'.

THE MALAYSIAN INSURANCE INSTITUTE

THE CERTIFICATE EXAMINATION IN
INVESTMENT-LINKED LIFE INSURANCE
SAMPLE OF EXAMINATION QUESTIONS

DATE

DURATION 1 Y2 hours

LANGUAGE ENGLISH

Candidate's Full Name (as in Identity Card)

Candidate's I.C No.

This sample of examination question set is the property of

The Malaysian Insurance Institute and it should be used for educational
or training purposes only.

@ Copyright The Malaysian Insurance Institute.

THE MALA YSIAN INSURANCE INSTITIlTE, NO 5, JALAN SRI SEMANT AN SA TU, DAMANSARA HEIGHTS, 50490 KUALA LUMPUR.
GENERAL LINE: 03 - 20878882 CUSTOMER SERVICE: 03 - 2087 8883

',.....

I
IL
.- ~-
S The Certificate Examination in Investment-Linked Life Insurance

Please read all instructions carefully.

1. Copy your Candidate Examination Number (CEN) from your examination entry
permit into the box provided on the cover page of this question paper.

2. The duration of this examination is one and a half (1 %) hour.

3. This examination question paper consists of 60 questions with 4 answer

choices.

4. Mark all your answers on the answer sheet provided. You are to blacken only
one oval with the alphabet corresponding to your answer choice for each
numbered row. If there appears to be more than one answer choices, select
the one you think is the best alternative.

5. You may write anything on the examination question paper BUT Mil will not
consider anything that you have written for marking.

6. Only correct answers will be given a point. Wrong and unmarked answers will
not be given any point. Therefore you are to answer all questions even if you
have to guess.

7. Please do NOT remove any paper from the examination room.

8. Use 28 pencils and soft erasers only.

9. This question book, answer sheet and other materials provided during this
examination are NOT permitted to be taken away from the examination hall. It
is the onus, duty and responsibility of the candidate to hand-in personally to the
Presiding Official all these materials before leaving the hall.
 a The Certificate Examination in Investment-Linked Life Insurance

1. The payment made to the insured upon the cancellation of a policy is called

A surrender value.
B penalty payment.
C investment value.
D return of premium.

2. In , the investment income of investment-linked life insurance policy

is ploughed back into the fund.

A an accumulated units fund

B an accumulated bonus fund
C a life insurance reserve fund
D an accumulated interest fund

3. What type of investment allows an investor to buy a right to purchase or sell a

security at a fixed price within a specified time period?

A Shares
B Options
C Property options
D Unit trust options

4. Using the single pricing method, calculate the cash value of 4,000 units at a unit
price of RM1, a mortality charge of 2% and a RM1 00 policy fee.

A RM3,500
B RM3,800
C RM3,820
D RM3,620

These questions for insurance companies' training purposes on!;\!

Questions continued overleaf
 ----I

.. -
.-
a The Certificate Examination in Investment-Linked Life Insurance

5. Name some of the criteria used to compare conventional insurance products with
investment-linked insurance products.

I Investment risks
II Investment return
III Surrender benefit
IV Management expenses

A I and II
B /, II and III
C I, II and IV
o II, III and IV

6. Treasury bills are generally considered to be of no risk. When is this NOT true?

A When the share market drops

B When the bank interest rate falls
C When the property market crashes
o When the country is politically unstable

7. Which type of investments offer bigger capital and income growth?

A Investments with no risks

B Investments with little risks
C Investments with higher risks
o Investments with highest risks

8. In what ways is an investment-linked fund divided amongst the respective

policyholders?

A The fund is divided into a number of units.

B The fund is divided by the number of the policyholders.
C The insurer declares the value according to the sum insured.
o The reinsurer declares the value according to the sum insured.

9. Under the calculation of death benefits on unit value or death cover basis, what is
the criteria for payment upon death?

A The unit value

B The sum assured
C The unit value plus sum assured
o Unit value or death cover, whichever is higher

These questions/or insurance companies' training purposes on(1'

2 Questions continued overleaf
,: -

a The Certificate Examination in Investment-Linked Life Insurance

10. What is the purpose of a proposal form?

A To disclose all material facts which will influence the acceptance of the
proposal by the insurer.
B To include a statement on claim procedures.
C To serve as ground for claim rejection.
D To simplify the work of an agent.

11. Who are appointed to supervise the way a company performs its obligations in
respect of debenture stocks?

A Bankers
B Lawyers
C Trustees
D Arbitrators

12. Investment-linked funds can be structured in two ways namely and

A terms units; annuity units

B warrants units; rights units
C investment units; mortality units
D accumulation units; distribution units

13. What do the current investment-linked whole life plans offer?

A Policyholders have total flexibility to alter their needs for investment and
protection.
B Policyholders have partial flexibility to alter their need for investment and
protection.
C The insurers have total discretion to invest on behalf of policyholders.
D Policyholders have no right to change the terms of the policy.

14. What are the types of investments of property funds?

A Real estate only

B Property shares only
C Individual property only
D Real estate and property shares

These questions/or insurance companies' trailling purpose.'!. on")?

