Pce set a

PCE PART (A&C)

Center for Learning Excellence – AT&D Dept 1

PCE A & CSET A

ENGLISH

AGENCY TRAINING & DEVELOPMENT DEPT.AIA CO. LTD

PCE PART (A&C)


Chapter 1

1. " By spreading the risk of loss faced by a specific person or enterprise, all parties who pool their resources to pay for individual losses." This statement refers to ...

A. agentB. insuranceC. warrantyD. broker

2. How does the insurance provide protection?

A. by transfer the risk to other parties' shoulderB. eliminate the risk by the concept of pooling of riskC. help people to gain profitD. insure all types of risk

3. Insurance can be classified into...

A. Life InsuranceB. General InsuranceC. A & BD. Risk Insurance

4. What is the Law of Large Number?

A. Large number of similar loss exposureB. Loss exposure must be independentC. Random or chance occurrence of lossesD. All of the above

5. Which risk is not covered by Life Insurance?

A. Premature deathB. Continuous stream of income during retirementC. Sickness or disabilityD. Suicide

6. Malaysian Insurance Business is control by...

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A. Insurance Act, 1963B. Insurance Act, 1996C. Insurance Act, 1966D. None of the above

7. The role of an insurance agent...

A. bring financial relief in the event of property lossB. inculcate the discipline of savings among the working populationC. bring financial relief to aggrieved dependants of insured people who meet

with an untimely deathD. All of the above

8. Risk cover by Life Insurance...

A. Premature deathB. Continuous stream of income during retirementC. Sickness or disabilityD. All of the above

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Chapter 2

1. What is the cause of loss?

A. HazardB. PerilC. RiskD. Sick

2. ____________ is determined when the total number of possible events are known.

A. Judgmental probabilityB. Empirical probabilityC. Priori probabilityD. Risk

3. When a person knows that he is suffering from a disease but he still has theintention to hide this fact from the insurance company, this is called...

A. anti-selectionB. moral hazardC. physical hazardD. peril

4. The insurance insure the following risk except...

A. property damageB. premature deathC. sickness and disabilityD. investment and betting

5. Pure Risk is defined...

A. lost investment in stock marketB. lost betting in a horse raceC. unprofitable in business ventureD. risk of premature death

6. Which of the following is NOT a Pure Risk?

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A. FireB. FloodC. RobberyD. Gambling

7. Moral Hazard defined...

A. dishonestyB. carelessnessC. unreasonablenessD. All of the above

8. Which of the following bodies is NOT a characteristic of an insurance risk?

A. It must be of a fortuitious natureB. It must be speculative in natureC. It must be a pure riskD. It must not be against public policy

9. The least effective approach to risk management...

A. Ignoring the riskB. avoiding the riskC. transferring the riskD. retaining the risk

10. The characteristics of insurable risk...

A. financial valueB. large number of similar riskC. pure risk onlyD. All of the above

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11. Which one among the occupations stated below is non-hazardous?

A. CookB. Trapeze artistC. Forklift operatorD. Long distance bus driver

12. As an entrepreneur, you may encounter one of the following situation...

A. pure riskB. no riskC. pure and speculative riskD. speculative risk

13. In the practice of his profession, an underwriter is concerned with theassessment of risk. His assessment will almost exclusively be based onthe consideration of both physical and moral hazards. Factors influencingthe physical hazard would include:

I. The health of the proposed insuredII. The family of the proposed insuredIII. The age of the proposer

A. I & IIB. II & IIIC. All of the aboveD. I only

14. Which of the following methods of handling risk is closest to insurance?

A. Risk retentionB. Loss prevention and controlC. Transfer of risksD. Risk avoidance

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15. Which of the following CANNOT be insured?

A. To protect one's investment in case of depressionB. To protect one's car from being stolenC. To protect one's house when there is a fireD. To protect one's loss of income when disbaled in an accident

16. What do you understand by fortuitous losses?

A. An accident brought about intentionally by the insuredB. Losses that occur due to wear and tear and depreciationC. The loss is not within the control of the insuredD. An incident that occurs as expected

17. The selection of lives is a process of identifying the adverse factors.These factors are broadly classified into two categories. They are...

