2 Ceilli Set a(Eng)

CEILI SET A

Training, Education & Development Page 1 of 24

Chapter 2

1. The public generally invest their money to provide ____________.

I. funds for a company II. comfortable standard of living

III. income in retirement IV. funds for the education and up-bringing of their children

(A) I, II and III (B) I, II and IV (C) I, III and IV (D) II, III and IV

2. Depending on the investment objective, a person would need to choose ________.

(A) Investing in asset that yield less regular income or those that have better for capital gain (B) Investing in asset that yield more regular income or those that have less for capital gain (C) Investing in asset that yield less regular income or those that have less for capital gain (D) Investing in asset that yield more regular income or those that have better for capital gain

3. Important considerations of an individual’s decision in investment include ______.

I. the individual’s attitude towards risk

II. the accessibility of fund III. the taxation liability IV. the individual’s employer performance

(A) I, II and III (B) II, III and IV (C) I, II and IV (D) I, III and IV

4. The performance of an investment depends on ______________.

I. a country’s economy factors and past experience of the invested company

II. the competencies and capability of the invested company management team III. the number and spread of small-time investors choosing to invest IV. the invested company’s level of cost and the life cycle of the investment


5. A person’s investment horizon will greatly depend on ________________.

(A) The investment objectives, age of investor and the current financial condition of investor (B) The education background, sex and occupation background of investor (C) The taxation treatment, moral characteristic of the investor and age of investor (D) The process of investment, the fund for paying financial expenses and age of investor

6. The factors that may influence the choice of the deposit in a bank include:

I. funds available for investment

II. any penalty for withdrawal before maturity III. whether emergency withdrawals are likely IV. prevailing market conditions

CEILI SET A


(A) I, II (B) I, II, III (C) I, II, IV (D) All of the above

7. What are the three components of accessibility of fund?

I. If individual requires the fund in a short period of time.

II. Cost or penalty of realising the investment before maturity period. III. Individual’s attitude towards risk. IV. The initial cost in setting up or buying into the investment.

(A) I, II, IV (B) II, III, IV (C) I, II, III (D) I, III, IV

8. What if an investor has a small amount of free funds?

(A) Certain types of investment are not accessible to the investor. (B) Most types of investment are not accessible to the investor. (C) All types of investment are accessible to the investor. (D) Only variable life insurance is accessible to the investor.

9. What are the key considerations in investments?

I. Fund for education

II. Improvement in their financial position III. Income for retirement IV. Depositor’s academic qualifications

(A) I (B) I, II (C) I, II, III (D) All of the above

Chapter 3

1. The factors that may influence the choice of deposits in a bank include _______.

I. funds available for investment II. the length of time the funds can be in the account

III. whether emergency withdrawal are likely IV. the age of depositor

(E) I, II and III (F) I, II and IV (G) I, III and IV (H) II, III and IV

2. Among the advantages in investing in shares are:

I. Investors are able to participate directly in the future of the invested company

II. Shares provide good dividends and capital appreciation III. Shares are very liquid and can be traded in open market IV. The value of the shares can never go beyond the price at which the shares are bought.

(A) I, II and III

CEILI SET A


(B) II, III and IV (C) I, II and IV (D) I, III and IV

3. Unit trust is essentially for:

(E) two-way arrangements between the investors and the fund manager (F) two-way arrangements between the investors and the trustee (G) three-way arrangements among the investors, the trustee and the fund manager. (H) three-way arrangements among the investors, the trustee and the supervisory authority

4. The function of investment trust include:

I. making investment simpler to small-time investors

II. making investment accessible to small-time investors III. making investment more cost effective to small-time investors IV. making investment a definite profitable transaction for small-time investors

1. I, II and III 2. I, II and IV 3. I, III and IV 4. II, III and IV

5. An example of investment trust is:

(A) that of Amanah Saham Nasional (B) that of KL Mutual Fund (C) the listed Seacorp Schroders (D) that of Mayban Management Bhd.

6. What are derivatives?

(A) They are real estate investment providing good capital appreciation and high flow of income. (B) They are pools of fund introduced to many investors kept in trust by bank managed by a

professional fund manager. (C) They are preference shares that give the holders the right to a fixed dividend provided that have

been made. (D) They are financial instruments whose values are linked to the price of underlying instruments in the

cash market.

7. Investors purchasing call option will be hoping that:

(A) The share price will fall when option is exercised, the premium and the fixed price will be more than the values of the share.

(B) The share price will rise when option is exercised, the premium and the fixed price will be more than the values of the share.

(C) The share price will fall when option is exercised, the premium and the fixed price will be less than the values of the share.

(D) The share price will rise when option is exercised, the premium and the fixed price will be less than the values of the share.

CEILI SET A


8. Warrants or TSR are:

I. seldom issued on their own

II. often issued free and attached to rights or loan stocks III. often issued as an added attraction or sweetener allowing a corporate issuer to obtain a lower

financing costs IV. not permitted to be detached from the loan stock and sold separately in the securities market


9. Hedging can be described as:

(A) assuming of present position opposite to future positions in an attempt to maximize financial gains

from price stability. (B) assuming of future positions opposite to cash position in an attempt to minimize the risk of

financial loss from adverse price changes. (C) making money by selling a physical commodity immediately to a buyer for his immediate

enjoyment. (D) shifting of the risk of price fluctuation from participants who are willing to assume risks to those

who are not.

