insurance functions as a means of saving, primarily through the use of endowment
insurance. b. Insurance helps to remove the fears and worries of losses of individuals and business
executives. c. Insurance is the equitable distribution of the financial losses of the few who are insured
among the many insured. d. Insurers accumulate large funds that they hold as custodians and out of which claims
and losses are met.
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105) What is/are the secondary function of insurance?
i. Equitable distribution of financial losses ii. Stabilization of costs iii. Provision of means of saving iv. Provision of sources of capital for investment
a. i only b. ii, iii and iv c. ii, iii and iv d. All of the above
106) The following statements are true about Centralization, EXCEPT:
a. Slow service b. Uniformity in practice c. Economic in administration d. Prompt service
107) Which of the following statement is TRUE about the responsibility of the company secretary?
a. Ensure the insurer complies with the company and insurance company law. b. Ensure to take minutes for each meeting or event that have occurred. c. Ensure correct filing has been done and maintain the filing system. d. Ensure to report to the CEO or COO on any events happened in the industry and do a
proper follow-up on every event.
108) Features of life insurance contract being long term and implications of surrender value being less than total premiums paid are usually part of information found in
a. Agent’s report b. Endorsements c. Sales Literature d. Proposal forms
109) A health insurance policy is automatically terminated upon the earliest happening of the following events EXCEPT
a. On the death of an insured person. b. If the lifetime limit paid under the policy is exhausted. c. On the diagnosis that the insured person has contracted a dread disease. d. On the policy anniversary immediately following the insured's maximum
eligibility age.
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110) The process by which the proceeds of a policy are paid other than as a lump sum cash payment is called
a. Dividend. b. Reinstatement. c. Settlement option. d. Non-forfeiture option.
111) Which one of the following is NOT settlement option of a maturity claims?
a. Cash maturity proceeds b. Leave the proceed in a bank c. Draw the cash by installments d. Conversion of proceeds to an annuity
112) Which of the following particulars are usually found in the schedule of a policy? i. Sum assured ii. Date of maturity iii. Name and address of the insurer iv. Name and address of the assured
a. i, ii and iii b. i, ii and iv c. i, iii and iv d. i, ii, iii and iv
113) Information relating to financial position and sources of income of the life proposed is generally obtained from the
a. Agent's report. b. Proposal form. c. Health declaration. d. Employer's certificate.
114) This is a method of distributing surplus: a. Extra or surpluses bonuses. b. Common and general bonuses. c. Simple or compound interest bonuses. d. Simple or compound reversionary bonuses.
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115) Life insurance companies usually give certain discounts on premium chargeable to female lives because
a. Females usually receive smaller incomes. b. Lesser insurance coverage is given to female lives. c. They wish to attract female lives in greater numbers. d. The female mortality rate is generally lower than that of male lives of the
same age.
116) What do you understand by the term 'high persistency'? a. It means that a high percentage of claims arise. b. It means that a high percentage of agents dropped out of the sales scene. c. It means that a high percentage of potential insureds sent in proposal forms. d. It means that a high percentage of policies stay in force to the end of the period of cover
117) The particulars asked for in the proposal form which will help to calculate the premium rates are i. Age and gender. ii. Occupation. iii. Additional benefits. iv. Sum assured and type of policy.
a. i, ii and iii b. i, iii and iv c. ii, iii and iv d. i, ii, iii and iv
118) A situation where more sub-standard risks are accepted for insurance resulting in a less favourable underwriting result is known as
a. Anti reaction. b. Contradiction. c. Anti rejection. d. Anti selection.
119) On August 1, Mr. Chong submitted a proposal form to an insurer. A letter of acceptance was issued on August 8, and was delivered to Mr. Chong on August 10. Mr. Chong paid the initial premium on August 17. A life insurance policy was issued and delivered to Mr. Chong on September 4. Mr. Chong's life insurance policy was effective on a. August 8. b. August 10. c. August 17. d. September 4.
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120) Under the 'cooling-off ' period, a new life policyholder may, within ________ of the delivery of the policy to him, return the policy to the insurer for cancellation due to objections to certain terms in the policy. a. One week b. One month c. 15 days d. 21 days
121) Special conditions that need to be endorsed at the time of issuing the policy are those i. Affecting the premium. ii. Affecting the sum insured. iii. Incorporating special benefits. iv. Incorporating special restrictions.
a. I and II b. II and III c. III and IV d. I, II, III and IV
122) A provision in a life insurance policy which states that any premium not paid by the end of the grace period is automatically paid by a policy loan if there is sufficient cash value is called a. The renewal provision. b. An automatic premium loan. c. The reinstatement provision. d. An automatic paid-up provision
123) When an applicant for insurance is classified as substandard risk, it means the applicant a. Will soon die from a disease. b. Will soon die from an accident. c. Possesses an average or less than average likelihood of a loss. d. Possesses a greater than average likelihood of creating a loss.