I. physical hazardsII. natural hazardsIII. catastrophic hazardsIV. moral hazards

A. I & IIB. III & IVC. I & IVD. I, II, III & IV

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Chapter 3

1. In Life Insurance, insurable interest must exist...

A. at the time of lossB. at the beginning onlyC. at the beginning and at the time of lossD. at the time when the contract has been in force

2. What is material fact?

A. Is a fact which influence in deciding the acceptance of riskB. The property that insured under a policyC. Is a fact that help to compensateD. Is anti-selection

3. The consequence of breach of utmost good faith:

A. a contract becomes voidB. a contract becomes voidable until the insurance company treat it voidC. a contract becomes unenforceableD. a contract still in force

4. Life Insurance is NOT ...

A. a contract of indemnityB. a valued contractC. insured the life of a human beingD. reduction of losses

5. Life Insurance is NOT a contract of indemnity because...

A. the insurable interest cannot be measured and cannot restorethe insured to the same financial position

B. it involves a large number of moneyC. it is very unpredictableD. it gives extra proceeds to the insured

6. Breach of utmost good faith may occur in the following ways:

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I. By concealmentII. By non-disclosureIII. By innocent misrepresentationIV. By fraudulent misrepresentation

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

7. The principle of Utmost Good Faith is that...

A. the insured has to disclose some important facts regarding the riskto be insured

B. the insured has to disclose partial important facts regarding the riskto be insured

C. the insured has to disclose all important facts regarding the riskto be insured

D. All of the above

8. The principle of indemnity requires the insurers to...

A. restore the insured to the same financial position as hehad enjoy immediately before the lost

B. restore the insured to better financial position as hehad enjoy immediately before the lost

C. restore the insured to the same financial position as hehad enjoy immediately after the lost

D. All of the above

9. Which of the following is CORRECT about Utmost Good Faith?

I. It is a contract of uberrimae fidesII. It is binding on the insurerIII. It is binding on the insuredIV. It is binding on the agent who sold the life policy

A. II & IV onlyB. I, II & III onlyC. I, II, III & IVD. I & II only

10. It is the duty to the proposer to disclose clearly and accurately allmaterial facts relating to the insurance proposed. Material facts, inthis instance, would include:

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I. Facts which tend to render a risk proposed greater than normalII. Facts necessary to explain the exceptional nature of a risk proposed

for insurance, without which, the insurer would justifiably believethe risk to be normal

III. The proposer's medical historyIV. The proposer's occupation

A. I & II onlyB. I, II & IIIC. I, III & IVD. I, II, III & IV

11. A person effecting a Life Insurance policy on his own life has aninsurable interest which is...

A. unlimitedB. limited to his annual incomeC. dependent on his saving capacityD. dependent on his state of health

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Chapter 4

1. The company that owns by the shareholders are...

A. insurance companyB. proprietary companyC. cooperative companyD. mutual company

2. Who will prove the losses and investigate the cause?

A. insurance companyB. agentC. loss adjusterD. loss assessor

3. Recruiting, training of employees is a job of...

A. Marketing DepartmentB. Administration DepartmentC. Investment DepartmentD. Customer Service Department

4. Centralization means...

A. the underwriting, renewals etc will be handled at branchesB. no more branchesC. the underwriting, renewals etc will be handled at headquartersD. the headquarter will act as a sale outlet too

5. This person works for the insurance company and his primaryresponsibility is to access all applicants to determine the risk theypresent to the company and to decide whether to accept these applicants,

A. UnderwriterB. Claims ExecutiveC. Medical ExaminerD. Accountant

6. The association established to protect the interest of insurancebrokers is...

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A. IBAMB. NAMLIAC. PIAMD. LOMA

7. Who among the following is NOT the main components of themarket for private insurance?

A. BuyersB. UnderwritersC. SellersD. Intermediaries

8. Who among the following are termed as the intermediaries in theinsurance business?

I. AdjusterII. AgentIII. BrokerIV. Underwriter

A. I & II onlyB. I & IV onlyC. II & III onlyD. III & IV only

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Chapter 5

1. To instil a better level of discipline and professionalism in thework force in insurance, the company established...

A. Code of Utmost Good FaithB. Code of Ethics and ConductC. PIAMD. LIAM

2. Which of the following statements are consumers' basic rights?

I. Right to satisfactionII. Right to chooseIII. Right to redressIV. Right to a safe & clean environment

A. I & IIB. I & IIIC. I, II & IIID. All fo the above

3. The objective of the Insurance Mediation Bureau is to...

A. undertake research in the field of insurance and other related subjectsB. safeguarding the interest of those engaged in Life Insurance selling

and sales managementC. provide dispute resolution procedure for policyholders

(Personal Insurance only) and insurersD. establish a sound insurance structure in Malaysia

4. The main purpose of the guarantee scheme fund established underthe Insurance Act is:

A. to meet the liabilities of an insolvent insurance companyB. to ensure all insurance companies insolventC. to pay the liabilities of an insurance companyD. to ensure all insurance companies are solvent

Chapter 6

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1. Under the Insurance Act, 1963, a person attaining the following age areallowed to enter into a contract for a life policy.

