Ceilli Sample Questions (Eng) Set 3

SET 3: CEILLI SAMPLE QUESTIONS 1. Choose the combination that best described the features of Government bonds. I. The government guarantees government bonds. II. They provide a good hedge against inflation. III. Government bonds are used to borrow money from the public. IV. Government bonds are used to borrow money from the private sector. A. B. C. D. I & II only I & III only II & IV only I & IV only

2. The duties of the trustee of unit trust do not include ___________. A. B. C. D. Ensuring that the fund manager adhere to the provision of the trusts deeds. Acting generally to protect the unit holder. Holding the pool of money and assets in trust on behalf on the investors. Managing the portfolio of investment and administering the buying and selling of shares in the unit trust itself.

3. Apart from the investment management charges, what other kind of charges do single premium investment-linked policy charged? I. II. III. Policy Fee Administrative and mortality charges Assurance charges C. II and III only D. I, II and III only

A. I and II only B. I and III only

4. Policy fee payable by an investment-linked life insurance policy owner is to cover: A. B. C. D. The mortality costs of the investment-linked life insurance policy. The administrative expenses of setting up the investment-linked life insurance policy. The handling charges by professional investment managers. The price of each unit bought under the investment-linked life insurance policy.

5. The investment returns under an investment-linked life insurance policy: I. II. III. IV. A. B. C. D. Are not guaranteed Are assured Are linked to the performance of the investment fund managed by the life office Fluctuate according to the rise and fall of market prices I, II and III only I, II and IV only I, III and IV only II, III and IV only

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Ceilli Sample Questions (Eng) Set 3

6. Surrender charges under the investment-linked life insurance policies: A. B. C. D. Are deducted from the value of units at surrender. Are deducted from the value of units at the commencement of the policies. Are applicable to policies with no uniform allocation. Represent initial expenses which have already been incurred and recovered.

7. Which of the following funds normally include a provision for the deferment of unit redemption by the manager, for up to 12 months, except for death? A. Property fund B. Managed funds 8. All the following statements are true, EXCEPT: A. The investment-linked policy is directly linked to investment performance. B. Once the policy is in force, the clients investments will grow steadily. C. Fund managers will make sure that the investment-linked policy is shielded from market fluctuations. D. The investment-linked policy only provides coverage and nothing else. 9. Under an investment-linked life insurance policy, if a policy owner pays a regular payment to the insurance company, this is normally a ______________. A. Regular premium plan B. Annual policy plan with renewal C. Top-up policy plan D. Single premium plan C. Equity funds D. Government bond funds

10. Investment-linked life insurance policy owners may make withdrawals in terms of _________. A. B. C. D. Number of units through cancellation of units only. Fixed monetary amount only through reduction of the life cover sum assured. Number of units or fixed monetary through reduction of the life cover sum assured. Number of units or fixed monetary amount through cancellation of units.

11. Which one of the following best describes the policy benefits of investment-linked policies? A. B. C. D. The policy benefits are guaranteed. The policy benefits are payable only on death or disability. The policy benefits will depend on the long-term of the life office. The policy benefits are directly linked to the investment performance of the underlying assets.

12. The administrative fee, insurance charge, fund management fee and the like under an investmentlinked life insurance policy are ______________. A. B. C. D. Usually guaranteed Not subject to review Subject to change by the life office after written notice is given Always up-front charges

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Ceilli Sample Questions (Eng) Set 3

13. One of the following statements about Debenture stocks is FALSE. A. B. C. D. There are unsecured loans that are made to a company. In case of default, the investor can sell the charged property to retrieve the loan. Trustees are appointed on the issue of the stock. The company can repay the loan earlier if it wishes.

14. Why do you think clients nowadays are adverse to investments? I. II. III. IV. The adverse economic conditions, in the last 15 years, have made them be wary of investments. The fall of many established financial institution in the last few years. The stock market cannot be approached by ordinary people. Many investors have seen their fortune dwindling due to the financial crisis. C. II, III and IV only D. All of the above

A. I, II and III only B. I, II and IV only

15. Misrepresentation resulting in inducing policy owner to cancel or have his policy made paid-up in order to purchase a new policy to earn more income for the agent is known as ___________. A. Switching B. Replacing C. Twisting D. Changing

16. The offer price under an investment-linked life insurance policy is__________. A. B. C. D. The price at which units under policy are offered for sale by the life office. The price at which units under policy are bought back by the life office. Also known as the bid price. A fixed amount throughout the life of the policy.

