E-Learning PCE Question Bank ENG - Oct.2014

Table of Content
Part A (1) - The Basic Of Insurance

Chapter 1 : Introduction to Insurance
Chapter 2 : Nature of Risk and Risk Management
Chapter 3 : The Basic Principles of Insurance
And An Introduction to Takaful
Chapter 4 : The Insurance Market
Chapter 5 : Consumer Protection And Statutory Regulations
Chpater 6 : The Insurance Contract
Chapter 7 : Law of Agency
Chapter 8 : Insurance Marketing and After-Sales Services
4
9
13
17
21
25
29
33
Part A (2) - Medical and Health Insurance

Chapter 9 : Introduction to Medical and Health Insurance
Chapter 10 : Types of Medical and Health Insurance
Chapter 11 : Underwriting Medical and Health Insurance
Chapter 12 : Policy Administration
Chapter 13 : Medical and Health Insurance Claims
38
41
44
48
52
__________________________________________________________________________________________
Developed by Learning & Development Department, Life Sales Division. Version 2.1, July 2010.
Table of Content
Part C - Life Insurance
Chapter 21 : Life Insurance Preliminaries
Chapter 22 : Life Insurance Products and Family Takaful
Business
Chapter 23 : Policy Conditions
Chapter 24 : Practice of Life Insurance: New Business Selection of Lives and Other Issues
Chapter 25 : Practice of Life Insurance: New Business Premium Rating
Chpater 26 : Practice of Life Insurance Monitoring The Insurance Fund
Chpater 27 : Practice of Life Insurance - Policy Documents
Chpater 28 : Practice of Life Insurance - Claims
Chapter 29 : Life Insurance - Some Mathematics
Chapter 30 : Practice of Life Insurance Ethics and Code of Conduct
56
60
68
74
78
82
86
90
94
98
Mock Exam
102
Sample Answers
122
__________________________________________________________________________________________
Part (A1) - The Basics Of Insurance
__________________________________________________________________________________________
Chapter 1 - Introduction to Insurance
Chapter Overview
Important of Insurance
How Insurance Works
What Is Insurance?
Functions of Insurance?
Classes of Insurance
Historical Aspects of Insurance
The Role of an Insurance Agent
__________________________________________________________________________________________
Chapter 1: Introduction To Insurance
1. As we know, misfortune can arise in many forms. Insurance can be defined as an

arrangement that can be made to overcome or reduce the consequences of
misfortune that may befall any one person. And, stated below are all the
misfortune covered by insurance, EXCEPT:I- Premature Death
II- Sickness or Disability
III- Lost or damage to property
IV- Continuous stream of income during retirement
A)
B)
C)
D)
III
I & II
All of the above
None of the above
2. Which of the following(s) is/are correct?

I- The insurance service involves payment of contracted benefits or
compensation to the insured or a third party against unforeseeable losses.
II- The insurance service only pays the payment of contracted benefits or
compensation to the third party against unforeseeable losses.
III- Insurance is an organization that seeks to provide protection against financial
loss caused by non-fortuitous events.
IV- The law of large number states that as the number of loss exposures
increases, the predicted loss tends to approach the actual loss.
A)
B)
C)
D)
I only
II & IV
I & IV
II, III & IV
3. Which of the following statement is true about the law of large numbers?
A) The loss exposures must be dependent, different loss exposures, and a
random or chance occurrence of loss.
B) The loss exposures must be independent, similar loss exposures, and a
random or chance occurrence of loss.
C) The loss exposures must be independent, different loss exposures, and
deliberately occurrence of loss.
D) The loss exposures must be dependent, similar loss exposures, and
deliberately occurrence of loss.
__________________________________________________________________________________________
4. Insurance, as an organization, seeks to provide protection against financial loss

caused by fortuitous events. Therefore, its essential features include:I- It is an economic institution based on the principle of co-operation.
II- It is a transfer of risk by an individual to the insurance company.
III- Its objective is to accumulate funds to pay for claims as a result of the
operation of the specific risks.
IV- Only certain risks can be insured and can be confidently estimated with a
certain degree of accuracy.
A)
B)
C)
D)
I, III & IV
I, II & III
II , III & IV
All of the above
5. The secondary functions of insurance will include all the following, EXCEPT:A)
B)
C)
D)
Reducing losses.
Means of savings.
Risk transfer mechanism.
Cost Stabilization.
6. In 1762, the Equitable Assurance for the first time fixed premium rates based on
modern lines adopting the __________.
A)
B)
C)
D)
increasing premium system

variable premium system
decreasing premium system
level premium system
7. Which of the following is NOT true about the function of insurance?

I- Equitable spread of the financial losses of the few who are insured among the
many insured.
II- Removes fears/worries to establish confidence and enables the forward
planning of economic activities.
III- Reduces losses through actions and recommendations in rating, survey,
inspections and salvage
IV- Provides employment opportunities such as underwriting, investment, and
actuarial dept.
A)
B)
C)
D)
I, II and III
II, III and IV
I, III and IV
None of the above
__________________________________________________________________________________________
8. Which ONE of the following facts is NOT true about both life and general
insurance?
A) Life insurance policies are subject to the principle indemnity whereas general
insurance policies are not.
B) General insurance policies are subject to the principle of indemnity whereas
life insurance policies are not.
C) Life insurance policies and general insurance policies will both pay when a
person suffers permanent disablement due to an accident.
D) Life assurance is a long-term contract whereas general insurance is a yearly
renewable contract.
9. Life insurance can be defined as a contract, which pays an agreed sum of money
upon a contingency event. Therefore, its contracts can be arranged to provide
cover against the following forms of risks, except
I- Sickness or disability.
II- Personal bank loan.
III- Loss of a continuous stream of income during retirement (i.e. old age)
IV- Premature death.
A)
B)
C)
D)
II & III
II
III
None of the above
10. To be an effective agent, one must be able to recognize the insuring needs of the
clients. What is/are the role(s) of an insurance agent?
I- Bring financial relief in the event of property loss.
II- Bring financial relief to aggrieved dependents of insured people who may
meet with an untimely death.
III- Inculcate the discipline of savings amongst the working population.
IV- Provide other forms of insurance related services to the public.
A)
B)
C)
D)
III only
I & II
III & IV
All of the above
11. The operation of the principle of the law of large numbers will ensure_________.
A)
B)
C)
D)
better prediction of future losses.

better understanding of customers needs.
A and B.
None of the above.
__________________________________________________________________________________________
12. What is a loss-sharing arrangement?

A) Individual losses are shared by a group of people.
B) Individual losses are shared by members of a group facing similar risk
exposures.
C) Individual losses are shared by members of the same society.
D) Individual losses are shared by certain companies which face similar risk
exposures.
__________________________________________________________________________________________
Chapter 2 - Nature of Risk and Risk Management
Chapter Overview
Concepts of Risk
Related Concepts
Basic Categories of Risk
Methods of Handling Risk
Risk Management
Characteristics of Insurable Risk
__________________________________________________________________________________________
Chapter 2: Nature of Risk and Risk Management
1. We live in a world where we are continually exposed to perils. When perils occur,
there usually will be a cause of loss and invariably lead to financial losses. Below
are some examples of peril and the concepts of losses, EXCEPT:I- Illness Future Earnings.
II- Illness Medical expenses.
III- Negligence Legal Expenses.
IV- Negligence Courts Award.
A)
B)
C)
D)
I & IV
II & III
IV
Non of the above
2. Which of the following is NOT a pure risk?

A)
B)
C)
D)
Theft
Flood
Earthquake
Operating a kindergarten
3. The risk management process involves the following steps :A)

B)
C)
D)
Identification Evaluation Selection Implementation Control.

Identification Selection Evaluation Control Implementation.
Selection Identification Evaluation Implementation Control.
Identification Evaluation Implementation Selection Control.
4. Damages arise from earthquake, flood and loss arising out of war will affect the
entire economy or large numbers of persons/ groups within the economy.
Referring to the above statement, what type of risks are they referred to?
A)
B)
C)
D)
Speculative Risks.
Fundamental Risks.
Particular Risks.
Physical Risks.
5. Which of the following is CORRECT?

A) A catastrophic loss arises when a very small number of risks incur losses at
the same time or when one risk results in a little loss.
B) A fortuitous loss is one that is intentionally brought by the insured.
C) Insurance is concerned only with pure risks because in pure risks one will
suffer a loss or incur no loss, thus there is no possibility of profiting.
D) Risk transfer is the only way in risk management.
__________________________________________________________________________________________
10
6. Which of the following is a moral hazard?

A)
B)
C)
D)
A physical characteristic that increases the outcome of a loss.

A character defect in a group of people that increases the outcome of a loss.
A character defect in an individual that increases the outcome of a loss.
A social illness that increases the outcome of a loss.
7. Which of the following is NOT a loss prevention and loss reduction technique in
life and health insurance?
A)
B)
C)
D)
Training employee in first aid.

Avoiding cigarette smoking.
Insuring a life for an amount in line with his financial standing in life.
Installing grills in windows of the house in which the life assured is living.
8. What are the main characteristics of insurable risk?

I- It must involve losses that can be measured financially.
II- The loss must be fortuitous, which is accidental and unintentional.
III- It must be concerned with only pure risks.
IV- The premium must be slightly higher in relation to potential risk.
A)
B)
C)
D)
I, II and III
II, III and IV
I, III and IV
All of the above
9. Which of the following is NOT a loss prevention and loss reduction technique in
fire insurance?
A)
B)
C)
D)
Training employees in fire prevention.

Disposal of waste material in a proper manner and good housekeeping.
Use of non-combustible materials in building construction.
Installation of a burglar alarm system.
10. When a person stops playing football because he does not want to get hurt, the
risk control method used is known as_____________.
A)
B)
C)
D)
Risk retention
Risk transfer
Risk avoidance
Risk prevention
__________________________________________________________________________________________
11
11. A condition that increases the chance of loss is a definition of _____________.

A)
B)
C)
D)
Risk
Loss
Peril
Hazard
12. Which of the following is/are NOT true about Risk Measurement?
A) Empirical probability is determined on the basis of historical data.
B) Priori probability will be applied when the total numbers of possible events are
known.
C) Judgmental probability will be applied when there is a lack of historical data or
credible statistics.
D) None of the above.
__________________________________________________________________________________________
12
Chpater 3 - The Basic Principles of Insurance And An

Introduction to Takaful
An Introduction to Takaful
Chapter Overview
Principles of Insurance
Takaful
Shariah Supervisory Council
Takaful and Insurance
Principles of Takaful Operation
Aspects of Takaful Operation
Types of Takaful Business
__________________________________________________________________________________________
13
Chapter 3: The Basic Principles of Insurance And An Introduction to Takaful
1. Insurable interest is a basic principle of insurance that requires the person

purchasing insurance to have an interest in the insured item or life insured in that
the loss or damage to the item or life insured would result in a financial loss to the
person. Which of the following is TRUE about the insurable interest?
A) The legal right to insure arising from the lifetime interest, which an insured has
in a subject matter of insurance.
B) The legal right to insure arising from the legitimate financial interest, which an
insured has in a subject matter of insurance.
C) Insurable interest is the subject matter of the insurance contract.
D) The transfer of all insurable rights from one party to another new party.
2. Utmost good faith is one of the basic principles of insurance that essentially
requires the policyholder to disclose all the material facts to the insurance
company when proposing a policy. This is in view that the insurance company
normally takes on the risk by relying on the information given by the policy owner
in the proposal form. And, the principle of utmost good faith is breached when:I- A proposer failed to disclose a matter that the insurer knows or in the ordinary
course of his business ought to know.
II- A proposer who knows or is reasonably expected to know a material fact fails
to disclose the material fact.
III- A proposer who knows or is reasonably expected to know a material fact
misrepresents the material fact.
IV- The proposer failed to disclose a common knowledge.
A)
B)
C)
D)
II & III
I, II & III
I, II & IV
III only
3. The principle of subrogation provides that an insurer who has indemnified an

insured for a loss may exercise the insureds rights to claim from the third party in
respect of the loss. Which of the following ways may arise in Subrogation:I- Arising out of tort
II- Arising out of statute
III- Arising out of the subject matter
IV- Arising out of contract
A)
B)
C)
D)
I & III only

I & IV
II, III & IV
All of the above
__________________________________________________________________________________________
14
4. Indemnity can be defined as a restoration of the claimant to the same financial

position immediately before a loss by payment, repair or replacement. The
objective of the principle of indemnity is to ensure that the insured _________.
A)
B)
C)
D)
can get more than his loss which is stated in the policy.
will not get less than his loss after being indemnified.
will be indemnified with his actual loss in accordance to the policy.
after being indemnified, shall not be better off than before the loss.
5. Contribution will apply in the following conditions:

I- The policies must cover a specific peril which gives rise to the loss.
II- The policies must cover a specific interest.
III- The loss involves a common subject.
IV- Two or more policies of indemnity must be in force.
A)
B)
C)
D)
I and II
II and IV
III and IV
I, II and IV
6. The life assured is greatly depressed and throws himself over the balcony,
resulting in his death. This happens within the 1st policy year. As a result of the
exclusion in the suicide clause, the insurer is not liable for the death by suicide.
This example describes _____.
A)
B)
C)
D)
excluded perils.
uninsured perils.
unknown perils.
exception perils.
7. In case of breach of utmost good faith, the aggrieved party can______________.

A)
B)
C)
D)
sue for damages

waive the breach
void the contract
request for compensation
8. Takaful is a protection plan based on Shariah principles. It can be divided into

family takaful business and general takaful business. And, it is a scheme that
_______________.
A) upholds the principles of shared responsibility, mutual help and co-operation.
B) upholds the principles of non-profit sharing responsibility, mutual help and cooperation.
C) upholds the principles of seller responsibility, mutual help and co-operation.
D) upholds the principles of individual interests, responsibility and wealth.
__________________________________________________________________________________________
15
9. Mr. Lau decided to transfer the rights and liabilities of his life policy to Mr. Lee,
who is his brother-in-law. Mr.Lee has then the rights, either absolutely or
conditionally on Mr.Laus policy after being assigned by Mr.Lau. Who are the
assignee and the assignor in this case?
A)
B)
C)
D)
Mr.Lee and Mr.Lau are both the assignee.

Mr.Lees wife is the assignee; Mr.Lee is the assignor.
Mr.Lau is the assignee; Mr.Lee is the assignor.
Mr.Lee is the assignee; Mr.Lau is the assignor.
10. Which of the following is TRUE?

A) Tabarru means donation, gift or contribution and Mudharabah can also be
named Trustee Profit-Sharing.
B) Tabarru means compensation, gift or contribution and Mudharabah can also
be named Entrepreneur Profit-Sharing.
C) Tabarru means donation, gift or contribution and Mudharabah can also be
named Entrepreneur Profit-Sharing.
D) Tabarru means compensation, gift or contribution and Mudharabah can also
be named Trustee Profit-Sharing.
11. For a life policy to be effective, insurable interest must be present ____________.
A)
B)
C)
D)
When claim occurs.

Upon maturity of the policy.
When the proposal is submitted to the underwriter for issuance.
Both A and C.
12. Concept of Takaful is a scheme that upholds the principles of ______________.

A)
B)
C)
D)
Not helping the participant who suffered an unexpected loss

Shared responsibility, mutual help and cooperation
Individual responsibility and self venture
Contractual agreement between two parties not to share the profit
13. The definition of Material fact is_________.

A) A fact which will influence a prudent underwriter in deciding whether to accept
the risk.
B) A fact which was known by the insurer after negotiation.
C) A fact which was known by both the insurer and the insured.
D) All of the above.
__________________________________________________________________________________________
16
Chpater 4 - The Insurance Market
Chapter Overview
The Insurance Market
Other Market Components
Organization Structure
Centralization Versus Decentralization
Insurance Supervisory Authority and
Mandatory Associations
Insurance Mediation Bureaus
Other Associations
Market Services
Insurance Educational Institutions
__________________________________________________________________________________________
17
Chapter 4: The Insurance Market
1. Which of the following is NOT true?

