PCE Trial Exam 1

PCE Trial Exam 2 – Part A
1 The Insurance industry in Malaysia is regulated by Insurance Act _____ .

A. 1962
B. 1965
C. 1996
D. 1997
2 The secondary functions of Insurance include

I. cost stabilization
II. reduction of losses
III. provision of employment for many
IV. provision of sources of capital for Investment
A. I,II,III only
B. II,III,IV only
C. I,III,IV only
D. I,II,III,IV
3 Which of the following is NOT a function of insurance?

A. reduction of losses- Secondary functions
B. It is a source of capital for investment- Other functions
C. It acts as a mind of gambling- Covering larger risks with small capital – Insurance assuages
the businessmen from security investments. This is done by paying small amount of premium
against larger risks and dubiety.
D. It provides employment opportunities
4 Insurance business can be classified into

A. Life insurance and Speculative Insurance
B. Life insurance and General Insurance
C. General Insurance and Speculative Insurance
D. Guaranteed Insurance and Speculative Insurance
5 Which of the following is NOT a method of handling risks?

A. risk retention
B. risk avoidance
C. loss control
D. identifying loss exposures
6 What is a risk?
A. it is a cause of loss
B. the possibility of danger
C. it is an uncertainty regarding loss.
D. it is a condition that increases the chance of loss
7 Below are the steps of risk management, EXCEPT

A. identification
B. evaluation
C. avoidance
D. implementation
8 Which of the following is an insurable risk?
Insurable risk would refer to the risks for which an insurance policy can be purchased. For
all types of insurance other than life insurance, insurable risks must be financial,
measurable and predictable. An insurable risk in general is a loss that is not intentionally
caused by the insured.
A. business venture risk
B. investment venture loss
C. loss in gambling
D. fire damage
9 Which of the following is not a pure risk?

A category of risk in which loss is the only possible outcome; there is no beneficial result.
A. protecting one’s house from fire
B. protecting one’ car from being stolen
C. protecting one’s investment from economic depression
D. protecting one’s loss of income risk and disability in an accident
10 Which of the following act is used to govern the operation of the Takaful companies?
A. Contract Act 1950
B. Company Act 1965
C. Takaful Act 1984
D. Insurance Act 1996
11 Perils covered in insurance policy are also known as

A. insured perils
B. excluded perils
C. excepted perils
D. uninsured perils
12 In common law, when is the proposer (The person who proposes to enter into a
contract of insurance with a life insurance company to insure himself or another life on
whose life he has insurable interest. ) required to disclose material facts?
A. during negotiation
B. during claim
C. after the enforcement of the policy
D. before the policy lapse
13 Assignment is
Transfer by the holder of a life insurance policy (the assignor) of the benefits or proceeds
of the policy to a lender (the assignee), as a collateral for a loan. In the event of the death
of the assignor, the assignee is paid first and the balance (if any) is paid to the policy's
beneficiary. Other types of insurance policies may not be used for this purpose.
A. a transfer of property to another person
B. a transfer of rights to another person
C. a transfer of rights to own self
D. a transfer of risk to another party
14 Lack of insurable interest will

A. render the contract void
B. have no effect on the insurance contract
C. render the insurance contract partly unenforceable
D. render the contract voidable
15 Which of the following are methods of indemnifying?
I. replacement
II. reinstatement
III. cash
A. I , II only C. II , III only
B. I , III only D. I , II , III
16 The legal term ‘caveat emptor” means

A Latin phrase for "let the buyer beware." The term is primarily used in real property
transactions. Essentially it proclaims that the buyer must perform their due diligence when
purchasing an item or service.
A. utmost good faith
B. insurable interest
C. consensus ad idem
D. letting the buyer beware
17 When an insured fails to disclose a material, the breach of utmost good faith (in the
insurance market, the doctrine of utmost good faith requires that the party seeking
insurance discloses all relevant personal information) is termed as:
A. twisting
B. ratification
C. concealment
D. misrepresentation
18 Which of the following are insurance professionals?

I. Underwriter
insurance underwriters evaluate the risk and exposures of potential clients. They decide how
much coverage the client should receive, how much they should pay for it, or whether even to
accept the risk and insure them
II. Loss Adjuster
III. Actuary
A. I and II only
B. I and III only
C. II and III only
D. I, II and III
19 Insurers who carry out both life and general business are
A. the reinsurers
B. the composite insurers
C. the proprietary insurers
D. mutual insurers
20 This department generally concentrates its efforts on identification of field officers,

recruiting, motivating and supervising the sales force. This department refers to
A. the marketing department
B. the underwriting department
C. the agency or sales department
D. the customer service department
21 What is the basic advantage of centralization?

A. teamwork is more effective
B. uniformity in practice and standards
C. easy access to all departmental functions
D. control and maintenance of manpower
22 Which of the following insurance institution’s vision is to be the preferred insurance
institute for human capital development and professional standards in insurance in
Malaysia?
A. Persatuan Insurans Am Malaysia (PIAM)
B. The Actuarial Society of Malaysia ( ASM )
C. The Malaysian Insurance Institute ( MII )
D. National Association Of Malaysian Life Insurance and Financial Advisors ( NAMLIFA)
23 The main objective of this institution is to help settle disputes between policyholders
and the financial service providers. This institution refers to:
A. Financial Mediation Bureau ( FMB )
B. Unplaced Motor Pool
C. Motor Insurers’ Bureau ( MIB )
D. Persatuan Insurans Am Malaysia (PIAM)
24 Which of the following are the advantages of self-regulation?

I. It avoids the need to introduce legislation to regulate the industry
II. It helps to instill discipline among insurance companies
III. It is a bureaucratic backup to enforce laws that are passed
IV. Its measures can respond to the changing needs faster than legislation
A. I, II, III only C. I, III, IV only
B. I, II, IV only D. I, II, III, IV
25 Under the provision of insurance act 1996, local life insurers are required to have a
minimum paid up capital of
A. 30 million
B. 50 million
C. 100 million
D. 150 million
26 Which of the following are the basic rights of consumers?

I. right to choose
II. right to consumer education
III. right to basic goods and services
IV. right to a safe and clean environment
27 The principle requirements of the Companies Act affecting insurance companies are
I. the method of valuing liabilities
II. the method of valuing assets and the provision for the depreciation
III. preparation and submission of annual accounts and the accompanying statements
A. I, II only
B. I, III only
C. II, III only
D. I, II, III
28 In insurance, for the applicant to have legal capacity to contract, he must be of age at
least
A. 16
B. 18
C. 20
D. 21
29 Which of the following are the essentials of an insurance contract?
I. consideration
II. consent
III. offer and acceptance
IV. intention to create a legal relationship
A. I, II only
B. II, IIII only
C. I, II, III only
D. I, II, III, IV
30 If a proposer submits a completed and signed proposal form to an insurer, he is making

A. an offer
B. an acceptance
C. a counter-offer
D. an invitation to offer
31 An agent is a person who acts on behalf of another person. The person whom he
represents is called
A. the broker
B. the principal
C. the second party
D. the third party
32 An implied authority is authority that implies to the agent from the circumstances
concerning the relationship between
A. the principal and the agent
B. the principal and the third party
C. the third party and the agent
D. the recruiter and the agent
33 When an agent performs an act which is not within his actual authority, but which later
becomes binding on the principal because the principal agrees to accept the act as having
been done on his behalf. This is:
A. ratification
B. usual authority
C. implied authority
D. apparent authority
34 Every agent is classified in accordance with the authority provided to them. A Universal
Agent
A. has unlimited authority, appointed to do a specific act or transaction.
B. has unlimited authority, may do anything for himself which himself is competent to do
C. has unlimited authority, may do anything for his principle which the principal himself is
competent to do
D. has unlimited authority, may do anything for third party which the third party himself is
competent to do
35 What is the agent’s most important right?

A. receives commission or payment for the services
B. receives premium and dividend for the services
C. receives more policies for the services
D. receives more customers or payment for the services
36 The relationship of the principal and agent may be terminated
I. by notice of revocation given to the principal to the agent
II. by notice of renunciation given to the principal by the agent
III. by the completion of the transaction.
IV. by expiration of the period stipulated.
A. I, II, III only
B. I, III, IV only
C. II, III, IV only
D. I, II, III, IV
37 A sales plan must include which of the following?

I. sales goal
II. objectives
III. sales strategy
IV. implementing and controlling the sales plan
B. II, III, IV only D. I, II, III, IV
38 The customer buying decision process includes which of the following stages?
I. information search
II. problem recognition
III. post -purchase evaluation
IV. sales interview
B. II, III, IV only D. I, II, III, IV
39 The correct sequence of the selling process that involves 5 basic steps is:
A. locating the prospective customer, closing the sales, creating a sales presentation, conducting
the sales interview, handling objections
B. creating a sales presentation, locating the prospective customer, conducting the sales
interview, handling objections, closing the sales
C. locating the prospective customer, handling objections, creating a sales presentation,
conducting the sales interview, closing the sales
D. locating the prospective customer, creating a sales presentation, conducting the sales
interview, handling objections, closing the sales
40 The after sales service is important to an agent because

I. the reputation of the insurer is enhanced
II. it can minimize the chance of lapse
III. the client’s new needs for insurance coverage could be recognized and a sale quickly made
A. I, II only
B. I, III only
C. II, III only
D. I, II, III
41 Through which department of an insurance company is medical and health insurance

usually administered?
A. Claim and Benefit Department
B. Human Resource and Training Development Department
C. Information Technology or Data Processing Department
D. Accident and health Department or Group Insurance Department
42 Which of the following are examples of benefit policies?
I. critical illness insurance
II. disability income insurance.
III. hospitalization cash benefit plans
IV. hospitalisation and surgical insurance (known as medical card or health card)
A. I, II and III C. I, III and IV
B. I, II and IV D. II, III and IV
43 A supplemental major medical insurance cover is usually an extension to what type of

policy?
A. a term insurance policy
B. a critical illness insurance policy
C. a hospitalization cash benefit insurance policy
D. a basis hospitalisation and surgical insurance policy
44 Who can be covered under a group medical and health insurance?

A. all members, regardless of sex or physical condition.
B. all members, regardless of sex or mental condition.
C. all eligible members, regardless of age or physical condition.
D. all eligible members, regardless of age or mental condition.
45 In medical and health insurance risk, the underwriters consider the following in risk
selection
I. medical factors
II. financial factors
III. occupational factors
IV. age and sex
A. I, II, III only C. I, II, IV only
B. II, III, IV only D. I, II, III & IV
46 The tendency of extending the period of disability for the purpose receiving more
insurance compensation is known as
A. twisting
B. rebating
C. anti-selection
D. malingering
47 The financial status of the applicant is a prime consideration in underwriting what type
of medical and health insurance?
A. Medical Expenses Insurance
B. Critical Illness Insurance
C. Disability Income Insurance
D. Hospital Cash Benefit Insurance
48 Which of the following groups are in the least hazardous occupation class?
A. second hand car dealers or restaurant owners
B. electricians, plumbers and mechanics
C. construction workers and agricultural labourers
D. persons with primarily executive or clerical duties
49 Which section of the scheduled policy form introduces or recites the parties in the
contract: the insurer and the insured?
A. Preamble
B. The Operative
C. Attestation or Signature Clause
D. Exclusions
50 When a dispute arises, it may be resolved through which of the following channels?
I. mediation
II. arbitration
III. litigation
IV. negotiation and compromise settlement
A. I, II, III only
B. I, II, IV only
C. II, III, IV only
D. I, II, III , IV
PCE Trial Exam 2 – Part C

101. The first known cases of life insurance policy on the life of William Gybbon dated
back to
A. 1583
B. 1660
C. 1700
D. 1810
102. Which of the following are the risks covered by life insurance policies?
I. premature death
II. total permanent disability
III. old age
A. I, II only
B. I, III only
C. II, III only
D. I, II, III
103. What is the disadvantage of a whole life assurance?

