PCE A & CSET C

ENGLISH

AGENCY TRAINING & DEVELOPMENT DEPT.AIA CO. LTD

1. Which of the following is correct?

A. Speculative risk is always catastrophic in natureB. Pure risk is uninsurableC. There is a gain in speculative riskD. Speculative risk is uninsurable

2. What is the meaning of concealment?

A. Unable to perform the agreed performanceB. One party becomes insaneC. Failure to disclose material factsD. The principle of subrogation

3. An insurance company owned by shareholders is called:

A. a mutual companyB. a proprietary companyC. a co-operative companyD. None of the above

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

A. An agent inculcates the discipline of saving amongst the publicB. An agent falsifies claims in order for claimants to obtain moneyC. An agent brings financial relief in the event of property lossD. An agent brings financial relief to grieving dependents of the insured who

may meet an untimely death

5. The primary function of insurance is ____________

A. to provide a sound capitalB. to provide employmentC. to compensate the unfortunate few from the many insuredsD. to provide social service

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

A. Large number of similar riskB. Reasonable premiumC. Insurable interestD. Against public policy

7. The principle of contribution stipulates that when two or more policies covering forthe same risk, the insured ________

A. can claim under one policyB. cannot make any claimC. must claim under all policies, recovering a ratable proportion from each insurerD. None of the above

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

A. When the preparation of policies and renewals & etc. is being carried out in thehead office

B. When only the preparation of policies and renewals of policies are carried out inthe branches concerned

C. When the company has no branchesD. When the underwriting, claims ad servicing of the branch business are handled

at the respective branches up to a pre-arranged limit

9. How do insurers encourage loss reduction and prevention?

A. By offering rates of discount to those who take such measuresB. By loading the premium of those who take such measuresC. By having more agentsD. All of the above

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

A. hazardB. lossC. perilD. risk

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

A. it is a self-inflicted injuryB. the risk is of illegal natureC. the risk is expectedD. he attempted suicide

12. The Takaful Act 1984 provides for the establishment of the ___________ whose functionis to advise the Takaful company on its operation in order to ensure that it does notinvolve itself in any element which is not approved by the Islamic Religion Law.

A. Takaful Supervisory CouncilB. PIAM Supervisory CouncilC. Syariah Supervisory CouncilD. LIAM Supervisory Council

13. What is the meaning of consensus ad idem?

A. Of the same mindB. DisagreementC. Meeting of the parties to contractD. Uberrima fides

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

A. Registration of insurersB. Solvency of the insurerC. Compulsory deposit by the insurerD. All of the above

15. Which of the following association of bureau provide for compassionate payment orallowance to person(s) injured or to dependant(s) of person(s) killed through the use ofmotor vehicle?A. PIAMB. MIIC. MIBD. None of the above

16. In life insurance, insurable interest must exist ____________

A. at the time of lossB. at the time of the insurance contract existC. at the inception of the contract and the time of lossD. during the life time of the policy

17. If an agent acts beyond his authority, a principal may subsequently _________the act and make it valid.

A. ratify

B. rectifyC. notifyD. dismiss

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

A. Incontestability clauseB. Days of graceC. Suicide clauseD. Assignment

19. The net premium in life insurance is the _________

A. amount of premium sufficient to pay total claims, as and when they ariseB. gross premium less expenseC. premium charged on riders attached to a basic policyD. premium charged to the policyholder

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

A. rebatingB. twistingC. misrepresentationD. underwriting

21. Level premium can be paid __________

A. annuallyB. quarterlyC. monthlyD. any of the above

22. Maturity benefits are made up of the _________

A. sum assured plus bonusB. sum assured plus disability benefitsC. sum assured plus disability benefits and bonusD. bonus plus disability benefits

23. Which of the following best defines 'surplus'?

A. Surplus is the difference between the life insurance fundand all policy liabilities

B. Surplus is profitC. Surplus is the difference between revenues and costs.D. Surplus is input less output

24. The 'burden of proof of death of a life assured caused by suicide' is laid on the _______

A. courtB. claimantC. certified doctorD. insurance company

25. The chances of dying in a year or at a specific age is commonly termed as the __________

A. rate of moralityB. rate of mortalityC. rate of morbidityD. rate of surviving

26. What is the accumulated amount of RM8,000 if the amount is invested forthree (3) years at a compounded interest rate of 7.5 percent per annum?