A) Buyers of insurance include individual persons, small business enterprises
and public enterprises.
B) Seller can be classified into 3 types, which are Life Insurer, Composite Insurer
and General Insurer.
C) Intermediaries or middleman comprised of insurance agents and brokers.
Their main function is to match the needs of buyers with the insurance
product offered by sellers.
D) Service specialists include loss assessor, reinsurer, lecturer and engineer.
2. What are the differences between insurance agents and insurance brokers?
I- Insurance agents represent an insurance company whereas insurance broker
acts on behalf of the insured.
II- Insurance agent is bound by the agency agreement whereas insurance broker
is licensed by Director General of Insurance (DGI).
III- Insurance agent is remunerated through payment of commission by the
insurer whereas insurance broker is through payment of brokerage.
IV- Insurance agent sells life insurance policies whereas insurance broker sells
general insurance policies.
A)
B)
C)
D)
I, II & III
I, III & IV
I, II & IV
All of the above
3. An organization that is not related to life insurance is ___________.

A)
B)
C)
D)
ASM
PIAM
NAMLIFA
LIAM
4. Which of the following statements are TRUE of loss assessors?

I- They are generally employed by the insured to assess the extent of damage
or loss settlement.
II- They frequently assist the insured in the preparation and negotiation of the
claim.
III- They carry on the adjusting business of investigating the cause and
circumstances of a loss and ascertaining the quantum of the loss either for the
insurer or the policyowner or both.
IV- They are independent parties appointed usually by an insurer when a loss
occurs.
A) I & II
B) III & IV
C) II & III
__________________________________________________________________________________________
18
5. Insurers will share the burden of paying claims, particularly those involving large
amounts with ___________.
A)
B)
C)
D)
loss adjuster
loss assessor
actuary
reinsurers
6. As per below which of the following are the advantages of decentralization?

I- Better position in satisfying customers.
II- Prompt services can be rendered to customers.
III- Branches are granted authority to make decision.
IV- Duplication of resources, particularly when each branch performs all the basic
functions.
A)
B)
C)
D)
I, II & III
II , III & IV
I, II & IV
I, III & IV
7. Which of the following is NOT true about their objective?

A) PIAM - to promote the establishment of a sound insurance structure in
Malaysia through co-operation and consultation with BNM.
B) LIAM - to promote public understanding and appreciation for life insurance &
to improve the image of life insurance agents through self-regulation.
C) AMLA - to monitor and regulate its members to adhere to all articles and rules
of the association and to comply with the provisions of all laws in Malaysia,
especially in insurance act.
D) NAMLIFA - to promoting monetary and financial system, stability and fostering
a sound and progressive financial sector to achieve sustained economic
growth for the benefit of the nation.
8. Which of the following is NOT true about their departments function?
A) Actuarial - design and pricing of news products, calculation of surrender
values and paid-up policy value.
B) EDP - serves others by establishing procedures and programs that enable
them to utilize computer in their work.
C) Account - to invest all available funds in a manner which ensures all
investments yield sufficient returns, satisfy the companys liquidity and
security.
D) Agency - identification of field officers and recruitment of sales force.
__________________________________________________________________________________________
19
9. Which one of the following is NOT the main objective of the Malaysian Insurance
Institute (MII)?
A) To provide and maintain a central organisation for promotion of efficiency,
progress and development in the insurance industry.
B) To establish a library for the institute.
C) To undertake research in the fields of insurance and related subjects.
D) To promote and represent the interests of the member companies and the
industry.
10. Which one of the following is NOT the objective of the Malaysian Reinsurance
Berhad (MRB)?
A) to diversify the existing business in order to achieve a better portfolio mix and
ensure sustainable growth.
B) to continuously explore innovative ways of doing business by taking
advantage of the latest in Information Technology.
C) to make rules, regulations and by-laws in accordance with Articles in
consultation with Bank Negara Malaysia.
D) to increase employment and training opportunities, particularly for bumiputera.
11. Which one of the following is NOT the objective of the Life Insurance Association
of Malaysia (LIAM)?
A) to improve the image of the life insurance industry through self-regulation.
B) to enhance the professionalism of staff and agents through continuous
training and education.
C) to support the regulatory authorities in developing a strong and healthy
industry.
12. Which one of the following is NOT the objective of the Persatuan Insurance Am
Malaysia (PIAM)?
A) to make rules, regulations and by-laws in accordance with these Articles in
consultation with Bank Negara Malaysia.
B) to take note of events, statements and expressions of opinion affecting
members, to advice and represent their interests by expression of views
thereon on behalf as may be deemed necessary and expedient.
C) to support the regulatory authorities in developing a strong and healthy
industry.
D) None of the above
__________________________________________________________________________________________
20
Chapter 5 - Consumer Protection And Statutory

Regulations
Chapter Overview
Insurance Industry and the Consumer
Self-Regulation
Statutory Regulation
The Companies Act, 1965
__________________________________________________________________________________________
21
Chapter 5: Consumer Protection And Statutory Regulations
1. According to the International Consumer Movement, Consumer rights include:I- Right to satisfaction
II- Right to information
III- Right to be heard
IV- Right to a safe and clean environment
A)
B)
C)
D)
I, II & IV
II, III & IV
I, II & III
All of the above
2. Below are the advantages of self-regulation, EXCEPT:A)

B)
C)
D)
It helps to instill self-discipline among insurance companies.

Voluntary codes of practice do not have the power of law.
It avoids the need to introduce legislation to regulate the industry.
When laws are passed, bureaucratic back-up will be required to enforce them.
3. Under Insurance Act 1996, the policy owner is allow to?

A)
B)
C)
D)
Return a general policy within 15 days after its delivery.

Return a general policy within 30 days after its delivery.
Return a life policy within 15 days after its delivery.
Return a life policy within 30 days after its delivery.
4. What is the main purpose of having regulation?

I- Protection of public interest
II- Promotion of fairness and equity
III- Management of licensee
IV- Playing a development role
A)
B)
C)
D)
I,II & III

II, III & IV
I,II & IV
I,III & IV
5. A local insurer is required to have a minimum paid-up capital of ________.

A)
B)
C)
D)
RM 10 million
RM 50 million
RM 100 million
RM 150 million
__________________________________________________________________________________________
22
6. The minimum solvency margin (which is the surplus of assets over liabilities for
each class of business is ___________.
A)
B)
C)
D)
RM 10 million
RM 50 million
RM 100 million
RM 150 million
7. In simple terms, the solvency margin can be defined as:

A)
B)
C)
D)
claims over first year collection

gross premium over net premium
liabilities over assets
surplus assets over liabilities
8. BNM currently does NOT license___________.

A)
B)
C)
D)
agents
brokers
loss adjusters
insurance companies
9. According to the Company Act, 1965, insurance companies are required to fulfill
the following, EXCEPT:
A)
B)
C)
D)
Preparation and submission of annual accounts

Methods of valuing assets and the provision for depreciation
Restriction on investment instrument
Method of valuing liabilities
10. A takaful insurance broker is required to maintain a minimum paid-up capital of

________.
A)
B)
C)
D)
RM 100,000
RM 300,000
RM 500,000
RM 600,000
11. The Code of Ethics and Conducts of LIAM deals with life insurance selling and
_______________.
A)
B)
C)
D)
life insurance annual report

life insurance practice
life insurance controlling law
life insurance profit sharing law
__________________________________________________________________________________________
23
12. Self-regulation has been introduced by the insurance industry with the objectives
to ____________.
A)
B)
C)
D)
instill discipline and promote healthy competition in the industry.

provide some element of protection to insurance agents.
increase the profit of the industry.
A and B.
__________________________________________________________________________________________
24
Chapter 6 - The Insurance Contract
Chapter Overview
Law of Contract
__________________________________________________________________________________________
25
Chapter 6: The Insurance Contract
1. Contract can be defined as _______________.

A)
B)
C)
D)
a non-legally binding agreement made between two or more parties

a legally binding agreement made between two or more parties
a commercial agreement, which has essential commercial requirements
a commercial agreement, which is legally binding between buyer and seller
2. Certain essential requirements have to be satisfied before the insurance

agreement can be legally binding. These essential requirements are:I- offer and acceptance
II- intention to create legal relationship
III- consent - consensus ad idem
IV- consideration
A)
B)
C)
D)
I, II & III
I, II & IV
I & IV
All of the above
3. Part XIII Section 153 of the Insurance Act 1996 provides that a minor who has
attained the age of _____ may affect a life policy on his own life.
A)
B)
C)
D)
15
19
18
16
4. In some instances, the insurer may not accept a proposal on its original terms but
may offer to provide insurance on different terms. This is called _____________.
A)
B)
C)
D)
offer and acceptance

counter offer from the insurer
counter acceptance
counter offer from the insured
5. In general and life insurance contracts, the insureds consideration is _________.

A)
B)
C)
D)
to pay or promise to pay premium

to promise to accept the policy
to submit the proposal form
to promise to accept the loss
__________________________________________________________________________________________
26
6. If the agreement is to commit robbery and share the loot, or an insurance policy
effected on a ship engaged in smuggling or a person insuring on the life of
another for wagering; these contracts are:
A)
B)
C)
D)
Void contracts
Voidable contracts
Unenforceable contracts
illegal contracts
7. A general contract may be described as _________.

I- An agreement made between two or more persons.
II- Enforceable by law.
III- An evidence of business.
A)
B)
C)
D)
I and II
I and III
II and III
All of the above
8. Section 153 of the Insurance Act 1996 provides that a minor aged __________
can effect a life policy on his own life or on the life of another in which he has an
insurable interest as well as may assign the life policy on his own life with the
written consent of his parent or guardian.
A)
B)
C)
D)
18 and above
10 to 18 years old
10 to 16 years old
Below 18 years old
9. Which of the following is NOT true about void contracts?

A)
B)
C)
D)
The law holds them to be no contracts at all, a nullity from the beginning.
They are totally invalid and are nothing more than mere agreements.
Void contracts are not enforceable in a court of law.
They are contracts which have consideration.
10. The best definition for an insurance contract would be as follows:

A) A legally binding agreement between two or more parties that can be
enforced by law.
B) A legally binding contract that is legally binding but not recognized in any way.
C) A form of agreement between two or more parties with sound frame of mind.
D) A form of agreement between the proposer and the insurer.
__________________________________________________________________________________________
27
11. Stated below are the legal requirements of insurance contracts, EXCEPT:A)
B)
C)
D)
Offer and acceptance

Consideration
Utmost Good Faith
Intention to create legal relationship
12. A life insurance policy is a contract between _________________.

A)
B)
C)
D)
insurer and insured.

insurer and beneficiary.
insurer, insured and beneficiary.
insurer, insured and agent.
__________________________________________________________________________________________
28
Chapter 7 - Law of Agency
Chapter Overview
Legal Provisions Governing the Law of Agency
Duties of an Agent
Rights of an Agent
Obligations of the Principal
Termination of Agency
Characteristics of Insurance Agents
Conclusion
__________________________________________________________________________________________
29
Chapter 7: Law of Agency
1. Which of the following is NOT true?

A) Special agent - appointed to carry out a specific act or transaction.
B) General agent - he/she will do anything for his principal within the limits of a
general authority conferred upon him.
C) Universal agent - he/she has unlimited authority, and can do anything for
his/her principal which he/she has the competency to do so.
D) Professional agent - acts within the expressed authority granted to him.
2. Which of the following(s) has/have an agency relationship?
I- Relationship between principal and agent.
II- Relationship between agent and third party.
III- Relationship between agency and third party.
IV- Relationship between principal and a third party.
A)
B)
C)
D)
I, II & III
I, III & IV
I, II & IV
II, III & IV
3. Some of the duties imposed on an agent are as follow, EXCEPT:I- To render accounts to the principal as required.
II- To delegate duties to a sub-agent without authority, expressed or implied.
III- Not to disclose confidential information obtained during the course of his
duties.
IV- Not to let his own interest conflict with his obligations to principal.
A)
B)
C)
D)
I & III
I only
I & IV
II only
4. The rights of an agent are as follow:I- The right to receive payment in the form of commission.
II- The right to perform his duties in the manner which he considers to be
appropriate.
III- Entitled to reimbursement of moneys, which he has expanded, with the
expressed authority of his principal.
IV- Right to reject any attempt by his principal to control the manner in which he
works.
A) I, II & III
B) II, III & IV
C) I, II & IV
D) All of the above
__________________________________________________________________________________________
30
5. The relationship of insurer and agent may be terminated as follows:I- By notice of revocation given by the principal to the agent.
II- By mutual agreement.
III- Notice of renunciation given to the principal by the agent.
IV- By operation of any law which renders the contract of an agent illegal.
A)
B)
C)
D)
I & II
I, II & IV
II, III & IV
All of the above
6. When an agent performs an act that is not within his/her actual authority, but
which later becomes binding on the principal because the principal agrees to
accept the act as having been done on his behalf. This is an act of __________.
A)
B)
C)
D)
ratification
clarification
authorization
certification
7. Which of the following is NOT TRUE about the authority of an agent?

I- Express Authority - Given to an agent verbally or in writing.
II- Implied Authority - Not expressed to the agent either verbally or in writing.
III- Usual Authority - When agent carries a particular trade or profession, his
expressed and implied authority carry with them an usual authority
IV- Apparent Authority - 3rd party reasonably believes that a particular person is
an agent of the principal, therefore making the principal liable for the agents
actions.
A)
B)
C)
D)
I
II
III
None of the above
8. The services of an agent are required for ______________.

A)
B)
C)
D)
the payment of premiums by the policyholders.

making a claim.
for the reinstatement or revival of policy.
all of the above.
__________________________________________________________________________________________
31
9. The relationship between the insurer and the agent may be created in the
following ways:
I- By expressed appointment.
II- By implication of the law.
III- By subsequent ratification of an unauthorized act.
IV- By statute.
A) I, II & III
B) II, III & IV
C) I, II & IV
10. Which of the following is NOT true about the Premium Warranty?
A) The insured is required to pay the premiums charged for the insurance within
60 days from the effective date of insurance cover.
B) If the premium is not paid by the 60th day, the insurance cover will be
cancelled on the 61st day.
C) The insurer shall be entitled to short period premium for the period they have
been on risk.
D) Any payment received by the appointed agent shall be deemed to be received
by the insurer.
11. Which of the following is NOT the responsibility of an agent towards principal?
A) Responsible for receiving money / premium on behalf of his principal.
B) Diligence when performing his / her work and not letting his/her own interest
conflict with his / her obligation to his/her principal.
C) Comply with his principals instructions.
D) To assure principal that claims proceed would not happen.
12. An agency may be terminated by the following act, EXCEPT:A)
B)
C)
D)
Expiration of the period stipulated in the contract of agency.

Mutual agreement.
Death of the principal or agent.
Ratification.
__________________________________________________________________________________________
32
Chpater 8 Insurance Marketing And After-Sales

Services
Chapter Overview
Sales
After-Sales Service
General Features of General Insurance
Renewal Process
Policy Register
__________________________________________________________________________________________
33
Chapter 8: Insurance Marketing And After-Sales Services
1. Marketing is defined as:A) The management process responsible for identifying, anticipating and
satisfying customer requirements in a profitable manner.
B) Satisfy the needs of customers and at the same time make a profit.
C) Distributing policies with the objective of satisfying customers requirement.
D) Developing products that meet customers needs.
2. Why is a sales plan important?
A)
B)
C)
D)
It allows an agent to make sales decision.