124) Proceeds from a personal life insurance policy are a. Taxable. b. Deductible. c. Chargeable. d. Not taxable.
125) This is the value which attaches to a policy of life insurance after a period of at least three years of being in force. a. Paid up value b. Residual value c. Cash value d. Forced sale value
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126) The conditions in a life insurance policy can be categorized into three groups, namely,
a. Rights, limiting and explaining. b. Privileges, limiting and clauses. c. Rights, privileges and restrictions. d. Privileges, limiting and explaining.
127) A misrepresentation in a life insurance application is considered to be a material
misrepresentation when the i. Misrepresentation is not relevant to the insurer's acceptance of the risk. ii. Insurer discovers the misrepresentation after the policy's contestable period. iii. Misrepresentation influences the judgement of the underwriter in deciding whether to
accept or decline the risk or in fixing the premium rate.
a. ii only b. iii only c. i and ii d. i and iii
128) An absolute assignment of an endowment policy entitles the a. Assured to take a policy loan. b. Assured to surrender the policy. c. Assured to receive policy proceeds on maturity. d. Assignee to receive policy proceeds in the event of a claim arising.
129) Which one of the following statements is true about the incontestability clause? a. The incontestability clause is in the Insurance Act, Section 16(C). b. The incontestability clause is in the Insurance Act, Section 17(C). c. No policy after expiry of two years from the date on which it was effected can be called
in question by an insurer on the ground that there is a misrepresentation of age. d. No policy after expiry of two years from the date on which it was effected can be called
in question by an insurer on the ground that there is a misrepresentation made in the personal statement.
130) Normally, the life insurance company requires when reinstating a lapsed policy. a. A health declaration b. A formal letter from the insured c. A new application to be submitted d. The consent of the life insurance agent
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131) Which one of the following statements is NOT true? a. An assignment effectively transfers the ownership or legal rights under the policy. b. An assignment is the transfer of rights and obligations under a contract from one person
to another. c. The person who transfers the rights is called an assignor and the person to whom the
rights are transferred is called an assignee. d. The person who transfers the rights is called an assignee and the person to whom the
rights are transferred is called an assignor.
132) A is the evidence of a contract between the insurer and the insured. a. Letter of acceptance b. Life insurance policy c. Life insurance proposal form d. Written presentation by an agent
133) This type of insurance provides for installment cash payments to policy holders with the sum assured being payable in the event of death anytime during the term of this policy. a. Whole life policy b. Short term endowment c. Single life immediate annuity d. Anticipated endowment insurance
134) The earliest and simplest form of life insurance is the a. Annuity scheme. b. Whole life insurance. c. Level term insurance. d. Endowment insurance.
135) One of the following policies does NOT accrue any cash or surrender value. a. Term insurance b. Whole life insurance c. Endowment insurance d. Limited payment whole life insurance
136) Accidental death benefit is a form of a. Bonus. b. Basic benefit. c. Permanent benefit. d. Supplementary benefit.
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137) Identify the major difference between an ordinary whole life policy and a limited payment whole life policy. a. An ordinary whole life policy accumulates cash value faster than a limited payment
whole life policy. b. An ordinary whole life policy is non-participating whereas a limited payment whole life
policy is participating. c. An ordinary whole life policy gives protection for a lifetime while a limited payment
policy provides protection for a limited period. d. Premiums on an ordinary whole life policy are payable for the lifetime of the insured
whilst premiums on a limited payment whole life policy are payable for a limited period.
138) Which of the following are the uses of an endowment policy? i. As an incentive to save in a systematic manner. ii. As a convenient and easy means of providing for old age. iii. As a means of accumulating a fund for a specific purpose. iv. As a means of hedging against the possibility of untimely death.
a. i, ii and iii b. i, ii and iv c. ii, iii and iv d. i, ii, iii and iv
139) In this policy, payment of the sum insured is made only in the event of the death of the life assured within the stipulated term of the policy and nothing is payable if the life assured survives the term: a. Children policies. b. Group insurance. c. Term assurance. d. Whole life assurance.
140) A participating policy is a. For juvenile policies only. b. A policy that shares in the company’s surplus c. A policy that determines a company's risk exposure. d. A policy that does not share in the company's surplus.