10. Life insurance can be described as:

I. A means of alleviating of the financial distress that death may bring II. A means of spending and divesting when death occurs

III. A pool of fund into which a large numbers of policy owners jointly contribute in relation to their risk exposures

IV. A contract dependent in human life


11. The price of an agricultural property depends on the following factors:

I. The location

II. The mortgage loan amount of the property III. The value of building IV. The quality and profitability of crops

(A) I , II and III (B) I, II and IV (C) I, III and IV (D) II, III and IV

12. Which one of the following statements about Investment Trust is true?

(A) The unit price is recalculated once a week. (B) The unit price will be quoted every month in at least one national Bahasa Melayu newspaper and

one national English newspaper. (C) The price reflect the value of the underlying investment. (D) The unit price will not fluctuate in line with stock market prices.

CEILI SET A


13. A cash contract __________________.

I. calls for future delivery. II. is used by those who need a commodity now.

III. cannot be canceled unless both parties to the contract agreed. IV. calls for immediate delivery.


14. The basic forms of life insurance cover include:

(A) Whole life insurance, endowment insurance, mortgage insurance, key person insurance. (B) Whole life insurance, endowment insurance, term insurance, annuities. (C) Term insurance, annuities, medical insurance, health insurance. (D) Whole life insurance, endowment insurance, term insurance, personal accident insurance.

15. What are the advantages of unit trust?

I. It allows small private investors who do not have sufficient funds to receive the benefit of a

diversified range and spread of investments. II. It allows small private investors who do not have sufficient time to receive the benefit of

professional investment management. III. Extra cost or charges which must be paid for switching from one fund to another. IV. It could generate income in the form of dividends, interest and capital gains.


16. Investors purchasing put option will be hoping that _______________.

(A) the share price will rise when option is exercised, the premium and the fixed price will be less than

the value of the share. (B) the share price will fall when option is exercised, the premium and the fixed price will be less than

the value of the share. (C) the share price will rise when option is exercised, the premium and the fixed price will be more

than the value of the share. (D) the share price will fall when option is exercised, the premium and the fixed price will be more than

the value of the share.

Chapter 4

1. The first investment-linked life insurance contract in the United Kingdom transacted some 30 years ago was ___________________.

(I) a group retirement annuity for the self-employed (J) an individual retirement annuity for the self-employed (K) introduced by the London & Manchester Association Company Limited in 1953 (L) linked to an internal unit trust administered by the London & Manchester Association Company

Limited

CEILI SET A


2. The Enhanced Investment Scheme (EIS) by the Central Provident Fund (CPF) in 1993 which contributed

to the expansion in Singapore of the life insurance industry including investment-linked life insurance business enables

(E) all CPF members who retain at least the required minimum sum in their CPF accounts invest in a

new scheme known as the Investment Scheme (IS). (F) all CPF members be provided with a prospectus that among others discloses the identity and nature

of the insurer’s business, how the premiums are going to be invested, financial information of the insurer, chargeable fees and expenses and rights of policyowners.

(G) CPF members who have cash of at least S$ 50,000 in their ordinary account to invest 80% of the excess in the ordinary account above S$ 50,000 in one or more of the eligible investment instruments.

(H) all CPF members to invest in all types of life insurance policies except for endowment policies.

3. Recent new business statistics revealed that investment-link life insurance products accounts for one third of the total individual life new business in UK. The Popularity of investment-linked life insurance business will continue to grow because __________________

V. the performance of the contracts can be monitored by reference to the unit prices published in the

daily newspaper. VI. the risks exposure to the policyowners are lesser.

VII. the charges for the product are more transparent. VIII. the plans are much more flexible.


4. One of the factors which has contributed to the expansion of the investment-linked life insurance business in Singapore was _______________.

(E) the requirement of the Securities Exchange Act 1934 that all insurance agents and agency office

employees dealing in variable life insurance must pass an examination in securities business. (F) the regulations of investment company’s management and operation including that of how the

premiums are going to be invested, financial information of the insurer, chargeable fees and expenses and rights of policyowners.

(G) the introduction of the Enhanced Investment Scheme (EIS) by the Central Provident Fund (CPF) in 1993.

(H) The introduction of the new generation of investment-linked life insurance products, the Hambro Whole Life Plan in 1997.

5. The Investment Company Act 1940 of United States ________________.

(A) regards entities that invest assets of variable life insurance policyowners as investment companies and regulates the companies’ management and operations.

(B) requires that potential clients be provided with a prospectus that among others discloses the identity and nature of the insurer’s business.

(C) requires that potential clients be provided with a prospectus that among others discloses the financial information of the insurer.

(D) requires that insurance agents and agency office employees dealing with variable life insurance must pass an examination in securities business and be registered with the National Association of Securities Dealers.

CEILI SET A


6. Skandia Plan introduced by Skandia Life UK in 1979?

(A) allowed the sum insured was guaranteed for a given investment of premium for the first 10 years. (B) allowed the policyowner to select whatever sum insured the policyowner required within a given

range of cover. (C) allowed policyowner could cash in his/her investment at any time. (D) is an endowment plan provided cash value after 10 years.

7. The Securities Act 1933 required that

(A) regulates the investment company’s management and operation. (B) potential client be provided with a prospectus that among others discloses the identity and nature

of the insurer’s business, how the premium are going to be invested, financial information of the insurer, chargeable fees and expenses and rights of policyowners.