3 Questions continued overleaf
 a The Certificate Examination in Investment-Linked Life Insurance

15. Which of the following is/are NOT readily available for most individual investors?

A Property
B Investment trusts
C Annuities and pensions
D Buying up a new company

16. Name some of the financial instruments used by investment-linked funds.

I Cash funds
II Diversified funds
III Specialised funds
IV Money market funds

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

17. What are the factors that can affect commodity prices?

I Demand and supply

II Weather conditions
III Pest attacks
IV Insecticides

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

18. The charges deducted from the benefits received by a policyholder are

I the policy fee.

II the mortality charge.
III an additional 5% charge.
IV the administration charges.

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

These questions for insurance companies' training purposes on~}J

4 Questions continued overleaf
 S The Certificate Examination in Investment-Linked Life Insurance

19. Under the current investment-linked whole life plans the policy has total flexibility
to alter a policyholder's need for investment and protection in accordance with the

A market trend.
B change of law.
C insurers suggestion.
D policyholder's wishes.

20. What is the minimum death benefit for investment-linked life insurance policies?

A RM3,000
B RM5,OOO
C RM10,000
D RM12,000

21. Under a regular premium investment-linked insurance plan withdrawals and

surrender are

A not allowed.
B allowed after a certain period.
C allowed after the premium is fully paid.
D allowed when the investor becomes invalid.

22. A liquid instrument which carries little or no risk of losing the principal amount is
known as

A cash and deposits.

B treasury bills.
C commodities.
D shares.

23. What does the investment-linked permanent health insurance offer?

I Health cover on disability income

II Medical expenses
III Death cover
IV Cash value

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

These questionsfor insurance companies' training purposes on(1'

5 Questions continued overleaf
..
,

S The Certificate Examination in Investment-Linked Life Insurance

24. What type of investment-linked insurance plan provided practically NO life

protection at all?

A Single premium insurance plan

S Regular premium insurance plan
C Investment-linked individual pension plan
o Investment-linked permanent health insurance

25. Investment-linked funds normally consist of what kinds of investments?

I Secured equity stocks

II Fixed interest securities
III Certain types of bonds only
IV A wide range of equity stocks

A I and III
S I and IV
C II and III
o II and IV

26. The investment returns under an investment-linked life insurance policy

are linked to the performance of the investment fund managed by the life
office.
II fluctuate according to the rise and fall of market prices.
III are not guaranteed.
IV are assured.

A I and III
S III and IV
C I, II and III
o I, III and IV

27. Investment-linked life insurance policies

A will never suffer any investment losses.

S lack smoothing process of traditional with-profit life policies.
C have a greater smoothing process than traditional with-profit life policies.
o always receive greater investment returns than traditional with-profit life
policies.

These questions for b",'urance companies' training purposes on!;.'

6 Questions continued overleaf
,.

.-
a The Certificate Examination in Investment-Linked Life Insurance

28. What distinguishes investment-linked insurance policies from unit trust products?

A The minimum death benefit is provided under only investment-linked

policies.
B There is no difference; both are investment vehicles.
C There is no guarantee for unit trust products.
o Unit trust products incur higher cost.

29. In investment-linked insurance, when is the investment premium placed in a

unitised fund?

A At the time the premium is paid.

B At the time the policy is taken up.
C At the time the post-dated cheque is received.
o At the time the policyholder agrees to pay the full premium.

30. At which price does the policyholder buy the units in an investment-linked life
insurance policy?

A The bid-offer price

B The cash price
C The unit price
o The bid price

31. Which type of policy does NOT have the surrender benefit?

A A term life policy

B A whole life policy
C An endowment policy
o A policy without profit

32. What does the term 'prospects' refer to?

A Potential products
B Potential customers
C The future of the agent
o Percentage of closing a deal

33. What will ultimately affect investment decision?

A Property pricing.
B The level of available funds.
C Fluctuations in the share market.
o The availability of management advice.

These questions/or insurance companies' training purpose.'- on~J'

7 Questions continued overleaf
 1

.-
S The Certificate Examination in Investment-Linked Life Insurance

34. What is an important ingredient for a successful sales interview?

A A change in the sales plan.

B A reduction in the product pricing.
e The agent's skill in handling objections from a prospect.
o The agent making objections and drawing the prospect's attention to the
advantages of the product.

35. How can an ordinary investor gain access to well diversified investment-linked
funds managed by professional investment managers with proven track records?

A By buying an investment-linked life policy.

B By buying a whole life with-profit policy.
e By buying an endowment life policy.
o By buying an annuity.

36. The promotional message delivered to a prospect by an agent is known as the

A sales report.
B marketing plan.
e sales presentation.
o purchase presentation.

37. What are the factors involved in the customer's shopping around for a suitable
product to meet his needs?

I The value involved.

II Professional advice.
III The benefits derived from the purchase.
IV The customer's experience in buying the product.