A. It is the most expensive form of permanent protection
B. Protection is only provided for the certain duration of life
C. Premiums continue even in old age when the ability to pay may be reduced by a reduction of
income
D. The sum assured including any accrued bonuses, becomes payable only upon the death of
the life insured
104. Whole life insurance is suitable for a person with

A. maximum death protection, minimum saving
B. maximum saving, minimum death protection
C. reasonable death protection and saving element
D. reasonable death protection with lump sum money payable in interval years
105. Which of the following are the uses of endowment Insurance?

I. It is an incentive to save in a systematic manner
II. It is a means of hedging against the possibility of untimely death
III. It is a means of accumulating a fund for specific purpose
IV. It is a convenient and easy means of providing for old age
A. I , II , III only
B. I , III , I V only
C. II , III , IV only
D. I , II , III , IV
106. The policy is generally affected by the parent on the life of a child. The premiums are
generally paid by the parent till the child attains the specified vesting age and can earn an
income of his own. This is referred to
A. Children’s term insurance
B. Children’s joint life insurance
C. Children’s deferred insurance
D. Protected educational policies
107. This annuity provides annuity payments as long as either of 2 or more persons lives.
The annuity provides for payment until the last death among the covered lives. This
annuity is called:
A. guaranteed immediate annuity
B. joint life annuity
C. last survivor annuity
D. single life immediate annuity
108. Most term insurance policies also include a convertible feature, that is, the privilege
on the part of the insured to opt to convert the policy into a whole life or endowment
insurance. Under the attained age method, the premium rate
A. is according to the adjusted premium rate
B. is according to the original age
C. is according to the current age upon the conversion
D. is according to the average premium upon the conversion
109. What are the benefits of an ordinary whole life insurance?

I. loan value
II. paid up value
III. cash surrender value
IV. non-forfeiture regulations
B. I , III , IV only
110. What is the main function of the PSA?

A. risk premium
B. saving only
C. investment only
D. saving and investment
111. This policy provides maximum protection and the sum insured of the policy is
payable only on the event of death of the life insured within a stipulated term of the policy.
This is a/an
A. whole life plan
B. term plan
C. endowment (Savings and Insurance)
D. participating plan
112. Which of the following statements regarding group insurance is TRUE?

A. group insurance is a whole life policy
B. if one of the insured member dies, the sum assured will be paid to the other members
C. it is a contract between the insurance company and a group of people
D. it provides coverage for a group of people under a master policy
113. A life insurance contract, which is written on two or more lives, is called
A. a group life insurance policy
B. a twin life insurance policy
C. a joint life insurance policy
D. a co-life insurance policy
114. Which of the following are some of the common exclusions under Personal Accident
Benefit Cover?
I. war
II. riot
III. drugs and alcoholism
IV. air travel as a fare paying passenger
B. I , III, IV only
115. This is an ordinary term insurance with the sum assured decreases in amount at
periodical intervals. It is generally utilized to cover loans which are gradually being repaid.
What type of insurance is this?
A. increasing term insurance
B. level term insurance
C. decreasing term insurance
D. family income protection
116. The limited payment whole life policy may not be convenient to which of the following
persons?
A. Those who have the ability to pay a high premium
B. Those whose income is small and who are in need of a high insurance protection
C. Those whose income is high and who are in need of a high insurance protection
D. Those who want to pay up the premium during their working lifetime
117. A lapsed policy can be reinstated by providing which of the following information?
A. evidence of health
B. evidence of trust
C. evidence of liable
D. ability to pay the premium
118. How many days after the premium due date does the insurer allow the policyholder to
pay the premium?
A. 15
B. 30
C. 45
D. 60
119. Most life insurance contents include provision which states if a person whose life
insured dies by suicide within specified period,
A. the insurer will pay the claim 2 years later
B. the insurer will not pay the claim and premium paid will be refunded
C. the insurer will just ignore the matter and just pay the claim
D. the insurer will not pay the claim and premium will not be refunded
120. Which of the following has no non-forfeiture provision?

A. term insurance
B. whole life insurance
C. endowment insurance
D. anticipated endowment
121. After the days of grace, a policy without cash value will be considered
A. lapse
B. testing
C. an extension
D. temporary stopped
122. The assured can exchange the acquired cash value for a paid-up term insurance for
the full sum assured. This is called
A. paid-up policy
B. automatic premium loan
C. extended term assurance
D. extended whole life assurance
123. An insured has overweight problem. This may lead to extra risk that may cause
A. extra level of mortality
B. the increase level of mortality
C. the decrease level of mortality
D. level of extra morbidity
124. Upon completing and signing of the whole life insurance application form, your
prospect asks when the coverage will be commencing. You respond to the prospect shall
be
A. when the life insurer issues the policy
B. when the life insurer issues the letter of acceptance
C. when the insurer receives the first payment of premium
D. when the life insurer receives the duly completed application form
125. When the proposal is approved, _____ is issued by the insurer to the proposer
requesting him to make the necessary payment of premium within a certain number of
days.
A. a letter of acceptance
B. a proposal form
C. an inform letter
D. a surrender letter
126. Commencement of the policy may be back dated to an earlier date, usually up to
A. 30 days
B. 3 months
C. 6 months
D. 12 months
127. Which of the following are examples of physical hazard?

I. age
II. build
III. occupation
IV. intention to defraud
A. I, II, III
B. I, III, IV
C. II, III, IV
D. I II, III, IV
128. Which of the following documents are used to gather underwriting information?
I. application form
II. medical report
III. credit card statement
A. I ,II only
B. I, III only
C. II, III only
D. I, II, III
129. What does the insurer use for premiums calculation purpose?
A. premium table
B. mortality table
C. future value table
D. current value table
130. What are the factors that an insurer considers before pricing the premium?
I. expenses
II. taxes
III. mortality
IV. investment returns
B. I , III , IV only
131. Basically, the balance of premium received, after deducting all expenses incurred, is
used for what purpose?
A. for investment purpose
B. for charities purpose
C. for paid-up capital purpose
D. for reserve fund purpose
132. The expenses that a life insurance company incurs fall into which of the following
categories?
I. initial expenses
II. renewal expenses
III. termination expenses
A. I , II ,only
B. I , III only
C. II , III only
D. I , II , III
133. Which of the following statements regarding risk premium is TRUE?

A. the risk premium increases with the age of the insured.
B. the risk premium decreases with the age of the insured.
C. the risk premium increases with the increases of taxes
D. the risk premium decreases with the growth of profit
134. The charge for covering the cost of mortality alone is called
A. the net premium
B. the gross premium
C. the risk premium
D. extra premium
135. Divisible surplus will be shared by
A. all policyholders only
B. share holders only
C. participating policyholders and shareholders
D. policyholders and preferred shareholders
136. Which of the following are the main sources of surplus?

I. expense
II. surrenders
III. interest
IV. mortality
A. I, II, III only C. II, III, IV only
137. Liabilities =
A. the present value of the benefits payable + the present value of expenses + The present value
of the future premiums receivable.
B. the present value of the benefits payable - the present value of expenses - The present value
C. the present value of the benefits payable + the present value of expenses - The present value
D. the present value of the benefits payable - the present value of expenses + The present value
138. What is book value?

A. price at which the asset is acquired.
B. value for which the assets can be sold in the open-market.
C. depreciated value after the valuation
D. value placed on the assets in the company’s account books
139. Bonuses are normally declared at the valuation date for the policy year preceding that
date i.e. in arrears. This type of surplus distribution is:
A. terminal bonus
B. interim bonus
C. simple reversionary bonus
D. compound reversionary bonus
140. What information is provided in the agent’s report?

A. the agent’s impression about the applicant’s habits, appearance, character and health
condition
B. the agent’s impression about the applicant’s habits, appearance, findings and health condition
C. the agent’s impression about the applicant’s habits, conduct, character and financial status
D. the agent’s impression about the applicant’s habits, appearance, character and financial status
141. What is the information in the heading?

A. the name and nature of business of the company
B. the name and address of the company
C. the assets and nature of business of the company
D. the assets and address of the company
142. The standard policy documents are often endorsed to take into account the differing
aspects of
A. individual circumstances and needs change
B. policy condition and clauses change
C. insurer circumstances and needs change
D. product features and benefits change
143. Information necessary for the proper assessment of risk is generally obtained from
the proposal form, the medical report, attending physician’s statement, agent’s report and
A. coroner’s report
B. premium receipt
C. previous records
D. loss adjuster’s report
144. The following can serve as proof of death, EXCEPT

A. certificate showing that death has occurred at sea
B. an order pronouncing a statutory presumption of death
C. verbal confirmation that death by last medical attendant
D. certificate evidencing the death of service personal and war death
145. What can be exercised with the maturity benefits of endowment policy?
I. cash maturity proceeds
II. convert benefits to annuity options
III. withdraw in installment based on an agreed interest
IV. keep as a deposit with the insurer on agreed terms
A. I, II ,III only C. I, III, IV only
146. When the policyholder is not the life insured, the document required in settling
maturity claims is
A. a simple statement that the insured is death
B. a deed of assignment or any other title document
C. identity card of the life insured
D. identity card of the policy owner
147. Your prospect is an accountant of a trading company. He intends to purchase a whole

life policy. You were informed that he is non-smoker and he has just celebrated his 38 th
birthday 7 months ago. Under age next birthday calculation the premium for him is
A. 38 year old male rate
B. 39 year old male rate
C. 38 year old male rate with non-smoker discount
D. 39 year old male rate with non-smoker discount
148. Mr. Lee was born on January 22, 1966 and he applies for a life insurance on July 28,
2006. Based on age nearest birthday, what is his age?
A. 38
B. 39
C. 40
D. 41
149. An agent leaves Company A and joins Company B. He advises a customer to