A. RM8,003.38B. RM8,003.00C. RM8,600.00D. RM9,938.38

27. What is a reversionary bonus?

A. Bonus usually takes the form of cash distribution and is usually contingent uponpayment of the next premium

B. Bonus is declared as proportion of the sum assured and the bonuses accumulatedunder the same circumstances as the original sum assured

C. Bonus allocated is in proportion to the sum assured and the bonusesaccumulated under the policy

D. Bonuses are normally declared on the valuation date of the policy yearpreceding that date, which is in arrears

28. Life insurance can be classified into three (3) main businesses. They are _______

A. Ordinary life, group insurance and home service insuranceB. Ordinary life, group insurance and home life insuranceC. Ordinary life, term insurance and group insuranceD. Ordinary life, annuity and group insurance

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

A. The philosophy of competitionB. The philosophy of risk sharingC. The philosophy of saving livesD. The philosophy of risk retention

30. An insured can return a policy within _______ from receipt of the policy with awritten notice. The insurer will then have to refund the premium.

A. 15 weeksB. 5 daysC. 15 daysD. 30 days

31. The three (3) basic insurance policies are ________

i group policyii whole life policyiii endowment policyiv term policyv home-service policy

A. i, ii, iiiB. i, ii, ivC. ii, iii, ivD. ii, iii, v

32. The three (3) common methods that value the assets of a life office are _______

i cost priceii book valueiii actuarial valuationiv market value

A. i, ii, iiiB. i, iii, ivC. ii, iii, ivD. i, ii, iv

33. Which of the following factors determine the life premium rates?

A. Mortality, interest, expenses, bonus loadingB. Mortality, interest, income tax, commissionC. Mortality,, interest, expenses, commissionD. Gender, interest, expenses, bonus loading

34. The difference between gross premium and net premium is due to________

A. rate of moralityB. rate of interestC. expenses loadingD. commission

35. En. Kamaruddin purchased a RM100,000 Whole Life non-participating policy onhis own life. The agreed sum insured of RM100,000 will be payable in the event ofdeath of En.Kamaruddin. This type of contract is known as ____________

A. contract of indemnityB. valued contractC. contract of adhesionD. unvalued contract

36. Mr. Chong, 25 years old, has effected a term policy of RM100,000 for 30 years. Whenhe reached 55 years old, he will receive__________

A. RM100,000 and the policy shall be terminatedB. RM100,000 and the policy shall continue for another 30 yearsC. nothing and the policy shall be terminatedD. nothing and the policy shall continue for another 30 years

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

A. Deferred annuityB. Single life annuityC. Last survivor annuityD. Joint life annuity

38. A life proposed with hazardous occupation is said to have___________

A. an increasing extra mortalityB. a level mortalityC. a decreasing extra mortality

D. none of the above

39. __________ is simply an additional clause to the policy or variation of oneor more of the conditions.

A. An endorsementB. A declarationC. A letter of extensionD. A letter of acceptance

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

A. charges an extra premiumB. offers an alternate form of contractC. imposes a debt or lienD. provides a premium discount

41. On March 1, Mr. Chong submitted a proposal form to an insurer. A letterof acceptance was then issued on March 8 and subsequently was delivered toMr. Chong on March 10. Mr. Chong paid the initial premium on March 17.A life insurance policy was issued and delivered to Mr. Chong on April 5.Mr. Chong life insurance policy became effective on_______

A. August 8B. August 10C. August 17D. April 5

42. Which of the following policies is not eligible for income tax relief in respectof the premium paid?

A. Whole life insuranceB. Endowment insuranceC. Personal accident insuranceD. Term insurance

43. Section 44(A) of the Insurance Act 1963/96 states that any act performed by an agentis deemed to be of knowledge to the insurer unless:

A. He is an agent of the insurerB. There is a collusion or connivance between the agent and the proposerC. He is soliciting new businessD. He acts on behalf of the insurer

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

A. All insurers must be registeredB. Every insurer is required to maintain a specific solvency margins at all timeC. BNM must approve all training programs of the insurance companiesD. Only fit and proper persons can be appointed as the Managing Director,

Chief Executive or Principal Officer of an insurance company

45. What is a risk?

A. Causes of lossesB. Uncertainty of lossesC. Occurrence of lossesD. Carelessness in decision making

46. Which of the following about the proposal form is true?

A. A proposal form consists of a series of questions drawn up by the insurer,requesting certain information that will enable them to assess the proposed risk.