A I and IV
B II and III
e L III and IV
o II, III and IV

These questions for insurance companies' training purposes on!;I'

8 Questions continued overleaf
 a The Certificate Examination in Investment-Linked Life Insurance

38. Why is the personal delivery of a policy regarded as an important aspect of providing
after-sales service?

The customer's cognitive dissonance is alleviated by the agents' reassurance

that the right purchase has been mode.
II The agent can take the opportunity to obtain more names of referred leads
and other prospects.
III It re-emphasizes the agent's commitment to providing the policyholder quality
service.
IV The policyholder is encouraged to call the agent whenever the need arises.

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

39. Every single investment vehicle can be categorised based on fundamental

characteristics. What are they?

I Safety
II Taxation treatment
III Growth (capital gains)
IV Income (steady stream of income)

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

40. The Takaful investment-linked life plans are developed by

A takaful companies.
B composite insurers.
C Bank Negara Malaysia.
o Syarikat Takaful Malaysia Sdn. Bhd.

41. What is the main DISADVANTAGE of property funds compared to equity funds?

A Property have lower liquidity

B Property funds carry a lower risk
C Property funds are a safer investment
o Property fund are difficult to sell at a profit

These questions/or insurance companies' training purposes on~JI

9 Questions continued overleaf
,
m
~-

The Certificate Examination in Investment-Linked Life Insurance

42. The Risk-Based Capital Framework for insurers was implemented on

A 1 January 2008.
B 1 January 2009.
C 1 February 2009.
D 1 October 2009.

43. Which of the following is considered INCONSISTENT with after-sales service?

A Establishing the customer! agent relationship.

B Strengthening the customer! agent relationship.
C Providing a basis for future sales on current needs.
D Explaining the policy's provisions terms and conditions.

44. What is the difference between endowment assurance and whole life assurance?

A There is no difference.
B Whole life policies only pay upon the death of the insured.
C Endowment assurance usually has a shorter term and an early maturity date.
D Whole life policies pay upon the policyowner's retirement from employment.

45. The structure of the charges of an investment-linked life policy is

I stipulated openly by life office.

II specified in the policy document.
III made known to policy owner at the outset.

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

46. Which funds are at the top end of the risk-return graph?

A Cash funds
B Equity funds
C Balanced funds
D Managed funds

These questions for insurance companies' training purposes ()n~}I

10 Questions continued overleaf
,•.
a The Certificate Examination in Investment-Linked Life Insurance

47. Once declared, the can be withdrawn at once by the policyholder.

A cash bonus
B terminal bonus
C survival benefit
D reversionary bonus

48. With regard to Bank Negara Malaysia's circular JP: 1/1997, what factors must be
taken into account to measure a licensed insurer's margin of solvency?

I The extent of liability of the insurer.

II Class of assets of a licensed insurer.
III Description of assets of a licensed insurer.
IV The extent of a class of assets of a licensed insurer.

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

49. Traditional guaranteed without-profit life insurance products do NOT include

A temporary assurance.
B investment-linked life insurance.
C non-participating whole life insurance.
D non-participating endowment insurance.

50. The principal legal document regulating income tax in Malaysia is the

A Company Act, 1965.

B Insurance Act, 1996.
C Income Tax Act, 1967.
D Income Tax Act, 1976.

51. The premium relief is allowable when the is on the life of the spouse of
the individual.

I life insurance
II deferred annuity
III general insurance

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

These questions for insurance companies' training purposes on(1'

11 Questions continued overleaf
#.

The Certificate Examination in Investment-Linked Life Insurance

52. The of an investment-linked life insurance policy must be at least 18 years

old.

A nominee
B assignee
C life assured
D policy owner

53. An investment-linked life insurance policy has a free-look provision of at least

_days.

A 14
B ~
C 21
D 30

54. If a policyholder buys units on the dual pricing basis, how many units can he get by
paying RM1 0,000 for a unit priced RM2?

A 5,000 units
B 6,000 units
C 8,000 units
D 10,000 units

55. Who has a greater or wider choice of investment available?

A A long term investor

B A small time investor
C A fixed income investor
D An investor with large funds

56. must be done if there is a major change that might have happened
to the clients' investment account.

A A regular review
B An ad hoc review
C An emergency review
D An accidental review

These questions for insurance companies' training purposes on~}I

12 Questions continued overleaf
t.

a The Certificate Examination in Investment-Linked Life Insurance

57. The customer fact find form contains the following information, EXCEPT:

A medical history.
B cash flow analysis.
C customer's risk profile.
D life and financial priorities and goals.

58. What are the DISADVANTAGES of an investment-linked life policy as compared to

a conventional with profit life policy?

I An investment-linked life insurance policy is more flexible.

II The policyholder shoulders all the risk of investment himself.
III There are few guarantees under an investment linked life policy.
IV In times of poor market sentiments, the policyholder of an investment-linked
life insurance policy can lose all his investment.

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

59. When marketing investment-linked life insurance products, which of the following are
the final step in a structured approach?

A Monitoring the portfolio.

B Gathering all relevant financial data.
C Implementation of the agreed recommendations.
D Developing plans and strategies to meet the goals.

60. is a form of misrepresentation in which a policy owner is induced to

discontinue an existing insurance policy, and purchase a new policy.

A Twisting
B Switching
C Withdrawal
D Money laundering

»> End of paper «<

These questions for insurance companies' training purposes onl;lI

13