PCE A & C

SET C
ENGLISH

AGENCY TRAINING & DEVELOPMENT DEPT.

AIA CO. LTD
1. Which of the following is correct?

A. Speculative risk is always catastrophic in nature

B. Pure risk is uninsurable
C. There is a gain in speculative risk
D. Speculative risk is uninsurable

2. What is the meaning of concealment?

A. Unable to perform the agreed performance

B. One party becomes insane
C. Failure to disclose material facts
D. The principle of subrogation

3. An insurance company owned by shareholders is called:

A. a mutual company
B. a proprietary company
C. a co-operative company
D. 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 public

B. An agent falsifies claims in order for claimants to obtain money
C. An agent brings financial relief in the event of property loss
D. 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 capital

B. to provide employment
C. to compensate the unfortunate few from the many insureds
D. to provide social service

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

A. Large number of similar risk

B. Reasonable premium
C. Insurable interest
D. Against public policy
7. The principle of contribution stipulates that when two or more policies covering for
the same risk, the insured ________

A. can claim under one policy

B. cannot make any claim
C. must claim under all policies, recovering a ratable proportion from each insurer
D. 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 the
head office
B. When only the preparation of policies and renewals of policies are carried out in
the branches concerned
C. When the company has no branches
D. 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 measures

B. By loading the premium of those who take such measures
C. By having more agents
D. All of the above

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

A. hazard
B. loss
C. peril
D. 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 injury
B. the risk is of illegal nature
C. the risk is expected
D. he attempted suicide
12. The Takaful Act 1984 provides for the establishment of the ___________ whose function
is to advise the Takaful company on its operation in order to ensure that it does not
involve itself in any element which is not approved by the Islamic Religion Law.

A. Takaful Supervisory Council

B. PIAM Supervisory Council
C. Syariah Supervisory Council
D. LIAM Supervisory Council

13. What is the meaning of consensus ad idem?

A. Of the same mind

B. Disagreement
C. Meeting of the parties to contract
D. Uberrima fides

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

A. Registration of insurers
B. Solvency of the insurer
C. Compulsory deposit by the insurer
D. All of the above

15. Which of the following association of bureau provide for compassionate payment or
allowance to person(s) injured or to dependant(s) of person(s) killed through the use of
motor vehicle?
A. PIAM
B. MII
C. MIB
D. None of the above

16. In life insurance, insurable interest must exist ____________

A. at the time of loss

B. at the time of the insurance contract exist
C. at the inception of the contract and the time of loss
D. 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. rectify
C. notify
D. dismiss

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

A. Incontestability clause
B. Days of grace
C. Suicide clause
D. Assignment

19. The net premium in life insurance is the _________

A. amount of premium sufficient to pay total claims, as and when they arise
B. gross premium less expense
C. premium charged on riders attached to a basic policy
D. 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 their
existing policies with company A. This situation is called ___________

A. rebating
B. twisting
C. misrepresentation
D. underwriting

21. Level premium can be paid __________

A. annually
B. quarterly
C. monthly
D. any of the above

22. Maturity benefits are made up of the _________

A. sum assured plus bonus

B. sum assured plus disability benefits
C. sum assured plus disability benefits and bonus
D. bonus plus disability benefits

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

 A. Surplus is the difference between the life insurance fund
and all policy liabilities
B. Surplus is profit
C. 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. court
B. claimant
C. certified doctor
D. insurance company

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

A. rate of morality
B. rate of mortality
C. rate of morbidity
D. rate of surviving

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

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

27. What is a reversionary bonus?

A. Bonus usually takes the form of cash distribution and is usually contingent upon
payment of the next premium
B. Bonus is declared as proportion of the sum assured and the bonuses accumulated
under the same circumstances as the original sum assured
C. Bonus allocated is in proportion to the sum assured and the bonuses
accumulated under the policy
D. Bonuses are normally declared on the valuation date of the policy year
preceding 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 insurance

B. Ordinary life, group insurance and home life insurance
C. Ordinary life, term insurance and group insurance
D. Ordinary life, annuity and group insurance
29. According to the statement of philosophy, life insurance business is based on ______