It allows an agent to perform the function of planning and controlling.
It allows an agent to satisfy customers needs.
It allows an agent to identify and select suitable channels for distributing
policies to customers.
3. An agent engages in personal selling requires skills of:I- Product knowledge

II- Promotional techniques
III- Selling techniques
IV- Market knowledge
A)
B)
C)
D)
I, II & III
II, III & IV
All of the above
I, III & IV
4. It is important for the agents to understand consumers buying decision process.

The five stages of consumers buying decision process are:A) Problem recognition Information Search Evaluation of Alternative
Policies Purchase Post-Purchase Evaluation.
B) Information Search Problem recognition Evaluation of Alternative
Policies Purchase Post-Purchase Evaluation.
C) Problem recognition Evaluation of Alternative Policies Information
Search Purchase Post-Purchase Evaluation.
D) Information Search Evaluation of Alternative Policies Purchase
Post-Purchase Evaluation Problem recognition.
__________________________________________________________________________________________
34
5. The step of personal selling process is as follow:A) Creating a sales presentation Locating the prospective customer
Conducting sales interview Handling objections Close Sales.
B) Locating the prospective customer Creating a sales presentation
Conducting sales interview Handling objections Close Sales.
C) Locating the prospective customer Conducting sales interview Creating a
sales presentation Handling objections Ask for referral.
D) Locating the prospective customer Creating a sales presentation
Handling objections Close Sales Conducting sales interview.
6. A market-oriented agent will do the following, EXCEPT:A) Satisfy the need of customers.
B) Make profit for him.
C) Use a sales plan and co-ordinate it with market analysis, segmentation and
targeting.
D) Develop and design insurance products.
7. The benefit of after sales service is stated as follows, EXCEPT:A)
B)
C)
D)
Minimise lapsed policy.

Simplified mode of payment.
Enhance the agents business.
Enhance the insurers reputation.
8. Premium notice is sent to the policy holder to:

A)
B)
C)
D)
Furnish policyholder with information for tax purposes.

Remind policyholder of the premium due date.
Furnish policyholder on the total amount premium paid to date.
Confirm the premium amount, which the company had received.
9. What is the main benefit from the 30 days grace period provision?
A) Upon receiving premium payments, the insurer would still be able to issue an
official receipt to the policyholder.
B) The insurer would be able to maintain an up-to-date register of all policies
issued.
C) Upon the death of the insured, whilst the premiums due remain unpaid, the
death claims will still be paid and the due premiums are deducted together
with any other outstanding or indebtedness from the claim.
D) The reputation of the insurer as a service-oriented organization is enhanced.
__________________________________________________________________________________________
35
10. Under what circumstances would the agent use the creative selling technique?
A) When the customer is unaware of his or her needs.
B) In a situation where the customer is able to recognize his needs immediately.
C) Where selling is done indirectly by establishing good will between the agent
and his customer.
D) When the customer may want time to think the idea over, or may not agree
with the price.
11. Which of the following should be considered the basic marketing decision(s) for
insurance agents?
A)
B)
C)
D)
The class of business to develop.

The category of customer to cultivate.
The realistic sales quota to set.
All of the above.
12. At what stage of the consumers buying decision process does the consumer
become aware of the threat of risks and feel the need for insurance to protect
himself from financial difficulties?
A)
B)
C)
D)
The evaluation of alternatives stage.

The information search stage.
The problem recognition stage.
The purchase stage.
__________________________________________________________________________________________
36
Part (A2) - Medical and Health

Insurance
__________________________________________________________________________________________
37
Chapter 9 - Introduction To Medical And Health

Insurance
Chapter Overview
Introduction to Medical and Health Insurance
(MHI)
Principles and Practices Applicable to Medical
and Health Insurance
Legislation and Regulations Applicable to
Medical and Health Insurance
The Duty of Disclosure
Categories of Medical and Health Insurance
Non-Termination of Coverage with Claim
Payment
Increase of Risk with Time in Medical and
Health Insurance
Cost Containment Measures
Cashless Hospital Admission
__________________________________________________________________________________________
38
Chapter 9: Introduction To Medical And Health Insurance
1. A licensed insurer, other than a____________, shall not carry on both life
business and general business.
A)
B)
C)
D)
licensed professional reinsurer

bank marketers
teenager
buyers
2. Under cashless hospital admission arrangement, admission to a panel hospital

is by issuance of _________ and the hospital deposit may be eliminated.
A)
B)
C)
D)
A letter of policy summary

A letter of warranty
A letter of guarantee
A letter of approval
3. To contain costs and abuses arising from inflated claims, various methods are
used by insurers which include:I- Inner Limits
II- Deductibles
III- Maximum period of compensation
IV- Co-payment for upgraded rooms
A)
B)
C)
D)
III only
I & II only
All of the above
None of the above
4. The following changes will affect the premium rates applicable at renewal:I- A change in the nature of the individual risk to be insured.
II- An overall change in premium rates for that particular class/portfolio.
III- A change in the mode of premium payments.
IV- A change in the name of the insured life.
A)
B)
C)
D)
III only
I & II only
All of the above
None of the above
5. Characteristics of health insurance are as follow, EXCEPT:A)

B)
C)
D)
Coverage renewable by mutual consent.

Principle of uberrima fides.
Contract will be terminated by the payment of claims.
Contract of indemnity.
__________________________________________________________________________________________
39
Chapter 9: Introduction To Medical And Health Insurance
6. Medical and health insurance is usually divided into indemnity & benefit policies.
And, insurers who launch new medical and health insurance products must lodge
the actuarial certificate for the products with BNM at least _____ days before the
products are offered to the public.
A)
B)
C)
D)
30 days
31 days
60 days
61 days
7. At each renewal, there is an onus on the insured to inform the insurer of any
material changes in the risk to be insured. The principle applied is ________.
A)
B)
C)
D)
Subrogation
Insurable interest
Principle of proximate cause
Utmost good faith
8. Medical and health insurance is designed ___________.

A) To ease the financial burden caused by adverse changes in medical.
B) To ease the financial burden caused by adverse changes in health.
C) To ease the financial and emotional burden caused by adverse changes in
life.
D) To ease the financial and emotional burden caused by adverse changes in
health.
9. Section 12 of the Insurance Act 1996, the guidelines JPI/GPI 16 (Revised)
entitled Guidelines on Medical and Health Insurance Business for the conduct
of medical and health insurance was issued by_____.
A)
B)
C)
D)
LIAM
BNM
PIAM
MII
10. The duty of disclosure does not require the disclosure of a matter that:
I- diminishes the risk to the licensed insurer.
II- is of common knowledge.
III- the licensed insurer knows or in the ordinary course of his business ought to
know.
IV- in respect of which the licensed insurer has waived any requirement for
disclosure.
A) I, II & III
B) I, III & IV
C) II, III & IV

D) All of the above
__________________________________________________________________________________________
40
Chapter 10 - Types of Medical and Health Insurance
Chapter Overview
Types of Medical and Health Insurance
Medical Expenses Insurance
Group Medical and Health Insurance
Hospitalisation Cash Benefit Insurance
Critical Illness Insurance
Disability Income Insurance
__________________________________________________________________________________________
41
Chapter 10: Types of Medical and Health Insurance
1. Some insurers may extend their medical expenses insurance policies to cover
the following, EXCEPT:A)
B)
C)
D)
Disability Income Insurance.

Clinical Insurance.
Dental Insurance
Maternity Insurance
2. Which of the following are the benefits provided by a hospital and surgical
insurance policy?
I- Intensive Care Unit.
II- Ambulance Fees.
III- Pre-Hospitalisation Diagnostic Tests.
IV- Operating Theatre Fees.
A)
B)
C)
D)
III only
I & II only
All of the above
None of the above
3. The followings are correct about Group Medical and Health Insurance, EXCEPT:I- All eligible members can be covered by a group policy, regardless of age or
physical condition.
II- Contributory group medical and health insurance requires the participation of
at least 75% of the eligible members of the group.
III- Unless specifically exempted, government tax is applicable to group policies.
IV- The benefits, rights and obligations of insured group are stated in a master
policy issued by the insurer to a single entity, the policyholder.
A)
B)
C)
D)
I, II & III
II, III & IV
I, III & IV
None of the above
4. Which of the insurance below may be sold as a stand-alone policy or as a rider to

a life insurance policy?
I- Hospitalisation Cash benefit Insurance.
II- Disability income Insurance.
III- Critical Illness insurance.
IV- Major Medical Expenses Insurance.
A) II, III & IV only
B) I, III & IV only
C) I, II & IV only
D) I, II & III only
__________________________________________________________________________________________
42
Chapter 10: Types of Medical and Health Insurance

5. Comprehensive hospitalization and surgical insurance policies are also called as
charged policies in Malaysia. Which of the following coverage item that is not
based on as charged basis?
A)
B)
C)
D)
Government hospital cash allowance benefit.

Pre-hospitalization diagnostic services.
Reimbursement of government service tax.
Emergency outpatient sickness treatment.
6. The following items are covered under hospital and surgical policy, EXCEPT:A)
B)
C)
D)
Extra bed.
X-ray, electrocardiograms and ordinary laboratory test.
Cost of obtaining medical report.
Physician daily visits of non-surgical disability.
7. The following categories will be excluded from medical expenses coverage,

EXCEPT:A)
B)
C)
D)
Congenital deformities and war.

Dental related treatment, normal pregnancy and related treatment.
Government tax and ambulance fees.
Long-term care and drug or alcohol abuse treatment.
8. The premium for individual medical and health insurance policies is usually
_______.
A)
B)
C)
D)
Age banded and increase with age

Age specified and decrease with age
Age banded and decrease with age
Age specified and increase with age
9. _____ keeps the cost of insurance within the reason by elimination of those risks
that are within the insureds control.
A)
B)
C)
D)
Contributory plan
Stop loss provision
Elimination period
Exclusion
10. Which of the following is NOT the deductible method?

A)
B)
C)
D)
A fixed amount.
A fixed limit.
A percentage.
A combination of percentage and fixed amount.
__________________________________________________________________________________________
43
Chapter 11 - Underwriting Medical and Health

Insurance
Chapter Overview
The Purpose of Underwriting
Anti-Selection
Adequacy of Premiums
The Risk Selection Process
Medical Underwriting
Sources of Underwriting Information
Underwriting Decisions
Issuing Modified Coverage
Renewal of Medical and Health Insurance
Payment of Premium
Termination of Policy
__________________________________________________________________________________________
44
Chapter 11: Underwriting Medical and Health Insurance
1. Underwriting can be defined as ________.

A) a process of assessment and selection of risks, and the determination of
premium, terms and conditions.
B) determining the amount and level of appropriate insurance coverage required.
C) evaluation of risks primarily by estimating the probable influence of current
impairments and previous medical histories and claims.
D) underwriter selecting those risks that are within the insurers range of
acceptability.
2. Which of the following are the CORRECT risk selection statement that
underwriters consider:I- Medical Factors disability and medical expenses coverage.
II- Financial Factors disability income coverage.
III- Occupational Factors assist to determine premium rate on disability,
accident and medical expense.
IV- Age and Sex medical and health insurance coverage.
A)
B)
C)
D)
I, II & III
I, III & IV
II, III & IV
All of the above
3. The underwriting decisions include the following, EXCEPT:I- Standard.

II- Sub-standard.
III- Declined.
IV- Ignore.
A)
B)
C)
D)
I & II only.
I & III only.
II & IV only.
IV only.
4. The disadvantages of using exclusion endorsements are as follow, EXCEPT :I- It permits coverage for an applicant with a known serious impairment.
II- The excluded condition presenting the greatest threat to persons health and
security is not covered.
III- Exclusion may not be fully understood by the insured resulting in
policyholders dissatisfaction.
IV- Loss of goodwill, increased cost of claim administration and discontinuance of
policy.
A) I only
B) III only
C) II only
D) IV only
__________________________________________________________________________________________
45
5. Which of the below are types of policies commonly available for renewal?
I- Optional Renewable Policies
II- Guaranteed Renewal Policies
III- Conditional Renewal
IV- Non-cancelable Policies
A)
B)
C)
D)
III only.
I & II only.
All of the above.
None of the above.
6. Anti-selection refers to a situation where__________________.

A) More standard risks are accepted for insurance resulting in a less favorable
underwriting result.
B) More sub-standard risks are accepted for insurance resulting in a less
favorable underwriting result.
C) More standard risks are accepted for insurance resulting in a more favorable
underwriting result.
D) More sub-standard risks are accepted for insurance resulting in a more
favorable underwriting result.
7. In order to ensure that sufficient funds will be available to pay claims, the insurer
will_________.
I- Increase premium rate yearly.
II- Present the lower acceptance insured rate.
III- Guard against anti-selection.
IV- Charge a premium that commensurate with the risk transferred.
A)
B)
C)
D)
I & IV
II & III
I & II
III & IV
8. Applicants ____________ and ___________ are the first indicators of present

physical condition.
A)
B)
C)
D)
family history, medical examination results.

medical examination results, applications statement.
application statement, financial factors.
financial factors, family history.
__________________________________________________________________________________________
46
9. The most drastic underwriting action of a medical and health insurance

underwriter is_________.
A)
B)
C)
D)
To accept a risk as sub-standard.

To decline acceptance of a risk.
To offer premium loading.
To issue modified coverage.
10. Which of the following statement is FALSE?

A) Guaranteed renewable policy is limited to the rescission of the policy during
contestable period.
B) Cancelable policy grants the insurer the right to terminate the individual policy
at any time for any reason.
C) Non-cancelable policy is guaranteed to be renewable but allows increasing
premium rates for one or more specific reasons.
D) Conditionally renewable policy grants an insurer a limited right to refuse to
renew a health policy at the end of payment period.
__________________________________________________________________________________________
47
Chapter 12 - Policy Administration
Chapter Overview
Overview of Medical and Health Insurance
Policy Administration
The Proposal Form
The Policy Form
Endorsements
Renewal Notices
Documents for Tax Relief for Medical and
Health Insurance Premium Payments
__________________________________________________________________________________________
48
Chapter 12: Policy Administration
1. ____________ provides for control by and the lodgement of proposal forms,

policies and brochures of insurers with Bank Negara Malaysia.
A)
B)
C)
D)
Section 149, Insurance Act 1996

2. Which of the following statement is INCORRECT?

A) The policy register serves as an official record of policies issued by the
insurer.
B) In the absence of expressed conditions, the contract of insurance would be
subject only to implied conditions.
C) Both the endorsement and policy constitute the evidence of contract.
D) Policy conditions which require the insured to inform the insurers of any
changes or alterations in the risk are conditions precedent to contract.
3. A proposal form is a document drafted by the insurer in the form of
questionnaires for each class of insurance to assist the insurer in gathering
information required to assess a risk being proposed. What is the purpose of the
proposal forms containing a declaration clause?
I- Warrant the answers are true.
II- Warrant that the information is complete.
III- Agree that the proposal becomes the basis of contract.
IV- Accept the usual form of policy for that class of business.
A)
B)
C)
D)
I
I & II
I, II & III
All of the above
4. The operative or insurance clause is playing the essential role of the contract in
the scheduled policy form. Which of the following is NOT true of the policy form?
A)
B)
C)
D)
It represents the written evidence.

It is considered as contract of insurance once the insured signs.
It has to be stamped; otherwise it cannot be used as evidence in the court.
Scheduled type of policy forms are frequently used by insurers.
5. Implied conditions relate to the following, EXCEPT:A)

B)
C)
D)
Duty of utmost good faith.