141) The policyholder of a life insurance policy can transfer all the rights under the policy to another person by a. Making an absolute assignment of the policy to that person. b. Naming that person as the beneficiary of the policy. c. Appointing that person as his agent. d. Making a conditional assignment of the policy to that person.
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142) Which one of the following is NOT a feature of an endowment policy?
a. It can be a participating or non-participating policy. b. The endowment period can be 10, 15, 20 or 30 years. c. It provides maximum death protection and minimum savings. d. The contract is divided into two parts, namely, a decreasing term insurance and
investment accumulation.
143) Mr. and Mrs. Lee, aged 65 and 60 respectively, are receiving income payment from a life
insurance company. The income will be paid as long as either annuitant is alive. The income payment will stop upon the death of the last annuitant. What type of annuity contract has been acquired by the couple? a. Joint life annuity b. Deferred annuity c. Single life annuity d. Last survivor annuity
144) Mr. Lim purchased a ten years duration convertible term policy at the age of 30. If he elects to convert the term to a whole life policy at the age of 35 on an attained age basis, then the premium for the whole life policy will be a. Term premium age 30. b. Whole life premium age 30. c. Whole life premium age 35. d. Whole life premium age 40.
145) Life insurance is the most practical means of meeting one's financial obligations arising from premature death because it a. Creates an immediate estate. b. Always provides the most money. c. Is more accessible than savings or stocks. d. Is a compulsory form of long-term savings.
146) The life insurance contract requires the proposer to disclose to the life office all material facts. For how long must this duty of disclosure continue? a. Until the policy attains cash value. b. For the entire duration of the policy. c. Until submission of the proposal form to the life office. d. Until payment of the first premium and a binding premium receipt is issued
147) If no insurable interest existed at the time a life policy was effected, the policy would a. Remain valid. b. Become voidable depending on the judgement of the high court. c. Become void; the company is not obliged to pay a claim under the policy. d. Become voidable; the company may or may not be obliged to pay a claim under the
policy depending on the discretion of management.
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148) In life insurance, the law requires the applicant for a life policy to have insurable interest at the time the a. Claim is paid. b. Policy is issued. c. Insured person dies. d. Application for life insurance is made.
149) Under the guidelines on the code of conduct, cases of fraud must be reported immediately to the a. Police only. b. Police and to the board of directors. c. Police and to Bank Negara Malaysia (BNM). d. Police and to the audit/ disciplinary committee.
150) Perils that have been expressly excluded from the policy are known as: a. Insured perils b. Excluded perils c. Uninsured perils d. Exception perils
151) What is the correct definition of speculative risk?
a. A basic of insurance cover b. There is a possibility of financial gain c. Risk that cannot be measured in financial terms d. Risk that only affects individuals, as opposed to affecting society
152) Carelessness is classified as ________ hazard
a. Moral b. Physical c. Legal d. Peril
153) Which of the following is not listed in risk handling methods?
a. Avoid b. Identify c. Transfer d. Retain
154) ‘Caveat emptor’ is defined as ______________
a. Utmost Good Faith b. Let the seller beware c. Let the buyer beware d. Material Fact
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155) Why ‘Material Facts’ is very important?
a. Influence a ‘prudent underwriter’ in deciding whether to accept or reject a risk b. To ensure arising from a legitimate financial interest c. To elicit information that is relevant to the decision of the insurer d. None of the above
156) Transfer of rights and liabilities from one person to another is defined as
a. Assignment b. Indemnity c. Subrogation d. Contribution
157) Which of the following is NOT objectives of Bank Negara Malaysia
a. Foster fair, responsible and professional business conduct of financial institutions b. Strive to protect the rights and interests of financial consumers c. Keep a close watch on solvency and market conduct to enhance professional standards and consumer confidence in the insurance industry d. Determine the capital adequacy ratio of insurance and shareholders’ funds
158) Registered adjusters, insurance brokers, financial advisors, required to be as ______
a. Unlimited company b. Public company c. Private company d. None of the above
159) What is the purpose of PDPA,
i. Protect personal data from being misused ii. Protect consumer rights iii. Handle complaints made by agent against their principals iv. Facilitate international trade
a. i, ii b. i, ii, iii c. i, ii, iv d. i, ii, iii and iv
160) Managed Care Organisations (MCOs) is required to register with ___________
a. Bank Negara Malaysia b. Ministry of Health c. Government and private Hospitals d. Insurance companies
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161) Which of the following is true?