surrender or cancel existing policies and purchase a new policy from Company B. This is
called
A. twisting
B. pinching
C. punching
D. rebating
150. When explaining the contract, the intermediary shall
I. draw attention to any restrictions applying to the policy;
II. draw attention to the long term nature of the policy and the consequent effects of early
discontinuance and surrender.
III. explain all the essential provisions of the contract, which he is recommending to ensure the
prospect understands what he is committing himself to
A. I , II only
B. I , III only
C. II , III only
D. I , II ,III
PCE Trial Exam 3 – Part A
1 The objective of insurance is achieved by having the losses experienced by the
unfortunate few compensated by the contributions of the many who are exposed to
A. the same risk
B. the lower risk
C. the higher risk
D. the different risk
2 Which of the following is NOT the secondary function of Insurance?
A. cost stabilization
B. capital guarantee
C. reduction of losses
D. to provide employment opportunities
3 The earliest form of life insurance was
A. group insurance
B. whole life insurance
C. endowment insurance
D. short term insurance
4 Which of the following is NOT the role of an insurance agent?
A. bring financial relief in the event of property loss
B. provide other forms of insurance related services to public
C. bring financial relief to aggrieved dependants of insured people
D. inculcate the discipline of investment amongst the working population
5 Hazard is
A. a cause of loss
B. a condition that increases the chance of loss
C. a reduction/disappearance of economic value
D. a character defect in an individual that increases the chance of loss
6 Pure risk exists when
A. there is the possibility of loss
B. there is the possibility of profit
C. there is the possibility of either loss or no loss
D. there is the possibility of profit, loss or no loss
7 Which of the following is NOT a method of handling risks?
A. risk avoidance
B. loss control
C. risk sharing
D. risk transfer
8 Which of the following is NOT a characteristic of insurable risk?
A. It must have financial value
B. It must be pure risks only
C. It must be catastrophic losses
D. It must be a large number of similar risks
9 Which of the following is NOT principle of insurance?
A. insurable interest
B. utmost good faith
C. indemnity
D. caveat emptor
10 What makes insurance different from wagering?
A. subrogation
B. contribution
C. insurable interest
D. proximate cause
11 The transfer of rights and liabilities by one person to another is called
A. twisting
B. reinstatement
C. an assignment
D. a risk transfer
12 At common law, the proposer is required to disclose material facts during
A. claim
B. negotiation
C. grace period
D. cooling off period
13 Subrogation may arise in the following ways. EXCEPT
A. arising out of tort
B. arising out of contract
C. arising out of statute
D. arising out of the condition
14 The underlying concepts that drive the acceptance of the takaful system includes
I. Piety or individual purification
II. Brotherhood via ta’awun or mutual assistance
III. Charity through tabarru’ or donation
IV. Self-sustaining operations
A. I , II. III only
B. II. III, IV only
C. I III, IV only
D. I , II , III, IV
15 Muslim jurists generally view that conventional insurance, which is based on exchange
transaction, does not conform to the rules and requirements of Syariah because of the
involvement in which of the following elements?
I. Al-Gharar – uncertainty in the contract of insurance
II. Al-Maisir – gambling as the consequence of the presence of uncertainty
III. Al-Riba – the existence of interest or usury in its investment activities
A. I , II only C. II , III only
B. I , III only D. I , II , III
16 A family takaful plan is a combination of
A. short-term investment and a risk transfer scheme
B. short-term investment and a mutual financial assistance scheme
C. long-term investment and a risk transfer scheme
D. long-term investment and a mutual financial assistance scheme
17 Intermediaries or middlemen in the insurance market are
A. brokers and reinsurer
B. loss adjusters and brokers
C. insurance agents and brokers
D. insurance agents and reinsurer
18 Penalty for breach of Section 186 is
A. RM 0.5 million
B. RM 1 million
C. RM 2 million
D. RM 3 million
19 Brokers are remunerated through payment of
A. salary
B. dividend
C. brokerage
D. commission
20 An insurer or an individual skilled in the process of selecting risks for an insurance
company is called
A. an actuary
B. an underwriter
C. a loss assessor
D. a loss adjusters
21 The responsibility of the Chief Executive Officer is
A. to develop new insurance product
B. to formulate the overall plan of operation of the company
C. to implement the decisions which are made by the board of directors
D. to ensure that the company complies with company and insurance company law
22 Which of the following is NOT the objective of LIAM?
A. to promote public understanding and appreciation of life insurance
B. to improve the image of the life insurance industry through self regulation
C. to give support to the regulatory authorities in developing a strong and healthy industry
D. to enhance the professionalism of staff and agents through continuous selling high premium
insurance product
23 This organization is concerned with safeguarding the interests of those are engaged in
life insurance selling and sales management. This organization is
A. The Malaysian Insurance Institute (MII)
B. The Malaysian Financial Planning Council (MFPC)
C. The Malaysian Insurance and Takaful Brokers (MITBA)
D. The National Association of Malaysian Life Insurance and Financial Advisors (NAMLIFA)
24 Which of the following is NOT the core value of The Malaysian Insurance Institute (MII)?
A. Resourceful
B. Innovative
C. Customer
D. Integrity
25 The basic rights of consumers include
I. right to choose
II. right to consumer education
III. right to basic goods and services
IV. right to a safe and clean environment
A. I, II , III only
B. I, III , IV only
C. II, III, IV only
D. I, II, III, IV
26 The objectives of self regulation include
I. to instill discipline and promote healthy competition
II. to provide protection to the insurance consumer
III. to increase the profit of the insurance industry
A. I only
B. II only
C. I ,II only
D. I ,II , III
27 The code of ethics and conducts of LIAM deals with
A. life insurance selling and life insurance practice
B. life insurance profit sharing and life insurance practice
C. life insurance selling and life insurance profit sharing
D. life insurance practice and life insurance twisting
28 Which of the following is NOT the purpose of government regulation on insurance
industry?
A. foster competence
B. play a developmental role
C. promote fairness and equity
D. protect the insurer’s interest
29 Which of the following is NOT the essential of an insurance contract?
A. consent
B. express authority
C. offer and acceptance
D. intention to create a legal relationship
30 If a proposer submits a completed and signed proposal form to an insurer, he is making
A. an offer
B. a ratification
C. an counter-offer
D. an acceptance
31 Section 153 of the Insurance Act 1996 provides that a minor can affect a life policy on
his own life if he/she has attained the age of
A. 15
B. 16
C. 17
D. 18
32 A contract which has no consideration is a
A. valid contract
B. void contract
C. voidable contract
D. unenforceable contract
33 When an agent carries on a particular trade on profession, his express and implied
authority carry with them
A. a ratification
B. apparent authority
C. an usual authority
D. unlimited authority
34 The relationship of the principal and agent may be terminated by the following actions,
except
A. expiration of the period stipulated.
B. the completion of the transaction.
C. notice of revocation given to the principal to the agent
D. notice of renunciation given to the principal by the policyholders
35 Which of the following is/are the obligations of the principal?
I. to pay remuneration and expenses as agreed
II. to indemnify the agent against consequences of any act lawfully done
III. to protect the agent against any legal action
A. I only
B. II only
C. I , II only
D. I ,II, III
36 No licensed general insurer shall assume any risk in respect of such description of
general policy as may be prescribed unless and until the premium payable is received by
the general insurer in such manner and within such time as may be prescribed. This is
known as
A. Cash Before Cover Regulations
B. Cash After Cover Regulations
C. Premium Waived Clause
D. Premium Warranty Clause
37 The functions of the marketing department include
I. pricing
II. promotion
III. market identification
IV. product development
A. I, II only
B. I, II, III only
C. II, III, IV only
D. I, II. III. IV
38 Which of the following is NOT the customer buying decision process?
A. servicing
B. problem recognition
C. information search
D. evaluation of alternative policies
39 This technique is used when the customer is unaware of his/her needs. This selling
technique is referred to as
A. creative selling
B. missionary selling
C. order processing
D. objection handling selling
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40 The vast majority of non-life policies renewal process will be for periods of
A. 3 months
B. 6 months
C. 9 months
D. 12 months
41 The duty of disclosure does not require the disclosure of a matter that
I. is of common knowledge
II. diminishes the risk to the licensed insurer
III. the licensed insurer knows or in the ordinary course of his business ought to know
IV. in respect of which the licensed insurer has waived any requirement for disclosure
A. I , II, III only
B. I, II, IV only
C. II, III, IV only
D. I, II , III, IV
42 Which of the following is NOT an example of benefit policies?
A. critical illness insurance
B. disability income insurance
C. hospitalisation and surgical insurance
D. hospitalization cash benefit plans
43 The two common expense participation methods in major medical expenses insurance
are
A. cashless and deductible
B. cashless and co-payment
C. deductible and co-payment
D. cashless and top-up
44 Contributory group medical and health insurance usually requires __________
participation of the eligible members of the group.
A. 50%
B. 60%
C. 75%
D. 100%
45 Morbidity rates vary considerably according to
A. a person's education
B. a person's occupation
C. a person's income level
D. a person's hobby
46 The additional premium of premium loading usually ranges from
A. 25 to 100 percent of the standard premium
B. 50 to 100 percent of the standard premium
C. 75 to 150 percent of the standard premium
D. 100 to 150 percent of the standard premium
47 A proposal form generally contains the following items, EXCEPT
A. signature
B. declaration
C. previous and present insurance
D. specific questions relating to general insurance
48 Which section of the scheduled policy form specifies the perils insured under the
policy
and the circumstances in which the insurer will become responsible to make payment or
its equivalent to the insured?
A. Heading
B. Exclusions
C. The Preamble
D. The Operative
49 Insurance policies require the policyholder to inform the insurer in writing of any claim
within a reasonable period. Such period, which is stipulated in the policy, is usually
A. 14 days to 30 days
B. 30 days to 45 days
C. 45 days to 60 days
D. 60 days to 75 days
50 Which of the following is NOT the condition for a valid claim?
A. is the policy in force?
B. has premium been paid?
C. is the servicing agent still active?
D. is the subject matter affected by the loss the same as that insured under the policy?
PCE Trial Exam 3 – Part C
101 In 1762 , the Equitable Society issued life insurance policies based on the following
principles, EXCEPT
A. cover was available to anyone who satisfied the initial health requirements
B. once accepted for insurance, further proof of continuing good health was not needed
C. increasing premiums were to be payable throughout the term of the contract
D. extra premiums were chargeable for special occupational risks and sub-standard health risks
102 Life insurance contracts are long- term contracts with
A. variable premium
B. increasing premiums
