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PCE Sample Questions (Eng) Set 3

SET 3: PCE SAMPLE QUESTIONS

1. Which of the following provides for an annuitant to put in a lump sum at entry and on
attainment of a specified age, the insurer will pay an annuity of a specified amount until
death?

A. Single life annuity


B. Immediate annuity
C. Deferred annuity
D. Last survivor annuity

2. Backdating of the commencement date of insurance may be allowed in some cases of


up to ____________ so that the proposer may benefit by paying a lower premium
applicable to the lower age.

A. 3 months
B. 4 months
C. 5 months
D. 6 months

3. On August 1, Mr. Chong submitted a proposal form to an insurer. A letter of acceptance


was issued on August 8, and was delivered to Mr. Chong on August 10. Mr chong paid
the initial premium on August 17. A life insurance policy was issued and delivered to Mr.
Chong on September 4. Mr. Chongs life insurance policy was effective on

A. August 8
B. August 10
C. August 17
D. September 4

4. In case of breach of utmost good faith, the aggrieved party can

A. Sue the damages


B. Waive the breach
C. Refuse to honour
D. Accept the cost

5. An insurance agent who solicits or negotiates a contract of insurance should NOT

A. Treat all information supplied by the prospective policyholder in confidence for


the sole purpose of issuing an insurance policy
B. Ensure as far as possible the policy proposed best meets the needs and
resources of the prospective policyholder
C. Discourage the prospective policyowner from stating material facts to the
insurance company or induce the person not to state them
D. Give advice only on insurance matters in which he is knowledgeable and seek or
recommend other specialist advice if necessary

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PCE Sample Questions (Eng) Set 3

6. Underwritting guards against anti-selection and to ensure that the rates charges are

A. Ratable
B. Equitable
C. Manageable
D. Unsuitable

7. The secondary functions of insurance include the following:

I. To provide a means of saving and reduction of lossess


II. To stabilize cost stabilization and stimulate business entreprise
III. To provide equitable distribution of financial losses
IV. To provide a source of capital for investment

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

8. The concept of tabarru refers to

A. The agreement between the participants and the takaful operation for the
purpose of business venture and both parties agree on a profit-sharing
arrangement
B. The sincere intention of the group members to help and support the needed
C. The agreement by the participant to hand over as donation, a certain proportion
of the takaful contribution, enabling him to fullfil his obligation as mutual help
D. An agreement to jointly indemnify the loss or damage that may influence any of
the contributors

9. Why are only pure risks insurable?

A. Because there is no possibility of a loss


B. Because of the need to maintain the principle of indemnity
C. Because insurers prefer good risks only
D. Because of the principle of utmost good faith

10. In the context of the law of contract, the term caveat emptor is

A. Let the seller beware


B. Let the buyer beware
C. Utmost good faith
D. Representation

11. Accidental dealth benefits is a form of

A. Basic benefit
B. Supplementary benefit

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PCE Sample Questions (Eng) Set 3

C. Permanent benefit
D. Bonus

12. Policies generally issued for the purpose of mortgage protection are usually in the nature
of __________________ insurance.

A. Convertible term
B. Decreasing term
C. Increasing term
D. Whole life

13. Term insurance is different from other forms of permanent insurance as it doesnt NOT
provid any

A. Protection
B. Survival benefit
C. Convertibility
D. Renewability

14. __________ are NOT categorized as being in hazardous occupations.

A. Quarry workers
B. Office workers
C. Construction labourers
D. Race car drivers

15. Premiums for participating policies are higher due to the right to share in the profits of
the operation of a life insurance company. This additional premium is known as

A. Profit premium
B. Risk premium
C. Bonus risk
D. Bonus loading

16. If your client effects an ordinary whole life policy on his own life at age 25, he has to pay
premium until

A. His dealth or when he reaches the age of 85 and above


B. He converts the policy into paid-up policy
C. He surrender the policy
D. Any of the above happens

17. An endowment policy pays the sum assured of the policy when the life insured

A. Dies anytime or survives up to the age 85 or more


B. Dies anytime within a specified perios or survives at the end of that period
C. Survives at the end of the specified period
D. Dies within the specified period

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PCE Sample Questions (Eng) Set 3

18. Term insurance is sold at a relatively low premium because it provides temporary death
protection and

A. Has no cash surrender value at the end of the period


B. An increasing commission rate is paid to agents
C. The mortality rate is lower
D. Involves a small face amount (sum assured)

19. Which type of policy does NOT have a cash value?

A. Term
B. Endowment
C. Whole life
D. Childrens deferred insurance

20. Nathan was hospitalized for 3 days in a private hospital this year. The hospital bill
amounted to RM3,000. This is his 1st claim on his hospital and surgical insurance policy
this year. Given that the policy has an annual deductible of RM1,000, a co-payment
requirement of 20% and assuming that the whole hospital bill is eligible for insurance
reimbursement, how much will the hospital and surgical insurance policy reimburse
Nathan?