A. 10B. 18C. 21D. 16

2. Select all of the following statements which are true.

I. A contract is legal that is, it can be enforced by lawII. A contract is legal only when both parties voluntarily live up

to the terms of the agreementIII. A contract involves two or more partiesIV. Consideration must be a part of the agreement

A. I & III onlyB. II & III onlyC. I, III & IV onlyD. All of the above

3. An agent is encouraged to collect premium from the proposer forsubmission together with the proposal form. Why?

A. To ensure that proposer will not change his mind since hehas pay the premiums

B. The risk will not commence unless the first instalment premium is paidC. This will save the agent the additional trip of collecting the premium

at another timeD. The commission from the premium will help the agent to cover his

expenses incurred in the prospecting

4. Which of the following accepts part of the risk from another insurer?

A. ReinsurersB. Loss adjustersC. Insurance agentsD. Insureds

5. When can a Life Insurance Company void a life policy?

A. When an unpaid policy loan, plus interest, equals thecash value of the policy

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B. When an unpaid policy loan, plus interest, equals theface value of the policy

C. When the policy owner ceases to make payments on the loanD. When the policy owner ceases to exist

6. Which of the following is NOT a requirement for the formation of avalid contract?

A. Offer and acceptanceB. Legality of objectC. Financial capacityD. intention to create legal relationship

7. One of the essential elements in the formation of a contract is consideration.In insurance contract, consideration refers to the...

I. premium paid by the insuredII. commission paid to the agentIII. promises made by the insurer under the life insurance contract

to pay the sum insured and any accrued bonuses

A. I onlyB. I & III onlyC. II & III onlyD. All of the above

8. A Life Insurance Policy is a contract between...

A. the life office and insuredB. the life office and beneficiaryC. the life office, insured and beneficiaryD. the life office, insured and beneficiary and the agent

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Chapter 7

1. The duty of an agent includes...

A. to render accounts to the principle as requiredB. not to disclose confidential information obtained during the

course of his dutiesC. not to delegate his duties to sub-agents without authorityD. All of the above

2. The agent can represent __________ general insurance company

A. 1B. 4C. 2D. more than 1

3. Who is an universal agent?

A. One who is appointed to do a specific act or transactionB. One who may do anything for his principal within the limits of a

general authority conferred upon himC. One who has unlimited authorityD. None of the above

4. An agency relationship may be created by the following way(s):

I. By implication of lawII. By express appointmentIII. By subsequent ratification of an agent's unauthorised act

A. I onlyB. I & II onlyC. I & III onlyD. All of the above

5. An agency may be terminated by the following acts EXCEPT one:

A. The principal receiving many complaintsB. The agent renouncing the agencyC. The principal revokes the authorityD. The insurance company becoming bankrupt

6. The duty of an agent includes:

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A. Comply with his principal's instructions and to notify him whencompliance becomes impossible

B. Delegate his duties to a sub-agent without authority, whetherexpress or implied

C. Let his own interest conflict with his obligation to the principalwhenever possible

D. Take secret profit from his client

7. An agent is a person who acts on behalf of another person. The personwhom he represents is called the...

A. insuredB. third partyC. principalD. broker

8. An agent of a life company is authorised to...

A. issue policies binding on the companyB. print premium receiptC. solicit business, collect the initial premium and pays

it to the companyD. get commission from the company

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Chapter 8

1. Grace period is a term of the contract that a due premium shall bepaid on the date specified. It consists of __________ days.

