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PCE A & C

SET C
ENGLISH
AGENCY TRAINING & DEVELOPMENT DEPT.
AIA CO. LTD

1.

Which of the following is correct?


A.
B.
C.
D.

2.

What is the meaning of concealment?


A.
B.
C.
D.

3.

An agent inculcates the discipline of saving amongst the public


An agent falsifies claims in order for claimants to obtain money
An agent brings financial relief in the event of property loss
An agent brings financial relief to grieving dependents of the insured who
may meet an untimely death

The primary function of insurance is ____________


A.
B.
C.
D.

6.

a mutual company
a proprietary company
a co-operative company
None of the above

Which of the following is NOT a role of an insurance agent?


A.
B.
C.
D.

5.

Unable to perform the agreed performance


One party becomes insane
Failure to disclose material facts
The principle of subrogation

An insurance company owned by shareholders is called:


A.
B.
C.
D.

4.

Speculative risk is always catastrophic in nature


Pure risk is uninsurable
There is a gain in speculative risk
Speculative risk is uninsurable

to provide a sound capital


to provide employment
to compensate the unfortunate few from the many insureds
to provide social service

Among the following, which is NOT a characteristic of an insurable risk?


A.
B.
C.
D.

Large number of similar risk


Reasonable premium
Insurable interest
Against public policy

7.

The principle of contribution stipulates that when two or more policies covering for
the same risk, the insured ________
A.
B.
C.
D.

8.

What do you understand when the organization of a company is said to be decentralized?


A.
B.
C.
D.

9.

By offering rates of discount to those who take such measures


By loading the premium of those who take such measures
By having more agents
All of the above

The condition that increases the chance of loss is known as:


A.
B.
C.
D.

11.

When the preparation of policies and renewals & etc. is being carried out in the
head office
When only the preparation of policies and renewals of policies are carried out in
the branches concerned
When the company has no branches
When the underwriting, claims ad servicing of the branch business are handled
at the respective branches up to a pre-arranged limit

How do insurers encourage loss reduction and prevention?


A.
B.
C.
D.

10.

can claim under one policy


cannot make any claim
must claim under all policies, recovering a ratable proportion from each insurer
None of the above

hazard
loss
peril
risk

A burglar who has a personal accident policy suffers injury during a burglary job.
The insurance company is not liable to pay for the claim because:
A.
B.
C.
D.

it is a self-inflicted injury
the risk is of illegal nature
the risk is expected
he attempted suicide

12.

The Takaful Act 1984 provides for the establishment of the ___________ whose function
is to advise the Takaful company on its operation in order to ensure that it does not
involve itself in any element which is not approved by the Islamic Religion Law.
A.
B.
C.
D.

13.

What is the meaning of consensus ad idem?


A.
B.
C.
D.

14.

Takaful Supervisory Council


PIAM Supervisory Council
Syariah Supervisory Council
LIAM Supervisory Council

Of the same mind


Disagreement
Meeting of the parties to contract
Uberrima fides

Which of the following is an important provision of the Insurance Act 1996?


A.
B.
C.
D.

Registration of insurers
Solvency of the insurer
Compulsory deposit by the insurer
All of the above

15.

Which of the following association of bureau provide for compassionate payment or


allowance to person(s) injured or to dependant(s) of person(s) killed through the use of
motor vehicle?
A.
PIAM
B.
MII
C. MIB
D. None of the above

16.

In life insurance, insurable interest must exist ____________


A.
B.
C.
D.

17.

at the time of loss


at the time of the insurance contract exist
at the inception of the contract and the time of loss
during the life time of the policy

If an agent acts beyond his authority, a principal may subsequently _________


the act and make it valid.
A.

ratify

B.
C.
D.
18.

Which of the following is a privilege in the life insurance contract?


A.
B.
C.
D.

19.

annually
quarterly
monthly
any of the above

Maturity benefits are made up of the _________


A.
B.
C.
D.

23.

rebating
twisting
misrepresentation
underwriting

Level premium can be paid __________


A.
B.
C.
D.

22.

amount of premium sufficient to pay total claims, as and when they arise
gross premium less expense
premium charged on riders attached to a basic policy
premium charged to the policyholder

Mr. Lee was working with Insurance company A before he changed to Insurance company B.
He then brought his customers over to company B by asking them to discontinue their
existing policies with company A. This situation is called ___________
A.
B.
C.
D.

21.

Incontestability clause
Days of grace
Suicide clause
Assignment

The net premium in life insurance is the _________


A.
B.
C.
D.

20.

rectify
notify
dismiss

sum assured plus bonus


sum assured plus disability benefits
sum assured plus disability benefits and bonus
bonus plus disability benefits

Which of the following best defines 'surplus'?

A.
B.
C.
D.

24.

The 'burden of proof of death of a life assured caused by suicide' is laid on the _______
A.
B.
C.
D.

25.

RM8,003.38
RM8,003.00
RM8,600.00
RM9,938.38

What is a reversionary bonus?


