PCE A & C
SET A
ENGLISH
Chapter 1
1. " By spreading the risk of loss faced by a specific person or enterprise, all parties
who pool their resources to pay for individual losses." This statement refers to ...
A. agent
B. insurance
C. warranty
D. broker
A. Life Insurance
B. General Insurance
C. A&B
D. Risk Insurance
A. Premature death
B. Continuous stream of income during retirement
C. Sickness or disability
D. Suicide
A. Premature death
B. Continuous stream of income during retirement
C. Sickness or disability
D. All of the above
Chapter 2
A. Hazard
B. Peril
C. Risk
D. Sick
2. ____________ is determined when the total number of possible events are known.
A. Judgmental probability
B. Empirical probability
C. Priori probability
D. Risk
3. When a person knows that he is suffering from a disease but he still has the
intention to hide this fact from the insurance company, this is called...
A. anti-selection
B. moral hazard
C. physical hazard
D. peril
A. property damage
B. premature death
C. sickness and disability
D. investment and betting
A. Fire
B. Flood
C. Robbery
D. Gambling
A. dishonesty
B. carelessness
C. unreasonableness
D. All of the above
A. financial value
B. large number of similar risk
C. pure risk only
D. All of the above
A. Cook
B. Trapeze artist
C. Forklift operator
D. Long distance bus driver
A. pure risk
B. no risk
C. pure and speculative risk
D. speculative risk
A. I & II
B. II & III
C. All of the above
D. I only
A. Risk retention
B. Loss prevention and control
C. Transfer of risks
D. Risk avoidance
I. physical hazards
II. natural hazards
III. catastrophic hazards
IV. moral hazards
A. I & II
B. III & IV
C. I & IV
D. I, II, III & IV
Chapter 3
A. a contract of indemnity
B. a valued contract
C. insured the life of a human being
D. reduction of losses
I. By concealment
II. By non-disclosure
III. By innocent misrepresentation
IV. By fraudulent misrepresentation
A. I, II & III
B. I, III & IV
C. II, III & IV
D. All of the above
A. the insured has to disclose some important facts regarding the risk
to be insured
B. the insured has to disclose partial important facts regarding the risk
to be insured
C. the insured has to disclose all important facts regarding the risk
to be insured
D. All of the above
A. II & IV only
B. I, II & III only
C. I, II, III & IV
D. I & II only
10. It is the duty to the proposer to disclose clearly and accurately all
material facts relating to the insurance proposed. Material facts, in
this instance, would include:
A. I & II only
B. I, II & III
C. I, III & IV
D. I, II, III & IV
11. A person effecting a Life Insurance policy on his own life has an
insurable interest which is...
A. unlimited
B. limited to his annual income
C. dependent on his saving capacity
D. dependent on his state of health
Chapter 4
A. insurance company
B. proprietary company
C. cooperative company
D. mutual company
A. insurance company
B. agent
C. loss adjuster
D. loss assessor
A. Marketing Department
B. Administration Department
C. Investment Department
D. Customer Service Department
4. Centralization means...
5. This person works for the insurance company and his primary
responsibility is to access all applicants to determine the risk they
present to the company and to decide whether to accept these applicants,
A. Underwriter
B. Claims Executive
C. Medical Examiner
D. Accountant
A. IBAM
B. NAMLIA
C. PIAM
D. LOMA
A. Buyers
B. Underwriters
C. Sellers
D. Intermediaries
I. Adjuster
II. Agent
III. Broker
IV. Underwriter
A. I & II only
B. I & IV only
C. II & III only
D. III & IV only
Chapter 5
I. Right to satisfaction
II. Right to choose
III. Right to redress
IV. Right to a safe & clean environment
A. I & II
B. I & III
C. I, II & III
D. All fo the above
Chapter 6
1. Under the Insurance Act, 1963, a person attaining the following age are
allowed to enter into a contract for a life policy.