A. RM1,400
B. RM1,600
C. RM1,800
D. RM2,000

21. The common health insurer underwritting decisions are

A. Standard (issued exactly as applied for), declined, postponed


B. Standard (issued exactly as applied for), postponed, sub-standard (issued on
other than applied for basis)
C. Standard (issued exactly as applied for), declined, sub-standard (issued on other
than applied for basis)
D. Standard (issued exactly as applied for), postponed, change plan

22. Which of the following circumstances does NOT require further medical investigations,
and/or documentation in the process of underwriting medical and health insurance?

A. A pre-existing condition which increases the probability of a recurrence


B. A medical condition which is capable of prolonging the recover period
C. An accidental injury which had caused temporary disablement
D. An impaired risk which adverse medical history

23. Which section of the policy states that the proposal and declaration shall be the basis of
the contract between the insured and the insurer?

A. Representation clause
B. Recital clause

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PCE Sample Questions (Eng) Set 3

C. Operative clause
D. Attestation clause

24. Adam was killed while robbing a goldsmith shop. When his nominee filed a claim for
death benefit under a personal accident policy, the insurer declined the claim because

A. There was no consideration


B. There was no intention to create a legal relationship
C. He died while committing an illegal act
D. There was no offer and acceptance

25. For personal accident policy, the doctrine of __________ is important, as more than one
condition can operate leading to a claim.

A. Utmost good faith


B. Proximate cause
C. Contribution
D. Subrogration

26. If the agent is authorised to collect monies in accordance with the terms of his agency
appointment, the agent shall NOT

A. Keep a proper account of all financial transactions with his policy owners
B. Remit any such monies so collected to the insurer in strict conformity with his
agency appointment
C. Use the money collected for agency use until such time the premiums are due for
payment
D. Acknowledge receipt of all money received in connection with an insurance
policy and distinguish the premium from any other payment

27. The following are the underlying princeiples of the code of ethics and conduct:

I. To avoid conflict of interest


II. To avoid misuse of position
III. To prevent misuse of information
IV. To prevent competition between agents

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

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PCE Sample Questions (Eng) Set 3

28. Choose one practice which is ethical.

A. Investing the insured premium and sharing the profit together


B. Holding in trust information on 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 1st premium for the prospect

29. The law of agency, an agent is a person who acts on behalf of another person whom he
represents and the person whom he represents is called as the

A. Broker
B. Principle
C. Intermediary
D. Insured

30. Agents must not conceal any relevant information, must maintain confidentiality, not
accept secret commissions, and generally act in the principals best interest.
This statement refers to agents duty

A. To obey the principals instructions


B. To account for monies received on behalf of the principal
C. To act in good faith towards the principal
D. To exercise proper care and skill

31. The type of policies that provide for a lump sum payment upon the claimant being
diagnosed as having any one of the specified critical illness are known as

A. Critical illness policies


B. Investment-linked policies
C. Permanent health insurance policies
D. Permanent disability insurance policies

32. Group health premium rates may be influenced by which of the following factors?

I. Age
II. Financial situation
III. Occupation

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

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PCE Sample Questions (Eng) Set 3

33. When an agent invites any person or individual to make an offer or proposal to enter into
a contract of insurance, the agent is NOT required to disclose

A. The amount of premium charged by the licensed insurer


B. The name of the licensed insurer
C. His relationship with the insurer
D. Any discount offered by the licensed insurer

34. Why are ethnical conduct and behavior crucial?

A. To increase sales of insurance policies


B. To preserve the trust on which insurance transactions are based and to preserve
public trust in the life insurance industry
C. To abide Bank Negaras Code of Ethics for the insurance industry
D. To prevent an increase in claims

35. A maturity claim arises upon the

A. Death of the life insured while the policy is in force


B. Survival of the life assured up to the stipulated date of maturity of the policy
C. Hospitalization of the life insured
D. Suffering of a dreadful disease by the life insured

36. Which one of the following would NOT require for the settlement of a maturity claim?

A. Proof of death
B. Proof of ownership
C. Proof of survivorship
D. Proof of age

37. Upon survival of the life assured at the end of the policy term the payment of policy
proceeds is known as a _______________ claim.