A.
B.
C.
D.

28.

rate of morality
rate of mortality
rate of morbidity
rate of surviving

What is the accumulated amount of RM8,000 if the amount is invested for


three (3) years at a compounded interest rate of 7.5 percent per annum?
A.
B.
C.
D.

27.

court
claimant
certified doctor
insurance company

The chances of dying in a year or at a specific age is commonly termed as the __________
A.
B.
C.
D.

26.

Surplus is the difference between the life insurance fund


and all policy liabilities
Surplus is profit
Surplus is the difference between revenues and costs.
Surplus is input less output

Bonus usually takes the form of cash distribution and is usually contingent upon
payment of the next premium
Bonus is declared as proportion of the sum assured and the bonuses accumulated
under the same circumstances as the original sum assured
Bonus allocated is in proportion to the sum assured and the bonuses
accumulated under the policy
Bonuses are normally declared on the valuation date of the policy year
preceding that date, which is in arrears

Life insurance can be classified into three (3) main businesses. They are _______
A.
B.
C.
D.

Ordinary life, group insurance and home service insurance


Ordinary life, group insurance and home life insurance
Ordinary life, term insurance and group insurance
Ordinary life, annuity and group insurance

29.

According to the statement of philosophy, life insurance business is based on ______


A.
B.
C.
D.

30.

An insured can return a policy within _______ from receipt of the policy with a
written notice. The insurer will then have to refund the premium.
A.
B.
C.
D.

31.

32.

33.

The philosophy of competition


The philosophy of risk sharing
The philosophy of saving lives
The philosophy of risk retention

15 weeks
5 days
15 days
30 days

The three (3) basic insurance policies are ________


i
ii
iii
iv
v

group policy
whole life policy
endowment policy
term policy
home-service policy

A.
B.
C.
D.

i, ii, iii
i, ii, iv
ii, iii, iv
ii, iii, v

The three (3) common methods that value the assets of a life office are _______
i
ii
iii
iv

cost price
book value
actuarial valuation
market value

A.
B.
C.
D.

i, ii, iii
i, iii, iv
ii, iii, iv
i, ii, iv

Which of the following factors determine the life premium rates?

A.
B.
C.
D.

34.

The difference between gross premium and net premium is due to________
A.
B.
C.
D.

35.

RM100,000 and the policy shall be terminated


RM100,000 and the policy shall continue for another 30 years
nothing and the policy shall be terminated
nothing and the policy shall continue for another 30 years

Mr. and Mrs. Chong both aged 70 & 60 respectively received income payment from
an annuity company. The income will be paid as long as either one annuitant is alive.
The income payment shall cease upon death of the last annuitant.
What type of annuity contract has the couple acquired?
A.
B.
C.
D.

38.

contract of indemnity
valued contract
contract of adhesion
unvalued contract

Mr. Chong, 25 years old, has effected a term policy of RM100,000 for 30 years. When
he reached 55 years old, he will receive__________
A.
B.
C.
D.

37.

rate of morality
rate of interest
expenses loading
commission

En. Kamaruddin purchased a RM100,000 Whole Life non-participating policy on


his own life. The agreed sum insured of RM100,000 will be payable in the event of
death of En.Kamaruddin. This type of contract is known as ____________
A.
B.
C.
D.

36.

Mortality, interest, expenses, bonus loading


Mortality, interest, income tax, commission
Mortality,, interest, expenses, commission
Gender, interest, expenses, bonus loading

Deferred annuity
Single life annuity
Last survivor annuity
Joint life annuity

A life proposed with hazardous occupation is said to have___________


A.
B.
C.

an increasing extra mortality


a level mortality
a decreasing extra mortality

D.

39.

__________ is simply an additional clause to the policy or variation of one


or more of the conditions.
A.
B.
C.
D.

40.

August 8
August 10
August 17
April 5

Which of the following policies is not eligible for income tax relief in respect
of the premium paid?
A.
B.
C.
D.

43.

charges an extra premium


offers an alternate form of contract
imposes a debt or lien
provides a premium discount

On March 1, Mr. Chong submitted a proposal form to an insurer. A letter


of acceptance was then issued on March 8 and subsequently was delivered to
Mr. Chong on March 10. Mr. Chong paid the initial premium on March 17.
A life insurance policy was issued and delivered to Mr. Chong on April 5.
Mr. Chong life insurance policy became effective on_______
A.
B.
C.
D.

42.

An endorsement
A declaration
A letter of extension
A letter of acceptance

Insurers do not ___________ when dealing with sub-standard lives.


A.
B.
C.
D.

41.

none of the above

Whole life insurance


Endowment insurance
Personal accident insurance
Term insurance

Section 44(A) of the Insurance Act 1963/96 states that any act performed by an agent
is deemed to be of knowledge to the insurer unless:
A.
B.
C.
D.

He is an agent of the insurer


There is a collusion or connivance between the agent and the proposer
He is soliciting new business
He acts on behalf of the insurer

44.

Which of the following is not a provision of the Insurance Act?


A.
B.
C.
D.

45.

What is a risk?
A.
B.
C.
D.

46.