i. Standard - Normal risk, acceptable by standard policy terms ii. Sub-standard - Higher than normal risk, acceptable with extra premiums iii. Below average - May not be accepted or may be deferred for a specific period iv. Decline - Unacceptable risk will be rejected or declined.
a. i, ii, iii b. i, iii, iv c. ii, iii, iv d. i, ii, ii and iv
162) In how many days, a policy owner may return the policy to the insurer?
a. 10 days b. 15 days c. 30 days d. 60 days
163) What do policyholders stand to lose when they surrender the policy?
i. Terminal bonus and all cash value ii. The surrender value will amount to roughly 30 per cent of the premiums paid iii. Lose a great deal as the premium allocation charges in these schemes are front-loaded. iv. All the benefits associated with it, including the protection cover will cease to exit.
a. i, i i, i i i b. i, i i, iv c. i i, i i i, iv d. all the above
164) What is the meaning of ‘non-contestability’ in a life insurance company?
a. A life insurer is not allowed to contest the validity of the contract on the ground of fraud b. A life insurer is not allowed to contest the validity of the contract for misrepresentation after the policy has been in force for more than 2 years c. A life insured is not allowed to contest the decision of the life insurer not to accept his proposal d. A life insurer is not allowed to void the contract when false statements were made by the insured.
165) Which of the following policies has no savings element in it?
a. Term b. Whole life c. Endowment d. None of the above
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166) Gross Premium is made up of _________________________
a. Pure risk premium plus interest b. Net premium plus interest c. Management expenses and contingencies plus profit d. Net premium plus management expenses and contingencies plus profit
167) _______ not a hazardous work.
a. Office workers b. Bike Racers c. Ship-breaking d. Structural iron and steel workers
168) Which of the following documents are relevant sources of information for the underwriting of
life insurance?
i. Proposal form ii. Medical examiner’s report iii. Police report iv. Agent’s report a. i, ii, iii b. i, ii, iv c. ii, iii, iv d. i, ii, iii and iv
169) Which of the following incidents classified as pure risk?
a. Factory fire b. Death c. Investments in the share market d. Natural disaster
170) What is the purpose of introduction of Risk-Based Capital (RBC) by Bank Negara Malaysia?
a. To promote monetary and financial stability conducive to sustainable growth of the
economy b. To keep a close watch on solvency and market conduct to enhance professional standards
and consumer confidence in the insurance industry. c. To provide educational information to enhance financial literacy and awareness d. To help settle disputes between financial consumers and financial service providers who
are its members.
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171) The Financial Mediation Bureau (FMB) is ____________________________
a. A statutory body established under the Malaysia Deposit Insurance Corporation Act 2005 b. A corporate registry and regulatory authority that meets business needs through registration, information, regulation and advice. c. An independent body set up to help settle disputes between financial consumers and financial service providers who are its members. d. A centralised point of contact to facilitate a rapid and effective response for member of the public and small and medium enterprises (SMEs)
172) Which of following factors needed for the formation of a valid contract?
i. Offer and Acceptance ii. Intention to Create a Legal Relationship i i i. Consideration iv. Contribution
a. i, i i b. i, i i, i i i c. i i, i i i, iv d. i, i i, i i i and iv
173) Ostensible Authority can arise in cases where :
a. The principal has restricted the authority of a validly appointed agent b. The apparent agent has never been appointed at all c. Unknown to the third party, the authority of the agent has been terminated d. All the above
174) What remedy is available for policy owner who is not agreeable to the policy terms after taking delivery of the policy?
a. Return the policy to the insurer within 30 days and request for cancellation of the policy b. Return the policy to the insurer with the grace period and demand cancellation c. Return the policy within the 15 days and return any expenses incurred by the insurer for
issuing the policy d. Return the policy to the insurer within 15 days and expect full refund minus expenses
incurred for medical examination
175) The principal and agent relationship may be terminated by following aspects by,
a. Mutual agreement b. Death, lunacy or bankruptcy of the principal or the agent c. Notice of revocation given by the principal to the agent d. All the above
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176) Which policy provides a lump sum payment of the sum insured upon diagnosis of any of the dread disease or illnesses specified in the policy?
a. Critical Illness (CI) or Dread Disease Insurance b. Disability Income Insurance c. Hospital Income Insurance d. Medical Expenses or Hospital and Surgical Insurance (HSI)
177) Under a group policy, a/an ________ is liable to the person insured if the ____________ has no insurable interest in the life of that person insured and if that person has paid the premium to the policy owner regardless that the insurer has not received the premium from the group policy owner.