(C) Agents and agency office employees pass an examination in securities business. (D) register with the National Association of Securities Dealers (NASD) and pass an examination.

Chapter 5

1. How are the premiums under investment-linked life insurance policies apportioned?

(A) A major portion of the investment-linked life insurance policies premium are allocated for the mortality protection aspects under the policy, and a lesser part of the premium are used to purchase units in the investment-linked fund managed by the life offices.

(B) Investment-linked life insurance policies premium will be divided equally in both mortality protection aspects and to purchase units in the investment-linked fund managed by the life offices.

(C) A major portion of the investment-linked life insurance policies premium are used to purchase units in the investment-linked fund, and a lesser portion for the mortality protection aspects under the policy.

(D) The whole Investment-linked life insurance policy premiums are used to purchase units in the investment-linked fund, and the mortality aspects is given free.

2. Each premium that an investment-linked life insurance policyowner makes is ____________.

(A) allocated to units at the life office’s selling price called offer price prevailing on each investment

date. (B) allocated to units at the life office’s selling price called offer price prevailing on each cash-in-date. (C) allocated to units at the life office’s selling price called bid price prevailing on each investment date. (D) allocated to units at the life office’s selling price called bid price prevailing on each cash-in-date.

3. In respect of investment-linked life insurance funds, the difference between the offer and bid prices in

normal market condition is ______________.

(A) 10% - 20% of offer price, and this difference is known as the offer-bid spread (B) 10% - 20 % of bid price, and this difference is known as the offer-bid spread (C) 5% - 6% of offer price, and this difference is known as the offer-bid spread (D) 5% - 6% of bid price, and this difference is known as the offer-bid spread

4. If the offer price in an investment date is RM 2.50 and the premium amount of RM 250.00 is used to buy units it will buy______________.

(A) 0.01 unit (B) 10 units (C) 100 units (D) 100 units less the unallocated premium

CEILI SET A


5. One fundamental differences between traditional with-profit life insurance policies and investment-linked life policies is __________.

(A) investment-linked life insurance policies aim to produce a steady return by smoothing out market

fluctuations. (B) traditional with-profit life insurance policies aim to produce a steady return by smoothing out market

fluctuations. (C) investment-linked life insurance policies do not offer the potential for higher returns. (D) traditional life insurance policies offer the potential for higher returns.

6. The expenses of running a life office and acquiring investment-linked life insurance business ____________.

(A) are covered by making certain charges on the policies issued, both ‘up-front’ and regular policy

charges not specifically detailed in the policy items. (B) are borne in part by the policyowners directly in relation to the particular policies and in part taken

out of the line fund as a whole. (C) are levied on the policies through open stipulation in the policies including the types and level of

charges imposed. (D) cannot be determined by a careful study of the policies document and policies statement.

7. Investment-Linked Permanent Health Insurance

I. Provide disability income. II. Contain cash value.

III. No cash value. IV. Price is more competitive when compared to traditional with-profit life insurance product.

(A) I, II, III (B) I, II, IV (C) I, III, IV (D) II, III, IV

8. What are the criterias of Investment-linked Permanent Health Insurance:

I. Provides health coverage such as disability income. II. Contains cash value unlike traditional health product that does not have cash value.

III. No cash value like traditional health products.

(A) I (B) II (C) I, II (D) All of the above

Chapter 6

1. Investment-linked funds can be structured into 2 ways:

(A) Warrant units and right units (B) Investment units and mortality units (C) Accumulation units and distribution units (D) Term units and annuity units

CEILI SET A


2. As the value of Investment-linked policy depends on the performance of financial instrument in which the investment is invested,

(A) fund manager bears the risk and the policyowner bears the benefit of the policy. (B) the life office bears the risk and policyowner bears the benefit of the policy. (C) the invested company bears risk and life office bears the benefit of the policy. (D) Policyowner bears both risk and benefit of the policy.

3. Currently, financial instrument which Investment-linked Funds are invested include:

I. Cash Fund

II. Equity Fund III. Property Fund IV. Diversified Fund

(A) I (B) I and II (C) I, II and III (D) I, II, III and IV

4. Switches between funds may:-

I. be offered free of charge.

II. be offered free of charge for a limited number of switches within a given period and charges imposed for subsequent switches.

III. incur a specific charge for each and every switch. IV. Incur a specific charge by monthly basis.


5. The switching facility in Investment-linked fund allows

(A) a life office to switch an Investment-linked life insurance policy to a traditional with profit endowment

policy. (B) a life office to switch a single premium Investment-linked whole life insurance plan to a regular

premium Investment-linked whole life insurance plan. (C) a policyowner to switch part or all of his investment from one Investment-linked fund to another. (D) policyowner to switch part or all of his investment from one life office’s policy to another life office’s

policy at the same premium.

6. What is the definition of accumulation units?

(A) Income is ploughed back into the fund and the unit price will increase over the long term. (B) Income is distributed to policyowner as additional units, the number of units will increase over long

term when unit price remains unchanged. (C) Income is ploughed back into the fund and the number of units increase over the long term. (D) Income is distributed to the policyowner, both unit price and number of units increase over the long

term.

CEILI SET A


7. In times of volatile stock market the policyowner may want to switch all or part of his investment

(A) in cash fund to equity fund (B) in managed fund to property fund (C) in equity fund to cash fund in order to protect the capital value if he thinks the stock market will

crash. (D) in balanced fund to equity fund.