A. 15B. 16C. 30D. 60

2. Salesmanship is ____________.

A. an art of public speakingB. a skill in opening an insurance agency businessC. the art of convincing people to purchase somethingD. an art of acting

3. What characteristics does a market-oriented agent have?

I. Satisfying customer requirementsII. Satisfying customer needsIII. profit makingIV. policy ditribution

A. I onlyB. I & II onlyC. I, II & III onlyD. All of the above

4. Marketing emphasises...

A. planning and controllingB. product developmentC. improved services to customersD. All of the above

5. Basic marketing decision for an agent includes the following EXCEPT

A. personnel sellingB. measuring of resultsC. the submission of accountsD. proposing proper plan for client

6. A professional agent must be trained to...

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A. close a businessB. handle objectionsC. conduct sale interviewsD. All of the above

7. The requirements an agent must be prepared to meet in order to besuccessful are:

I. knowledgeII. proper selling attitudeIII. professional attitudeIV. skills

A. I, II & III onlyB. I, II & IV onlyC. All of the aboveD. I & II only

PCE PART (A&C)


Chapter 16

1. Insurable interest in Life Insurance needs to exist only...

A. at the time of claimB. at the time of surrenderC. at the time of inception of the insuranceD. at the time of changing the beneficiaries

2. A life insurance contract is a contract of...

A. premature deathB. financial guaranteesC. permanent disabilityD. uberrima fides (Utmost Good Faith)

3. An insurance contract must have 'insurable interest' as required by the...

A. Insurance Act, 1962B. Insurance Act, 1963C. Life Insurance Act, 1963D. Insurance Act for life 1963

4. If no insurable interest exists at the time a life policy is effected, thepolicy becomes...

A. void, the company is not obliged to pay a claim under the policyB. voidable, the company may or may not be obliged to pay a claim

under the policy depending on the discretion of the managementC. voidable, depending on the judgement of the high courtD. Unenforceble, the company is not obliged to pay a claim

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5. The purchaser of life insurance must stand to suffer a legal financial losson the death of the other person on whom he buys the insurance.This is known as:

A. Utmost Good FaithB. Common LawC. Insurable interestD. Insurance Act 1963

6. The risks covered by life insurance included the following EXCEPT...

A. retirement benefitB. premature deathC. financial lossD. permanent disability

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Chapter 17

1. __________ contract pays out a lump sum on the diagnosis of anyof a number of specified diseases.

A. Permanent HealthB. Dread Disease CoverC. Personal AccidentD. Term

2. Three kinds of Life Insurance contract:

I. Home serviceII. Group insuranceIII. OrdinaryIV. Health policy

A. I, II & III onlyB. II, III & IV onlyC. I & III onlyD. All of the above

3. What is term insurance?

I. The earliest life insuranceII. The sum assured is payable only in the event of death of the life assuredIII. The sum assured is payable only if the life assured survives the termIV. Can convert it to whole life and endowment

A. I & II onlyB. II & III onlyC. II, III & IV onlyD. I, II & IV only

4. It is used for the dual purpose of providing for old age or augmentingpension and for protection of the family's interest.

A. Limited Whole Life InsuranceB. Decreasing Term InsuranceC. Endowment AssuranceD. Increasing Investment

5. In this policy, the office makes a series of payment to the annuitant,

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this policy is called...

A. term insuranceB. annuityC. whole lifeD. endowment

6. The insurer will pay the policyholder with installment cash during theterm of the policy, if the policyholder survives till the end of the term, hewill be paid only the balance of the installment payment, usually 50%. Thebenefit of this policy is the full sum assured is payable in the event of the lifeinsured's death. This policy called...

A. whole lifeB. anticipated endowmentC. term insuranceD. annuity

7. __________ provides guaranteed payment over fixed period and theraftertill death. If the annuitant dies during the fixed period, the annuity paymentwill continue to be paid till the end of the guaranteed period.

A. Deferred annuityB. Single life immediate annuityC. Guaranteed immediate annuityD. Annuity certain

8. In a group insurance, a minimum number of lives to be insured are...

A. 100B. 10C. 5D. 50

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9. Family Takaful Plans may elect to incorporate the following supplementarybenefits:

I. Takaful MortgageII. Health and Medical Takaful PlanIII. Personal AccidentIV. Takaful plan for education

A. I, II & III onlyB. III onlyC. I onlyD. IV only

10. Under the "Group Insurance Scheme", the parties to contract are the...

A. employers and the employeesB. employees, employer and the insurance companyC. employer and the insurance companyD. beneficiary, employees, employer and the insurance company

11. A term policy is also sometimes known as 'temporary assurance'.Which of the following statements is true?

A. Provides protection for an unlimited period of timeB. Premiums are comparatively higherC. A small cash value is payable at the expiry of the termD. Sum assured is not payable if life assured survives the term

12. Term Insurance is useful when...

A. buyer has a need for insurance but cannot afford the premiumsof permanent plans

B. buyer has a need for insurance but does not feel it is importantC. buyer has a huge tax bill to payD. agent has run out of products to sell

13. Participating (PAR) policies can only be bought with the following types

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of life policies:

I. Whole LifeII. EndowmentIII. TermIV. Annuity

A. I , II, III onlyB. I , II, IV onlyC. II, III & IV onlyD. All of the above

14. "Premium are paid for a limited number of years after which the policybecomes paid-up for its full amount and no further premiums are required."The paragraph above describes...