Subrogation condition.
Existence of insurable interest.
Identification of subject matter of insurance.
__________________________________________________________________________________________
49
6. In order for the health insurance policies premium to qualify for tax relief, ______.
I- The coverage should be for a period of 12 months or more.
II- The coverage should be related to the treatment or payment resulting from
disease or accident.
III- A copy of the insurance premium receipt issued by the insurance company
must be submitted to IRB.
IV- The total of premium paid from life insurance policies and EPF contribution
does not exceed RM6,000 and education or medical insurance does not
exceed RM 3,000.
A)
B)
C)
D)
I & II
II & III
III & IV
I & IV
7. Which of the following statements is NOT TRUE about proposal form?

A) A proposal form is a document drafted by the agent in the form of
questionnaires for each class of insurance to assist in gathering of
information.
B) Enables the insurer to consider the application regarding the risk in a speedy
and accurate manner.
C) Frequently used in relation to simple risks where information can be furnished
in a structured format.
D) To assist in gathering of information required to assess a risk being proposed.
8. The clause that specifies the perils insured under the policy and the
circumstances in which the insurer will become responsible to make payment is
known as _________.
A)
B)
C)
D)
the operative or insurance clause

the recital clause
the exclusion clause
the attestation clause
9. ____________ are policy conditions which require the insured to inform the
insurers of any changes or alterations in the risk.
A)
B)
C)
D)
Conditions precedent to contract

Conditions precedent to liability
Condition subsequent to contract
Conditions subsequent to liability
__________________________________________________________________________________________
50

10. An offer under medical and health insurance is typically the _____________.
A) Submission of a completed Request for Change form and signed by the life
assured
B) Submission of a completed Medical Questionnaire and signed by the life
assured
C) Submission of a completed Disclosure Statement form and signed by the
proposer
D) Submission of a completed proposal form and signed by the proposer
together with the initial premium consideration
__________________________________________________________________________________________
51
Chapter 13 - Medical and Health Insurance Claims
Chapter Overview
Notification of Loss
Proof of Loss/Claim
Checking Coverage
Claim Investigation
Medical and Health Insurance Claim Forms
Settlement of Medical and Health Insurance
Claims
Repudiation of Liability by Insurers
Disputes
Claims Example
__________________________________________________________________________________________
52
Chapter 13: Medical and Health Insurance Claims
1. Insurance policies require the policyholder to inform the insurer in writing of any
claim between _________.
A)
B)
C)
D)
Between 14 days to 30 days.

Between 14 days to 60 days.
Between 14 days to 90 days
Between 14 days to 120 days
2. When a dispute arises, it may be resolved through the following channel.

A)
B)
C)
D)
PIAM
FMB
AMLA
ASM
3. Which of the following determines the validity of claims?

I- The existence of loss.
II- Loss is caused by a peril insured under the policy.
III- The person making the claim is the rightful claimant.
IV- Loss does not fall within the scope of an exclusion of the policy.
A)
B)
C)
D)
III only
I & II only
All of the above
None of the above
4. The notification of loss must be ________.

I- In written notice of claims.
II- Gone through a preliminary check by the physician.
III- Furnished by the qualified medical practitioner.
IV- Within 30 days or as soon as possible after the occurrence of loss.
A)
B)
C)
D)
I & III
I & IV
II & III
All of the above
5. Claim investigation involves ascertaining the following, EXCEPT:A)

B)
C)
D)
The person making the claim is related to the claimant.

Loss is caused by a peril insured under the policy.
Existence of loss.
Loss does not fall within the scope of an exclusion of the policy.
__________________________________________________________________________________________
53
Chapter 13: Medical and Health Insurance Claims
6. Conditions for a Valid Claim included:

I- Is the policy in force?
II- Has been paid premium?
III- Is the loss caused by an insured peril?
IV- Has notice of loss been given with undue delay?
A)
B)
C)
D)
I, III & IV
I, II & IV
I, II & III
All of the above
7. When a claim dispute arises, it may be resolved through the following

Channels______________.
A)
B)
C)
D)
Negotiation and Compromise Settlement

Litigation
Arbitration and Mediation
All of the above
8. ______________usually results where a substantial question exists about the

degree of disability or result in the insurer paying something more than its
interpretation of the facts would warrant and the claimant accepting payment for
less than that claimed.
A)
B)
C)
D)
A Compromise Settlement
Litigation
Arbitration
Medication
9. Health insurance policy is NOT automatically terminated ______.

A)
B)
C)
D)
On the death of an insured person

On the policy anniversary of the insureds maximum eligibility age
Total benefits paid exceed the maximum limit
On the first occurrence of accident and resulting in a serious loss
10. Which of the following statement regarding to the claim form is FALSE?
A) Claim form is the document that enables insurer to gather information relevant
to assessing claims.
B) The issue of a claim form constitutes an admission of liability on the part of
the insurers.
C) The claim form is to seek information to identify the circumstances of loss and
extent of loss.
D) Ordinary health insurance claim form consists of insureds statement and the
attending physicians statement.
__________________________________________________________________________________________
54
Part C - Life Insurance
__________________________________________________________________________________________
55
Chapter 21 - Life Insurance Preliminaries
Chapter Overview
Introduction
Characteristics of Life Insurance Products
Basic Principles of Insurance as Applied to Life
Insurance
Risks Covered by Life Insurance Policies
__________________________________________________________________________________________
56
Chapter 21: Life Insurance Preliminaries
1. For life insurance policies, which of the following is required to exist at the time of
inception of insurance?
A)
B)
C)
D)
Indemnity.
Subrogation.
Insurable interest.
Contribution.
2. The following are the risks covered by life insurance, EXCEPT:A)

B)
C)
D)
Premature death.
Permanent disability.
Old Age.
Financial loss.
3. A life insurance is a contract of Uberrima Fides and this term is referring to

___________.
A)
B)
C)
D)
Insurable interest
Claim
Utmost good faith
Underwriting
4. Insurable interest exists in all the following situations, EXCEPT:A)

B)
C)
D)
A parent in the life of a child.

A creditor in the life of the debtor.
A man in the life of his brother-in-law.
An employer in the lives of its key personnel.
5. Which of the following will be taken into account by the Insurer when determining
the premium rate:A)
B)
C)
D)
Tax.
Expenses.
Rate of investment returns.
All of the above.
6. A contract where one party provides something of value to another party in

exchange for a promise that the other party will perform a stated act if a specified,
uncertain event occurs is called a/an __________.
A)
B)
C)
D)
business contract
aleatory contract
offering contract
investment contract
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57
7. Section 152 of the Insurance Act, 1996 elaborates on the principle of _________.
A)
B)
C)
D)
equitable
insurable interest
uberrima fides
subrogation
8. In life insurance, with the exception of permanent health insurance policies, the
settlement of a claim will ______________.
A)
B)
C)
D)
revise the contract

terminate the contract
extend the term of the contract
Increase the premium of the contract
9. The first case of life insurance was found in England in year 1583 on the life of
_____________.
A)
B)
C)
D)
Edward Gybbon
William Gybbon
William Cybbon
William Edward
10. ______________is defined as the method of changing a uniform premium

throughout the duration of the policy irrespective of the increase in risk due to
increase in the age of the life assured.
A)
B)
C)
D)
Level premium system

Level payment system
Level term system
Increasing premium system
11. Life insurance policies which were issued on a short-term basis in the past had
many disadvantages. What was/were they?
A)
B)
C)
D)
Premium tended to increase with duration of time.

Cover was often denied when it was most needed.
All of the above.
None of the above.
__________________________________________________________________________________________
58
12. The following are characteristics of life insurance contracts, EXCEPT:I- These are aleatory contracts.
II- These are long-term contract.
III- The life companies cannot cancel these contracts unilaterally.
IV- The mortality risk will increase with age and the duration of the contract.
A)
B)
C)
D)
I, II & III
None of the above
II, III & IV
All of the above
__________________________________________________________________________________________
59
Chapter 22 - Life Insurance Products and Family

Takaful Business
Chapter Overview
Introduction
Types of Life Insurance Policies
Description of Life Insurance Contracts
Types of Family Takaful Business
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60
Chapter 22: Life Insurance Products and Family Takaful Business
1. In life insurance, there are mainly three kinds of life insurance contracts and the
products offered by insurer can be broadly categorized further into two types.
They are__________________.
A) ordinary life, home service & group insurance with protection and bonus
B) ordinary life, home service & group insurance with participating and nonparticipating
C) ordinary life, short-term & group insurance with protection and bonus
D) ordinary life, short-term & group insurance with participating and nonparticipating
2. Which of the following is/are NOT TRUE of the difference between homeservices insurance and ordinary life insurance:A) Premium for home-services insurance is usually collected at a more frequent
interval than ordinary life insurance.
B) The agent of home-service is usually directly employed by the insurer
whereas in ordinary life insurance, the agent is not employed by the insurer.
C) Premium for home-services policies are usually collected at the home of the
policyholders.
D) Home-services insurance can only be underwritten as term insurance.
3. Which of the following statement is TRUE about participating contracts?
A) Participating contracts are mainly for protection purpose.
B) The benefit is generally made up of guaranteed benefit, regular bonuses and
a final bonus.
C) The main benefit is generally guaranteed.
D) These contracts are often simple and easily compared, which means
competition on premium rates is keen.
4. Participating policies can only be bought with the following types of life policies?
I- Whole life.
II- Endowment.
III- Term.
A)
B)
C)
D)
I and II
I and III
II and III
All of the above
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61
5. One of the term insurance products is level term insurance, which is the earliest
and simplest form of life insurance. And, the following is/are the feature of Term
Insurance, EXCEPT?
I- It can convert the policy into permanent assurance like whole life or
endowment assurance without evidence of insurability but subject to proper
adjustment in the premium charged.
II- It can be renewable for a limited number of periods at the option of the
assured.
III- It provides cheap guaranteed protection.
IV- It provides guaranteed payment of sum assured on death within the term of
the contract.
A)
B)
C)
D)
I & II
II & IV
None of the above
All of the above
6. Your client borrows RM 50,000 from the bank for 10 years (repayable by equated
installments) and wants to assure payment of the loan should death occur during
the 10 years period. What type of policy would you recommend your client?
A)
B)
C)
D)
Limited-payment whole life.

Endowment.
Level term assurance.
Decreasing term assurance.
7. Term insurance provide _____________.

A)
B)
C)
D)
Surrender value
Loan value
All of the above
None of the above
8. Which of the following is a life insurance?

A)
B)
C)
D)
Personal Accident Policy.

Workman Compensation Policy.
Endowment Policy.
None of the above.
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62
9. Which of the following is/are the feature of whole life assurance?

I- Premiums are not reviewable.
II- Usually a minimum guaranteed surrender value is available after 3 years.
III- Policy will be eligible for the benefits of non-forfeiture regulations, cash
surrender value, loan and etc.
IV- Premiums might cease at a certain age or after a certain term. This helps to
reduce premium collection costs.
A)
B)
C)
D)
I, II & III
II, III & IV
All of the above
None of the above
10. By purchasing a continuous-premium whole life insurance policy instead of a

comparable limited-payment whole life policy, a policyholder gains the advantage
of ____________________.
A)
B)
C)
D)
a longer grace period

a cheaper annual premium
guaranteed renewable
guaranteed payment of total sum assured on death
11. The sum assured is payable only upon death, but premiums are payable for a
limited number of years only, after which the policy become paid-up for its full
amount. The above statement best described:
A)
B)
C)
D)
Whole life endowment policy.

Annuity policy.
Limited payment whole life policy.
Joint life policy.
12. ___________ policy provides not only the payment of the face value of the policy
upon the death of the life assured during a fixed term of years, but also the
payment of the full face amount at the end of the said term if the life assured is
living.
A)
B)
C)
D)
Whole life endowment

Annuity
Endowment
Term
__________________________________________________________________________________________
63
13. An endowment policy is suitable for a person who_____________, EXECEPT:A) wishes to prepare his/her retirement fund
B) is opening a business and needs to make a large initial investment in the
business
C) is paying off a mortgage on the new home by periodic payments
D) has small income as a protection plan
14. An advantage provided by endowment if compared with term assurance is ____.

A) an automatic conversion of the policy, if the insured is still living at the end of
the period of coverage
B) no cash value at any time during the period of coverage
C) a payment of the full face amount, if insured is still living at the end of the
coverage period
D) an affordable premium for the small income group
15. Which of the following is NOT TRUE about Annuity contract?
A) A periodic payment made during a fixed period of time or for the duration of
the survival of a designed life (the annuitant) or lives.
B) Annuities are mainly bought by older people seeking to convert capital from,
e.g. a gratuity fund, and policy-maturing benefit into income for life.
C) All of the above.
16. An agreement under which life office, in return for the payment of a certain sum
of money known as the purchase price, makes a series of payment at regular
intervals from a fixed date until the death of the annuitant or at some other
specified time is known as _________________.
A)
B)
C)
D)
a government scheme
an annuity
a family income benefit
an endowment insurance
17. En. Ali Bin Mohamad is self-employed and has no EPF savings. But, En. Ali
wants to begin planning for his retirement. He wants to a guaranteed fixed and
periodic income when he retires. Therefore, the most suitable choice for his
retirement planning is _______________.
A)
B)
C)
D)
a government bond
an annuity
a family income benefit
an endowment insurance
__________________________________________________________________________________________
64
18. Which of the following is NOT TRUE about Permanent Health Insurance?
A) It provides income during periods of sickness or disability on a long-term
basis.
B) Policies normally do not acquire a surrender or maturity benefit.
C) All of the above.
19. Which of the following is NOT TRUE about dread disease plan?
A) It provides a lump sum of ready cash to the policyholder for seeking
treatments and health recovery purposes.
B) It may provide an acceleration of all or part of any death benefit.
C) It may be a stand-alone benefit.
20. Investment-linked policies premium is divided into the following components:I- Expense related II - Mortality and /or Morbidity cost related.
II- Investments related IV - Single premium.
A)
B)
C)
D)
I, II & III
II & IV
None of the above
All of the above
21. The maximum amount allowed as basic insurance premium for protection under
the investment-linked policy is limited to __________ a year for each
policyholder.
A)
B)
C)
D)
RM 4,000
RM 5,000
RM 6,000
RM 7,000
22. Which of the following is NOT TRUE of the difference between contributory and
non-contributory in Group Insurance?
A)
B)
C)
D)
100% vs. 75% of all full-time employees must join the plan.
Employer and employee share the cost vs. employer pays all the cost.
All of the above.
None of the above.
__________________________________________________________________________________________
65
23. Powertech Sdn Bhd purchased a group insurance for its 12 full time staffs
between ages 16 and 55 on Jan 2008. But, Steven, one of the staff tendered his
resignation with effect from Jun 2008. Therefore, is the policy still valid and are
there any changes of the premium?
A)
B)
C)
D)
Policy is not valid and the premium will be fully refunded.

Policy is valid and the premiums remain unchanged.
Policy is valid and the premium will be decreased.
Policy is valid and the premium will be increased.
24. Which of the following is NOT TRUE about Supplementary Benefits?

A) These are benefits or riders attached to the basic policies subject to the
payment of extra premium.
B) It included surgical and nursing fees benefit.
C) It included saving benefit.
25. In childrens deferred insurance, should the child die before reaching the vesting
age ________?
A)
B)
C)
D)
The sum assured of the policy become payable.

Only the cash value is payable.
Only refund of the premium paid.
The insurer will refund Compound Interest plus premium paid.
26. An education policy must satisfy the following conditions so as to eligible for the
tax relief, EXCEPT:A)
B)
C)
D)
The beneficiary should be the parent.

If the insured is the child, the life of the payor must be covered.
If the insured is the parent, the child must be the nominee.
Maturity benefits must be payable when the child is at aged 13 to 25.
27. Family Takaful benefits are divided into three main portion EXCEPT:A)
B)
C)
D)
Disability benefit
Death benefit
Maturity benefit
Surrender value
28. Family Takaful plan participants may elect to incorporate any of the following
supplementary benefits EXCEPT:A)
B)
C)
D)
Dread disease benefit.