8. Investment-linked funds can be structured into two ways, namely accumulation units and distribution units. In accumulation units, the investment income of the funds is ____________. (A) ploughed back into the fund, thus the unit prices will increase over the long term. (B) ploughed back into the fund, thus the unit prices will decrease over the long term. (C) used to purchase additional units to be distributed to the policyowner, thus the unit price remains

unchanged but the policyowner get more units. (D) used to purchase additional units to be distributed to the policyowners, thus the unit price decreases

and the policyowners get more units.

9. Investment-linked funds can be invested in any financial instruments including cash funds, equity funds, bond funds, property funds, specialized funds and diversified funds. Property funds _______________________.

(A) Invest in real estates and property shares and normally only small property funds invest directly in

real estates. (B) Invest in real estates and property shares and such funds are generally considered to be safer than

equity funds, and have higher liquidity. (C) Invest in real estates and property shares and it is always possible to quickly sell a property when

policyowners redeem their units. (D) Invest in real estates and property shares and such funds usually have a provision which allows the

fund manager to defer redemption of units for up to 12 months.

10. Investment-linked funds can be invested in any financial instruments including cash funds, equity funds, bond funds, property funds, specialized funds and diversified funds. Specialized funds _______________________.

I. offer a policyowner exposure to different markets in different regions of the world and in different

currencies. II. that are restricted to investment in particular geographical regions include such examples as China

Fund and US Fund. III. invested overseas are most susceptible to currency risk particularly in times of volatile currency and

financial markets. IV. invested in industries that are put in specialized sectors such as commodities, mining, plantation

and public utilities.


11. Switching between one unitised funds to another may ________________.

I. be offered free of charge

II. be offered free of charge for a limited number of switches within a given period and charges imposed for subsequent switches.

III. incur a specific charge for each and every switch. IV. not be useful at all to an investment-linked life insurance policyowner.

CEILI SET A



Chapter 7

1. If the number of unit in an Investment-linked Fund is 100,000 and the value of the total value of the fund at x point in time is RM 1 million, the value of each unit can be calculated by

(A) multiplying number of unit in existence with value of the total fund. (B) subtracting the number of unit existing before x point from the 100,000 unit multiply the number

with the value of total fund. (C) dividing the value of the total fund by the sum of the number of units in existence. (D) dividing the value of the total fund by the sum of the number of units existing before x point in

time.

2. With dual pricing method, Ahmad has paid RM 4,000 premium to buy his single premium investment-linked policy. The offer price is RM 1 and bid offer spread is 5%. Assuming the unit price never change, what is the bid price and the amount that Ahmad will get if he cash in or claim the policy?

(A) 0.095 and RM 3,800 respectively (B) 0.95 and RM 3,800 respectively (C) 0.05 and RM 2,000 respectively (D) 0.50 and RM 2,000 respectively

3. The phrase “Top-Up” in Investment-Linked Life Insurance means:

(A) The policyowners pay further premium to purchase additional units of the investment-linked fund

which will be added to the existing units in the policyowner’s account. (B) The life office maintain reserves to level out short term fluctuation in the value of Investment-linked

fund. (C) When the Investment-linked fund value increases, the value of the fund will also increase. (D) The policyowner can change his investment fund to another fund which he believes to have great

opportunities for higher return.

4. The value of investment depends on 2 factors:

(A) The offer price and bid price. (B) Disability income and cash value. (C) Cash value plus protection cost. (D) The value of each of the units plus number of unit the policy has accumulate to date.

5. Under single premium pricing method, Joo Hin bought a single-premium investment-linked policy. He

hold 3,800 units at RM 1.00 unit price. With 1% mortality charge and policy fee of RM 100, what is the cash value of his policy?

(A) RM 3,938 (B) RM 3,800 (C) RM 3,700 (D) RM 3,662

6. The formula for Annual Yield for single premium fund is

(A) (RGP)1/n + 1, n = number of units (B) (RGP)1/n + 1, n = number of years (C) (RGP)1/n - 1, n = number of units (D) (RGP)1/n - 1, n = number of years

CEILI SET A


7. Under the single pricing method, Joo Eng pays a premium of RM 4,000 for his single premium investment-linked life insurance policy. The price per unit is RM 1.00. The life office deducts a charge of 5%. The number of units that Joo Eng can buy is ____________.

(A) 4,200 (B) 4,000 (C) 3,800 (D) 380

8. The policyowner may cash out all his units or partially from his units. These two processes are known as

_____________respectively. (A) withdrawal or surrender (B) surrender or withdrawal (C) surrender (D) withdrawal

9. For single premium investment-linked life insurance policy, the death benefit is either one of the

following, depending on the company’s policy:

I. The minimum sum assured or the value of the units, whichever is higher. II. The minimum sum assured plus the value of the units.

III. The sum assured (chosen by the life assured) or the value of the units whichever is higher. IV. The sum assured (chosen by the life assured) plus the value of the units.