A. Death
B. Revival
C. Disability
D. Maturity

38. Which of the following statements is true?

A. Risk remains the same throughout the duration of the policy


B. Risk increases as age increases
C. Risk decreases as age increases
D. Risk first increases and then levels as age increases

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PCE Sample Questions (Eng) Set 3

39. Health insurers are very careful not to accept unhealthy persons at standard premium
rates as these results in a less favourable underwriting result. This occurs when an
applicant who knows that he has a very high probability of loss submits a proposal for
health insurance. This situation is known as
A. Poor selection
B. Anti-selection
C. Averse selection
D. Risk selection

40. The four main classes of health insurance contract are


A. Home service, clinical, maternity and dental insurance
B. Medical expenses, disability income, home service and critical illness insurance
C. Disability income, hospital income insurance, medical expenses and critical
illness insurance
D. Dental, medical expenses, maternity and home service insurance

41. The minimum paid-up capital or surplus of assets over liabilities prescribed by law for
local/foreign direct insurers shall not be less than

A. RM50 million
B. RM75 million
C. RM100 million
D. RM120 million

42. The function of the Financial Mediation Bureau (FMB) is to

A. Serve as a central registry for all health policies issued on a medically sub-
standard basis
B. Inform its members of specific underwriting actions taken by its members
C. Assist its members in detecting non-disclosures of facts by applicants
D. Provide an independent service for dealing with disputes between insurers and
personal policyholders

43. _______________ is NOT essential for an insurance contract.

A. Offer and acceptance


B. Consensus ad idem
C. Consideration
D. Ratification by a lawyer

44. Which part of the insurance policy sets out the perils insured against and circumstances
in which the insurer will be liable?

A. The recital clause


B. The operative clause
C. The schedule
D. Conditions

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PCE Sample Questions (Eng) Set 3

45. Exclusions are inserted into policies for the following reasons, EXCEPT:

A. Cover can be provided under more appropriate policies


B. The insurer requires additional premium for such cover
C. The cover is not demanded by the insured
D. The risks are uninsurable

46. Under policy conditions, the duty of disclosure must be observed

A. During the negotiation of the insurance contract


B. During the currency of the insurance contract
C. At the time of renewal of the insurance contract
D. During the negotiation, currency, and at the time of renewal of the insurance
contract

47. The person works for an insurance company and his primary responsibility is to assess
all applications to determine the risk they present to the company and to decide whether
to accept these applicants.

A. Underwriter
B. Medical examiner
C. Claims executive
D. Accountant

48. The contribution condition in the policy requires the insured to claim _______________
from each insurer involved.

A. Proportionately
B. In installments
C. Periodically
D. The total loss

49. Which of the following comprise prohibited business conduct for insurers as well as
insurance agents?

I. Persuading or attempting to persuade a financial consumer to dishonestly


conceal, omit or provide material facts ambiguously
II. Offering or assuming to act on behalf of an insurer in negotiating a policy
III. Making any statement, illustration, promise, forecast or comparison which is
misleading
IV. Carrying out any other act on behalf of an insurer in relation to the issuance,
renewal or continuance of policy

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

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PCE Sample Questions (Eng) Set 3

50. The expenses of running an insurance business can be categorized as the following
EXCEPT

A. Initial expenses
B. Renewal expenses
C. Management expenses
D. Termination expenses

51. Insurers employ the mortality table as a

A. Means of not paying death claims


B. Practical tool to estimate the mortality for groups or lives for premium calculation
C. Table of calculation for administrative expenses
D. Chart to foresee the mortality of a person

52. The chance of dying in a year at a specified ages is commonly termed as rate of

A. Morbidity
B. Mortality
C. Interest
D. Surviving

53. The charge for covering the cost of mortality and interest is called _________ premium.

A. Gross
B. Net
C. Risk
D. Written

54. Which of the following relationships about insurable interest is FALSE?

A. A creditor has an insurable interest in the life of the debtor to the extent of the
debt
B. A company has an insurable interest in the life of a director or a manager who
occupies a key position in the company
C. Insurable interest can never exist among partners in a partnership
D. A husband has an insurable interest on the life of his wife

Note: There are total of 54 sample questions only in this set (as at August 11, 2015).

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PCE Sample Questions (Eng) Set 3

Answer

1 C 26 C 51 B
2 D 27 A 52 B
3 D 28 B 53 B
4 B 29 B 54 C
5 C 30 C
6 A 31 A
7 C 32 C
8 C 33 D
9 B 34 B
10 B 35 B
11 B 36 A
12 B 37 D
13 B 38 B
14 B 39 B
15 A 40 C
16 D 41 C
17 B 42 D
18 A 43 D
19 A 44 B
20 B 45 C
21 C 46 D
22 C 47 A
23 B 48 A
24 C 49 B
25 B 50 C

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