Permanent total disability.
Personal accident.
Hospitalisation benefit.
__________________________________________________________________________________________
66
29. The main function of the Participants Special Account in Takaful Insurance is for
__________.
A)
B)
C)
D)
saving
saving and Investment
the intention of tabaruk
the intention of mudharabah
30. Family Takaful plan benefits shall be paid to participants depending on the
following cases, EXCEPT:A)
B)
C)
D)
The participants die before the term of the Takaful plan.

The participants survive until the end of the full term of the Takaful plan.
The participants terminate the contract.
The participants withdraw the plan within 15 days.
__________________________________________________________________________________________
67
Chapter 23 - Policy Conditions
Chapter Overview
Definition of Life Policy
Privileges and Conditions
Policy Transactions
Policy Alterations
__________________________________________________________________________________________
68
Chapter 23: Policy Conditions
1. Which of the following is TRUE about life policy:A) A legally binding agreement made between two or more parties.
B) To restore the insured to the same financial position he had enjoyed before
the loss.
C) Any instrument by which the payment of money is assured on death or the
happening of any contingency dependent on human life, or any instrument
evidencing a contract which is subject to payment of premiums for a term
dependent on human life.
D) To protect the interests of the assured who has omitted to pay premium or
who is temporarily unable to pay under a permanent insurance policy.
2. Which of the following regarding days of grace is NOT TRUE?
A) Coverage continues during the days of grace for half of the sum assured only.
B) If renewal premium is not paid within the days of grace, the policy ceases to
have any further cover, subject to any non-forfeiture provisions.
C) The days of grace for yearly, half-yearly, quarterly and monthly premiums are
the same.
D) It is usually a period of 30 days after the premium due date.
3. The grace period refers to:A) The applicant is required to go for medical check up.
B) The policyholder is required to pay the premium when due so as to keep the
policy in force.
C) The policyholder is required to submit any claim.
D) The insurer must settle any claim upon request.
4. Section 155 of the Insurance Act, 1996 regulates the basis of surrender values.
Accordingly, when a policy has been in force for ______ years or more, the
ordinary policy becomes entitled to a surrender value.
A)
B)
C)
D)
2
3
4
5
5. The following plans are generally in use as non-forfeiture provisions, EXCEPT:A)

B)
C)
D)
Extended Term Insurance and Paid-Up Policy.

Automatic Premium Loan.
Policy Loans.
None of the above.
__________________________________________________________________________________________
69
6. A provision in a life insurance policy which states that any premium not paid by
the end of the grace period would be automatically paid by the policy loan if there
is sufficient cash value is called ____________.
A)
B)
C)
D)
Automatic Paid-Up
Automatic Premium Loan
Automatic Policy Loan
Automatic Protection Loan
7. Which of the following is NOT TRUE about policy loan?

A) Loans are granted up to 92% of the acquired cash value of a policy.
B) The governing rate of interest on the loan shall be fixed by the company
granting the loan. Normally, the interest rate is higher than fixed deposit rate.
C) The policyholder can apply for the loan anytime.
D) The amount of loan available will be quoted on application to the company.
8. Which of the following is/are NOT TRUE about Automatic Premium Loan?
A) It provides for a continuation of the insurance cover when the assured fails to
pay premium.
B) The assured must provide evidence of insurability when bringing the policy
back to its original status.
C) Premium is paid automatically as it falls due after the grace period, by the
creation of a loan which, interest becomes a lien upon the insurance until
paid.
9. A policy under which the cash value is available for use as a single premium to
provide for insurance on the original terms but reduces sum assured is known as
A)
A)
B)
C)
A paid-up policy.
An extended policy.
An Automatic premium loan policy.
An assignment policy
10. Which of the following policies do not have the non-forfeiture provision?
A)
B)
C)
D)
Whole life policy .

Endowment policy.
Term policy.
Education policy.
__________________________________________________________________________________________
70
11. Which of the following is/are NOT TRUE about Paid-Up Policy?
A) The original sum assured will be reduced, but the terms of coverage
remained.
B) All the riders and supplementary benefit cease.
C) No further premium is required.
12. Which of the following option would be most appropriate when the need for
insurance protection continues but the financial capacity to meet premium
payment becomes impaired?
A)
B)
C)
D)
Extended term assurance

Paid-up policy
Policy loan
Automatic premium loan
13. Which of the following is/are NOT TRUE about Extended Term Assurance?
A) The original sum assured unchanged, but the terms of coverage will be
shortened.
B) All the riders and supplementary benefit cease.
C) No further premium is required.
14. Ali bought a RM 15,000 policy 3 years ago. The policy acquired a cash value of
RM 2,000 with a loan of RM 200 (including interest) and an overdue premium of
RM 300 outstanding. Ali finds that he can no longer make the premium payments
for his policy. If Ali chooses the cash surrender value option, he will receive a
sum of_________.
A)
B)
C)
D)
RM 1,800
RM 1,700
RM 1,600
RM 1,500
15. Reinstatement is normally allowed for _______________.

A) A policy that lapsed more than three years for whole life and endowment
policies, and six months for term policies.
B) A lapsed policy due to no payment of premium. The life assured needs to
provide the evidence of good health and settle all the outstanding premium
plus interest.
C) A female life assured who is pregnant 8 months and above.
D) A life assured who has attained age 60 and above on his/her next birthday.
__________________________________________________________________________________________
71
16. Which of the following is/are TRUE?

I- Surrender value is granted if a policy has been in force for three years or
more.
II- Surrender value is granted if a policy has been in force for five years or more.
III- If the insured commits suicide within one to two years from the date of
inception or reinstatement of the policy, the policy becomes void and the
insurer is not liable to pay the claim except to refund all premium paid.
IV- If the insured commits suicide within three to four years from the date of
inception or reinstatement of the policy, the policy becomes void and the
insurer is not liable to pay the claim except to refund all premium paid.
A)
B)
C)
D)
I and III
I and IV
II and III
II and IV
17. According to section 147(4) of the insurance act 1996, the insurer cannot deny
liability on a policy after 2 years of its issue on the grounds of misrepresentation
of non-disclosure alone unless he/she can prove that such misrepresentation or
non-disclosure was made fraudulently by the insured.
The above statement refers to:
A)
B)
C)
D)
Reinstatement clause.
Suicide clause.
Incontestability clause.
Contestability clause.
18. Which of the following documents are generally acceptable as proof of age by life
offices in Malaysia?
I- International Passport.
II- Certified extract from Baptism Register.
III- School leaving certificate from Government or Government aided school.
IV- Extract from service record of Government, Semi-Government, Public Sector
undertakings and reputable commercial firms.
A)
B)
C)
D)
I, II, III
I, II, IV
I, III, IV
All of the above
__________________________________________________________________________________________
72
19. Which section of the Insurance Act 1996 states that an insurer shall not dispute
liability by reason only of a misstatement of the age of the life assured?
A)
B)
C)
D)
Section 145(1)
Section 146(1)
Section 147(1)
Section 148(1)
20. Which of the following is/are NOT TRUE about Assignment?

A) An agreement that Mr. Life Assured does not have any rights to his policy
except to pay the premium is known as absolute assignment.
B) An agreement that assignor can revoke all the rights if the assignee dies
before the payment of the policy money becomes due is known as a
conditional assignment.
C) It must be in writing and may be affected by an endorsement or a separate
deed.
21. According to BNM JPI: 2/2005, any transaction involving the purchase of life
insurance policy is construed as a replacement of policy if within 12 months
before or after a new policy is effected if the existing policy is in the following
situation, EXCEPT:I- Continued as extended term insurance or automatic premium loan.
II- Lapsed, surrendered or partially surrendered.
III- Changed or modified into the form of non-forfeiture benefit.
IV- Reduced in the amount of premium paid arising from the reduction of sum
insured and/or rider or removal of rider.
A)
B)
C)
D)
II & III
I
III & IV
None of the above
__________________________________________________________________________________________
73
Chapter 24 - Practice of Life Insurance: New Business

- Selection of Lives and Others Issues
Chapter Overview
Introduction
Risk Management
New Business Premium Accounting
Life Insurance and Income Tax
__________________________________________________________________________________________
74
Chapter 24: Practice of Life Insurance:

New Business Selection of Lives and Others Issues
1. Which of the following will influence mortality?

A)
B)
C)
D)
Geographical location.
Social Status.
Ethnicity.
All of the above.
2. Which of the following is/are TRUE?

I- Mortality increases with age.
II- Male mortality is lower than female mortality.
III- Female morbidity is higher than male morbidity.
IV- Single male experiences higher mortality than married male.
A)
B)
C)
D)
I, II, III
I, II, IV
I, III, IV
All of the above
3. To deal with sub-standard lives, the insurer usually employs any one of the
following method, EXCEPT:A)
B)
C)
D)
Charge an extra premium.

Imposing a debt or a lien.
Offer an alternate form of contract.
Provide a premium discount.
4. Which of the following is classified as -rising mortality in the underwriting of risks?

A)
B)
C)
D)
A construction worker.
A person who is overweight.
A person who is engaged in the liquor trade.
A young person who suffered from tuberculosis but has been pronounced as
cured.
5. Based on the clause 148 of Insurance Act 1996, what is a cooling off period?
A) The policyowner within 15 days of receipt of the policy can return the policy
with a notice in writing objecting to a term of condition of the policy.
B) The policyowner can make a claim against the insured hazard covered by the
policy.
C) Cooling off period is the waiting period where the policyowner does not
receive any coverage, this period is generally 15 days.
D) Cooling off period is the period where the life company refuses to entertain
any claims, this period is generally 6 months.
__________________________________________________________________________________________
75

6. When a loading letter is issued by the insurer, it is considered_______________.

A)
B)
C)
D)
a consent to the insured

a rejection to the insured
a counter offer to the insured
a bonus declaration
7. When a proposal is being approved without premium payment, the Insurer will
issue a letter of acceptance to the proposer requesting payment to be made
within ____ days.
A)
B)
C)
D)
14
15
30
45
8. Ahmad applied for life insurance and he requested that the policy be backdated.
The usual reason for an applicant to make this kind of request is to gain the
advantage of ______________.
A)
B)
C)
D)
more policy dividends

more cash value
a lower premium on a lower age
extra insurance protection at no additional cost
9. Saiful works for a multi-national company in Kuala Lumpur. Which of the following
is/are taxable or assessable income(s) in his case?
A)
B)
C)
D)
Leave pay.
Fees and allowances.
Gratuity.
All of the above.
10. In the year of 2008, En. Hamli and his wife are sole proprietors. They do not
contribute to EPF but En. Hamli owned a deferred annuity with an annual
premium of RM 3,500 while his wife has an endowment policy with sum assured
of RM 40,000 and an annual premium of RM 4,150. They also have a
householder policy with sum assured of RM 100,000 and an annual premium
RM1,500. Under the Income Tax Act, how much is the income tax relief allowed
on their premium?
A)
B)
C)
D)
RM 3,500
RM 4,150
RM 9,150
RM 6,000
__________________________________________________________________________________________
76

11. Financial underwriting seeks to discover the presence of moral hazard and it may
involve_____________.
A) determining the existence of insurable interest
B) determining the application commensurate with the applicants financial
standing
C) All of the above
12. Which of the following transaction of life business, the insurer will be at risk?
A) as soon as a letter of acceptance is issued and received by the proposed
insured.
B) as soon as the completed proposal form is submitted.
C) as soon as a letter of acceptance is issued and the first premium is paid.
D) as soon as a letter of acceptance is issued and the first premium is paid and
accepted by the office of the insurer.
13. Which of the following is NOT allowed deductions for those gainfully employed?
A) A full medical check-up.
B) Purchase of books, journals, magazines and other publications.
C) Save RM 3,000 per year under the National Education Saving Scheme
(SSPN).
D) Personal medical expenses.
__________________________________________________________________________________________
77
Chapter 25 - Practice of Life Insurance:

- New Business - Premium Rating
Chapter Overview
Quantifying the Risk
Costing the Risk
Calculation of Premium Rates
Other Considerations
The Adjustments to Gross Premiums in the
Rate Book
Numerical Rating System
__________________________________________________________________________________________
78
Chapter 25: Practice of Life Insurance - New Business - Premium Rating
1. Which of the following statement is INCORRECT about the expenses of an

insurance company?
A) Initial expenses, including advertising costs, first year commission, medical
examination and policy issuance.
B) Renewal expenses, including renewal of commissions, premium collection
and servicing policy.
C) Termination expenses, including claims payment and litigation.
D) Management expenses, including director fees, staff salary and benefits, and
administration.
2. Which premium system method charges a uniform premium throughout the
duration of the policy irrespective of the increase in risk due to the increase in
age of life insurance?
A)
B)
C)
D)
Gross Premiums.
Level Premiums.
Increasing Premiums.
Decreasing Premiums.
3. Which of the following statement is INCORRECT?

A) Risk Premium decreases with age.
B) Gross premium consists of net premiums, loading for expenses, and the
loading for profits and contingencies.
C) Net premium will take into account the element of mortality and interest.
D) Installment and true premiums are two types of periodic premiums.
4. A satisfactory premium rate structure is one which is_____________.
A)
B)
C)
D)
Equitable.
Consistent.
Adequate.
All of the above.
5. Participating policies enjoy the right to share in the profits of the life insurance
companys operations in the form of bonuses. For this privilege, they are charged
additional premium called _____________.
A)
B)
C)
D)
Bonus Premium
Bonus Loading
Bonus Charges
Bonus Expenses
__________________________________________________________________________________________
79
6. The charge for covering the cost of mortality alone is ______________.

A)
B)
C)
D)
Gross Premium
Net Premium
Risk Premium
Pure Premium
7. In calculating the tabular (gross) premiums for non-participating policies, the

following elements are normally taken into account, except___________.
A)
B)
C)
D)
Mortality
Interest
Expenses
Bonus loading
8. In the event of death occurring before all the premium payments for that
particular policy year are paid, the remaining installments of that year are
deducted from the claim amount payable under the policy. This type of periodic
premiumis ______________.
A)
B)
C)
D)
Level Premium
Installment Premium
True Premium
Risk premium
9. If a proposer is engaged in a hazardous occupation, the Insurer will consider

__________.
A)
B)
C)
D)
increase the basic premium rate

charge an extra premium known as occupational extra
reduce the occupational loading amount
maintaining the premium rate with original loading
10. Additional premium will be charged in the following cases, EXCEPT:A)

B)
C)
D)
Sport activities involving additional risk of death.

Hazardous occupations.
Change of address.
Sub-standard health.
11. In 1919, the numerical rating system was introduced by________________.

A)
B)
C)
D)
Arthur H. Hunter
Dr. Decar H. Rudgers
William Gybbon
A and B
__________________________________________________________________________________________
80
12. Insurers use _________ for premium collection.

A)
B)
C)
D)
Standard Tables
Mortality Tables
Standard Mortality Tables
Ratio Mortality Tables
__________________________________________________________________________________________
81

- Monitoring the Insurance Fund
Chapter Overview
Introduction
Valuation of Liabilities
Valuation of Assets
Surplus
__________________________________________________________________________________________
82
Chapter 26: Practice of Life Insurance - Monitoring the Insurance Fund
1. The purpose of valuation exercise conducted by the actuarial of a life office

is/are____________.
A)
B)
C)
D)
to test whether the company is solvent.

to test the adequacy of the existing premium scales.
to comply with the statutory requirements.
all of the above.
2. Which of the following best defined surplus?

A)
B)
C)
D)
Surplus is the difference between life insurance fund and all policy liabilities.
Surplus is profit.
Surplus is the difference between revenues and cost.
Surplus is input minus output.
3. Three common methods to value the assets of a life office are_____________.