(A) I, II (B) I, III (C) I, IV (D) II, IV

10. Under the dual pricing method, Mei Lin pays a premium of RM 4,000 for her single premium investment-

linked life insurance policy. The offer price is RM 1.00 per unit. The bid-offer spread was 5%. There was an increase in the value of the offer price to RM 1.20 per unit. The bid price and amount that Mei Lin will receive if she cash the policy will be

(A) RM 0.05 and RM 2,400 (B) RM 0.50 and RM 2,400 (C) RM 0.114 and RM 4,560 (D) RM 1.14 and RM 4,560

11. The formula for the circulation of Return on Gross Premium (RGP) is:

(A) Ending Value of Investment Beginning Value of Investment

(B) Beginning Value of Investment Ending Value of Investment

(C) Offer Price Bid price

(D) Dual Pricing Single Pricing

CEILI SET A


12. Under the single pricing method of his single premium investment-linked life insurance policy, John

allocated RM 4,000 to buy units. The number of units that John held was 3,800. After 10 years, the unit price was RM 1.97. The mortality charge was 1% and the policy fee was RM 100. The Ending value of Investment, return on Gross premium and Annual Yield is

(A) RM 7,311.14/ 1.828 and 0.062 or 6.2% (B) RM 7,701.20/ 1.925 and 0.118 or 11.8% (C) RM 7,486.00/ 1.871 and 0.087 or 8.7% (D) RM 7,311.14/ 1.924 and 0.118 or 11.8%

13. Under the single pricing method of single premium investment-linked insurance policy, the amount of

money an investment-linked life insurance policyowner will get when withdrawals are made is

(A) the number of units withdrawn multiplied by the unit price or in the case of a fixed monetary amount, the number of units that will be cancelled will equal to the amount withdrawn divided by the unit price.

(B) the number of units withdrawn divided by the unit price or in the case of a fixed monetary amount, the number of units that will be cancelled will equal to the amount withdrawn multiplied by the unit price.

(C) the number of units withdrawn divided by the unit price and deduct mortality charge and policy fee or in the case of a fixed monetary amount, the number of units that will be cancelled will equal to the amount withdrawn divided by the unit price.

(D) the number of units withdrawn divided by the unit price and deduct mortality charge and policy fee or in the case of fixed monetary amount, the number of units that will be cancelled will equal to the amount withdrawn multiplied by the unit price.

14. Under the dual pricing method of single premium policies, the number of units that can be bought is

equivalent to ____________

(A) the premium paid divided by the offer price. (B) the premium paid less policy charges divided by the offer price. (C) the premium paid divided by the bid price. (D) the premium paid less policy charges divided by the bid price.

15. Under the dual pricing method of single premium investment-linked life insurance policy, the unit value

plus sum assured type of death benefit is equal to ________.

(A) (number of units x life office’s selling price) plus sum assured covered. (B) (number of units x offer price) plus sum assured covered. (C) (number of units x bid price) plus sum assured covered. (D) (number of units x bid0offer spread) plus sum assured covered.

16. The number of units under the single pricing method of single premium investment-linked life insurance

policy is 3,800 with a sum assured of RM 5,000. The offer price when the policyowner first pays his premium is RM 1. The bid price at the time of the policy owner’s death is RM 1.22. Under the unit value or death cover type of death benefit, this will result in a death benefit of ______________.

(A) RM 9,636 (B) RM 5,000 (C) RM 4,636 (D) RM 3,800

CEILI SET A


Chapter 8

1. The benefits of investing in investment-linked funds.

I. It offers the policyowner an access to a “pooled” or “diversified portfolio” of investment. II. Investment-linked products have simple design with clear structure which caters separately for

investment and insurance protection. III. Policyowners can access to the investment-linked fund managed by professional fund manager

with unproven track record. IV. Investors can buy investment-linked life insurance policy with an initial investment at as low as

RM 4,000.

A. I, II and III B. I, II and IV C. I, III and IV D. II, III and IV

2. A well-diversified investment-linked fund has ___________.

(A) many professional fund managers who take care of many funds (B) a better risk characteristic then a less-diversified fund (C) a simple designed product which cater separately for investment and insurance protection (D) provision of flexibility to change the level of premium payment and take premium holidays

3. The flexibility benefits of investment-linked fund are ____________.

I. investment-linked products have simple product design which cater separately for investment and

insurance protection II. policyowner can easily change the level of his premium payment and add single premium top-ups

III. policyowner can buy an investment-linked life insurance policy with an initial investment at as low as RM 4,000

IV. policyowner can easily change the level of sum assured and switch his investment between funds


4. The following statements about investment expertise in investment-linked is FALSE.

(A) Investment-linked funds have professional fund managers who have the investment expertise to invest the fund to achieve high return over the long term.

(B) Investment-linked funds have professional fund managers who have the investment expertise to invest the fund to always achieve high return over the short term.

(C) An ordinary policyowner does not normally has good knowledge of financial market to invest his money effectively.

(D) Investment-linked fund have professional fund manager to manage the fund.

5. The benefits of investing in investment-linked life insurance include:

I. Policyholders are relieved of the day to day administration of their investment. II. The funds invested are managed by professional fund managers.

III. Investment –linked funds do not offer the policyowner access to diversified portfolio of investments.

IV. Policyowner cannot easily change the level of his premium payment, take premium holidays, add single premium top-ups, make withdrawals, and switch his investment between funds.

CEILI SET A


(A) I, II (B) I, IV (C) II, III (D) III, IV

6. A well-diversified investment-linked fund has ___________.

(A) many professional fund managers who take care of many funds. (B) a better risk characteristic than a less-diversified fund. (C) a simple designed product which cater separately for investment and insurance protection. (D) provision of flexibility to change the level of premium payment and take premium holidays.