B. The issuance of a blank proposal form constitutes an offer by the insurerC. An applicant is not required to give material information in the proposal formD. A life insurance contract comes into force when a proposal is submitted

47. Which of the following is not false?

A. The charge for covering the cost of mortality alone is called Risk PremiumB. Net Premium is the charge computed after taking into account of

mortality & interestC. Net Premium provides for expensesD. Gross premium is derived from taking net premium add loading for expenses

add loading for profits & contingencies

48 Section 161 of the Insurance Act 1996 provides that where a claim upon death ofthe policyowner is not paid within________days of receipt of intimation of the claimthe insurer should pay a minimum compound of _________per annum

A. 90 days, 7%B. 60 days, 3%C. 60 days, 4%D. 30days, 3.5%

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

i At minimum, one policy of indemnity must be in force

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

A. i, ii, iiiB. i, iii, ivC. ii, iii, ivD. i, ii, iv

50. In consumer buying decision process, studies conducted in the U.S.A indicatethat the most important factors for the selection of a particular insurer are asfollow. Rank the following from the most important.

i Quality of coverage and services providedii Policy benefitsiii Reputation of the insurer

A. i, ii, iiiB. ii, iii, iC. iii, ii, iD. iii, i , ii

51. When a proposal is submitted to the insurance company without the initial premium andthe proposal is approved by the company, a letter of acceptance is issued to theproposer requesting him to make the necessary payment of premium,often within ________ days

A. 15B. 30C. 60D. 90

52. In cases where there is an extra loading on the proposal, a letter indicating theloading is issued to the proposer as a___________

A. offer-counterB. counter-offerC. off-counterD. one off-counter

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

A. 3B. 6C. 8D. 9

54. Calculate the age for Esther should the following insurer adopt different bases for arriving atthe age of an individual in the following order.Insurance co. A: Age last birthdayInsurance co. B : Age next birthdayInsurance co. C: Age nearest birthday

Proposer's date of birth: 21 October 1972Date of the proposal submitted: 2 Dec 2003

A. 31, 32, 31B. 31, 31, 32C. 32, 31, 32D. 32, 32, 31

55. The term life insurance used in the Code of Ethics and Conduct covers all types of:

i Home-Serviceii Ordinary Life Insuranceiii Annuitiesiv Pension Contracts & Personal Accidentsv Permanent Health Insurance

A. i, ii, iii, ivB. i, ii, iii, vC. ii, iii, iv, vD. All of the above

56. What are the risks that are covered by life insurance?

i Death or injury to a person by an accidentii Premature deathiii Continuous stream of income during retirementiv Sickness or Disability

A. i, ii, iiiB. i, ii, ivC. ii, iii, ivD. All of the above

57. What are the major objectives of LIAM?

i To promote and represent the interests of the member companies andthe life insurance companies

ii To make rules, regulations and tariffs and by-laws in consultation withthe Director General of Insurance (DGI) for implementation by the members

iii To render where possible, to member companies such advice and assistance as maybe required

iv To circulate information likely to be of interest to member companies,to collect, collate and publish statistics and other information relating tolife insurance

A. i, ii, iiiB. ii, iii, ivC. i, iii, ivD. All of the above

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

i Group insurance coverage may be extended to cover employee'sspouse and illegitimate children

ii The lives assured must be in the regular employment of the assuredemployer

iii Lives assured consists of full-time and casual employeesiv The contract of group insurance is solely between the insurer and the

insured

A. i, ii, iiiB. i, iii, ivC. ii, iii, ivD. All of the above

59. The Takaful company provides the following types of family takaful plan forparticipation by both individuals and corporate bodies except:

A. Takaful Mortgage PlansB. Hospitalization BenefitC. Health and Medical Takaful PlanD. Takaful Plans for Education

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

A. a void contractB. a voidable contractC. an unenforceable contractD. no contract