C. decreasing premiums
D. usually level premiums
103 The prerequisite for a life insurance contract is the existence of
A. insurable interest
B. monetary interest
C. utmost good faith
D. subrogation
104 Which policy incorporate the savings element as an essential feature and provide for
the
payment of the sum assured and other additional benefits, if any, if the policyholders
survive to the end of the term of the policies?
A. Annuities
B. Endowment policies
C. Investment-Linked policies
D. Accident or sickness policies
105 Which of the following is NOT the basic life insurance contracts?
A. annuities
B. whole life
C. unit trust
D. term insurance
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106 Under a renewable term insurance, the policyholder is allowed an option, before the
expiry of the term to renew the policy
A. with evidence of continued good health
B. with evidence of continued good health plus exclusions
C. without evidence of continued good health
D. without evidence of continued good health but with exclusions
107 This is an ordinary term insurance with the sum assured decreases in amount at
periodical intervals. It is generally utilized to cover loans which are gradually being
repaid. This is
A. level annuities
B. level term insurance
C. decreasing annuities
D. decreasing term insurance
108 The following statements regarding whole life assurance are correct, EXCEPT
A. Protection is provided for the whole duration of life
B. Sum assured including any accrued bonuses, becoming payable only upon the death of the
life assured
C. Is the purest form of a permanent contract
D. Can only be issued with participating
109 Which of the following is NOT the benefit of an ordinary whole life insurance?
A. Loan value
B. Paid up value
C. Convertible feature
D. Non-forfeiture regulations
110 A whole-life endowment policy is a combination of
A. a whole life and an annuity contract
B. a whole life and an endowment contract
C. an investment contract and an term contract
D. a whole life and an investment contract
111 The endowment insurance can be viewed as a combination of
A. a decreasing term insurance and a decreasing investment component
B. a decreasing term insurance and an increasing investment component
C. a increasing term insurance and a decreasing investment component
D. a increasing term insurance and an increasing investment component
112 The annuitant pays a lump sum at entry, or a periodical premium for a defined period.
On
the attainment of a specified age, or on the survival by the annuitant of a defined period,
the insurer pays an annuity of a specified amount until death. This annuity is called:
A. joint life annuity
B. deferred annuity
C. last survivor annuity
D. guaranteed immediate annuity
113 It is not a life annuity. In return for the payment of a certain sum, known as the
purchase
money, the insurer makes a series of yearly, half-yearly or quarterly payments for a
specified number of years. This annuity is called:
A. joint life annuity
B. deferred annuity
C. annuity certain
D. guaranteed immediate annuity
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114 Permanent Health Insurance is usually arranged with a deferred period. A deferred
period is during this period of disability
A. future premiums are waived
B. no benefits are payable
C. the benefits are payable
D. only 50% of the benefits are payable
115 A basic critical illness plan provides a lump sum payment upon:
I. loss of life
II. total permanent disability
III. diagnosis of suffering from any one of the 36 types of dread diseases
A. III only
B. I , III only
C. II, III only
D. I , II , III
116 “Contracts of insurance on human life or annuities where the benefits are, wholly or
partly, to be determined by reference to the value of, or the income from, property of any
description or by reference to fluctuations in, or in an index of, the value of property of
any description.” This is the description of
A. annuities
B. endowment insurance policies
C. investment-linked insurance policies
D. whole life endowment insurance policies
117 Permanent disability benefit is provided for, should the life insured becomes disabled,
that at any future date, he will not be able to engage in any occupation or perform any
work for remuneration or profit before attainment of age
A. 60
B. 65
C. 70
D. 75
118 If the participant dies before the term of a takaful plan, the benefits payable will be
equal
to the amount of
A. death benefit defined by the plan only
B. accumulated value of the participant’s PA only
C. death benefit defined by the plan + accumulated value of the participant’s PA
D. death benefit defined by the plan + accumulated value of the participant’s PSA
119 The conditions in the policy can be broadly classified under the followings, EXCEPT
A. privileges
B. those limiting the scope of assurance
C. those expanding the scope of assurance
D. those explaining the nature of the contract
120 Policy loan generally grants up to _________ of cash value
A. 75%
B. 85%
C. 92%
D. 100%
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121 Which of the following is NOT a non-forfeiture condition?
A. paid-up policy
B. premium waived
C. automatic premium loan
D. extended term assurance
122 Reinstatement is normally NOT allowed for which the following situations?
I. A policy which has lapsed for more than three years for whole life and endowment policies,
and six months for term policies
II. A female life assured who is pregnant 8 months and above.
III. A life assured who has attained age 60 age and above next birthday
A. I only
B. I , II only
C. II, III only
D. I , II , III
123 The process of assignment can be carried out by the following procedures listed
below,
EXCEPT
A. the assignment shall be in writing
B. the assignment may be effected by an endorsement or a separate deed
C. a written notice of the assignment must be served to the servicing agent
D. upon receipt of an assignment notice, the insurer should register it
124 Which of the following is NOT the major factor which influence mortality?
A. geographical location
B. marital status
C. personal habits
D. education
125 The purpose of selection is
A. to avoid twisting
B. to avoid anti-selection
C. to increase the insured rate
D. to increase the sales
126 The insurer usually employs which of the following methods to deal with sub-standard
lives?
I. charge an extra premium
II. charge a debt or a lien. e.g. reduce the amount payable in the event of death
III. offer an alternate form of contract
IV. decline or postpone coverage
A. I , II, III only
B. I, II, IV only
C. II, III, IV only
D. I , II , III, IV
127 Extra risks are classified into the followings, EXCEPT
A. level extra mortality
B. unusual extra mortality
C. increasing extra mortality
D. decreasing extra mortality
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128 The allowable deduction for savings under the National Education Saving Scheme
(SSPN)
is
A. RM 3,000
B. RM 4,000
C. RM 5,000
D. RM 6,000
129 Which of the following is NOT one of the expenses of a life insurance company?
A. initial expenses
B. investment expenses
C. renewal expenses
D. termination expenses
130 When the charge is computed after taking into account the elements of mortality and
interest is called
A. the initial premium
B. the net premium
C. the risk premium
D. the total premium
131 The disadvantages of a regular premium are
I. more administrative work
II. loss of interest to the policy holders
III. loss of interest to the insurance company
A. I , II only
B. I, III only
C. II, III only
D. I , II , III
132 Insurance companies impose premium loading to the following persons, EXCEPT
A. persons with impaired health
B. persons involved in hazardous occupations
C. persons with extra risk
D. persons in good health
133 The Risk-Based Capital (RBC) Framework requires each insurer to
A. maintain a capital adequacy level commensurate with its risk profiles
B. maintain a capital adequacy level commensurate with its operation cost
C. maintain a investment fund adequacy level commensurate with its risk profiles
D. maintain a investment fund adequacy level commensurate with its operation cost
134 Which of the following is NOT the asset of a life assurance company?
A. shares
B. loan to policyholders
C. bank loan
D. government securities
135 The portion of the surplus that may be passed to the shareholders in the form of
A. shares
B. interest
C. bonuses
D. dividends
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136 Under this method, the bonus allotted is in proportion to the sum assured and the
bonuses accumulated under the policy. This type of surplus distribution method is:
A. interim bonus
B. maturity bonus
C. simple reversionary bonus
D. compound reversionary bonus
137 Information necessary for the proper assessment of risk is generally obtained from
the
followings, EXCEPT
A. the proposal form
B. the medical report
C. loss adjuster’s report
D. attending physician’s statement
138 Two main forms of policy are
A. report type and listing type
B. narrative type and schedule type
C. narrative type and listing type
D. report type and narrative type
139 Which of the following is NOT the main section found in most policies?
A. the heading
B. the preamble
C. endorsement
D. the proviso
140 Days of grace, non-forfeiture condition is under
A. conditions limiting the scope of contract
B. conditions enlarging the scope of contract
C. conditions explaining the scope of contract
D. conditions changing the scope of contract
141 Which of the following is not the detail that must be provided to the insurer upon a
death
claim?
A. policy number
B. date and cause of death
C. policyholder’s name and identity card number
D. nominee’s name and identity card number
142 The most commonly used document for proof of age is
A. school leaving certificate
B. identify card
C. international passport
D. certified extract from baptism register
143 Section 161 of the Insurance Act 1996 provides that where a life policy claim upon the
death of the policyowner is not paid within 60 days of receipt of intimation of the claim,
the insurer shall pay a minimum compound of _________ percent of interest per annum?
A. 3%
B. 4
C. 5%
D. 6
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144 Documents required for total permanent disability claim due to accident are:
I. completed claim form
II. certified true copy of the life assured’s identification card
III. medical certification to be completed by the attending doctor after the life assured’s disability
IV. certified true copy of the police report
B. I, II, IV only
C. II, III, IV only
145 Which of the following is NOT the method of calculation of age used by insurance
companies?
A. age last birthday
B. age next birthday
C. age nearest birthday
D. age possible birthday
146 Interest charge calculations usually arise under the following conditions, EXCEPT
A. policy revival
B. policy under grace period
C. policy loan repayments
D. outstanding premium charges
147 The document on the code of Ethics and Conduct, dwells at length on the following
principles, EXCEPT
A. to avoid conflict of interest
B. to avoid misuse of information
C. to avoid misuse of position
D. to conduct business with highest return
148 The Code applies to all intermediaries, the intermediaries refers to
A. persons selling life insurance and registered insurance brokers
B. employees of a life insurance company and registered insurance brokers
C. persons selling life insurance an employees of a life insurance company
D. registered insurance brokers and registered financial planners
149 To discontinue a policy or to have a policy paid-up and then to affect a new one in
another company or the same company is called
A. rebate
B. twisting
C. ratification
D. reinstatement
150 The aim of statement of life insurance practice is
A. to reduce the formalities involved in the reinstatement and assignment of policies
B. to reduce the formalities involved in the issue of new policies and assignment of policies
C. to reduce the formalities involved in the issue of new policies and payment of a claim
D. to reduce the formalities involved in the assignment of policies and payment of a claim
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PCE Trial Exam 4