A. this member leaves the groupB. endowment policiesC. renewable term policiesD. investment linked policies

15. An endowment life insurance policy differs from a term life insurancepolicy in that the endowment policy provides...

A. for only death cover during the term of insuranceB. no cash value at any time during the period of coverageC. for payment of the face amount, if the insured is still living at the

end of the period of coverageD. for an automatic conversion of the policy, if the insured is still living

at the end of the period of coverage

16. Policies generally issued for the purpose of mortgage protection areusually in the nature of...

A. Whole Life InsuranceB. Increasing Term InsuranceC. Decreasing Term InsuranceD. Convertible Term Insurance

17. A life insurance contract written on two or more lives is called...

A. Co-Life PolicyB. Twin-Life Policy

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C. Joint-Life PolicyD. Group Insurance Policy

18. "Accidental Death Benefit" is a form of...

A. basic benefitB. permanent benefitC. temporary benefitD. supplementary benefit

19. Under the Family Takaful Plans, the amount credited into the participant'saccount and the participant's special account is made with the intention of,EXCEPT...

A. paying annual cost of Takaful against the covered riskB. saving and investmentC. payment of benefits to the poor who are not participants of the planD. payment of Takaful benefits to the heir of any participant who may

die before reaching the term of the plan

20. The provision which allows the policy owner to change in the plan ofinsurance from term life insurance to whole life insurance is commonlyreferred as the...

A. reinstatement provisionB. renewal provisionC. conversion provisionD. policy provision

21. As a result of an accident, Mr.Koh was totally disabled for 26 months.During that time, a special provision in his whole life insurance policyexempts him from making premium payments, while the full insurancecoverage continues in force. The provision in Mr.Koh's policy whichexempts him from paying premium is called the...

A. disability income benefitB. accidental means benefitC. waiver of premium for disability benefitD. dread-disease benefit

22. What are supplementary benefits?

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A. These are benefits or riders attached to the basic policiessubject to the payment of extra premiums

B. These are benefits such as bonuses given out on participating policiesC. These are benefits given to better-than average livesD. These are benefits that comes with the basic plan

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Chapter 18

1. This policy permits the insured to exchange the acquire cash value fora paid-up term insurance. The term insurance depends on the availableamount of cash value applied. This policy is...

A. paid up policyB. extended term assuranceC. endowment insuranceD. annuity

2. If the insured commits suicide within a stated period of time,

A. the insurance company is not liable to pay any claim and premium paidB. the insurance company is not liable to pay any premium paidC. the insurance company is liable to refund all premium paidD. the insurance company is not liable on anything

3. If there has been a misrepresentation of age, the following measurescould be adopted:

A. if the age has been overstated, the company will not liable on anythingB. if the age has been overstated, the amount of money payable would

be treated as the premium paid according to the true ageC. the contract will become voidD. the insured needs to reinstate the policy again

4. Policy alterations includes:

I. decrease the sum assuredII. increase the sum assuredIII. change of name of beneficiaryIV. change of class of policy

A. I & II onlyB. II, III & IV onlyC. I, II & III onlyD. I, III & IV only

5. The following documents is NOT accepted as proof of age in Malaysia.

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A. School leaving certificateB. identity cardC. certificate of baptismD. credit card

6. An assignment of a life policy is a transfer of...

A. equitable interest onlyB. ownership and legal rightsC. risk from life assured to assigneeD. beneficial interest only

7. The cash value of a life insurance policy is the amount of money theinsurance company...

A. guarantees to pay the beneficiaryB. may be prepared to grant as a loan on security of the policyC. guarantees to pay the policy owner if the policy is surrendered

before its maturityD. must hold in assets in order to be able to pay a policy claim

whenever it is due

8. A provision in a life insurance policy which states that any premium notpaid by the end of the grace period be automatically paid by a policyloan if there is sufficient cash value is called...

A. renewal provisionB. automatic premium loanC. reinstatement provisionD. automatic paid-up provision

9. Some of the alterations that can be made to a life policy are listedbelow. Which of these are true?

I. Reduction in the sum assuredII. Change in the mode of premium paymentIII. Increase in the sum assuredIV. Change of name of the life assured

A. I, II & III onlyB. I, II & IV onlyC. II & III only

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D. All of the above10. The incontestability clause in a life insurance policy is intended to...