A. 10
B. 18
C. 21
D. 16
4. Which of the following accepts part of the risk from another insurer?
A. Reinsurers
B. Loss adjusters
C. Insurance agents
D. Insureds
5. When can a Life Insurance Company void a life policy?
A. I only
B. I & III only
C. II & III only
D. All of the above
Chapter 7
A. 1
B. 4
C. 2
D. more than 1
I. By implication of law
II. By express appointment
III. By subsequent ratification of an agent's unauthorised act
A. I only
B. I & II only
C. I & III only
D. All of the above
A. insured
B. third party
C. principal
D. broker
Chapter 8
A. 15
B. 16
C. 30
D. 60
2. Salesmanship is ____________.
A. I only
B. I & II only
C. I, II & III only
D. All of the above
4. Marketing emphasises...
A. personnel selling
B. measuring of results
C. the submission of accounts
D. proposing proper plan for client
A. close a business
B. handle objections
C. conduct sale interviews
D. All of the above
I. knowledge
II. proper selling attitude
III. professional attitude
IV. skills
Chapter 16
A. premature death
B. financial guarantees
C. permanent disability
D. uberrima fides (Utmost Good Faith)
A. void, the company is not obliged to pay a claim under the policy
B. voidable, the company may or may not be obliged to pay a claim
under the policy depending on the discretion of the management
C. voidable, depending on the judgement of the high court
D. Unenforceble, the company is not obliged to pay a claim
5. The purchaser of life insurance must stand to suffer a legal financial loss
on the death of the other person on whom he buys the insurance.
This is known as:
A. retirement benefit
B. premature death
C. financial loss
D. permanent disability
Chapter 17
A. Permanent Health
B. Dread Disease Cover
C. Personal Accident
D. Term
I. Home service
II. Group insurance
III. Ordinary
IV. Health policy
A. I & II only
B. II & III only
C. II, III & IV only
D. I, II & IV only
4. It is used for the dual purpose of providing for old age or augmenting
pension and for protection of the family's interest.
A. term insurance
B. annuity
C. whole life
D. endowment
6. The insurer will pay the policyholder with installment cash during the
term of the policy, if the policyholder survives till the end of the term, he
will be paid only the balance of the installment payment, usually 50%. The
benefit of this policy is the full sum assured is payable in the event of the life
insured's death. This policy called...
A. whole life
B. anticipated endowment
C. term insurance
D. annuity
A. Deferred annuity
B. Single life immediate annuity
C. Guaranteed immediate annuity
D. Annuity certain
A. 100
B. 10
C. 5
D. 50
I. Takaful Mortgage
II. Health and Medical Takaful Plan
III. Personal Accident
IV. Takaful plan for education
10. Under the "Group Insurance Scheme", the parties to contract are the...
A. buyer has a need for insurance but cannot afford the premiums
of permanent plans
B. buyer has a need for insurance but does not feel it is important
C. buyer has a huge tax bill to pay
D. agent has run out of products to sell
13. Participating (PAR) policies can only be bought with the following types
of life policies:
I. Whole Life
II. Endowment
III. Term
IV. Annuity
14. "Premium are paid for a limited number of years after which the policy
becomes paid-up for its full amount and no further premiums are required."
The paragraph above describes...
15. An endowment life insurance policy differs from a term life insurance
policy in that the endowment policy provides...
16. Policies generally issued for the purpose of mortgage protection are
usually in the nature of...
A. Co-Life Policy
B. Twin-Life Policy
C. Joint-Life Policy
D. Group Insurance Policy
A. basic benefit
B. permanent benefit
C. temporary benefit
D. supplementary benefit
19. Under the Family Takaful Plans, the amount credited into the participant's
account and the participant's special account is made with the intention of,
EXCEPT...
20. The provision which allows the policy owner to change in the plan of
insurance from term life insurance to whole life insurance is commonly
referred as the...