7. The risk of investing in investment-linked life insurance product includes the following, except:

(A) the value of investment is not guaranteed. (B) the value is linked to the underlying asset. (C) in equity fund the value will move drastically. (D) the professional fund manager not able to invest professionally.

8. The risks of investment-linked funds include ________________.

I. the value of units is not guaranteed.

II. the value of units id directly linked to investment performance of the underlying assets of the funds.

III. in times of a volatile stock market, the cash and maturity values of units invested in equity funds will rise and fall drastically.

IV. unitised funds are not managed by professional fund manager.


9. The following statements about expertise in investment is false:

(A) Professional fund managers have the investment expertise to achieve high return over a long

term. (B) Professional fund managers have the investment expertise to always achieve high return over a

short term. (C) An ordinary policyowner does not normally have good knowledge of financial markets to invest

his money effectively. (D) Investment-linked funds are managed by fund managers who have investment expertise.

Chapter 9

1. The criterias for comparing traditional life insurance products with investment-linked life insurance products include

I. the products investment returns and risks.

II. the policy premium computation. III. the death benefit. IV. the life offices management expertise.


CEILI SET A


2. Under traditional without-profit life insurance products, the amount payable to the policyowners

(A) does not depend on the investment performance of the life office as it is fixed at the inception of the

policy, thus there are no investment risks. (B) includes bonuses which are allocated to the policyowner in the form of additions to the sum assured

but these allocations are not directly linked to the life office investment performance. (C) vary according to the performance and values of the underlying assets of the life offices investment. (D) Vary according to the performance and values of the underlying assets that the policies are tied to.

3. Investment-linked life insurance policies are said to be account driven. This means that

I. the premiums charged and the benefits uner the policy are fixed base on specific sum assured and

ststed in the policies at their inceptions. II. policyowner have the flexibility in changing their premium payments.

III. life offices may retain the right to vary some of the charges made under the policies. IV. If the future experience differs from what is assumed when the policies are priced, the life offices

may depart from their intended policies and change the offer and bid prices.


4. Investment-linked life insurance products benefits

(A) are solely dependent on fixed income securities in which the funds invest. (B) comprise the investment returns only. (C) wholly or partly determined by referring to the value of or income from property of any description or

by referring to the fluctuation in, or in an index of, the value of property of any description. (D) are determined and fixed at the inception of the policy contract.

5. A major difference between traditional with-profit life insurance product and investment-linked life

insurance policy is:

(A) Traditional with-profit life insurance policy can reduce in value particularly when the life fund is being transferred to policy reserve.

(B) Traditional with-profit life insurance policy can never reduce in value, provided that the life office is solvent.

(C) The value of traditional with-profit life insurance policy will fluctuate greatly depending on the investment performance of the life office.

(D) The value of Investment-linked life insurance policy can never fluctuate once the units are added to the policyowner’s policy.

6. Under traditional with-profit life insurance policy,

I. the life fund maintains a reserve to help level out the short term fluctuation in value of the life

fund’s investment. II. not maintaining a reserve could mean that the policyowner receive the full value in a year of high

investment gains. III. not maintaining a reserve could mean that the policyowner suffer in a year of poor investment

conditions. IV. not maintaining a reserve could mean that the full impact of the changes in investment

conditions will not be directly borne by the policyowner.


CEILI SET A


7. Traditional with-profit life insurance products include:

(A) non-participating while life insurance. (B) temporary assurance. (C) participating endowment insurance. (D) non-participating endowment insurance.

8. Under traditional with profit life insurance policies, the following statements is NOT true about the death benefit. (A) It is a fixed Sum Assured plus whatever bonuses accumulated up to the date of death and whatever

outstanding policy loans inclusive of interests. (B) It may be altered with the agreement of the policyowner. (C) It is guaranteed at the outset only as far as the Sum Assured is concerned. (D) It is subject to change if future experience differs from what the policy had assumed when it was

priced.

9. Under investment-linked life insurance policies, _____________

I. there is no guaranteed minimum sum assured for the purposes of declaring bonuses. II. there is guaranteed minimum sum assured as a level of life insurance protection.

III. each of the policyowner’s premium will be used to purchase units, the number of which is dependent on the offer price of each unit.

IV. Purchases of units can only be made from the investment-linked fund itself, which will then create new units and add the investment monies to the value of the fund.


10. With investment-linked life insurance products, the amount payable to the policyowners

______________

(A) include bonuses which are allocated to the policyowners in the form of additions to the sum assured, and these allocations are directly linked to the life offices’ investment performance.

(B) does not depend on the investment performance of the life office as it is fixed at the inception of the policy, thus there are no investment risks except the risk of insolvency of the life offices.

(C) varies according to the values of the underlying assets that the policies are tied to at the time, and the policyowners enjoy the entire investment awards net of charges as well as bear all the investment risks.

(D) includes bonuses which are part of the surplus which is revealed when the life offices carry out the valuation of their assets and liabilities of their life fund.

11. A major difference between traditional with-profit life insurance product and Investment-linked life insurance policy is _________________.

A. traditional with-profit life insurance policy can reduce in value particularly when the life fund is

being transferred to policy reserve. B. traditional with-profit life insurance policy can never reduce in value, provided that the life office is

solvent. C. the value of traditional with-profit life insurance policy will fluctuate greatly depending on the

investment performance of the life office. D. the value of Investment-linked life insurance policy can never fluctuate once the units are added to

the policyowner’s policy.