a. Insurer, group policy owner b. Agent, insurer c. Insurer, agent d. Group policy owner, agent
178) Surrender value is granted if a life policy has been in force for ______________
a. 2 years or more b. 3 years or more c. 5 years or more d. 7 years or more
179) Composite company is _____________ a. A company who consisting of a head office and branches b. A company formed under the Companies Act c. A company writing both life and general insurance business d. A company that specialises in writing single class of business
180) A Peril is ______
a. Cause of loss b. Reduction or disappearance of economic value c. Condition which increase chance of a loss d. Subject matter of insurance
181) Legal right to insure arising from a legitimate financial interest. This is called as ___________
a. Utmost Good Faith b. Proximate Cause c. Insurable Interest d. Indemnity
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182) In the case of a missing person, what is the time lapse before a statutory presumption of death can be issued by a court?
a. 1 year b. 3 years c. 5 years d. 7 years
183) What type of bonus is only paid in force policies, which result in claims either by maturity or
death?
a. Interim bonus b. Terminal bonus c. Cash bonus d. Guaranteed bonus
184) A claim provides that a claim upon the death of policy owner must be paid within how many days upon receipt of intimation of the claim?
a. 15 days b. 30 days c. 45 days d. 60 days
185) Which life insurance mode of payment would result in the lowest cost:
a. Annually b. Monthly c. Quarterly d. Semi-annually
186) A provision that keeps a policy from lapsing due to non-payment of premium by borrowing from cash value is:
a. Automatic Premium Loan b. Mode of Payment c. Extended Term Option d. Reduced Paid-up Option
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187) Which of the following is true about term insurance?
i. Term insurance also known as temporary insurance ii. A term insurance policy does not provide for any payment if death does not take place
within the contract period iii. A term insurance policy provides cash payment every term within the contract period iv. Insured of term insurance need to pay premium till old age
a. i b. i, ii c. i, iv d. ii, iii
188) Which one of following has no insurable interest in the life of another? a. Child dependent on a parent b. Employer on an employee’s life c. Principal on an agent’s life d. Legal guardian on a minor’s life
189) What is the operative clause of an insurance policy? a. The clause that described what the insured must do in the event of a claim b. The clause that describes or refers to the cover provided by the insurers c. The clause that describes the risks excluded from the policy cover d. The operating clause that refers to the proposal, the parties and the premium
190) Which of the following NOT normally found in the Schedule of a policy? a. Name and address of the insured b. Period of insurance c. Amount of premium d. Exclusions
191) Which of the following is NOT a Medical and Health Insurance Product?
a. Critical Illness (CI) or Dread Disease Insurance b. Disability Income Insurance c. Permanent Disability Insurance d. Hospital and Surgical Insurance (HSI)
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192) When must insurable interest exist for a life insurance contract?
a. At the time of claim b. At the time of surrender c. At inception of insurance d. At the time of changing the beneficiary
193) What is the method of charging a uniform premium throughout the duration of a life insurance
policy despite the rate of death increasing with age?
a. Level payment system b. Level premium system c. Increasing premium system d. Decreasing premium system
194) A life claim can arise under any of the following situations, EXCEPT:
a. Death of insured b. Death of beneficiary c. Maturity of the life policy d. Critical illness
195) A death claim must be paid within _____ days of receipt of notification of the claim; otherwise, the law requires compound interest to be charged on the amount payable.
a. 15 days b. 30 days c. 60 days d. 90 days
196) The commencement date of a life policy I usually allowed to be backdated to a maximum of
a. 3 months b. 4 months c. 6 months d. 8 months
197) Insurance Act 1996 provides that where a life policy has been in force for 3 years or more, it shall not lapse by reason of non-payment of premiums but shall have effect subject to such modification as to the period for which the policy is to be in force, or of the benefit receivable under it, or both. This statement is referring to:
a. Automatic Premium Loan b. Incontestability Clause c. Non-forfeiture Benefit d. Reinstatement Condition
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198) The role of Life Insurance :
a. Bring financial relief in the event of property loss b. Inculcate the discipline of savings among the working population c. Bring financial relief to aggrieved dependants of insured people d. All the above
199) Name, age, sex, occupation and address of the life assured are contained in:
a. The preamble b. The schedule c. The heading d. Attestation
200) The policy is issued on the life of one of the parents. The child is designated as the beneficiary
and the policy moneys are payable on the child attaining a specified age mentioned in the policy. This policy refers to:
a. Joint life insurance b. Children deferred assurance c. Protected education policies d. Whole life endowment policies