Note: You are strongly urged to purchase and read MII’s Textbooks for a complete
understanding of the syllabus in preparation for the examination. This revision material is
purely a revision tool and it is to be used only after you have read MII’s Textbooks. Since
this
revision material is purely a revision tool, it does not guarantee your passing of the
respective
examinations.
PCE Trial Exam 04 – Parts A & C
1. The following are essential features of insurance EXCEPT
A. It is an economic institution based on the principle of mutuality or cooperation
B. It accumulates funds and pays claims for all risks
C. It accumulates funds to pay for claims arising as a result of specified risks
D. Only certain risks can be insured, the occurrence which can be confidently estimated with a
certain degree of accuracy
2. The following are methods of handling risk
I. Avoid the person who produces the risk
II. Reduce the total amount of loss
III. Plan to retain risks
IV. Transfer the risk to a third party
A. I,II and III
B. I, II and IV
C. I and II
D. All the above
3. Life insurance can be defined as a contract which
A. Pays donations
B. Pays an agreed sum of money on the happening of a contingency/event dependent on a
human life.
C. Pays an agreed sum of money when someone is struck by accident only
D. Helps accumulate savings to purchase an annuity
4. An agent performs an act not within his scope of authority. This authority exercised
later
becomes binding on the principal. This is known as
A. Express authority-an authority given to the agent orally or in writing
B. Implied authority
C. Ratification
D. Apparent Authority
5. An applicant knows he has a high probability of loss and submits a proposal for
insurance. This leads to sub-standard risks being accepted for insurance resulting in a
less favourable underwriting result. This is known as
A. Moral obligation
B. Anti-Selection
C. Physical hazard
D. Hazardous Insurance
6. Peril is the ……..of loss whereas Hazard ……… the outcome of a loss.
A. Object, decreases
B. Cause, increases
C. Chance, accelerates
D. Source, causes
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7. An accidental and unintentional loss is known as
A. Pure loss
B. Predictable loss
C. Fortuitous loss
D. Catastrophic loss
8. What type of bonus is only paid on in-force policies, which result in claims either in
maturity or death?
A. Interim bonus
B. Terminal bonus
C. Cash bonus
D. Guaranteed bonus
9. Which of the following is NOT true about the categories of risk?
A. Particular risks are the responsibility of the individuals themselves
B. Pure risks exists when there is the possibility of either loss or no loss
C. Investment in the stock market is considered as speculative risk
D. Speculative risk can easily be insured.
10. The termination of a life insurance contract is usually through the settlement of a
claim. A
claim arises out of the following situations EXCEPT
A. Maturity of the policy
B. Death of the insured
C. Sickness or disability claims
D. Property damage claims
11. Which of the following is NOT true about the application of the law of large numbers?
A. As the number of the loss exposure increases, the predicted loss tends to approach the
actual loss.
B. It operates when a large number of claims arises
C. It is used to estimate adequate premium to be charged
D. It operates when insurers are able to underwrite a large number of similar risks
12. Medical and Health insurance comprises which of the following types of insurance
products?
I. Medical expenses insurance
II. Critical illness insurance
III. Disability income insurance
IV. Hospitalization cash benefit insurance
A. I, II & III C. I, II & IV
B. I, III & IV D. All of the above
13. An insured’s car was damaged by a negligent third party. The cost of repairs amounted
to
RM 1200. In the presence of subrogation, which of the following is NOT true?
A. The insured can claim RM1200 from the insurer and RM1200 from the negligent party
B. In the absence of subrogation, the insured can claim from the insurer and the negligent party
C. In the presence of subrogation, the insured can only claim either from the insurer or the
negligent party
D. The principle of subrogation applies to prevent the insured from making profit out of his loss
14. The following are among the few stages in the consumer buying decision process,
EXCEPT
A. Pre-purchase evaluation
B. Information search
C. Problem recognition
D. Evaluation of alternative choices
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15. Which is the least effective approach to risk management?
A. Avoiding the risk
B. Retaining the risk
C. Transferring the risk
D. Ignoring the risk
16. Listed below are the legal requirements of insurance contracts EXCEPT
A. Intention to create legal relationship
B. Consideration
C. No offer and no acceptance
D. Legal capacity to contract
17. An insurance policy is a legally binding contract between
A. The insurer and the nominee
B. The insurer and the trustee
C. The insurer and the insured or policyholder
D. The policy owner and the nominee
18. An agent is not allowed to
I. Let his own interest conflict with his obligation to the principal
II. Take any secret motive or bribe from any party with whom he deals on behalf of the
principal
III. Disclose confidential information obtained in the course of his duties as an agent to other
parties except the principal insurance company
IV. Delegate his duties to a sub-agent without authority expressed or implied
A. I and II only
B. II and IV only
C. I, II and IV only
D. All of the above
19. List out the sequence of the risk management process
A. Selection, Evaluation, Identification, Implementation, Control
B. Evaluation, Identification, Selection, Implementation, Control
C. Identification, Evaluation, Selection, Implementation, Control
D. Identification, Selection, Implementation, Evaluation, Control
20. The term “grace period” in a life/family takaful policy means
A. The period where you can cancel your policy without any penalty
B. Additional period of time to make premium payment after the premium due date without
penalty
C. Period of time required by the life insurer to underwrite your proposal
D. Period of time required to pay your loan installment
21. The principle of Utmost Good Faith is breached when
A. The proposer for insurance discloses irrelevant information
B. The proposer for insurance fails to disclose material facts or misrepresents material facts
C. Non material facts are not disclosed to the insurer
D. The agent voids the insurance contract
22. For life insurance, insurable interest needs to exist only at
A. At the time of policy surrender
B. The time of the claim
C. The time of inception of the insurance
D. The time of changing the beneficiary
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23. The risks covered by life insurance include the following EXCEPT
A. Premature death
B. Financial loss
C. Total permanent disability
D. Old age or retirement
24. Information necessary for the proper assessment of risk can be obtained from
I. proposal form
II. attending physician’s statement
III. agent’s report
IV. adjustor’s report
A. I, II and III only
B. I, II and IV only
C. I, III and IV only
D. I,II,III and IV
25. The following information is contained in the proposal form
A. Applicant’s personal particulars
B. Details of insurance such as sum assured, type of insurance, frequency and method of
payment
C. Applicant’s occupation and family history
D. All of the above
26. Below are the various categories of policy conditions and its examples. Which one is
NOT
true?
A. Conditions limiting scope of contract-incontestability clause
B. Conditions adding benefits to the scope of contract- e.g. grace period
C. Conditions limiting scope of contract- non forfeiture conditions
D. None of the above
27. The following are expenses incurred by life insurers in running business EXCEPT
A. Initial expenses
B. Renewal expenses
C. Termination expenses
D. Profit share expenses
28. If no insurable interest existed at the time a life policy was taken out, the policy
becomes
A. Voidable; depending on the judgment of the High Court
B. Null and void; the contract is not enforceable in a court of law
C. Voidable; the company may or may not be obliged to pay a claim under the policy
depending on the discretion of the manager.
D. Unenforceable; the policy is still recognized by the courts as still subsisting but no claim can
be made.
29. In times of death claims, the following documents are acceptable to the insurer as
proof
of title and ownership, EXCEPT
A. A deed of assignment
B. A probate of the will
C. Insured’s identity card
D. Proof as trustee under section 23 of the Civil Law Act
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30. The main function of Insurance Mediation Bureau is to
A. Provide compensation to victims of motor accidents
B. Provide an alternative procedure to resolve disputes arising out of personal insurance
policies.
C. Provide insurance coverage at a reasonable cost to certain classes of vehicles as a kind of
social service
D. Manage the Unplaced Motor Pool
31. Replacement of Policies (R.O.P) is considered detrimental to the policyowner’s interest
EXCEPT
A. The qualifying period (2-3 years) to accumulate cash value will commence again from the
new policy
B. The amount of annual premium under an existing policy may be lower than the new policy
based on the insured’s then attained age
C. The initial costs of life insurance policies in the earlier policy years results in the policyowner
bearing the costs only once
D. The suicide and incontestability clause begin anew in a new policy being denied by the
insurer which would be paid under the policy replaced.
32. The following statements describe the characteristics of an agency relationship. Which
of
them is/are true?
I. A contract completed by an agent on behalf of the principal is considered to be the contract
of the principal
II. If it is within an agent’s authority to accept premiums, payment to the agent is deemed as
payment as made to the principal
III. The act of an agent within the scope of his or her authority is deemed to be an act of the
principal
IV. An agent has fiduciary relationship with his principal
A. II, III & IV
B. I, II & IV
C. All of the above
D. I, II and III
33. Which of the followings are the principles underlying the guidelines of the Code of
Ethics
and Conduct?
I. to avoid misuse of position
II. to avoid conflict of interest
III. to conduct business with the utmost good faith and integrity
IV. to ensure completeness and accuracy of relevant records
B. I, III and IV only
C. II,III and IV only
D. I, II, III and IV
34. The insurance intermediaries shall not
I. make inaccurate or unfair criticisms of any insurers
II. ensure the policy proposed is suitable to the needs of the prospective policyholder
III. attempt to persuade a client to terminate his existing policies
IV. conduct business with the highest degree of integrity and ethics
A. I and II only
B. I and III only
C. II and IV only
D. III and IV only
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35. An insurance plan based on Shariah principles is called
A. Takaful
B. Wakalah
C. Mudharabah
D. Aqad
36. Which of the following is NOT true about the coverage under supplementary benefits?
A. Permanent disability benefit include payment of sum insured and waiver of premium
B. Personal accident benefit does not cover bodily injury caused by some hazardous pursuits
and sports
C. Double Accident benefit pays out when there is a continuous event of accidents incurred to
the life assured.
D. Surgical and Nursing Fees benefit does not include the hospitalization expenses
37. The amount of group insurance that can be applied for without medical evidence is
referred to as
A. Free Cover
B. Non- Medical Limit
C. Non- evidence Cover
D. Medical Free Cover
38. To have the existence of _____________, the purchaser of a life insurance policy must
stand to suffer a financial loss on the death of the insured.
A. Uberrimae fides
B. Insurable interest
C. Utmost good faith
D. Proximate cause
39. What principles apply as a consequence of indemnity?
A. Subrogation
B. Contribution
C. Proximate cause
D. Subrogation and contribution
40. Which of the following does not satisfy conditions for an education policy?
A. The beneficiary should be the child
B. If the insured is the parent, the child must be the nominee
C. If the insured is the child, the life of the payor is not covered
D. Maturity benefits must be payable when the child is between the ages 13 to 25 years
41. The earliest life insurance contract was found in England in 1583 on the life of
A. Edmund Halley
B. William Gybbon
C. William Cybban
D. William Halley
42. Level Term insurance is also known as
A. Renewable Term Insurance
B. Limited Insurance
C. Temporary Insurance
D. Life Insurance
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43. The methods of indemnity include
I. Payments by cash
II. Replacement
III. Reinstatement
IV. Repair
A. I,II and III only
B. I,II and IV only
C. I,III and IV only
44. In Malaysia, the main purpose of regulation include
A. To maximize the profit of insurers
B. To ensure consumers are informed and competent
C. The promotion of public interest and promote fairness and equity
D. To protect the interest of insurance companies
45. For personal accident policies, the most important cause is called
A. Proximate cause
B. Mortality cause
C. Crucial cause
D. Deciding cause
46. The principle of “utmost good faith” means that the parties must disclose
A. All material facts of which they are aware
B. All material facts of which they ought to be aware
C. Only those facts which have been specifically asked for by the company
D. Both A & B
47. In determining the tabular (gross) premium for _____________ policies, the
corresponding
elements are mortality, interest, expenses and bonus loading.
A. Endowment
B. Term
C. Non-participating
D. Participating
48. The following benefits are covered under a medical and health policy EXCEPT
A. Cosmetic or plastic surgery
B. Hospital accommodation and nursing expenses
C. Surgical expenses
D. Physicians’ expenses
49. What are the documents important for policy administration?
A. Proposal form, policy document, gratuity statement
B. Proposal form, policy, endorsement, renewal notice, proof of medical and health insurance
premium payment for tax relief
C. Policy form, pay slip, income tax B1 form
D. Reinstatement form, pay slip and income tax form
50. When a loss is the result of many causes _______________________, that is the
dominant
or effective cause, must be identified and attributed as the cause of loss.
A. The proximate cause
B. The probability of loss
C. The damaging cause
D. The concurrent cause
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51. What is Underwriting from an insurer’s perspective?
A. It is assessing and preventing the risk from taking place
B. It is assessing moral hazard and prevent it from taking place
C. It is the assessment and selection of risks and determining the premium, terms and
conditions of the insurance application
D. It is avoiding under-table applications
52. In determining a premium rate for life insurance, it is assumed that the deaths among a
group of insured people of the same age, will in future,
A. Follow a pattern similar to that of an identical known group in the past
B. Change according to the pattern of an identical known group
C. Follow a pattern of an identical known group
D. Change according to the pattern of identical known group in the past