CEILI SET A


12. Under traditional with-profit life insurance policy,

I. the life fund maintains a reserve to help level out the short term fluctuation in value of the life

fund’s investment. II. maintaining a reserve could mean that the policyowner does not receive the full value in a year of

high investment gains. III. maintaining a reserve could mean that the policyowner does not suffer in a year of poor investment

conditions. IV. maintaining a reserve could mean that the full impact of the changes in investment conditions will

be directly borne by the policyowner.


Chapter 10

1. The following statements concerning taxation in respect of investment-linked life insurance policies are true.

I. Surpluses generated from writing investment-linked life insurance products are already taxed at the

level of the life insurance companies. II. Proceeds distributed to policyowners of investment-linked life insurance policy are tax free in the

hands of policyowner. III. Disposal of units in investment-linked life insurance should attract tax as they are capital receipts. IV. The tax laws currently governing other forms of life insurance apply to investment-linked life

insurance.


2. The laws that govern the other forms of life insurance is regulated by the laws that govern the life

insurance business such as:

I. The insurance Act 1996, and its regulations II. The Companies Act 1965

III. The Contracts Act 1950 IV. The Transport Act 1985


3. Which one of the following statements which describe the rates of the tax and relief of investment-linked

life insurance is true?

(A) Reviewed biannually by Finance Minister and proposed for that year. (B) Reviewed every quarterly by Bank Negara. (C) Disposal of units in an investment-linked life insurance should attract tax as they are capital

receipts. (D) Proposed by Finance Minister in the budget for the year and then incorporated in the Finance Act for

that year.

CEILI SET A


4. Section 7(2)(b) of the Insurance Act, 1996 defines “Investment-linked insurance business’

(A) To mean the effecting and carrying out of a contract of insurance on human life only where the benefits are, wholly or partly, to be determined by reference to the value of, or the income from, human life of any description or by reference to fluctuations in, or in an index of, the value of property of any description.

(B) To mean the effecting and carrying out of a contract of insurance on annuity only where the benefits are, wholly or partly, to be determined by reference to the value of, or by reference to fluctuation in, or in an index of, the value of property of any description.

(C) To mean the effecting and carrying out of a contract of insurance on human life or annuity where the benefits are wholly or partly, to be determined by reference to the value of, or the income from, property of any description or by reference to fluctuations in, or in an index of, the value of property of any description.

(D) To mean the effecting and carrying out of a contract of insurance on human life or annuity where the benefits are, wholly or partly, to be determined by reference to the value of, or the income from, human life of any description or by reference to fluctuations in, or in an index of, the value of property of any description.

5. The total relief allowable for all insurance premium on the life of individual on his/her spouse and on

contribution to approve provident funds (e.g. to EPF) in a basis year is

(A) RM 3,500 (B) RM 3,500 plus RM 2,000 for children education and medical policies. (C) RM 5,000 (D) RM 5,000 plus RM 2,000 for children education and medical policies.

Chapter 11

1. What are the stages involved in providing effective advice to investment-linked life insurance customers?

I. Conducting the fact-finding II. Marketing Qualification

III. Assessing and satisfying customers IV. Making recommendation to customers

(A) I, II and III (B) I, III and IV (C) II, III and IV (D) I, II, III and IV

2. After the financial needs of a customer is assessed, what must an investment-linked life insurance agent

do?

I. Consider the most appropriate means to satisfy those needs offered within the investment-linked insurance.

II. Consider the most appropriate means of satisfying those needs which may involve financial products other than investment-linked life insurance.

III. Refer the customer to another person with better expertise in certain areas of financial services, should the need arise.

IV. If the financial needs fall outside the scope of the insurer’s portfolio the agent must discontinue his finding.

(A) I and IV (B) II and III (C) II and IV (D) II

CEILI SET A


3. What are the key issues in making recommendations to customers?

I. Explaining the recommendations. II. Providing customers with information on all options open to them.

III. To provide customers with alternative relevant to their needs. IV. To arrange review at regular intervals

(A) I, II and III (B) I and III (C) II, III and IV (D) All of the above.

4. What do you understand by the phrase “conducting the fact-finding” which is done by an investment-

linked insurance agent?

(A) Gathering all information of the investment available by the insurer. (B) Gathering all relevant information about the customer before making recommendation. (C) Gathering all information about the various plans offered by other insurers in the market. (D) Gathering as far as possible all elements that will affect the customer’s investment.

5. What is the second stage in the process of providing advice to customer?

(A) Conducting the fact-find. (B) Assessing and satisfying customer’s needs. (C) After-sales services. (D) Making recommendation to the customer.

6. An agent who engages in personal selling requires the following process:

I. Conducting fact finding.

II. Assessing/satisfying customers’ needs. III. Making recommendation to the customer.

(A) I and II (B) I and III (C) II and III (D) I, II and III

7. Conducting the fact-find requires an agent to obtain relevant information like:

(A) what is the sex of the customer. (B) what are the customer’s hobbies. (C) what are the customer’s personal details. (D) what is the favorite fruit of the customer.

8. What is the extra knowledge/ requirement needed for an investment-linked life insurance agent?

(A) All relevant knowledge about technical aspect of life insurance, coverage and scope. (B) All aspects about life cover. (C) All aspects of life insurance and legal requirements. (D) The financial advice in order to fulfill the customer’s needs.