I- Cost price
II- Book value
III- Actuarial valuation
IV- Market value
A)
B)
C)
D)
I, II, III
II, III, IV
I, II, IV
All of the above
4. The investment that a life assurance company made from the premiums it has
received after meeting its out-going items in the form of claims and expenses is
called_____________.
A)
B)
C)
D)
market value
surplus
assets
liability
5. The assets of a life assurance company consist of ____________, except:A)

B)
C)
D)
Loans to policyholders
Loans and debentures in corporate bodies
Cash in hand
Terminal Bonus
__________________________________________________________________________________________
83
6. The portion of the surplus that may be passed to shareholders in the form of
dividends is normally stated in the companys Memorandum of Articles of
Association or by registration and is in the region of ________ of the divisible
surplus.
A)
B)
C)
D)
10% - 15%
10% - 20%
10% - 25%
15% - 25%
7. Which of the following is the value placed on the assets in the companys
accounts?
A)
B)
C)
D)
Book value.
Cost value.
Market value.
Cash value.
8. What value can be derived from assets sold in the open-market?

A)
B)
C)
D)
Cash value.
Book value.
Market value.
Cost value.
9. Which of the following is the price at which the asset was acquired?
A)
B)
C)
D)
Purchase price.
Cost price.
Market price.
Fix price.
10. For a life insurance policy to provide a guaranteed bonus each year, the policy
must be__________.
A) Strictly participating policy with sum assured increasing automatically each
year at a predetermined rate
B) Strictly participating policy with sum assured decreasing automatically each
year at a predetermined rate
C) Strictly non-participating policy with sum assured increasing automatically
each year at a predetermined rate
D) Strictly non-participating policy with sum assured decreasing automatically
each year at a predetermined rate
__________________________________________________________________________________________
84

11. Which of the following is/are the method to distribute the policyholders share of
surplus?
A)
B)
C)
D)
Simple Reversionary Bonus.

Interim Bonus.
Terminal Bonus.
All of the above.
12. __________ Bonus is declared as a proportion of the sum assured and is

payable in the same circumstances as the original sum assured.
A)
B)
C)
D)
Interim
Maturity
Simple Reversionary
Compound Reversionary
13. __________ Bonus is allotted in proportion to the sum assured and the bonuses
accumulated under the policy.
A)
B)
C)
D)
Interim
Maturity
Simple Reversionary
Compound Reversionary
14. __________ Bonus is only paid for policies that result in claims in between
valuation dates.
A)
B)
C)
D)
Interim
Maturity
Terminal
Guaranteed
15. __________ Bonus is only paid for in-force policies, which result in claims either
by maturity or death.
A)
B)
C)
D)
Interim
Maturity / Terminal
Cash
Guaranteed
__________________________________________________________________________________________
85

Policy Documents
Chapter Overview
Sources of Information for Risk Assessment
The Proposal Form
The Medical Report / Special Examinations
Policy Form and Its Structure
Endorsements
__________________________________________________________________________________________
86
Chapter 27: Practice of Life Insurance Policy Documents
1. Which of the following details appear in the proposal form?

A)
B)
C)
D)
Personal particulars like age, sex and occupation.

Details of insurance like type of insurance required and additional riders.
Particulars of the insureds hobbies and medical history.
All of the above.
2. When any adverse history of the applicants health is revealed, what type of
document will an insurer normally require?
A)
B)
C)
D)
Medical Statement.
Agents report.
Attending physicians statement.
Proposal form.
3. The agents report furnishes the agents impression about the life proposers
__________.
A)
B)
C)
D)
habit and appearance

financial status
character
All of the above
4. Which section states that a declaration given in the proposal and medical report
forms shall form the basic of the contract?
A)
B)
C)
D)
The Preamble.
The Proviso.
The Operative Clause.
The Schedule.
5. Attestation is the final portion of the policy. And, it is _________________.

A)
B)
C)
D)
signed by certain officers of the company who are authorized to do so

signed by the insured to declare that all information given is complete and true
signed by agent as a witness to the contract
signed by the agents supervisor as a witness to the contract
6. The ________ in a policy document contains the name and address of the
assured, life assured, age, sum assured and the mode of premium.
A)
B)
C)
D)
Proviso
Schedule
Heading
Preamble
__________________________________________________________________________________________
87
7. This is the section which introduces the parties to the contract and states that the
proposer has submitted an application for insurance including statements
concerning the health of the life assured and that the assured has paid the first
premium and agrees to pay subsequent premiums as they fall due. This section
refers to:
A)
B)
C)
D)
The heading.
The preamble.
The operative clause.
The provison.
8. The Heading of a policy contains_____________________________.

A)
B)
C)
D)
the name of the company

offer and acceptance of the contract
the event which claim is payable
particulars of the insured and the policy
9. The Operative Clause contains_____________________________.

A)
B)
C)
D)
the name of the company

offer and acceptance of the contract
the event which claim is payable
particulars of the insured and the policy
10. Endorsement can be done at the time of issue and after issue of the policy.
These changes are mainly due to:I- Alterations to the form of the contract.
II- In mode of payment.
III- Surrender of bonus.
IV- Date of proposal.
A)
B)
C)
D)
I, II & III
II & III
All of the above
None of the above
11. General information necessary for the proper assessment of risk is obtained from
the different sources as below, EXCEPT:A)
B)
C)
D)
Pay slip.
Physicians statement.
Medical report.
Proposal form.
__________________________________________________________________________________________
88
12. An insurer, in pursuance to Subsection __________ of the Insurance Act 1996,

shall prominently display a warning in the proposal form that if a proposer does
not fully and faithfully state the facts as he knows them or ought to know them,
the policy may be invalidated.
A)
B)
C)
D)
145(4)
147(4)
149(4)
151(4)
__________________________________________________________________________________________
89
Chapter 28 - Practice of Life Insurance: Claims
Chapter Overview
Introduction
Death Claims
Maturity Claims
Total Permanent Disability Claims
Claims Arising Under Personal Accident,
Sickness and Permanent Health Insurance
Policies
Claims Register
__________________________________________________________________________________________
90
Chapter 28: Practice of Life Insurance - Claims
1. Claims arise under any one of the following:I- Upon maturity of the insurance policy.
II- Sickness or disability benefits claims.
III- On the death of the insured.
IV- Arising under supplementary contracts.
A)
B)
C)
D)
I, II & III
II & III
II, III & IV
All of the above
2. Where the policy money becomes payable in consequence of the death of the life
assured, who is the person entitled to claim?
A)
B)
C)
D)
The person who has a deed of assignment.

The person who has a letter of administration issued by a court of law.
A trustee.
All of the above.
3. Section 161 of Insurance Act 1996 provides that a claim upon the death of policy
owner must be paid within how many days upon receipt of intimation of the claim
and what is the minimum compound rate if the claimant is not paid within the
mentioned period?
A)
B)
C)
D)
30 days and 4% per annum.

4. Which of the following is incorrect?

A) The insurer would usually inform the policyholder of the impending maturity of
the policy and would request the policyholder to comply with the procedures
to be followed.
B) On the death of the policyholder, the beneficiary or claimant should notify the
life insurance company and provide details like policy number, address, date
and cause of death.
C) In settling maturity claim, discharge voucher is not required to be completed
by the policyholder when the policyholder is the life insured.
D) If there is a misrepresentation of age, an adjustment will be made to the claim
amount.
__________________________________________________________________________________________
91
Chapter 28: Practice of Life Insurance: Claims
5. Where a person disappeared without trace for more than seven years, the Court
may presume death in the light of inquiries made in likely places of interested
people who could be expected to have heard of him. This refers to
___________________________.
A)
B)
C)
D)
presumption of death from circumstantial evidence

statutory presumption of death
unregistered death
false death
6. For personal accident, the doctrine of ________ is important, as more than one
condition can be in effect, leading to a claim.
A)
B)
C)
D)
insurable interest
proximate cause
contribution
caveat emptor
7. A claim can arise under one of the following, EXCEPT:A)

B)
C)
D)
Death of the insured.

Maturity of the policy.
A will made by insured.
Disability benefit.
8. The insurance company would accept any one of the following documents as
proof of death EXCEPT:A) Coroners report.
B) Insurance policy document.
C) An order pronouncing a statutory presumption of death, like in the case of a
person who has gone missing for more than 7 years.
D) Medical certificate by the last medical attendant.
9. Under Section 169 of Insurance Act 1996, the payment of claim can proceed to
the proper claimant without letters of probate or administration. Insurance may
pay _________.
A)
B)
C)
D)
The full amount if the proceeds do not exceed RM50,000.

RM100,000 if the policy proceeds exceed RM100,000.
50% of the policy proceed if it exceeds RM100,000.
Maximum up to RM50,000 .
__________________________________________________________________________________________
92
Chapter 28: Practice of Life Insurance - Claims
10. Which of the following is NOT relevant to the common settlement option for an
endowment plan?
A)
B)
C)
D)
Convert the maturity proceeds into annuity.

Withdraw portion of the proceeds without letter of probate.
Continue to deposit the maturity proceeds with the insurer.
Withdraw the proceeds via installments over a number of years.
11. Which of the following documents is/are required for a total permanent disability
claim due to accidents?
A)
B)
C)
D)
The completed claim form.

A certified true copy of the police report.
Medical certification by the attending doctor.
All of the above.
12. The following documents are required in settling maturity claim, EXCEPT:A)
B)
C)
D)
A deed of assignment when the policyholder is not the life insured.

Discharge voucher completed by policyholder.
Bank Passbook.
Policy document.
__________________________________________________________________________________________
93
Chapter 29 - Some Mathematics
Chapter Overview
Calculation of Age
Using the Rate Book for Premium Calculations
Interest Charges
Guaranteed Surrender Value Calculations
__________________________________________________________________________________________
94
Chapter 29: Some Mathematics
1. The premium rate for life insurance policies usually varies according to the
following factors, EXCEPT:A)
B)
C)
D)
The current state of health of the proposer.

The age and sex of the proposer, as well as type of policy required.
The age and sex of the proposers children.
The term of policy, premium payment mode and the social environment.
2. Proposers particulars:Sex : Male

Date of birth : 19/10/1964
Cover to commence : 18/05/1995
Determine the age at next birthday age.
A)
B)
C)
D)
21
31
41
51
3. Age ( Next birthday)

25
26
27
28
29
30
Premium for RM1000 Sum Insured

40.00
40.50
41.00
41.60
42.00
42.80
Sex : Male
Date of birth : 19/10/1974
Cover to commence : 18/05/2002
Policy type : 20 year Endowment
Sum Assured : RM 5000.00
Determine the unadjusted premium.

A)
B)
C)
D)
RM 280.00
RM 218.00
RM 208.00
RM 238.00
__________________________________________________________________________________________
95
4. What is the outstanding premium charges for the following situation ?

Sum insured : RM 100,000.00
Policy type : Whole Life Plan
Annual Premium : RM 650.00
Premium payment date: 27 May
Last premium paid : 27 May 1993
Application for Reinstatement: 15 May 1996
Interest Charged : 6 %
A)
B)
C)
D)
RM 1500.00
RM 1416.69
RM 1200.00
RM 1518.00
Please refer to Table I and II for question 5-7

Table I:
25-year Endowment insurance on Male (For female, treat as 3 years younger)
Age Next Birthday
Premium Per RM1000 Sum Insured
25
39.50
26
40.00
27
40.50
28
41.25
29
42.00
30
42.80
31
43.60
Table II:
Large Sum Assured Discounts
Sum Insured
10,000 24,999
25,000 39,999
40,000 54,999
55,000 69,999
Above 70,000
Discount
Per RM1000 Sum Insured
RM1
RM2
RM3
RM4
Special quotation
5. Calculate the premium for Puan Rosnah.

Birthday : Dec 25, 1970
Cover starts : January 26, 1998
Sum insured: RM30, 000
Gender : Female
A) RM1,125.00
B) RM1,185.00
C) RM1,177.00
D) RM1,237.50
__________________________________________________________________________________________
96
6. Calculate the premium for Mr. Victor.

Age : 26
Sum insured : RM10, 000
Gender : Male
A) RM390
B) RM395
C) RM400
D) RM405
7. Calculate the premium for Mr. Chan.

Birthday : July 25, 1970
Cover starts : Jan 26, 1998
Sum assured : RM50, 000
Gender : Male
A) RM1,875.00
B) RM1,912.50
C) RM2,025.00
D) RM2,062.50
8. Interest charges will be incurred when the policyholder _______________.

A)
B)
C)
D)
reinstates a lapsed policy

repays the outstanding premium
repays the policy loan
All of the above
9. A lapsed policy may be reinstated provided that there is _______________.

A)
B)
C)
D)
Evidence of continued good health

Payment of outstanding premiums
Accumulated interest charges
All of the above
10. The premium rate stated in the rate book is only applicable to ___________.
A)
B)
C)
A)
impaired cases
sub-standard cases
standard cases
A&B
__________________________________________________________________________________________
97

Ethics and Code of Conduct
Chapter Overview
Part I: Guidelines on the Code of Conduct
Part II: Life Insurance Selling
Part III: Statement of Life Insurance Practice
Sales Materials / Advertisements
__________________________________________________________________________________________
98
Chapter 30: Practice of Life InsuranceEthics and Code of Conduct
1. The following are the principles underlying the guidelines on the Code of Ethics
and Conduct, EXCEPT:A) To prevent misuse of information.
B) To prevent confidentiality of communication and transactions between the life
insurance company and its policyholders and clients.
C) To ensure fair and equitable treatment of all policyowners and others who rely
on or who are associated with the life insurance company.
D) To conduct business with the utmost good faith and integrity.
2. The following statements are true pertaining to the Code of Conduct, EXCEPT:A) It serves as a guide for the promotion of proper standards of conduct.
B) It intends to restrict or replace the matured judgment of employees in
conducting their day-to-day business.
C) It serves as a guide for establishment of sound and prudent business
practices amongst life insurance companies.
3. The following are the general sales principles which the intermediaries shall
serve as a guide, EXCEPT:A) Give advice only to those matters in which he is competent to deal with and
seek or recommend other specialists if this seems appropriate.
B) Render continuous service to the policyholder.
C) Share information supplied by the prospective policyholder to his or her
next-of-kin.
D) When making comparisons with other types of policies, make clear the
different characteristics of each policy.
4. When explaining the contract to the prospective prospect, the intermediary shall
not:A) Explain all the provisions of the contract to the prospective prospect, in order
not to confuse him or her.
B) Attempt to persuade a prospective policyholder to cancel any existing policies
unless they are not suitable for their needs.
C) Draw attention to any restriction applying to the policy.
D) Draw attention to the long-term nature of the policy.
5. The Code of Ethics and Conduct does NOT apply to__________.
A)
B)
C)
D)
those who sell life insurance

agency leaders
employees of a life insurance company
registered insurance brokers
__________________________________________________________________________________________
99
6. The guidelines for Code of Conduct abided by all employees of insurers

operating in Malaysia at all times are formulated by ________.
A)
B)
C)
D)
Life Insurance Association of Malaysia (LIAM)

The Actuarial Society of Malaysia
The Malaysian Insurance Institute (MII)
National Association of Malaysian Life Insurance and Financial Advisors
(NAMLIFA)
7. Which of the following is not covered under the term life insurance used in the
code of ethics and conduct?
A)
B)
C)
D)
Home-Service.
Ordinary Life Insurance.
Annuities.
Fire Insurance.
8. Which of the following is NOT TRUE in relation to claim?