17. The law that govern the other forms of life insurance is regulated by the laws that govern the business of investment-linked life insurance such as the ________________. I. II. III. IV. Insurance Act, 1996 and its regulation Companies Act, 1965 Contracts Act, 1950 Transport Act, 1985 C. I, II and IV only D. II, III and IV only

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

18. The switching facility under investment-linked life insurance policies is very useful for the purpose of __________________. A. B. C. D. Financial planning by the policy owners. Profit planning by the life officers. Sales planning by the fund managers. Assets planning by the trustee.

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Ceilli Sample Questions (Eng) Set 3

19. Under the dual pricing method of single premium policies, _________________. A. B. C. D. There is only one price quoted whether the policy owner is buying or selling his units. The bid price is always higher than the offer price. The policy owner buys the units at the offer price and sells the units at the bid price. The policy owner buys the unit at the life offices buying price and sells the units at the life offices selling price.

20. The principal legal document regulating income tax in Malaysia is the ________________. A. Income Tax Act, 1967 B. Companies Act, 1965 C. Contracts Act, 1950 D. Insurance Act, 1996

21. Owing to changes in the market environment many insurance companies now sell their product on a _______________ basis. A. Sales-oriented B. Hard sales C. Market-oriented D. Varied product

22. When a consumer becomes aware of a potential opportunity and feels the need for a product to satisfy his needs, the term used in the consumer buying decision process is known as _____________. A. Information search B. Problem solution C. Problem recognition D. Evaluation of problem

23. The term used in marketing where results are measured against the plan and changes made when and where necessary is known as __________________. A. Planning B. Sales goal C. Controlling D. Sales strategy

24. Customer Fact Finding Form by an investment-linked life insurance agent should provide answers to which of the following questions? A. B. C. D. What are the customers habits? What are the customers personal and dependents details? What is the reputation of the consumer? What are the landed properties that the customers have?

25. An agent owes the client a moral obligation to ________________. A. B. C. D. Educate a client to be an expert investor. To recommend specific funds to invest in. Educate clients with some basic and sound investment principles. Make decision on behalf of the client.

26. What must an agent do to ensure the client is given proper advice on investment? A. Ensure that there is a right combination of objectives and make sure proper risk analysis is done. B. Show the wide selection of investment for the client to choose from. C. Motivate the client to borrow money to invest in guaranteed investment vehicles. D. Ensure that the advice is advantageous to the agent and the insurance company.
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Ceilli Sample Questions (Eng) Set 3

27. A call option gives the holder the right ________________. A. To buy B. To sell C. Not to buy D. Not to sell

28. Unit trust is essentially for ___________________. A. B. C. D. Two-way arrangements between the investors and the fund manager. Two-way arrangements between the investors and the trustee. Three-way arrangements among the investors, the trustee and the fund manager. Three-way arrangements among the investors, the trustee and the supervisory authority.

29. Investment-linked funds can be structured into two ways: A. B. C. D. Warrant units and right units Investment units and distribution units Accumulation units and distribution units Term units and annuity units

30. Adam lives in UK. He was impressed by the investment-linked life insurance policy that you bought when he was down for a holiday in Malaysia. He is now on London and wants to buy a similar plan. What plan should he say that he wants to buy to his agent? A. Investment-Linked Life Insurance Plan B. Universal-Variable Life Insurance Plan 31. Investment-linked permanent health insurance: I. II. III. IV. Provide disability income Contain cash value No cash value Price is more competitive when compared to traditional with profit life insurance product C. I, III and IV only D. II, III and IV only C. Variable Life Insurance Plan D. Unit-Linked Life Insurance Plan

A. I, II and III only B. I, II and IV only

32. What is the second stage in the process of providing advice to customer? A. Conducting the fact-finding. C. Gathering all relevant financial data. B. Assessing and satisfying customers needs. D. Market recommendation to the customer. 33. The Takaful Investment-linked Life Insurance Plan was developed due to: A. B. C. D. Meeting the market demands and financial demands. The response to the religious principles and practices of the Muslims. The fact that there were no products suitable for Muslims in Malaysia before this. Tap into a vast and very lucrative insurance market.