9. Fact find by an investment-linked life insurance agent should provide answers to which of the following

questions?

(A) What are the customer’s habits? (B) What are the customer’s personal details? (C) What is the reputation of the customer? (D) What are the landed properties that the customer has?

CEILI SET A


10. During the process of assessing the customer’s needs, if it is found that the needs are beyond the investment-linked life insurance agents’ expertise, what can be done?

(A) Refer the customer to a different insurer. (B) Discontinue further assessment to refer and start on a new case. (C) Decide whether it is necessary to refer the customer to another expert advisor in a specialist field and

how to do so. (D) Pass the case to his company to proceed further if necessary.

11. When selling investment-linked life insurance policies, the objectives of an insurance agent to his

customers are _______________.

I. to impose his views on the customers concerning investment. II. to satisfy his customers’needs and requirement.

III. to increase his sales quota by all means. IV. to earn an income for himself.

(A) I and III (B) II and IV (C) III and IV (D) II and III

Chapter 12

1. Under the sales-oriented basis, what technique is frequently used?

E. Product Sales Technique F. Market Sales Technique G. Hand Sales Technique H. Forced Sales Technique

2. For a company to be successful in selling the products, the most important thing to have is:

(A) Market-oriented agency force. (B) Competitive products. (C) Dedicated Staff. (D) Good working environment.

3. What are the important ingredients in a successful sales interview?

(E) The agent’s skill in handling objections from a prospect. (F) The reduction of the product price. (G) Change in sales plan. (H) The agent making objections and drawing the prospect’s attention to the advantages of the product.

4. What is the main reason of insurance agent in participating in the planning of new product?

(E) Feedback on the market. (F) To establish a goal for the agency and ways to achieve it. (G) New ideas are established. (H) To promote self esteem and confident in agent.

5. Customers who have purchased policies from an organizations who are sales-oriented, usually ended

buying policies which

I. they do not understand. II. cannot meet their needs.

III. can meet their needs. IV. they surrender for its value or paid-up.

CEILI SET A


(E) I, II, III (F) I, II, IV (G) I, III, IV (H) II, III, IV

6. What is defined as “the management process responsible for identifying, anticipating and satisfying

customers requirement profitably”? (E) Investment. (F) Investment-linked. (G) Marketing. (H) Marketing investment.

7. Ethics should include:

I. behaving with complete integrity in an Insurance Agent’s professional life.

II. complying with Law and with the best principles and practices relating to Financial Advice. III. conducting in a Professional and Honorable Manner towards those with whom Insurance Agent is in

contact in Business Life. IV. observing and applying the relevant Codes of Good Practice.

(E) I, II (F) I, II, III (G) I, III, IV (H) All of the above.

8. Why is the sales plan regarded as important to an agent for the successful selling of a new insurance

product?

I. It allows an insurance agent to establish his goal during planning. II. It allows an insurance agent to participate in the function of controlling.

III. It makes the customer buy according to what the sales plan offers. IV. It allows an insurance agent to establish ways to achieve goals for the agency.


9. The term used in marketing where results are measured against the plan and changes made when and

where necessary is known as _________.

(E) planning (F) sales goal (G) controlling (H) sales strategy

10. When a consumer becomes aware of a potential opportunity and feels the need for a product to satisfy his needs, the term used under the Consumer Buying Decision Process is known as ______________.

V. information search

VI. problem recognition VII. problem solution

VIII. evaluation of problem

CEILI SET A


11. The following are the General Sales Principles required under Part II of LIAM’s Code of Ethic and Conduct:

I. The intermediary must make known to the prospective customer his principal and produce his

authorization card. II. Ensure that policy proposed is suitable to meet the needs of customer and not beyond his

resources. III. To give all advice sought irrespective of his knowledge so as not to lose his prospect’s confidence in

him. IV. All information supplied by the prospective customer can be revealed to people who request it.

(A) I, II and III (B) I, III and IV (C) I and II (D) All of the above

CEILI SET A


CEILI SAMPLE ANSWERS – Chapter 2

1. D 2. D 3. A 4. B 5. A

6. D 7. A 8. A 9. C


1. A 2. A 3. C 4. A 5. C

6. D 7. D 8. A 9. B 10. C

11. C 12. C 13. D 14. B 15. B

16. D


1. B 2. C 3. D 4. C 5. A

6. B 7. B


1. C 2. A 3. C 4. C 5. B

6. C 7. B 8. C


1. C 2. D 3. D 4. A 5. C

6. A 7. C 8. A 9. D 10. All correct

11. A


1. C 2. B 3. A 4. D 5. D

6. D 7. C 8. B 9. A 10. D

11. A 12. A 13. A 14. A 15. C

16. B


1. B 2. B 3. B 4. B 5. A

6. B 7. D 8. A 9. B


1. A 2. A 3. D 4. C 5. B

6. A 7. C 8. D 9. D 10. C

11. B 12. A


1. B 2. A 3. D 4. C 5. D


1. B 2. B 3. D 4. B 5. B

6. D 7. C 8. D 9. B 10. C

11. B


1. D 2. A 3. A 4. A 5. B

6. C 7. D 8. B 9. C 10. B

11. C

2 Ceilli Set a(Eng)

Documents

dual pricing

single pricing

amount withdrawn

central provident

amount withdrawn

future experience

minimum sum

professional