A) Insurer shall collect a claim processing fee from the policyholder.
B) The guidelines require an insurer not to unreasonably reject a claim.
C) On the claimant proving the insured event and the right to receive the claim,
the claim has to be settled without undue delay.
9. The proposal form shall include statements that:
A) Draw attention to the consequences of non-disclosure of all material facts.
B) Warn the proposer to disclose all the material facts even those that are in
doubt.
C) State a copy of the policy form is available from the intermediary for viewing
on request.
10. The Code of Conduct serves as a guide for:
A) The promotion of proper selling skills.
B) Placing judgement on agents conduct.
C) The promotion of proper standards of conduct and prudent business practices
among life insurance companies.
__________________________________________________________________________________________
100
11. In respect of a proposal for Whole Life or Endowment insurance, the sales
illustration should bring out the following features of these contracts, EXCEPT:A)
B)
C)
D)
Long-term contracts.
Surrender values are often less than the total premium paid in the early year.
Product Features.
A & B.
12. Which are the parties involved in the case of a complaint from a policyholder that
an intermediary has acted in breach of the Code of Conduct?
A)
B)
C)
D)
The policy holder.

The intermediary.
The insurer.
All of the above.
13. Agent A was working with Company B. Then later Agent A changed to Company
C and brought his customers to Company C, what is this called?
A)
B)
C)
D)
Transferring.
Misrepresentation.
Twisting.
Switching.
__________________________________________________________________________________________
101
Mock Exam
__________________________________________________________________________________________
102
Mock Exam
1. Ali was hospitalized for 5 days in a private hospital this year. The hospital bill
amounted to RM 3,000. This is his 1st claim on his hospital and surgical insurance
policy this year. Given that the policy has a co-payment requirement of 20%, and
assuming that the whole bill is eligible for insurance reimbursement, how much
will the hospital and surgical insurance policy reimburse Ali?
A)
B)
C)
D)
RM 3,000.
RM 2,400.
RM 2,000.
RM 600.
2. What is NOT Risk-Based Capital Framework?

A) RBC is a capital adequacy framework for all insurers.
B) RBC requires each insurer to maintain a capital adequacy level
commensurate with its risk profiles.
C) RBC calculated by Capital Adequacy Ratio.
D) Insurance companies must implement the RBC Framework by 2012.
3. What are the 2 categories of health insurance policies?
A)
B)
C)
D)
Indemnity and overall annual limit policies.

Benefit and life time limit policies.
Indemnity and benefit policies.
Life time and overall annual limit policies.
4. Under current Malaysian tax regulations, a deduction of up to a maximum of

RM 3,000 in premium paid for _______________ is allowable.
A)
B)
C)
D)
Education and/or life insurance.

Education and/or medical insurance.
Education and/or health or life insurance.
Education and/or health or personal accident insurance.
5. A satisfactory premium rate structure is one which has to be:

A)
B)
C)
D)
Adequate.
Profitable.
Competitive.
All of the above.
__________________________________________________________________________________________
103
Mock Exam
6. When does a policy become effective if it is issued within an extra premium or
exclusion rider that was NOT in the original application?
A)
B)
C)
D)
Upon an offer of the rated policy by the underwriter.

Upon an acceptance by the applicant and payment of any required premium.
On the date of original application.
Upon acceptance by the insurer after submission of the original application
form.
7. Typically, before an insurer will pay for the pre-admission testing charges, the
following criterion must be met:
A) The pre-admission testing performed is for routine physical purposes.
B) Hospital admission must occur within 96 hours after the completion of the
testing.
C) Expenses would not be covered if the patient was a hospital in-patient.
D) Procedures must be ordered by the same physician who ordered the
confinement.
8. Miscellaneous hospital charges might be questioned as to their
reasonableness_______.
A) When the confinement does not appear to bear a reasonable relationship to
the diagnosis.
B) If any corrective surgery is contemplated.
C) When the confinement exceeds 30 days.
D) When the confinement is the result of a sickness rather than an injury.
9. Which of the following statement is TRUE?
A)
B)
C)
D)
Female mortality is lower than male mortality.

Female mortality is higher than male mortality.
Female mortality is the same as male mortality.
Female morbidity is higher than male morbidity.
10. The term twisting, as applied to health insurance refers to_______.

A) A policyholder refusing a policy, but accepting a similar policy with another
company.
B) An agent misrepresenting facts to induce an insured to replace a policy.
C) An agent sharing a commission with the insured as an inducement to buy a
policy.
D) An agent proving interim coverage between the application date and the
policy issue date.
__________________________________________________________________________________________
104
Mock Exam
11. In the agency business, the marketing process benefits agents by____________.
A)
B)
C)
D)
Improving the efficiency of the agents operations.

Ensuring the possibilities of undercutting from the brokers.
Providing additional cash flow.
Doing all of the above options.
12. Which of the following is NOT a stage in the consumer buying decision
process?
A)
B)
C)
D)
Problem recognition.
Information search.
Post purchase evaluation.
Sales maximization.
13. The term marketing refers to the______.

A)
B)
C)
D)
Selling of a tangible product.

Buying of an intangible product.
Strategy for the firms business development.
Methods of communication with the marketing manager.
14. Which of the following are the rights of an agent?

I- To receive payment for his services.
II- Entitlement to reimbursement of money which he has spent with the consent
of his principal.
III- To perform his duties in the manner which he considers to be appropriate.
IV- To delegate his duties to a sub-agent without approval.
A)
B)
C)
D)
II
II & IV
I, II & III
All of the above
15. If an act which is not within his authority is performed by an agent, and the
principal agrees to accept the same as having been done on his behalf, it is
known as______.
A)
B)
C)
D)
Acceptance
Ratification
Authorization
Assignment
__________________________________________________________________________________________
105
Mock Exam
16. Which of the following is NOT a duty of an agent?
A) To exercise care and skill.
B) To perform his duty in a professional manner.
C) Not to disclose confidential information obtained during the course of his
duties as agent.
D) To make secret profits from any party with whom he deals on behalf of the
principal.
17. In Malaysia, the age of majority is_________.
A)
B)
C)
D)
16 years old
18 years old
20 years old
21 years old
18. Ms. Chan, aged 17, recently effected a life insurance policy with an insurance
company. Which of the following statements is true of Ms. Chans policy?
A) The contract is illegal as Ms. Chan is a minor.
B) The contract is valid as Ms. Chan has attained the age of 16 as stipulated in
the Insurance Act, 1996.
C) The contract is void as Ms. Chan has not attained the age of 21.
D) The contract is unenforceable as Ms. Chan does not have the capacity to
form a valid contract.
19. What is the insureds consideration for an insurance contract to be effective?
A)
B)
C)
D)
Payment of premium.
Signature on the proposal form.
Promise to pay.
Deposit.
20. Which of the following is NOT required to constitute a contract?

A)
B)
C)
D)
Offer and acceptance.

Consideration.
Legal capacity of the parties.
Parties to be knowledgeable in legal matters.
21. Under which of the following statutes is the maintenance of the policy register a
requirement?
A)
B)
C)
D)
The Companies Act, 1965.

The Internal Security Act, 1960.
The Insurance Act, 1996.
The Official Secrets Act, 1970.
__________________________________________________________________________________________
106
Mock Exam
22. The Insurance Act,1996 empowers ______________ to supervise insurance
companies.
A)
B)
C)
D)
The Malaysian Insurance Institute (MII).

Bank Negara Malaysia.
The public.
A & C.
23. Which association represents life insurers of Malaysia?

A)
B)
C)
D)
LIAM.
NAMLIFA.
ASM.
PIAM.
24. As stated in the Insurance Act 1996, the 2 classes of insurance business are
__________ business.
A)
B)
C)
D)
Life and general

Life and annuity
General and motor
Marine hull
25. Which of the following are appointed by Insurance companies to represent them?
A)
B)
C)
D)
Reinsurers.
Insurers.
Insurance brokers.
Insurance agents.
26. The following are licensed by Bank Negara Malaysia and appointed by insurance
companies.
A)
B)
C)
D)
Insurance agents.
Reinsurers.
Loss adjusters.
All of the above.
27. Which of the following is NOT part of the insurance market in Malaysia?
A)
B)
C)
D)
Insurance companies.
Loss adjusters.
Reinsurers.
Real estate agents.
__________________________________________________________________________________________
107
Mock Exam
28. Under the provisions of the Insurance Act, 1996 all general insurers are required
to be members of_____________.
A)
B)
C)
D)
MII.
PIAM.
AMLA.
MITBA (formerly known as IBAM).
29. The duty of utmost good faith is ________ contracts.

A)
B)
C)
D)
Optional in general insurance.

Compulsory only in marine.
Compulsory in all insurance.
Optional in insurance.
30. A person is said to possess an insurable interest if he___________.

A)
B)
C)
D)
Stands to make a profit upon the occurrence of an insured event

Suffers financial loss upon the happening of the insured event
Encounters mental suffering as a result of the occurrence of the insured event
Suffers financial loss when his business venture fails
31. The most effective cause in a loss is termed the _________ cause.
A)
B)
C)
D)
Contributory
Remote
Substantial
Proximate
32. Which of the following are methods of indemnity adopted by insurers?

A)
B)
C)
D)
Cash only.
Repair only.
Replacement and repair only.
Cash, repair, replacement or reinstatement.
33. A breach of utmost good faith__________.

A)
B)
C)
D)
Renders the contract void from inception

Renders the contract voidable by the affected party
Has no effect at all on the contract
Have all of the above effects
__________________________________________________________________________________________
108
Mock Exam
34. The prior written consent of the insurer is required before the assignment of a
policy, EXCEPT in the case of a __________.
A)
B)
C)
D)
Hull policy
Marine cargo policy
Motor policy
Fire policy
35. The main reason why people buy insurance is they__________.

A)
B)
C)
D)
Want to profit from making insurance claims

Worry about the effects of misfortune
Want to claim income tax deductions for the premium paid by them
Feel obliged to the insurance agent
36. Property which is partially saved from a loss or damage is called_________.

A)
B)
C)
D)
Left over
Constructive loss
Salvage
Partial loss goods
37. The following are characteristics of life insurance contracts, EXCEPT:A)

B)
C)
D)
These are aleatory contracts.

These are long-term contracts.
The life companies cannot cancel these contracts unilaterally.
None of the above.
38. The principle of subrogation prevents the insured from___________.

A)
B)
C)
D)
Receiving more than the actual amount of his loss

Recovering from more than one insurer
Calling upon other insurers to contribute to the loss
Renewing his policy if a loss occurs
39. Which of the following is NOT a method of indemnity?

A)
B)
C)
D)
Loss retention.
Cash.
Repair.
Replacement.
__________________________________________________________________________________________
109
Mock Exam
40. Which of the following is NOT a secondary function of insurance?
A)
B)
C)
D)
Provision of employment.
Provision of encouragement to reduce losses.
Provision of a source of capital for business.
Provision of a mechanism to assist insureds to make profit.
41. Trade risks usually cannot be insured because they are____________.

A)
B)
C)
D)
Against the basic principles of insurance

Not fire risks
Speculative in nature
A&C
42. Which of the following is NOT a method of handling risk?

A)
B)
C)
D)
Transfer.
Retention.
Avoidance.
Investment.
43. A cargo of electrical goods has been stolen from a warehouse. This is a______.
A)
B)
C)
D)
Risk
Peril
Hazard
Loss
44. The cause of a loss is a definition of ____________.

A)
B)
C)
D)
Hazard
Peril
Loss
Risk
45. Insurance deals with fortuitous losses which are_______.

A)
B)
C)
D)
Accidental losses
All losses
Physical hazards
Risks, the severity/frequency of which is within the control of the insured
persons
__________________________________________________________________________________________
110
Mock Exam
46. Which of the following statement is correct?
A)
B)
C)
D)
Speculative risks are always catastrophic in nature.

Pure risks are uninsurable.
There is the possibility of a gain in a speculative risk.
Speculative risks are insurable.
47. How can risks be classified?

A)
B)
C)
D)
Pure and fundamental risks.

Speculative and particular risks.
Pure and complex risks.
Fundamental and particular risks / Pure and speculative risks.
48. Which Act was introduced for the purpose of regulating the conduct of the
insurance business in Malaysia?
A)
B)
C)
D)

The Company Act, 1965.
The Company Act, 1963.
49. The functions of insurance include____________.

A) Indemnifying insureds against losses sustained as a result of fortuitous
events
B) Providing employment to many
C) Freeing funds otherwise tied up as reserves
D) All of the above
50. Insurance is____________________________.
A)
B)
C)
D)
An investment business only

A mechanism for transferring risks
A mechanism for computing risks
A means of providing charity
51. The main purpose of delivering the life policy through the agent is to________.
A) Enable the agent to stress the importance of the policy and to explain again
the various conditions and privileges contained in the policy
B) Enable the agent to close more cases
C) Enable the agent to collect the first premium due
D) Advertise the image of the insurance company
__________________________________________________________________________________________
111
Mock Exam
52. In Malaysia, the conduct of life insurance agents is regulated by the code of
ethics and code of conduct drawn up by________.
A) The Insurance Act, 1996
B) The Life Insurance Association of Malaysia (LIAM)
C) The National Association of Malaysian Life Insurance and Financial Advisors
(NAMLIFA)
D) The Malaysian Insurance Institute (MII)
53. Under the guidelines on the code of conduct, cases of fraud must be reported
immediately to the __________.
A)
B)
C)
D)
Police and Bank Negara Malaysia

Police and to the audit/disciplinary committee
Police and to the Board of Directors
Police only
54. Which of the following is the correct ethical practice?

A) Investing the insured premium and sharing the profit together.
B) Holding in trust information about the prospect such as weight, salary and
past medical history.
C) Holding all information about the prospects previous surgery from the
underwriters.
D) Paying the first premium for the prospect.
55. Plan required : who life non-participating
Age of entry : 35
Sum insured : RM 200,000
Gender : Male
Premium rate : RM 21 per RM 1,000 sum insured
Quality discount : RM 5 per RM 1,000 sum insured
Using the information provided, calculate the premium payable for yearly mode.
A)
B)
C)
D)
RM 1,000
RM 2,100
RM 3,200
RM 4,200
__________________________________________________________________________________________
112
Mock Exam
56. The requirements for proof of age may differ from one company to another.
However, there are certain common documents which may ordinarily be
accepted by the life office as proof of age. They are____________.
I- Birth certificate
II- Identity card
III- Passport
IV- School certificate
A)
B)
C)
D)
I, II & III
I, II & IV
I, III & IV
I, II, III & IV
57. Which of the following statements is FALSE?

A)
B)
C)
D)
Settlement options are available for both death claims and maturity claims.
Settlement options are available for maturity claims only.
Proof of survivorship is required in a maturity claim.
Assignment of life policies may be effected by an endorsement on the policy
document.
58. A maturity claim arises due to the_________.