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Ceilli Sample Questions (Eng) Set 3

34. What is defined as the management process responsible for identifying, anticipation and satisfying customers requirement profitably? A. Investment B. Investment-linked 35. The bid price is: A. B. C. D. The price at which the agent sells the unit linked policy. The price at which the investor sells the units held in the fund. The price at which the life office buys the units in the investment fund. The price at which the agent buys the units in the investment fund. C. Marketing D. Marketing investment

36. When units are cashed to meet death, maturity or surrenders; these are cashed at the ______. A. Offer price C. At the bid-offer spread B. Bid price D. None of the above

37. The government has allowed insurance premiums paid as relief to a certain extend because the government _____________. A. B. C. D. Feels that by giving this relief, all Malaysians will be able to purchase insurance easily. Is giving this relief to encourage national thrift and promote individual financial independence. Feels that the tax they will collect if the relief is not given is considerably low and insignificant. Is allowing this relief to make sure it is popular.

38. The three basic types of corporate stocks include: A. B. C. D. Debenture stocks, loan stocks and convertible stocks. Fixed income stocks, treasury bills and time deposits. Preference stocks, unit trusts and derivatives. Future, investment trusts and options.

39. Traditional with-profit life insurance products include: A. Non-participation whole life insurance B. Temporary insurance 40. Bond funds __________. I. Are also called income funds II. Are also called fixed income funds III. Can be found in the private sector IV. Can be found in the public sector A. B. C. D. I only I & II only I, II & III only All of the above C. Participation endowment insurance D. Non participation endowment policy

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Ceilli Sample Questions (Eng) Set 3

41. Customers who have purchased policies from an organization who are sales-oriented, usually ended buying policies which I. II. III. IV. A. B. C. D. They do not understand. Do not meet their needs. They might not afford to pay. They surrender for its value or paid up I, II and III only I, II and IV only I, III and IV only II, III and IV only .

42. For the dual pricing method, the number of units that can be purchased is _______. A. B. C. D. Equivalent to the premium paid divided by the offer price. Equivalent to the premium paid divided by the bid-offer spread. Equivalent to the premium paid divided by the bid price. Equivalent to the premium paid divided by investment return.

43. Generally, a market-oriented insurance company should undertake the following functions; I. II. III. IV. A. B. C. D. Planning and control. Market identification. Product development. Undercut slow agents with productive ones. I,II,IV only. I,II,III only. I,III,IV only. II,III,VI only.

44. Siva is a very satisfied insurance client. He is happy with his agent and the plans that have been offered to him. His agent has done a lot for him. Siva will definitely do the following: I. Speak highly about the level of commitment and service given to him by his agent. II. Recommend that his agent be given a letter of recommendation and an award from the company III. Help him in prospecting and referring his friend to the agent. IV. Keep his agent a very well guarded secret. A. B. C. D. I & III only II,III & IV only I,II & III only All of the above

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Ceilli Sample Questions (Eng) Set 3

45. What are the stages involved in providing effective advice to investment-linked life insurance customers? I. II. III. IV. A. B. Establishing relationship with the client Recommendations and record of advice Gathering all relevant financial data Establishing current financial position and goals I, II and III only C. II, III and IV only I, III and IV only D. All of the above

46. It is one of the methods used by government to borrow money from the public. It is a short-term funding vehicle issued by Central Bank and it is also the safest type of investment which carries no risk except the country is politically unstable, it is A. Bank account B. Shares C. Government bond D. Debenture stock

47. Which of the following section of the insurance Act 1996 explains the term investment -linked insurance business? A. B. C. D. 7(1)(b) 71(b) 70(1)(b) 7(2)(b)

48. Which of the following is NOT a type of fixed income securities? A. Money market instrument B. Preference shares C. Government bonds D. None of the above

49. The public generally invest their money to provide: I. II. III. IV. Funds for a company Comfortable standard of living Income in retirement Funds for the education and upbringing of their children C. I, III and IV only D. II, III and IV only

A. I, II and III only B. I, II and IV only

50. The disadvantages of warrants or TSR is _________________. A. Investors have to pit in a large initial outlay to establish and expose the shares. B. On expiry, warrants which are not exercised lose their value completely. C. Like ordinary shares, there is no chance for price recovery. D. By selling the warrants given to an investor in the first instance, the investor cannot benefit from the capital gain.