A. limit the time during which the policy owner has the right to cancelthe policy

B. limit the time during which the insurance company can deny claimson the basis of statements made in the application

C. prevent delay on the part of the insurance company in the paymentof legitimate claims

D. provide for time limit for the proposer to challenge the underwriter'sdecision under his proposal

11. A lapsed policy is one for which the...

A. policy owner made the premium payment during the grace periodB. policy owner has failed to make the premium payment within the grace periodC. premium has not been paid during the last 30 days of the policy periodD. policy owner has failed to pay premium after the 30 days period

12. Most life insurance contracts include a provision which states that if theperson whose life is insured dies by suicide within a specified period, the...

A. company will ignore the cause of death and settle the claimB. company has no liability whatsoeverC. liability of the company is limited to the amount of the premium paidD. liability of the company is limited to the cash value of the policy at

the time of death

13. A policy owner wants to discontinue paying the premiums on a life insurance policy,but wishes to retain life insurance coverage for the same period and on the sameplan as provided by the original policy. The non-forfeiture option which the policyowner should select is the...

A. Extended Term Insurance OptionB. Reduced Paid-Up Insurance OptionC. Fixed-Period OptionD. Automatic Premium Loan

14. Which one of the following statements about "days of grace" is NOT true?

A. Interest will be charged for payment of premium within the periodB. Interest will not be charged for payment of premium within this periodC. The policy will still remain in force if payment is made within this periodD. The policy ceases to have any further coverage if renewal premium is not

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paid within the days of grace

15. On revival of a policy, a new contract is said to have come into existencein place of the original one that had lapsed. Which one of the followingstatement is FALSE?

A. The incontestability clause may start afresh under the new contractB. The insurer may impose an extra premium or any other restrictive

condition at the time of revival, if felt necessaryC. A new policy document will be prepared in all casesD. Suicide clause will begin anew

16. The ABC Insurance Company's policyholder service department has receiveda request for the reinstatement of a whole life insurance policy. In order to complywith the request, the policyholder service department probably will check to seethat the policyholder has...

I. submitted satisfactory evidence of insurabilityII. paid all unpaid premiums in arrears plus interestIII. submitted the request for reinstatement within the specified time after

the lapse of the policyIV. repaid any outstanding loan against the lapsed policy or agreed to have the loan

restored as a lien against the reinstated policy

A. I, II & IV onlyB. II, III & IV onlyC. All of the aboveD. I, II & III only

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Chapter 19

1. What is the risk factor of mortality?

I. SexII. Social statusIII. AvocationIV. Marital Status

A. I & II onlyB. II, III & IV onlyC. I, II & III onlyD. All of the above

2. The insurer usually employs any one of the following methods to deal withsub-standard lives:

I. charge the higher premiumII. debt or lienIII. postpone the premiumIV. postpone the coverage

A. I, II & III onlyB. I, II & IV onlyC. II & IV onlyD. I & IV only

3. In 1999, Encik Ali needs to pay RM2,500 for his EPF, RM1,800 for his anticipatedendowment premium and RM2,000 for house renovation. What is the allowablededuction for that year?

A.B.C.D.

4. Extra risks are classified generally as falling into 3 main groups EXCEPT...

A. increasing extra mortalityB. level extra mortalityC. constant extra mortalityD. decreasing extra mortality

5. The following are major factors affecting mortality EXCEPT...

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A. personal habitsB. ethnicityC. sexD. wealth

6. Financial underwriting is done by insurance company to uncover...

A. physical hazardB. fire hazardC. wealth hazardD. moral hazard

7. In the transaction of life business, the insurers are on risk...

A. as soon as a letter of acceptance is issued and received by the proposed insuredB. as soon as the completed proposal form is submittedC. as soon as a letter of acceptance is issued and the first premium is paidD. as soon as a letter of acceptance is issued and the first premium is paid and

accepted by the insurer

8. An impairment which causes increasing extra mortality is one which, with increasingduration, becomes more and more a potent factor in affecting longevity. Which of thefollowing is classified as increasing extra mortality in the underwriting of risks?