53. What are the factors taken into consideration for life insurance premium calculation
purposes?
I. Investment returns
II. Expenses
III. Tax
IV. Bonus Loading
C. II,III and IV only
54. Parties must give consideration before an agreement can be legally binding. In general
and life contracts, the consideration to be paid by the insured is termed as
A. Cash value
B. Money consideration
C. Premium
D. Cash payment
55. In settling a maturity claim, the following is NOT required when the policyholder is the
life
insured
A. Proof of survival
B. Proof of age
C. Policy document
D. Death certificate
56. Below are the examples of initial expenses incurred in the first year of the policy,
EXCEPT
A. Advertising costs
B. Medical examination expenses
C. First year commission
D. Litigation Expenses
57. Its membership is compulsory for all general insurers in Malaysia. One of it’s main
objective is to manage the Malaysian Motor Insurance Pool
A. Unplaced Motor Pool
B. High Risks Motor Insurance Pool
C. Motor Insurers’ Bureau
D. Persatuan Insurans Am Malaysia
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58. For General Insurance business, self-regulation with respect to the transaction of
insurance business has been achieved through insurance associations such as:
I Association of Malaysian Loss Adjustors (AMLA)
II General Insurance Association of Malaysia (PIAM)
III Insurance Brokers Association of Malaysia (IBAM)
IV Malaysian Insurance Institute (MII)
B. II, III and IV only
D. I, II III and IV
59. Takaful concept is
A. To establish confidence and enables forward planning of economic activities
B. A method of joint guarantee among a group of people in a scheme to share the burden of
unexpected financial losses that may fall upon any of them. It upholds the principles of
shared responsibility, mutual help and cooperation.
C. A pooling of resources by a group of people to benefit one another
D. A method of joint venture among a group of people to realize business ventures
60. The use of fire resistant material in the construction of building is the method of
handling
risks through
A. Risk avoidance
B. Loss control
C. Risk retention
D. Risk transfer
61. Ms A has cancer, which is known by herself. In filling the proposal form to apply for a
life
insurance policy, she is not aware of the principle of utmost good faith and her agent did
not task her to state the above health condition. The principle of utmost good faith is
breached under_________.
A. Innocent misrepresentation
B. Fraudulent misrepresentation
C. Non-disclosure / Concealment
D. Disclosure
62. The term “indemnity” represents which one of the following
A. Promise to Pay
B. Insurability
C. Insurance for sales
D. Insurance risk
63. Such schemes are based on an agreement between the insurer and the employer
whereby
the employer deducts the premium from the employee’s salary.
A. Banker’s Order Deduction
B. Payroll Deduction
C. Employee Premium Deduction
D. Employee Fund Deduction
64. The arrangement where a group of members agree to jointly guarantee against loss or
damage that may fall upon any of them, but without a contractual transfer of risk is called
A. Insurance
B. Syura
C. Takaful
D. Mudharabah
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65. Endorsements on a life insurance policy can be done at
I time of issue of policy
II after issue of policy
III before issue of the policy
IV the time of claims
A. II only
B. I and II only
C. I and III only
D. II and IV only
66. On maturity on an endowment policy, what are the settlement options which can be
exercised?
I cash
II convert to annuity
III leave with the insurer on agreed terms
IV installments
C. II, III and IV only
67. The premium charge for life insurance policies usually vary in relation to the following
factors
A. The age and sex of the proposer
B. The type of policy required
C. The sum assured
D. All of the above
68. What is key-man insurance?
A. It is insurance purchased by a firm to protect itself against financial losses caused by death
or disability of a key employee.
B. It is insurance purchased by an important employee in an organization to protect himself
against any loss of employment.
C. It is an insurance plan which provides for the payment of annual income to a key employee
after retirement
D. It is an insurance plan which provides benefits for a large group of key employees
69. In order to ensure that the child will have life insurance even if he or she later becomes
uninsurable, the parents can issue this type of life insurance on the life of the child
during his or her early years
A. Protected Educational Policies
B. Children’s Deferred Assurance
C. Child’s Education Plan
D. Juvenile Policy
70. Takaful contribution is credited into two separate accounts namely
A. Participant’s Account and Participant’s Personal Account
B. Mudharabah and Tabaruk
C. Participant’s Account and Participant’s Special Account
D. Tabaruk and Participant’s Account
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71. Which of the following is not true about the privileges of a life policy?
A. The cover under the policy continues during the 30 days of grace for half of the sum
assured.
B. A home service life policy is entitled for a surrender value after the policy has been in force
for six years or more
C. Cash value of a life policy can be used as a single premium to provide for an insurance on
the original terms but with a reduced sum assured.
D. Policy loans are generally granted up to 85 or 90 percent of the acquired cash value of a
policy
72. What is the Risk-Based Capital (RBC) framework?
A. It’s an underwriting framework for insurers to implement to ensure uniformity of underwriting
practices
B. It’s a capital adequacy framework for all insurers licensed under the Insurance Act 1996 to
maintain a capital adequacy level commensurate with its risk profiles
C. It’s a risk assessment framework to ensure risks are correctly classified
D. It’s a human resource framework to ensure insurers recruit technically qualified personnel
73. Conventional insurance does not conform to some Shariah requirements. What are
some
of these requirements?
I. Al Taruk
II. Al Maisir
III. Al Gharar
IV. Al Riba
V. Al Shira
A. I & II
B. II & IV
C. II, III & IV
D. All of the above
74. The intermediaries or middlemen in the insurance market are composed of
______________ and ______________.
A. Insurance agents and sellers
B. Buyers and sellers
C. Brokers and buyers
D. Brokers and insurance agents
75. Agency can be defined as the relationship where
A. The person called the broker is engaged by another person called employer – the broker
has the power to effect the employer’s relationship with third parties.
B. The person called the agent is engaged by another person called the principal – the agent is
given power to effect the principal’s relationship with third parties
C. The intermediary is engaged by the other party known as creditor to recover debts
76. Studies have shown that the important factors that influence the consumer buying
decision in selecting an insurer are
A. The reputation of the insurer and its policy benefits only
B. The reputation of the insurer, quality of coverage and services provided, policy benefits,
agent’s professional capability and personality
C. The quality of the insurer’s staff
D. The insurer’s extensive branch network
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77. It is a legal requirement in terms of Section 47 of the Insurance Act 1996, that every
insurer should establish and maintain an up-to date_____________________.
A. Record Book
B. Note book
C. Policy Register
D Register of Insurance Agents
78. The term permanent disability is also often referred to as ________________ since the
affected life ceases to be a productive force.
A. Economic death
B. Death
C. Temporary disability
D. Situational death
79. What is the MAJOR difference between participating and non-participating contracts?
A. Participating contracts are mainly for protection purposes and non-participating contracts
are mainly for savings
B. Participating contracts’ major benefit is generally guaranteed and non-participating contracts
are made of guaranteed benefit, regular bonuses and final bonus
C. Non-participating contracts are mainly for protection purposes and participating contracts
are mainly for savings.
D. Non-participating contracts and participating contracts have no difference at all
80. Endowment insurance can be useful in these 3 main ways EXCEPT
A. As a means of hedging against the possibility of untimely death.
B. As a means of accumulating a fund for specific purposes.
C. As an incentive to save in a systematic manner.
D. As an inconvenient and difficult way of providing for old age.
81. Medical and health insurance policies can be divided into two categories which are
______________ and ___________.
A. Indemnity Policies and Benefit Policies
B. Benefit Policies and Surrender Policies
C. Indemnity Policies and Subrogation Policies
D. Surrender and Subrogation Policies
82. Below are the categories of underwriting decisions EXCEPT
A. Standard (issued exactly as applied for) ;
B. Sub-substandard/modified (issued on other-than-applied- for basis)
C. Non-standard
D. Declined
83. The following are classified as breach of “utmost good faith” EXCEPT
A. Non-disclosure
B. Concealment
C. Fraudulent misrepresentation
D. Innocent non-disclosure
84. Medical underwriting of an applicant for medical and health insurance requires
considerations of both _____________and ________________ to determine on what basis
insurance can be offered or if it should be refused.
A. Medical history and current physical condition
B. Medical insurance history and mental condition
C. Medical history and current emotional state
D. Medical insurance history and current physical condition
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85. Section 7 of the Insurance Act 1996 describes
A. Endowment Policies
B. Investment Link Insurance Policies
C. Last Survivor Annuity
D. Group Insurance
86. The principle of utmost good faith applies to medical and health insurance under
_____________ of the Insurance Act 1996.
A. Section 152
B. Section 168
C. Section 160
D. Section 150
87. In Major Medical Expenses insurance, two common expense participation methods are
A. Experience refunds and contributions
B. Deductibles and co-payments
C. Replacement fees and deductions
D. Rating fees and refunds
88. Disability income insurance is also known as
A. Temporary health insurance
B. Permanent health insurance
C. Non permanent health insurance
D. Semi permanent health insurance
89. In practice, insurance company uses this technique to predict future losses through
historical data
A. Priori Probability
B. Empirical Probability
C. Judgmental Probability
D. Secondary Probability
90. Specific questions relating to Medical and Health Insurance. This would include the
following
I Family and Medical History
II Smoking & drinking habits
III Hazardous pursuits / avocation
IV AIDS related questions
A. I, II and III
B. I, III and IV
C. II, III and IV
D. All of the above
91. What is the difference between contributory and non contributory group medical and
health insurance plans?
A. Non- contributory group medical and health insurance must cover all eligible members of
the group and contributory group medical and health insurance requires the participation of
at least 75% of the eligible members group.
B. Non- contributory group medical and health insurance must cover half of the eligible
members of the group and contributory group medical and health insurance requires the
participation of at least 70% of the eligible members group
C. Non- contributory group medical and health insurance covers none of the eligible members
of the group and contributory group medical and health insurance requires the participation
of at least 85% of the eligible members group.
D. Non- contributory group medical and health insurance covers all of the eligible members of
the group and contributory group medical and health insurance requires the participation of
none of the eligible members group.
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92. Questions 92, 93 and 94 are based on the following table:
Table: Premium Rates for Whole Life Policy on Male Lives. Treat Female Lives as 3 Years
Younger
Male Age Last Birthday Premium Per RM 1,000 Sum Assured
21 18.02
22 18.25
23 18.50
24 18.74
Proposer’s particulars and Policy Details:
Sex : Female
Date of Birth : 22/08/1971
Cover to Commence : 07/09/1996
Policy Type : Whole Life Policy
Sum Assured : RM 10,000
Based on the data above what is the insured’s age LAST birthday?
A. 22 C. 26
B. 25 D. 30
93. How much is the premium payable based on age NEXT birthday?
A. RM 180.20 C. RM 185.00
B. RM 179.20 D. RM 182.50
94. Which of the following is TRUE about the information shown above?
A. The premium rate for male and female is the same
B. This policy is entitled to a basic cash value
C. The monthly premium is RM 14.93
D. If the insured surrender the policy after five years, she will get nothing
95. Medical and Health insurance policies usually provide for payment of claims up to
limits
stipulated in the policy. These limits could be one or a combination of
A. One time limit and annual limit
B. Maximum limit, one time limit and annual limit
C. Per disability limit, overall annual limit and lifetime limit
D. Per disability limit, one time limit and annual limit
96. In general, the loans are granted up to ______________ of the acquired cash value of a
life
policy.
A. 85 %
B. 90 %
C. 92 %
D. 95 %
97. In medical and health insurance claims, insurers use the following cost containment
measures EXCEPT
A. Inner limits and maximum period of compensation
B. Schedule of surgical procedures
C. Flexible limits
D. Deductibles and panel hospitals
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98. The principle of Indemnity requires that the insurer
A. Restore the insured to a better financial position as he enjoyed after the loss
B. Restore the insured to the same financial position as he enjoyed immediately before the loss
C. Restore the insured to a reasonable financial position as he enjoyed before the loss
D. To compensate the insured for mutually agreed sum of money before the loss
99. Mortality and morbidity rates generally increase with
A. the age of the population
B. the increase in income of the population.
C. the length of period required to recuperate from any injury.
D. economic downturn
100. What is the difference between life insurance and annuity?
A. Life insurance is to liquidate the estate and annuity is to create the estate of the deceased
B. Life insurance aims to create an estate or accumulate a lump sum fund whereas the annuity
is to liquidate the asset that has been created
C. Life insurance is to accumulate a lump sum whereas annuity is to distribute the lump sum
when the insured dies
D. No difference between the two
Answers for PCE Trial Exam 4 – Parts A & C
Q = Question; A = Answer
QAQAQAQAQA
1 B 21 B 41 B 61 C 81 A
2 D 22 C 42 C 62 A 82 C
3 B 23 B 43 D 63 B 83 D
4 C 24 A 44 C 64 C 84 A
5 B 25 D 45 A 65 B 85 B
6 B 26 C 46 D 66 D 86 D
7 C 27 D 47 D 67 D 87 B
8 B 28 B 48 A 68 A 88 B
9 D 29 C 49 B 69 B 89 B
10 D 30 B 50 A 70 C 90 D
11 B 31 C 51 C 71 A 91 A
12 D 32 C 52 A 72 B 92 B
13 A 33 D 53 D 73 C 93 C
14 A 34 B 54 C 74 D 94 B
15 D 35 A 55 D 75 B 95 C
16 C 36 C 56 D 76 B 96 C
17 C 37 A 57 D 77 C 97 C
18 D 38 B 58 A 78 A 98 B
19 C 39 D 59 B 79 C 99 A
20 B 40 C 60 B 80 D 100 B
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PCE Trial Exam 5