A. reinstatement provision
B. renewal provision
C. conversion provision
D. policy provision
Chapter 18
1. This policy permits the insured to exchange the acquire cash value for
a paid-up term insurance. The term insurance depends on the available
amount of cash value applied. This policy is...
A. paid up policy
B. extended term assurance
C. endowment insurance
D. annuity
A. the insurance company is not liable to pay any claim and premium paid
B. the insurance company is not liable to pay any premium paid
C. the insurance company is liable to refund all premium paid
D. the insurance company is not liable on anything
A. if the age has been overstated, the company will not liable on anything
B. if the age has been overstated, the amount of money payable would
be treated as the premium paid according to the true age
C. the contract will become void
D. the insured needs to reinstate the policy again
A. I & II only
B. II, III & IV only
C. I, II & III only
D. I, III & IV only
7. The cash value of a life insurance policy is the amount of money the
insurance company...
8. A provision in a life insurance policy which states that any premium not
paid by the end of the grace period be automatically paid by a policy
loan if there is sufficient cash value is called...
A. renewal provision
B. automatic premium loan
C. reinstatement provision
D. automatic paid-up provision
9. Some of the alterations that can be made to a life policy are listed
below. Which of these are true?
A. limit the time during which the policy owner has the right to cancel
the policy
B. limit the time during which the insurance company can deny claims
on the basis of statements made in the application
C. prevent delay on the part of the insurance company in the payment
of legitimate claims
D. provide for time limit for the proposer to challenge the underwriter's
decision under his proposal
A. policy owner made the premium payment during the grace period
B. policy owner has failed to make the premium payment within the grace period
C. premium has not been paid during the last 30 days of the policy period
D. policy owner has failed to pay premium after the 30 days period
12. Most life insurance contracts include a provision which states that if the
person whose life is insured dies by suicide within a specified period, the...
A. company will ignore the cause of death and settle the claim
B. company has no liability whatsoever
C. liability of the company is limited to the amount of the premium paid
D. liability of the company is limited to the cash value of the policy at
the time of death
13. A policy owner wants to discontinue paying the premiums on a life insurance policy,
but wishes to retain life insurance coverage for the same period and on the same
plan as provided by the original policy. The non-forfeiture option which the policy
owner should select is the...
15. On revival of a policy, a new contract is said to have come into existence
in place of the original one that had lapsed. Which one of the following
statement is FALSE?
A. The incontestability clause may start afresh under the new contract
B. The insurer may impose an extra premium or any other restrictive
condition at the time of revival, if felt necessary
C. A new policy document will be prepared in all cases
D. Suicide clause will begin anew
16. The ABC Insurance Company's policyholder service department has received
a request for the reinstatement of a whole life insurance policy. In order to comply
with the request, the policyholder service department probably will check to see
that the policyholder has...
A. I, II & IV only
B. II, III & IV only
C. All of the above
D. I, II & III only
Chapter 19
I. Sex
II. Social status
III. Avocation
IV. Marital Status
A. I & II only
B. II, III & IV only
C. I, II & III only
D. All of the above
2. The insurer usually employs any one of the following methods to deal with
sub-standard lives:
3. In 1999, Encik Ali needs to pay RM2,500 for his EPF, RM1,800 for his anticipated
endowment premium and RM2,000 for house renovation. What is the allowable
deduction for that year?
A.
B.
C.
D.
4. Extra risks are classified generally as falling into 3 main groups EXCEPT...
A. personal habits
B. ethnicity
C. sex
D. wealth
A. physical hazard
B. fire hazard
C. wealth hazard
D. moral hazard
8. An impairment which causes increasing extra mortality is one which, with increasing
duration, becomes more and more a potent factor in affecting longevity. Which of the
following is classified as increasing extra mortality in the underwriting of risks?
A. A construction worker
B. A person who is overweight
C. A person who is engaged in the liquor trade
D. A young person who has suffered from tuberculosis but has been pronounced
as cured
9. The tendency of persons with greater likelihood of loss to apply for life insurance
is called...