A. A construction workerB. A person who is overweightC. A person who is engaged in the liquor tradeD. A young person who has suffered from tuberculosis but has been pronounced

as cured

9. The tendency of persons with greater likelihood of loss to apply for life insuranceis called...

A. impairementB. persistencyC. anti-selectionD. physical hazard

10. Normally, the ordinary life insurance policyholder is given 15 days to review theterms and conditions of the policy. He can return the policy with objections inwriting and the insurer will refund the premium paid in full. This period is called...

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A. testing periodB. observing periodC. cooling-off periodD. days of grace period

11. Who bears a great responsibility in the transaction of non-medical business?

A. AgentB. Life insuredC. ProposerD. Insurer

12. A life office does not accept automatically all applications for insurance, they willexamine all the elements of risk carefully. This process is called...

A. inspectionB. prospectingC. selectionD. anti-selection

Chapter 20

1. Participating policies enjoy the right to share in profits of operations of life insurancecompany in the form of bonuses. The insured has to pay a slightly higher premiumthan their non participating. This additional premium is known as...

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A. premium loadingB. bonus loadingC. taxD. financing cost

2. Installment and true premium is...

A. annual premiumB. periodical premiumC. net premiumD. gross premium

3. If a policyholder is engaged in a hazardous occupation (site worker) at the inception ofthe policy, and after 2 years, he changes his occupation to a office job, theinsurer normally will consider ...

A. reducing the basic premium rateB. reducing the occupational loading amountC. allowing the removal of occupational loadingD. maintaining the premium rate with original loading

4. If the health of the insured deteriorates after the policy is effected, the insurer...

A. can ask for extra premiumB. can terminate the policyC. can allow removal of extra premiumD. cannot ask for extra premium

5. The extra premium for occupational risk will only be imposed or removed when...

A. the proof of age has been submittedB. the change of occupation has been notifiedC. the policy has been in force for more than three yearsD. the person's health is good

Chapter 21

1. What is the sources of surplus?

I. ExpenseII. MortalityIII. MorbidityIV. Interest

PCE PART (A&C)


A. I, II, IVB. I, II, IIIC. II, III, IVD. All of the above

2. The bonus that is only paid on policies resulting into claims either by maturityor death...

A. cash bonusB. terminal bonusC. interim bonusD. guaranteed bonus

3. There are various ways in which the policyholder's share of surplus is distributed.Which among the following is NOT TRUE?

A. Simple reversionary bonusB. Cash bonusC. Interim bonusD. Policy loan bonus

4. Assets maybe valued in several ways depending on the purpose of the valuationEXCEPT one:

A. cost priceB. market valueC. interestD. book value

5. Which among the following is NOT a form of bonus?

A. Interim bonusB. Maturity bonusC. Policy loan bonusD. Compound reversionary bonus

Chapter 22

1. This section introduces the parties to the contract...

A. the headingB. the provisoC. the preambleD. the attestation

PCE PART (A&C)


2. The insurance company agrees to make payment of the sum stated in the scheduleupon the happening of the insured event. This section is...

A. the headingB. the condition and privilegesC. the operative clauseD. the preamble

3. Most proposal forms usually seek the following information:

I. personal particulars like age, sex and occupationII. particulars of other insuranceIII. particulars of the proposed insured's hobbies and interestIV. particulars of the beneficiaries

A. I, II & IV onlyB. II & III onlyC. III & IV onlyD. All of the above

4. The attestation clause in a policy document...

I. confirms the insurer's intention to enter into a contractII. must be signed by an authorised officer of the insurer

A. I onlyB. II onlyC. All of the aboveD. None of the above

5. The purpose of a proposal form is to...

I. service as an evidence in the event of any disputeII. provide the information for the calculation of the premiumsIII. form the basis of the contract between the company and the applicant

A. I & III onlyB. II & III onlyC. All of the aboveD. II only

PCE PART (A&C)


6. The following are sources of information when the underwriter examines thedegree of risk before a life is insured EXCEPT one:

A. the proposal formB. medical reportC. letter from employerD. agent's confidential report

7. Which of the following about a proposal form is CORRECT?

A. A proposal form consists basically of a series of questions drawn up by theinsurer, requesting certain information which will enable them to assess theproposed risk

B. The answers to the questions in a proposal form will discharge the duty upona prospective insured to disclose all material information

C. The proposal form is prima facie evidence of the insurance contractD. The proposal form must be endorsed by the employer of the insured

Chapter 23

1. For a policy effected under section 23 of the Civil Law Act, the moneywould be paid to the...

A. spouseB. trusteeC. beneficiaryD. child

2. The following document are acceptable to the insurer as proof of title and ownership:

PCE PART (A&C)