Note: You are strongly urged to purchase and read MII’s Textbooks for a complete
understanding of the syllabus in preparation for the examination. This revision material is
purely a revision tool and it is to be used only after you have read MII’s Textbooks. Since
this
revision material is purely a revision tool, it does not guarantee your passing of the
respective
examinations.
PCE Trial Exam 05 – Parts A & C
1.
2.
3.
4.
5.
6.
Which of the following is one of the risk handling methods?
A. Risk manipulation
B. Risk protection
C. Risk modification
D. Risk retention
In contrast to life insurance, ________________ is not a very significant factor in
underwriting medical and health insurance.
A. Physical condition
B. Insurable interest
C. Family history
D. Medical history
A voidable contract will remain valid until
A. It fails to comply with legal formalities
B. The aggrieved party exercises the option to treat it void
C. It is proven there is no consideration
D. It is used for illegal purposes
Insurance is
A. A loss sharing arrangement
B. A pooling of risk
C. An economic institution
D. All of the above
The functions of insurance include the following
I. Stimulates business enterprise
II. Reduction of losses
III. Provides employment for many
IV. Sources of capital for investment
A. II & IV
B. II, III & IV
C. I & II
D. I, II, III & IV
Which of the following is NOT a characteristic of an insurable risk?
A. It should not be against public policy
B. It must be accidental in nature
C. It must be a speculative risk
D. It must be a pure risk
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7.
8.
9.
10.
11.
12.
13.
14.
Risk of property damage from earth quake, flood and typhoon is classified under
A. Fundamental risk
B. Speculative risk
C. Particular risk
D. Pure risk
Which of the following describes the definition of risks?
A. An uncertainty regarding loss
B. A condition that increases the chance of loss
C. A reduction of economic value
D. All of the above
The essential elements of a contract are offer and acceptance and
A. Consideration
B. Legality of object
C. Capacity to contract
D. All of the above
In marine cargo insurance, insurable interest must exist
A. At the time of loss
B. Before the ship sails
C. At the time of effecting the insurance contract
D. At the inception of the contract and at the time of loss
The transfers of legal rights and obligations under a life insurance policy to another
person
is called
A. A conversion
B. An endorsement
C. A rectification
D. An assignment
What is the main statute law governing the life insurance business?
A. The Civil Law 1972
B. The Insurance Act 1996
C. The Insurance Act 1965
D. The Companies Act 1983
The relationship of principal and agent may be terminated by
I. Notice of renunciation given to the principal by the agent
II. Notice of revocation given by the principal to the agent
III. Mutual agreement
IV. Death, lunacy or bankruptcy of the principal or agent
A. I, II and III
B. II, III and IV
C. I, II and IV
D. I, II, III & IV
Which of the following statements is NOT true about void contracts?
A. Void contracts are not enforceable in a court of law
B. Void contracts are simply those which the law holds to be no contracts at all, a nullity from the
beginning
C. They are totally invalid and are nothing more than mere agreements
D. Void contracts will remain valid until the aggrieved party exercises the option to treat them
void
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15.
16.
17.
18.
19.
20.
21.
22.
An unenforceable contract usually arises because
A. There was non-disclosure
B. Of the failure to comply with legal formalities
C. The agent failed to disclose material facts
D. There was a breach of the principle of utmost good faith
The legislation in Malaysia that regulates Islamic insurance is the
A. Takaful Act 1984
B. Insurance Act 1996
C. Central Back of Malaysia Ordinance 1958
D. Muslim (Titles and Construction) Ordinance 1952
The Takaful Act 1984 is the source of Takaful legislation in Malaysia. The Act is divided
into
four parts, including the following:
I. Provides for interpretation, classification references to takaful business
II. Provides the mode and conduct of takaful business
III. Provides for the administration and enforcement of matters such as indemnity, submission of
annual reports and statistical returns etc
IV. Specifies powers vested in the Director General of Insurance (DGI)
A. I & II
B. I, II & IV
C. I, II & III
D. I, II, III & IV
The person to whom the rights are transferred is called __________________; while the
person who transfers the rights is called _________________.
A. Assignee; assignor
B. Assignor; assignee
C. Transferor; transferee
D. Transferee; transferor
Agents can be classified into three categories:
A. Life agent, group agent and personal agent
B. Special agent, specific agent and universal agent
C. Special agent, general agent and universal agent
D. Individual agent, group agent and special agent
The principle of indemnity states that
A. The insurer should restore the insured to the same financial position as before the loss
B. The insurer should restore the insures to a better financial position as before the loss
C. The insurer should restore the insured to a lesser financial position as before the loss
D. The insured should enjoy indemnity which is less than his loss as a result of policy limitations
Which of the following is NOT true about a claim under the principle of subrogation?
A. This type of subrogation is considered as arising out of tort
B. In the absence of subrogation, the insured cannot get his claim
C. In the presence of subrogation, the insured can either claim from the insurer or the negligent
party
D. The principle of subrogation applies to prevent the insured from making profit out of his loss
Which of the following is NOT true about the insurance market?
A. An insurance market refers to the facilities of buying and selling insurance
B. A propriety company is owned by shareholders and profits earned belong to them
C. A co-operative society is owned by shareholders and policyholders which may be termed as a
mutual insurer
D. The intermediaries in the insurance market are agents and brokers
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23.
24.
25.
26.
27.
28.
29.
30.
What do you understand when the organization of a company is said to be decentralized?
A. When the preparation of all policies and renewal, etc. is carried out in the head office
B. When only the preparation of policies and renewal of the policies are carried out in the
branches concerned
C. When there are no branches
D. When underwriting, claims and servicing of the branch business are handled at the branches
up to a pre-arranged limit
The Malaysia Insurance Institute was formed to
A. Promote insurance product of Malaysia
B. Encourage people to buy insurance
C. Promote insurance professionalism and to conduct professional insurance examination
D. Both A & B
The principle of ‘utmost good faith’ expect the parties
A. To disclose only those material facts which are asked
B. To answer truthfully only the questions in proposal forms
C. To disclose only those which they consider material
D. To disclose all material facts of which they are aware of, even if no question is specifically
asked
Assignment of policy can be effected without prior consent of the insurer under the
following circumstances except
A. Marine Cargo Policies
B. Life policies
C. Transfer of will
D. Aviation
A life officer does not accept all applications for insurance automatically. They examine all
risks carefully. The process of examining the risks is called
A. Ascertaining standard
B. Adverse selection
C. Selection
D. Letter of acceptance
An illegal contract is one which
A. Is created for a specific purpose
B. Is created for illegal purposes or is against public policy
C. Is legally binding
A material fact is
A. A fact which will influence an underwriter in deciding the acceptance of the risk or the premium
to be charged
B. Any information given by the insurance company
C. A Warranty
D. Representation of any kind
Perils covered in the policy are known as
A. insured perils
B. excluded perils
C. uninsured perils
D. exception perils
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31.
32.
33.
34.
35.
36.
37.
The relationship between the insurer and the agent is normally that of
A. Master and servant
B. Buyer and seller
C. Principal and agent
D. Employer and employee
What is the main purpose of the Inter-Company Agreements on General Insurance
Business
(ICAGIB)?
A. To regulate and control the conduct and activities of every person engaged in general
insurance business
B. To regulate and control the conduct and activities of every insurer engaged in general
insurance business
C. To regulate and control the conduct and activities of every insurer engaged in life insurance
business
D. To regulate and control the conduct and activities of all PIAM members
This involves the selection of segments of the market which have needs that can be met
by
the policies developed by the company. This function is known as
A. Planning and controlling
B. Market identification
C. Product development
D. Selection of distribution channel
_______________ is/are part of the insurance market components.
I. Hospitals
II. Agents
III. Loss adjusters
IV. Reinsurers
A. II & III
B. I, II & III
C. II, III & IV
D. I, II, III & IV
Insurable interest should be present in all life insurance contracts. Which of the following
relationships does not create insurable interest?
A. Husband and wife
B. Creditor and servant
C. Master and servant
D. Brother and sister
A life insurance contract is an aleatory contract. An aleatory contract is
A. A contract of indemnity
B. A contract when one party provides something of value to another party in exchange for a
promise that the other party will perform a stated act if a specified, uncertain event occurs
C. A contract that pays double the sum assured in the event of suicide
D. A contract that has legal flaws
It is important for an agent to provide good after sales service because
I. the chance of lapse or business going elsewhere can be minimized
II. the client’s new needs for insurance can be recognized and a sale can be quickly closed
III. the reputation of the insurer as a service-oriented organization is enhanced
IV. It can enhance the agent’s business
A. I and II
B. I, II and III
C. I and III
D. All of the above
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38.
39.
40.
41.
42.
43.
44.
The incontestable clause in life insurance policies
A. Limits the time during which the policyowner has the right to cancel the policy
B. Limits the period during which the insurance company can deny claims on the basis of
statements made in the application
C. Restricts the insurance company as to the time it can take in the payment of legitimate claims
D. Restricts the policyowner as to the time period during which he or she can exercise ownership
rights
A policy under which the surrender value is used as a single premium to provide for an
assurance on the original terms, but for a reduced sum assured is known as
A. An extended policy
B. A paid-up policy
C. A term policy
D. A fees policy
Policies that provide for an income during periods of sickness or disability on a long-term
basis are known as
A. Dread disease policies
B. Investment-linked policies
C. Permanent health insurance policies
D. Permanent disability insurance policies
The grace period is
A. A period of time after the maturity date during which a policy remains in force without penalty
even though the premium due has not been paid
B. A period of time after the premium due date during which a life policy remains in force without
penalty even though the premium due has not been paid
C. A period of time in which an insurance policy goes into effect once the initial premium is paid
D. A period of time which a policyholder could lodge a complaint with the Director General of
Insurance
The renewal underwriting of ___________________policy is limited to the rescission of the
policy during the contestable period or the refusal to accept an application for
reinstatement.
A. An optional renewable
B. A guaranteed renewable
C. A conditional renewable
D. A non-cancelable
For married couples under combined assessment in the basis year, the total tax relief
allowable for life insurance premiums and EPF contribution is
A. RM5,000
B. RM6,000
C. RM8,000
D. RM12,000
______________ is one where the premium payment ceases on death and no deduction on
the remaining premium is made from the claim payment.
A. True premium
B. Installment premium
C. One-off premium
D. Full premium
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45.
46.
47.
48.
49.
50.
51.
__________ will usually result in the insurer paying something more than its interpretation
of the facts would warrant and the claimant accepting payment for less than that claimed.
A. Arbitration
B. Litigation
C. Mediation
D. A compromise settlement
The following documents are generally acceptable as proof of age, except
A. Government school leaving certificate
B. Certified extract from Baptism Register
C. International passport
Which of the following describe endowment assurance?
I. It is a decreasing term insurance
II. It has an increasing investment component
III. In short-term endowments, the life insurance predominates and the investment element is
relatively unimportant
IV. Anticipated endowment insurance pays cash to the policyholder at regular intervals
A. I & II
B. I, II & IV
C. I, II & III
D. All of the above
Which of the following does NOT describe mode of payment correctly?
A. Premium paid under modes other than yearly are slightly higher per year