A. impairement
B. persistency
C. anti-selection
D. physical hazard
10. Normally, the ordinary life insurance policyholder is given 15 days to review the
terms and conditions of the policy. He can return the policy with objections in
writing and the insurer will refund the premium paid in full. This period is called...
A. testing period
B. observing period
C. cooling-off period
D. days of grace period
A. Agent
B. Life insured
C. Proposer
D. Insurer
12. A life office does not accept automatically all applications for insurance, they will
examine all the elements of risk carefully. This process is called...
A. inspection
B. prospecting
C. selection
D. anti-selection
Chapter 20
1. Participating policies enjoy the right to share in profits of operations of life insurance
company in the form of bonuses. The insured has to pay a slightly higher premium
than their non participating. This additional premium is known as...
A. premium loading
B. bonus loading
C. tax
D. financing cost
A. annual premium
B. periodical premium
C. net premium
D. gross premium
4. If the health of the insured deteriorates after the policy is effected, the insurer...
5. The extra premium for occupational risk will only be imposed or removed when...
I. Expense
II. Mortality
III. Morbidity
IV. Interest
A. I, II, IV
B. I, II, III
C. II, III, IV
D. All of the above
2. The bonus that is only paid on policies resulting into claims either by maturity
or death...
A. cash bonus
B. terminal bonus
C. interim bonus
D. guaranteed bonus
3. There are various ways in which the policyholder's share of surplus is distributed.
Which among the following is NOT TRUE?
4. Assets maybe valued in several ways depending on the purpose of the valuation
EXCEPT one:
A. cost price
B. market value
C. interest
D. book value
A. Interim bonus
B. Maturity bonus
C. Policy loan bonus
D. Compound reversionary bonus
Chapter 22
A. the heading
B. the proviso
C. the preamble
D. the attestation
2. The insurance company agrees to make payment of the sum stated in the schedule
upon the happening of the insured event. This section is...
A. the heading
B. the condition and privileges
C. the operative clause
D. the preamble
A. I, II & IV only
B. II & III only
C. III & IV only
D. All of the above
A. I only
B. II only
C. All of the above
D. None of the above
6. The following are sources of information when the underwriter examines the
degree of risk before a life is insured EXCEPT one:
Chapter 23
1. For a policy effected under section 23 of the Civil Law Act, the money
would be paid to the...
A. spouse
B. trustee
C. beneficiary
D. child
2. The following document are acceptable to the insurer as proof of title and ownership:
I. life policy
II. a deed of assignment
III. a probate of will obtained from a court of law
IV. a letter of administration issued by a court of law
3. Claim proceeds that do not exceed __________ can claim without letters of
probate administration.
A. RM 10,000
B. RM 100,000
C. RM 1,000
D. RM 25,000
I. proof of age
II. proof of survival
III. discharge voucher completed by the policyholder
IV. the policy document
I. proof of death
II. proof of age
III. proof of estate
IV. proof of title and ownership
A. I, II & IV only
B. I, III & IV only
C. II, III & IV only
D. All of the above
7. In life insurance, there are essentially 3 kinds of claims that can arise. There are...
A. I only
B. II only
C. I & II only
D. all of the above
9. When an agent is made aware of an insured's death, the first task is to...
10. A policyholder should submit the proof of age as early as possible because...
A. the life company will not recognize any proof of age during death claim
B. it is often easier for the policyholder to produce the necessary proof when
he or she is still alive.
C. any misrepresentation of age will cancel the policy
D. any misrepresentation of age will result into claims not being met
Chapter 24
1. What is the age next birthday, if the life assured was born on March 21, 1965 and
the date of the proposal submitted was January 1, 1998?
A. 31 years old
B. 32 years old
C. 33 years old
D. 30 years old
A. RM 1,880.93
B. RM 1,890.00
C. RM 1,882.36
D. RM 1,908.90
Chapter 25
A. twisting
B. rebating
C. underwriting
D. misrepresentation