I. life policyII. a deed of assignmentIII. a probate of will obtained from a court of lawIV. a letter of administration issued by a court of law

A. I, II & III onlyB. II, III & IV onlyC. III & IV onlyD. All of the above

3. Claim proceeds that do not exceed __________ can claim without letters ofprobate administration.

A. RM 10,000B. RM 100,000C. RM 1,000D. RM 25,000

4. The requirements in settlement of the maturity claims are...

I. proof of ageII. proof of survivalIII. discharge voucher completed by the policyholderIV. the policy document

A. I, II & III onlyB. I, III & IV onlyC. II, III & IV onlyD. All of the above

5. A life insurance policy is said to be under a claim when...

A. the insured lapses the policyB. the insured leaves the countryC. the insured becomes a bankruptD. the life insured dies, while the policy is in force

6. The fundamental proofs required for death claims are…

I. proof of deathII. proof of ageIII. proof of estateIV. proof of title and ownership

PCE PART (A&C)


A. I, II & IV onlyB. I, III & IV onlyC. II, III & IV onlyD. All of the above

7. In life insurance, there are essentially 3 kinds of claims that can arise. There are...

I. claims against supplementary contractII. performance claimsIII. death claimsIV. maturity claims

A. I, II & III onlyB. I, II & IV onlyC. I, III & IV onlyD. II, III & IV only

8. In maturity claims, the settlement options is / are to...

I. accept the maturity proceeds in cashII. convert the maturity cash value into a paid-up whole life policyIII. surrender the policy proceeds to the life company

A. I onlyB. II onlyC. I & II onlyD. all of the above

9. When an agent is made aware of an insured's death, the first task is to...

A. notify the insurance companyB. contact the beneficiaryC. make a police reportD. notify the court

10. A policyholder should submit the proof of age as early as possible because...

A. the life company will not recognize any proof of age during death claimB. it is often easier for the policyholder to produce the necessary proof when

he or she is still alive.C. any misrepresentation of age will cancel the policyD. any misrepresentation of age will result into claims not being met

PCE PART (A&C)


Chapter 24

1. What is the age next birthday, if the life assured was born on March 21, 1965 andthe date of the proposal submitted was January 1, 1998?

A. 31 years oldB. 32 years oldC. 33 years oldD. 30 years old

2. Calculate the outstanding premium charges for the following situation:

Sum assured : RM 100,000Policy Type : Whole LifeHalf yearly premium : RM 600Premium payment dates : 1 April & 1 OctoberLast premium paid : 1 October 1993Application for reinstatement : 1 July 1995

PCE PART (A&C)


Interest charge : 6% per annum

A. RM 1,880.93B. RM 1,890.00C. RM 1,882.36D. RM 1,908.90

Chapter 25

1. Why is a code of ethics for agents particularly important?

A. To increase commission rateB. Ethics is an art of sellingC. Agents earn commissionD. Clients rely upon the agent's advice on the right plan to take

2. Peter was previously the agent of company A. Now he is the agent ofcompany B. Recently he successfully convinced one of his clients todiscontinue his policy which was effected with company A and to take out afresh policy with company B. This action is termed as...

A. twistingB. rebatingC. underwritingD. misrepresentation

PCE PART (A&C)


3. In the sale of life policies, the agent should...

I. adequately study the prospect's needs and finances before presentingan insurance plan

II. ensure that the life insurance policy reaches the client safelyIII. give advice only on matters which he is competent to deal withIV. when making comparisons with other types of policies, highlight the

different characteristics of each policy

A. I, II & III onlyB. II, III & IV onlyC. I, III & IV onlyD. All of the above

4. Which one of the following about twisting is NOT TRUE?

A. Twisting is strongly prohibited in the insurance industryB. Twisting is against the code of ethicsC. Twisting is permitted if agreed by the policyholderD. Twisting is allowed between agents

5. Before a contract of insurance is sold to a consumer, the life insurance agentshould undertake the following EXCEPT one:

A. explain all the essential provisions of the contract, or contracts, which heis recommending so as to ensure that as far as possible the prospectivepolicyholder understands what he is committing himself to

B. draw attention to the long-term nature of the policy and to the consequenteffects of early discontinuance and surrender of the policy

C. attempt to persuade a prospective policyholder to cancel anyexisting policies

D. explain the owner-benefits of the plan and its riders

Pce set a

Economy & Finance

risk insurance

insurance risk

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pure risk

following risk

speculative risk

assessment of risk

risk management