A)
B)
C)
D)
Death of the life insured while the policy is in force

Survival of the life assured up to the stipulated date of maturity of the policy
Hospitalization of the life insured
Suffering of a dreadful disease by the life insured
59. Which one of the following is NOT required for the settlement of a maturity claim?
A)
B)
C)
D)
Proof of death.
Proof of ownership.
Proof of survivorship.
Proof of age.
60. Information relating to the date of birth, occupation and type of policy plan applied
for is generally found in the______________.
A)
B)
C)
D)
Agents report
Medical declaration form
Proposal form
Personal statement of health
__________________________________________________________________________________________
113
Mock Exam
61. Which of the following is a restrictive condition that appears in the policy
document?
A)
B)
C)
D)
Suicide.
Day of grace.
Cash surrender.
Revival of lapsed policies.
62. Which part of the policy document mentions that the proposal form and the
medical report form the basis of the contract?
A)
B)
C)
D)
Proviso.
Heading.
Schedule.
Operative clause.
63.In Malaysia, life offices generally declare bonuses as addition to the sum assured
and these are payable when the sum assured is payable. Such bonuses are
known as ____ bonuses.
A)
B)
C)
D)
Cash
Interim
Reversionary
Guaranteed
64. Life insurance companies usually give certain discounts on premium chargeable
to female lives because______________.
A) Female usually receive smaller incomes
B) The female mortality rate is generally lower than that of male lives of the same
age
C) Lesser insurance coverage is given to female lives
D) They wish to attract female lives in greater numbers
65. The chance of dying in a year at a specified age is commonly termed as rate of
A)
B)
C)
D)
Morbidity.
Mortality.
Interest.
Surviving.
66. There is a special form of bonus which is only payable when the policy becomes
a claim after a stipulated period. This bonus is called ____ bonus.
A)
B)
C)
D)
Maturity/terminal
Interim
Special
Simple
__________________________________________________________________________________________
114
Mock Exam
67. Level premium is best defined as______________________.
A) A premium charging method where a uniform premium is imposed throughout
the duration of the policy
B) The sum assured of a policy stays uniform whereas the premium charged
increases steadily throughout the policy duration
C) The premium and sum assured decrease in a proportionate rate throughout
policy duration
D) The sum assured of a policy decreases but premium charged increases by a
steady ratio
68. Which of the following are elements of gross premium?
I- Mortality.
II- Expenses.
III- Interest.
IV- Bonus loading.
A)
B)
C)
D)
I, II & III
I, II & IV
I, III & IV
I, II, III & IV
69. On 1st August 2007, Mr. Sew submitted a proposal form to an insurer. A letter of
acceptance was issued on 8th August 2007, and was delivered to Mr. Sew on 10th
August 2007. Mr. Sew paid the initial premium on 17th August 2007. A life
insurance policy was issued and delivered to Mr. Sew on 4th September 2007.
Mr. Sews life insurance policy was effective on_______.
A)
B)
C)
D)
8th August 2007

10th August 2007
17th August 2007
4th September 2007
70. Under the cooling-off period, a new life policyholder may, within ____ of the
delivery of the policy to him, return the policy to the insurer for cancellation due to
objections to certain terms in the policy.
A)
B)
C)
D)
1 month.
7 days.
21 days.
15 days.
71. Which of the following is NOT subject to the Income Tax Act 1967?
A)
B)
C)
D)
Employment income.
Dividends.
Rents.
Maturity proceeds from a life insurance policy.
__________________________________________________________________________________________
115
Mock Exam
72. In the formation of a life insurance contract, an insurer is on risk as soon
as________.
A) A letter of acceptance is issued
B) A proposal form is submitted
C) A letter of acceptance is issued and the first premium is paid and accepted by
the insurer
D) The proposer receives a letter of acceptance
73. The maturity proceeds of a life insurance policy are taxable under
the__________.
A)
B)
C)
D)
Income Tax Act.

Estate Duty Enactment.
Insurance Act 1996.
None of the above.
74. When an applicant for insurance is classified as substandard risk, it means the
applicant______.
A)
B)
C)
D)
Possesses an average of less than average likelihood of a loss

Possesses a greater than average likelihood of creating a loss
Will soon die from a disease
Will soon die from an accident
75. Proceeds from a personal life insurance policy are____________.

A)
B)
C)
D)
Not taxable
Taxable
Deductible
Chargeable
76. _________ are NOT categorized as being in hazardous occupations.

A)
B)
C)
D)
Quarry workers
Politicians
Construction laborers
Race car drivers
77. Which one of the following is NOT a non-forfeiture provision?

A)
B)
C)
D)
Paid-up policy.
Extended term insurance.
Installment payment over a fixed period.
Automatic premium loan.
__________________________________________________________________________________________
116
Mock Exam
78. _________ promises to reimburse the insurer for any losses he may incur as a
result of the issuance of a duplicate policy.
A)
B)
C)
D)
An indemnity letter
A statutory declaration
An authorization letter
A public note
79. Mr. Liow died during the grace period of his life insurance policy without having
paid the premium due. The beneficiary of his policy is entitled to receive______.
A)
B)
C)
D)
Only a return of the premiums paid on the policy

The full policy benefit
The policy benefit, minus the unpaid premium
Nothing
80. Many policies contain a provision that the policy shall not immediately lapse for
non-payment of premium if it has acquired____________.
A)
B)
C)
D)
Cash value
Non-lapse value
Letter of non-lapse provision
Policy loan
81. Which one of the following statements is true about the incontestability clause?
A) The incontestability clause is in the Insurance Act, Section 16(C).
B) No policy after expiry of two years from the date on which it was
be called in question by an insurer on the ground that
misrepresentation of age.
C) No policy after expiry of two years from the date on which it was
be called in question by an insurer on the ground that
misrepresentation made in the personal statement.
D) The incontestability clause is in the Insurance Act, Section 17(C).
effected can
there is a
effected can
there is a
82. Mr. Lee applied for life insurance and he requested that the policy be
backdated. The usual reason for an applicant to make this kind of request is to
gain the advantage of_________.
A)
B)
C)
D)
Larger policy dividends

A lower premium rate applicable to a lower age at entry
Extra insurance protection at no additional cost
Reducing the outstanding term of insurance
__________________________________________________________________________________________
117
Mock Exam
83. Which one of the following statements is NOT true?

A) An assignment is the transfer of rights and obligations under a contract from
one person another.
B) An assignment effectively transfers the ownership or legal rights under the
policy.
C) The person who transfers the rights is called an assignee and the person to
whom the rights are transferred is called an assignor.
D) The person who transfers the right is called assignor and the person whom
the rights are transferred is called an assignee.
84. Extra premiums are charged for the following occupations EXCEPT:
A)
B)
C)
D)
Blasters.
Underground mine workers.
Insurance agents.
Deep sea divers.
85. Under the family takaful plans, the benefits are divided into certain portions,
EXCEPT:
A)
B)
C)
D)
Death benefits.
Maturity benefits.
Immediate annuity benefits.
Surrender value.
86. Life insurance can be classified into three main classes of business, as follows:
A)
B)
C)
D)
Term, ordinary life and home service business.

Ordinary life, home service business and group insurance.
Ordinary life, annuity and group insurance.
Ordinary life, annuity and superannuation scheme.
87. The security from a life policy ensures that______________.

A) In the event of the premature death of a bread winner, there is cash from the
life policy for the family to pay for debts and bills
B) The beneficiary wins a lottery ticket
C) The insured money is stored in a bank vault
D) There are security guards guarding the house at night
__________________________________________________________________________________________
118
Mock Exam
88. Ms. Ang purchases a contract with a lump sum payment of RM 100,000. This
contract provides for a series of payments by the insurance company at regular
intervals immediately after Ms. Angs retirement. This contract is
called______________.
A)
B)
C)
D)
An endowment policy
An annuity
A whole life policy
A mutual fund
89. Childrens policies are of tow types:

Childrens protected educational plan.
Childrens deferred insurance.
What is the main difference between these two policies?
A) Childrens protected educational policies are issued on the life of the parent
whereas childrens deferred insurance policies are issued on the life of the
child.
B) Childrens protected educational policies are issued on the life of the child
whereas childrens deferred insurance policies are issued on the life of the
parent.
C) Childrens protected educational policies are of longer duration compared to
childrens deferred insurance policies.
D) Childrens protected educational policies have higher face amounts compared
to childrens deferred insurance policies.
90. Under which one of the following situations can group insurance be bought?
A)
B)
C)
D)
A father buying group insurance for his family members.

A creditor buying group insurance on the life of a debtor.
Employees buying group insurance for their employer.
An employer buying group insurance for his/her employees.
91. For an equivalent amount of coverage, which insurance plan has the highest
premiums?
A)
B)
C)
D)
Whole life policy.

Endowment policy.
Term policy.
Convertible whole life policy.
92. A participating policy is_____________.

A)
B)
C)
D)
A policy that shares in the companys surplus.

A policy that does not share in the companys surplus.
For juvenile policies only.
A policy that determines a companys risk exposure.
__________________________________________________________________________________________
119
Mock Exam
93. Which of the following statements is WRONG?

A) Life insurance is one of those contracts which require more than just good
faith.
B) Utmost good faith means that each party to the contract is legally obliged to
reveal all material facts.
C) Only the insured is obliged to reveal all material facts.
D) If there is a failure to disclose any material information, the other party can
regard the contract as void.
94. The following persons are legally considered to be parties to a life insurance
contract:
I- The husband who applies for a policy on his wifes life, naming himself as
beneficiary.
II- The wife who applies for a policy on her husbands life, naming her children
as beneficiaries.
III- The man who applies for a policy on his fiances life, naming himself as
beneficiary.
IV- The employer who applies for a policy on his employees life, naming the
company as beneficiary.
A)
B)
C)
D)
I & IV
I, II & IV
II, III & IV
I, II, III & IV
95. Which one of the following is NOT a feature of an endowment policy?

A) The contract is divided into 2 parts, namely, a decreasing term insurance and
investment accumulation.
B) The endowment period can be 10, 15, 20 or 30 years.
C) It provides maximum death protection and minimum savings.
D) It can be a participating or non-participating policy.
96. Muthu purchased a 10 years convertible term policy at the age of 35. If he elects
to convert the term to a whole life policy at the age of 45 on an attained age
basis, then the premium for the whole life policy will be_________.
A)
B)
C)
D)
Whole life premium age 30

__________________________________________________________________________________________
120
Mock Exam
97. Decreasing tem insurance is a form of term insurance in which__________.

A) The bonus reduces each year
B) The sum insured reduces each year until a small or no cover remains at the
end of the term
C) It can be converted to whole life policy any time
D) The insurance cover will terminate when the insured reaches 50 years of age
98. The duty of utmost good faith applies_______________.
A)
B)
C)
D)
Only to the insurer

Only to the insured
To both the insurer and the insured
To life insurance agents only
99. If no insurable interest existed at the time a life policy was effected, the policy
would_______.
A) Become void; the company is not obliged to pay a claim under the policy
B) Become voidable; the company may or may not be obliged to pay a claim
under the policy depending on the discretion of management
C) Become voidable depending on the judgment of the High Court
D) Remain valid
100.In life insurance, the law requires the applicant for a life policy to have insurable
interest at the time the___________________________.
A)
B)
C)
D)
Claim is paid
Insured person dies
Application for life insurance is made
Policy is issued
>>>The End>>>
__________________________________________________________________________________________
121
Sample Answers
__________________________________________________________________________________________
122
PCE Sample Answer

Part A1
Chapter 1
Chapter 2
Chapter 3
Chapter 4
Chapter 5
Chapter 6
Chapter 7
Chapter 8
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
D
C
B
A
C
D
D
A
B
D
A
B
D
D
A
B
C
C
D
A
D
C
D
D
B
A
D
D
C
A
C
A
D
A
C
B
A
D
A
B
A
D
A
D
C
D
C
D
C
D
B
C
C
C
B
D
A
C
D
B
D
B
D
D
B
A
D
D
C
D
A
C
A
D
C
D
D
D
A
D
D
D
C
D
D
Part A2- MHI

Chapter 9
Chapter 10
Chapter 11
Chapter 12
Chapter 13
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
A
C
C
B
C
A
D
B
B
D
A
C
D
D
A
A
C
A
D
B
A
D
D
A
C
B
D
B
B
C
A
D
D
B
B
D
A
A
C
D
A
B
C
B
A
D
D
A
C
B
__________________________________________________________________________________________
123
A
B
D
A
B
D
B
B
C
A
D
C
PCE Sample Answer

Part C
Chapter 21
Chapter 22
Chapter 23
Chapter 24
Chapter 25
Chapter 26
Chapter 27
Chapter 28
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
C
D
C
C
D
B
B
B
B
A
C
B
B
D
B
A
C
D
D
C
C
B
C
C
D
C
D
B
B
D
D
A
B
D
C
C
C
A
A
A
C
D
Chapter 29
Chapter 30
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
C
B
C
B
A
A
B
D
D
C
C
A
B
B
C
B
C
B
A
C
D
A
D
D
B
A
C
D
C
D
D
D
C
D
B
A
C
C
C
D
D
C
D
D
D
B
A
D
B
C
D
B
B
C
D
C
D
A
C
C
D
C
A
C
B
C
D
C
D
A
B
D
C
D
B
A
B
B
A
C
A
A
C
B
B
C
B
D
A
D
A
D
C
C
D
C
__________________________________________________________________________________________
124
D
D
C
C
B
B
C
B
B
B
D
C
PCE Sample Answer

Mock Exam
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
B
D
C
B
D
B
D
A
A
B
A
D
A
C
B
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
D
B
B
A
D
C
B
A
A
D
C
D
B
C
B
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
D
D
B
B
B
C
D
A
A
D
D
D
D
B
A
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.
57.
58.
59.
60.
C
D
B
D
B
A
B
A
B
C
A
A
B
A
C
61.
62.
63.
64.
65.
66.
67.
68.
69.
70.
71.
72.
73.
74.
75.
A
A
C
B
B
A
A
D
C
D
D
C
D
B
A
76.
77.
78.
79.
80.
81.
82.
83.
84.
85.
86.
87.
88.
89.
90.
B
C
A
C
A
C
B
C
C
C
B
A
B
A
D
91.
92.
93.
94.
95.
96.
97.
98.
99.
100.
B
A
B
A
C
D
B
B
A
C
__________________________________________________________________________________________
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E-Learning PCE Question Bank ENG - Oct.2014

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E-Learning PCE Question Bank ENG - Oct.2014

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Table of Content

Part A (1) - The Basic Of Insurance

Part A (2) - Medical and Health Insurance

Part (A1) - The Basics Of Insurance

Chapter 1 - Introduction to Insurance

Chapter 1: Introduction To Insurance

1. As we know, misfortune can arise in many forms. Insurance can be defined as an

2. Which of the following(s) is/are correct?

Chapter 1: Introduction To Insurance

4. Insurance, as an organization, seeks to provide protection against financial loss

increasing premium system

7. Which of the following is NOT true about the function of insurance?

Chapter 1: Introduction To Insurance

better prediction of future losses.

Chapter 1: Introduction To Insurance

12. What is a loss-sharing arrangement?

Chapter 2 - Nature of Risk and Risk Management

Chapter 2: Nature of Risk and Risk Management

2. Which of the following is NOT a pure risk?

3. The risk management process involves the following steps :A)

Identification Evaluation Selection Implementation Control.

5. Which of the following is CORRECT?

Chapter 2: Nature of Risk and Risk Management

6. Which of the following is a moral hazard?

A physical characteristic that increases the outcome of a loss.

Training employee in first aid.

8. What are the main characteristics of insurable risk?

Training employees in fire prevention.

Chapter 2: Nature of Risk and Risk Management

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

Chpater 3 - The Basic Principles of Insurance And An

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

1. Insurable interest is a basic principle of insurance that requires the person

3. The principle of subrogation provides that an insurer who has indemnified an

I & III only

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

4. Indemnity can be defined as a restoration of the claimant to the same financial

5. Contribution will apply in the following conditions:

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

sue for damages

8. Takaful is a protection plan based on Shariah principles. It can be divided into

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

Mr.Lee and Mr.Lau are both the assignee.

10. Which of the following is TRUE?

When claim occurs.

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

Not helping the participant who suffered an unexpected loss

13. The definition of Material fact is_________.

Chpater 4 - The Insurance Market

Chapter 4: The Insurance Market

1. Which of the following is NOT true?

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

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

Chapter 4: The Insurance Market

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

7. Which of the following is NOT true about their objective?

Chapter 4: The Insurance Market

Chapter 5 - Consumer Protection And Statutory

Chapter 5: Consumer Protection And Statutory Regulations

2. Below are the advantages of self-regulation, EXCEPT:A)

It helps to instill self-discipline among insurance companies.

3. Under Insurance Act 1996, the policy owner is allow to?