B.
C.
D.

C.
D.

The charge for covering the cost of mortality alone is called Risk Premium
Net Premium is the charge computed after taking into account of
mortality & interest
Net Premium provides for expenses
Gross premium is derived from taking net premium add loading for expenses
add loading for profits & contingencies

Section 161 of the Insurance Act 1996 provides that where a claim upon death of
the policyowner is not paid within________days of receipt of intimation of the claim
the insurer should pay a minimum compound of _________per annum
A.
B.
C.
D.

49

A proposal form consists of a series of questions drawn up by the insurer,


requesting certain information that will enable them to assess the proposed risk.
The issuance of a blank proposal form constitutes an offer by the insurer
An applicant is not required to give material information in the proposal form
A life insurance contract comes into force when a proposal is submitted

Which of the following is not false?


A.
B.

48

Causes of losses
Uncertainty of losses
Occurrence of losses
Carelessness in decision making

Which of the following about the proposal form is true?


A.

47.

All insurers must be registered


Every insurer is required to maintain a specific solvency margins at all time
BNM must approve all training programs of the insurance companies
Only fit and proper persons can be appointed as the Managing Director,
Chief Executive or Principal Officer of an insurance company

90 days, 7%
60 days, 3%
60 days, 4%
30days, 3.5%

The following conditions apply for contribution. Which of the following is/are true?
i

At minimum, one policy of indemnity must be in force

50.

51.

ii
iii
iv

The policies must cover a common interest


The policies must cover a common peril which gives rise to the loss
The loss involves a common subject matter covered by the policies

A.
B.
C.
D.

i, ii, iii
i, iii, iv
ii, iii, iv
i, ii, iv

In consumer buying decision process, studies conducted in the U.S.A indicate


that the most important factors for the selection of a particular insurer are as
follow. Rank the following from the most important.
i
ii
iii

Quality of coverage and services provided


Policy benefits
Reputation of the insurer

A.
B.
C.
D.

i, ii, iii
ii, iii, i
iii, ii, i
iii, i , ii

When a proposal is submitted to the insurance company without the initial premium and
the proposal is approved by the company, a letter of acceptance is issued to the
proposer requesting him to make the necessary payment of premium,
often within ________ days
A.
B.
C.
D.

52.

In cases where there is an extra loading on the proposal, a letter indicating the
loading is issued to the proposer as a___________
A.
B.
C.
D.

53

15
30
60
90

offer-counter
counter-offer
off-counter
one off-counter

The purpose of back dating the commencement date of a policy to an earlier date is to
benefit the proposer for paying the premium applicable to a lower age. Usually, this
back-dating exercise is up to a maximum of ________months

A.
B.
C.
D.
54.

3
6
8
9

Calculate the age for Esther should the following insurer adopt different bases for arriving at
the age of an individual in the following order.
Insurance co. A:
Age last birthday
Insurance co. B :
Age next birthday
Insurance co. C:
Age nearest birthday
Proposer's date of birth:
21 October 1972
Date of the proposal submitted: 2 Dec 2003
A.
B.
C.
D.

55.

56.

57.

31, 32, 31
31, 31, 32
32, 31, 32
32, 32, 31

The term life insurance used in the Code of Ethics and Conduct covers all types of:
i
ii
iii
iv
v

Home-Service
Ordinary Life Insurance
Annuities
Pension Contracts & Personal Accidents
Permanent Health Insurance

A.
B.
C.
D.

i, ii, iii, iv
i, ii, iii, v
ii, iii, iv, v
All of the above

What are the risks that are covered by life insurance?


i
ii
iii
iv

Death or injury to a person by an accident


Premature death
Continuous stream of income during retirement
Sickness or Disability

A.
B.
C.
D.

i, ii, iii
i, ii, iv
ii, iii, iv
All of the above

What are the major objectives of LIAM?

i
ii
iii
iv

A.
B.
C.
D.

58.

ii
iii
iv

A.
B.
C.
D.

Group insurance coverage may be extended to cover employee's


spouse and illegitimate children
The lives assured must be in the regular employment of the assured
employer
Lives assured consists of full-time and casual employees
The contract of group insurance is solely between the insurer and the
insured
i, ii, iii
i, iii, iv
ii, iii, iv
All of the above

The Takaful company provides the following types of family takaful plan for
participation by both individuals and corporate bodies except:
A.
B.
C.
D.

60.

i, ii, iii
ii, iii, iv
i, iii, iv
All of the above

Which of the following statements are not true regarding Group Insurance?
i

59.

To promote and represent the interests of the member companies and


the life insurance companies
To make rules, regulations and tariffs and by-laws in consultation with
the Director General of Insurance (DGI) for implementation by the members
To render where possible, to member companies such advice and assistance as may
be required
To circulate information likely to be of interest to member companies,
to collect, collate and publish statistics and other information relating to
life insurance

Takaful Mortgage Plans


Hospitalization Benefit
Health and Medical Takaful Plan
Takaful Plans for Education

The consequences of breaching the principle of Uberrima Fides leads to:


A.
B.
C.
D.

a void contract
a voidable contract
an unenforceable contract
no contract