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Ceilli Sample Questions (Eng) Set 3

51. One of the factors that have contributed to the expansion of the investment-linked life insurance business in Singapore was _______________. A. The requirement of the Securities Exchange ct 1934 that all insurance agents and agency office employees dealing in variable life insurance must pass an examination in securities business. B. The regulations of investment companys management and operation including that of how the premiums are going to be invested, financial information of the insurer, chargeable fees and expenses and rights of policy owners. C. The introduction of the Enhanced Investment Scheme (EIS) by the Central Provident Fund (CPF) in 1993. D. The introduction of the new generation of investment-linked life insurance products, the Hambro Whole Life in 1997. 52. In respect of investment-linked life insurance funds, the difference between the offer and bid prices in normal market condition is _________________. A. 10% - 20% of offer price B. 10% - 20% of bid price C. 5% - 6% of offer price D. 5% - 6% of bid price

53. Investment-linked funds can be invested in any financial instruments including cash funds, bond funds, property funds, specialized funds & diversified funds. Equity funds _____________. A. Invest in stocks & shares and the magnitude of the change in unit prices will depend on the quantity only of the equities held. B. Invest in stocks and shares and are inherently of lower risk in nature and the prices of stocks and shares are stable. C. Invest in stocks and shares and investor who buy such assets usually aim for capital appreciation. D. Invest in stocks and shares and during market recession, such assets are usually the last to depreciate. 54. Investment-linked funds can be structured into two ways, namely accumulation units and distribution units. In accumulation units, the investment income of the fund is ____________. A. Ploughed back into the fund, thus the unit prices will increase over the long term. B. Ploughed back into the fund, thus the unit prices will decrease over the long term. C. Used to purchase additional units to be distributed to the policy owner, thus the unit price remains unchanged but the policy owner gets more units. D. Used to purchase additional units to be distributed to the policy owner, thus the unit price decreased and the policy owner gets more units. 55. What are the key considerations in investment? I. II. III. IV. Accessibility of funds Availability of funds Investment horizon Investment objectives C. I, II and III only D. All of the above

A. I only B. I and II only

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Ceilli Sample Questions (Eng) Set 3

56. The benefits of investing in an investment-linked policy are all false EXCEPT: A. Client is expected to monitor and switch the funds on his own all the time the policy is in force. B. The burden of fund management is borne by the companys professional management team and does not burden the client. C. Client has the option to instruct the fund managers to follow his investment outlook and strategies. D. Client has the option to make decisions on how the company must invest his money totally. 57. Why does Bank Negara require insurer to submit a proposal on investment linked business before they can be allowed to operate such line of business. I. Because section 7(1)(b) makes it compulsory II. To ensure that there is no competition amongst insurers who does the same thing. III. To reduce competition between investments linked business and unit trust business. IV. To ensure that the insurer has the expertise and technical knowledge to market and manage the business soundly. A. I & II only C. I, III & IV only B. II & III only D. I & IV only

58. The premium system used in the calculation of premium rates in an investment-linked policy is using a ________________. A. B. C. D. Combination of level premium and natural premium system Level premium system Multiple level premium system Natural premium system

59. The formula for the circulation of Return on Gross Premium (RGP) is: A. Ending Value of Investment__ Beginning Value of Investment B. Beginning Value of Investment Ending Value of Investment C. Offer Price Bid Price D. Dual Price_ Single Price

60. In Part II of General Sales Principles of LIAMs Code of Conduct, intermediate are forbidden to I. II. III. IV. Sell high premium policy with good income for herself. Make inaccurate or unfair criticism of any insurers. Deal with or source other specialist advice when in doubt except from his supervisor. Attempt to persuade a prospect to cancel any existing policies unless these are clearly unsuited to his needs. C. II and IV only D. III and IV only

A. I and II only B. II and III only

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Ceilli Sample Questions (Eng) Set 3

ANSWERS 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. C C C B C A A C C D B C B C D B B A C D 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. A A B C B C B D D B C C C A D B D D A C

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20.

B D A B C A A D A D D C A B C A B A C A

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