A. The philosophy of competition

B. The philosophy of risk sharing
C. The philosophy of saving lives
D. The philosophy of risk retention

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

A. 15 weeks
B. 5 days
C. 15 days
D. 30 days

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

i group policy
ii whole life policy
iii endowment policy
iv term policy
v home-service policy

A. i, ii, iii
B. i, ii, iv
C. ii, iii, iv
D. ii, iii, v

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

i cost price
ii book value
iii actuarial valuation
iv market value

A. i, ii, iii
B. i, iii, iv
C. ii, iii, iv
D. i, ii, iv

33. Which of the following factors determine the life premium rates?
 A. Mortality, interest, expenses, bonus loading
B. Mortality, interest, income tax, commission
C. Mortality,, interest, expenses, commission
D. Gender, interest, expenses, bonus loading

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

A. rate of morality
B. rate of interest
C. expenses loading
D. commission

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

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

A. contract of indemnity
B. valued contract
C. contract of adhesion
D. unvalued contract

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

A. RM100,000 and the policy shall be terminated

B. RM100,000 and the policy shall continue for another 30 years
C. nothing and the policy shall be terminated
D. nothing and the policy shall continue for another 30 years

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

A. Deferred annuity
B. Single life annuity
C. Last survivor annuity
D. Joint life annuity

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

A. an increasing extra mortality

B. a level mortality
C. a decreasing extra mortality
 D. none of the above

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

or more of the conditions.

A. An endorsement
B. A declaration
C. A letter of extension
D. A letter of acceptance

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

A. charges an extra premium

B. offers an alternate form of contract
C. imposes a debt or lien
D. provides a premium discount

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

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

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

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

A. Whole life insurance

B. Endowment insurance
C. Personal accident insurance
D. Term insurance

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

A. He is an agent of the insurer

B. There is a collusion or connivance between the agent and the proposer
C. He is soliciting new business
D. 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 registered

B. Every insurer is required to maintain a specific solvency margins at all time
C. BNM must approve all training programs of the insurance companies
D. 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 losses
B. Uncertainty of losses
C. Occurrence of losses
D. 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 insurer
C. An applicant is not required to give material information in the proposal form
D. 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 Premium
B. Net Premium is the charge computed after taking into account of
mortality & interest
C. Net Premium provides for expenses
D. 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 of
the policyowner is not paid within________days of receipt of intimation of the claim
the insurer should pay a minimum compound of _________per annum

A. 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 interest
iii The policies must cover a common peril which gives rise to the loss
iv The loss involves a common subject matter covered by the policies

A. i, ii, iii
B. i, iii, iv
C. ii, iii, iv
D. i, ii, iv

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

i Quality of coverage and services provided

ii Policy benefits
iii Reputation of the insurer

A. i, ii, iii
B. ii, iii, i
C. iii, ii, i
D. iii, i , ii

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

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

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

A. offer-counter
B. counter-offer
C. off-counter
D. one off-counter

53 The purpose of back dating the commencement date of a policy to an earlier date is to
benefit the proposer for paying the premium applicable to a lower age. Usually, this
back-dating exercise is up to a maximum of ________months
 A. 3
B. 6
C. 8
D. 9

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

Proposer's date of birth: 21 October 1972

Date of the proposal submitted: 2 Dec 2003

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

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

i Home-Service
ii Ordinary Life Insurance
iii Annuities
iv Pension Contracts & Personal Accidents
v Permanent Health Insurance

A. i, ii, iii, iv
B. i, ii, iii, v
C. ii, iii, iv, v
D. All of the above

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

i Death or injury to a person by an accident

ii Premature death
iii Continuous stream of income during retirement
iv Sickness or Disability

A. i, ii, iii
B. i, ii, iv
C. ii, iii, iv
D. All of the above

57. What are the major objectives of LIAM?

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

A. i, ii, iii
B. ii, iii, iv
C. i, iii, iv
D. 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's

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

A. i, ii, iii
B. i, iii, iv
C. ii, iii, iv
D. All of the above

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

A. Takaful Mortgage Plans

B. Hospitalization Benefit
C. Health and Medical Takaful Plan
D. Takaful Plans for Education

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

A. a void contract
B. a voidable contract
C. an unenforceable contract
D. no contract