B. Monthly premium is higher because more administrative work is involved in the collection
C. Home service scheme operates in connection with industrial life insurance which usually
provides coverage for the higher income group who can afford
D. Payroll deduction scheme can only be applied after a written consent from the employee
According to the International Consumer Movement, consumers have some basic rights
which include:
I. Right to information
II. Right to be redress
III. Right to choose
IV. Right to satisfaction
A. I, II & III
B. II, III & IV
C. I, II & IV
D. All of the above
When an insured fails to disclose a material fact intentionally, it is called
A. Disclosure
B. Concealment
C. Misrepresentation
D. Fraudulent misrepresentation
Hospitalization cash benefit insurance can be sold as a ___________, except
A. Stand-alone policy
B. Critical illness insurance
C. Rider to a life insurance
D. Medical and health insurance policy
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52. Comprehensive hospitalization and surgical insurance policies are also called
___________________ in Malaysia.
A. Clinical insurance
B. Major medical expenses insurance
C. “As charged” policies
D. Co-insurance policies
53. Co-payment refers to
A. The sharing of expenses between the policyholder and the insurer
B. The sharing of expenses between the agents and the policyholder
C. The sharing of profits between the policyholder and the insurer
D. The sharing of profits between the agents and the insurer
54. The insurer of an optionally renewable policy may choose to modify the policy rather
than
non-renew. The modifications may be as following except:
I. An exclusion endorsement or a special-class premium because of a given impairment
II. An increase in the basic premium because of a change to a more hazardous occupation
III. An increase in elimination periods to avoid small, repetitious claims
IV. An extended coverage by an exclusion rider
A. I, II and III
B. I, II and IV
C. II, III and IV
D. All of the above
55. Which of the following clause is reflected under Section 147 (4) of the Insurance Act,
1996
A. Non-avoidance clause
B. Incontestability clause
C. Suicide clause
D. Misrepresentation clause
56. What are the alternative solutions when a person cannot pay his future life policy
premium
but still can be covered under the policy?
I Conversion to a paid-up policy
II Exchange the acquired cash value for a term insurance for the full sum assured
III Apply for surrender value
IV Conversion to an extended grace period
A. I and II only
B. I and III only
C. I, II and III only
D. I, III and IV only
57. The following are sources of surplus for an insurance company except:
A. Interest
B. Expense
C. Mortality
D. Interim bonus
58. When the insured fails to pay a premium, it provides for a continuation of the
insurance
cover to bring the policy to its original status
A. Policy conversion
B. Automatic premium loan
C. Maturity loan
D. Limited payment endowment
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59. The ___________________enables a person to renew a lapsed policy, notwithstanding
that
the days of grace and the period of non-forfeiture have both expired.
A. Lapsation provision
B. Reinstatement provision
C. Incontestable provision
D. Renewal provision
60. Under a standard case, the premium changes according to the age. The younger the
age at
entry of life insured, the premiums would be
A. Refunded
B. Lower
C. Higher
D. Loaded with additional payment
61. ___________________provides that the assignor can revoke all the rights even after
the
assignment of policy
A. Absolute assignment
B. Conditional assignment
C. Reassignment
D. Policy assignment
62. Below are various factors that influence mortality,
I Age
II Sex
III Marital status
IV Occupation
A. I,II and IV
B. I, II and III
C. II, III and IV
D. All of the above
63. Which of the following is NOT true about life insurance contracts?
A. Life insurance contracts are long-term contracts
B. The premium for life insurance contracts cannot be revised during the term of the contract
C. The contracts cannot be cancelled unilaterally by the insurer
64. For mortality only, females experience _____________ rates, and accordingly, females
are
charged _________ premiums,
A. Lower, lower
B. Lower, higher
C. Higher, higher
D. Higher, lower
65. Why is post-purchase evaluation an important factor for an agent?
A. The agent will understand the needs of his client better
B. When the customer may want time to think the idea over, or may not agree with the price
C. The agent will have a better chance of securing the loyalty of his client at the time of renewal
D. In situations where the customer is able to recognize his need immediately
66. What is the allowable deduction for savings under the National Education Saving
Scheme
(SSPN)?
A. RM3000
B. RM6000
C. RM1000
D. RM3000
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67. Commencement of the policy may be back dated to an earlier date, usually up to a
maximum of
A. 3 months
B. 6 months
C. 1 year
D. 2 years
68. The basic principle in insurance is when a group of people facing similar risks are
combined, there will be less uncertainty about the amount of loss likely to be incurred
within a certain period. This basic principle is called
A. Anti-selection
B. Law of large numbers
C. Mortality rates
D. Moral hazards
69. _______________ policies enjoy the right to share in the profits of the operations of a
life
insurance company in the form of bonuses.
A. Endowment
B. Term
C. Non-participating
D. Participating
70. When a loading letter is issued by the insurer it is considered
A. An offer to the insured
B. A rejection to the insured
C. A bonus declaration
D. A counter offer to the insured
71. To ensure that the policyholders whose policies become claims, between declaration
of
bonus, do not lose out, the insurers pay out
A. Interim bonus
B. Cash bonus
C. Guaranteed bonus
D. Reversionary bonus
72. Under current conditions, the main sources of surplus are as the following except
A. Excess interest (after tax) earned on the life fund over and above that assumed in the
valuation
B. Mortality surplus between the actual mortality experienced by the office and the mortality basis
assumed in the valuation
C. The excess of the allowance made for expenses in the valuation over the actual expenses
incurred
D. The present value of the liabilities under all policies in force greater than the present value of
the income and capable gains produced by the assets in the life fund
73. Which of the following methods in valuing assets and its explanation is NOT true?
A. Price at which the asset was acquired – Cost price
B. Value placed on the assets in the company’s account books – Book value
C. Value for which the assets can be sold in the open-market – Market price
74. The sources of information for Risk Assessment are as below, except
A. Proposal form
B. Medical report
C. Agent’s report
D. Policy contract
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75. Besides recording the applicant’s answers concerning medical history, the reports by
examining doctors include
I Height and weight
II Pulse and blood pressure readings
III Condition of the heart and nervous system
IV Chest and abdomen measurements
A. I and II only
B. I, III and IV
C. I, II and IV
D. All of the above
76. For a contract to be valid,
A. It must have consideration
B. It should not be against public policy
C. The parties to it must have intention to create a legal relationship
D. All of the above
77. Generally, policy endorsements done after the issuance of a policy are for
I Changes in the mode of premium payment
II Alterations to the form of the contract
III Imposition or removal of extra premiums
IV Surrender of bonus
A. I and II only
B. I and III only
C. II and IV only
D. All of the above
78. In general, the following conditions need endorsement at the time of issue of policy:
I Those affecting the sum insured or mode of payment
II Those affecting the premium or frequency of payment
III Those alterations to the form of the contract
IV Those incorporating special restrictions
A. I, II and III
B. I, II and IV
C. I, III and IV
D. All of the above
79. Which of the following is NOT relevant to the common settlement option for an
endowment
plan?
A. Convert the maturity proceeds into annuity
B. Continue deposit the maturity proceeds with the insurer
C. Withdraw 90% of the proceed without the letter of probate
D. Withdraw the proceed by installments
80. In the event of death, the beneficiary or claimant should notify the life insurer and
provide
the following details, except
A. Policyholder’s name and identity card number
B. Policy number
C. Date and cause of death
D. Agent’s address
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81. What is the interest rate payable by the insurer on the claim amount if a claim upon the
death of the policyholder is not paid within 60 days of receipt of intimation of the claim?
A. 5% per annum
B. 4% per annum
C. 6% per annum
D. 8% per annum
82. The doctrine of proximate cause is important for which type of claims?
A. Death claims
B. Maturity claims
C. Personal accident claims
D. Sickness and permanent health claims
83. Policies which accumulate ___________ often carry the right to a policy loan
A. Bonus
B. Cash values
C. Premium
D. Surrender
84. Age last birthday for a life insured born on March 12, 1965, date of the proposal
submitted
on December 31, 2007 is
A. 39
B. 40
C. 41
D. 42
85. The interest charges usually arise under the following circumstances:
I Outstanding premium charges after grace period
II Policy loan repayment
III Outstanding premium charges during grace period
IV Reinstatement of policy
A. I and II only
B. I, II and III
C. I, II and IV
D. All of the above
86. In explaining the contract, the life insurance intermediary shall:
I. Explain only part of the essential provisions of the contract to the prospective policyholder
II. Draw attention to any restrictions applying to the policy
III. Give advice to the customer on another company’s policy which has more benefits
IV. Draw attention to the consequent effects of early discontinuance
A. I and II
B. II and IV
C. I and III
D. II, III and IV
87. To be a successful and professional agent, he must fulfill the following requirement:
I Professional attitude
II Proper selling attitude
III Skill
IV Knowledge
A. I, II and III
B. II, III and IV
C. I, III and IV
D. All of the above
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88. The basic life insurance contracts are:
I Term insurance
II Whole life insurance
III Annuities
IV Endowment insurance
A. I and II
B. I, II and IV
C. II and IV
D. All of the above
89. Total permanent disability means
A. The life assured’s inability to work effectively for a period of 6 months to a year
B. The life assured loses sight in one eye and stutters when speaking
C. The life assured is completely unable to engage in any occupation and to perform any work for
remuneration or profit due to bodily injury or disease/illness
D. All of the above
90. Which of the following can be sold as a stand alone policy or as a rider to a life
insurance
policy?
I Hospitalization cash benefit insurance
II Endowment policy
III Critical Illness or Dread Disease insurance
IV Group insurance policy
A. I, II and III
B. I and III
C. II, III and IV
D. All of the above
91. To contain costs and abuses arising from inflated claims, various methods are used by
insurers which include the following, except
A. Maximum period of compensation
B. Deductibles
C. Cashless hospital admission
D. Timeframe during which expenses are payable
92. The main types of annuities are
I Single life immediate annuity
II Last survivor annuity
III Deferred annuity
IV Annuity certain
D. All of the above
93. The relationship of an insurer and an agent can be created in the following ways:
I By statue (Section 44A, Insurance Act 1963)
II By subsequent ratification of an unauthorized act
III By express appointment
IV By implication of the law
A. I, II and III
B. I, II and IV
C. I, III and IV
D. All of the above
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94. This type of annuity provides annuity payments as long as either of two person lives. It
continues the same amount of annuity until the death of last survivor.
A. Survivorship annuity
B. Deferred annuity
C. Single life immediate annuity
D. Last survivor annuity
95. For personal accident policies, the doctrine of ____________ is important, as more
than one
condition can operate leading to a claim.
A. Leading cause
B. Contributing cause
C. Proximate cause
D. Mortality cause
96. The association that controls the quality of life insurance agents by terminating those
who
do not fulfill sales and training requirements
A. PIAM
B. LIAM
C. MII
D. NAMLIFA
97. Amongst many other risks, general insurance contracts will cover the following,
except
A. Accident
B. Natural death
C. Property
D. Legal liability
98. To discontinue a policy or to have a policy made paid-up and then to effect a new one
in
another company or the same company is called
A. Twisting
B. Rebating
C. Underwriting
D. Prospecting
99.
100.
Regulations pertaining to the basis of surrender value as applicable in Malaysia can be
found in
A. Section 155 of the Insurance Act 1996
B. Section 156 of the Insurance Act 1996
C. Section 157 of the Insurance Act 1996
D. Section 158 of the Insurance Act 1996
Which of the following suggests the possibility of a moral hazard?
A. An application by a parent for a Children’s Deferred Insurance for the sum of RM50,000
B. An application by a married couple for a joint-life policy for the sum of RM100,000
C. An application by a businessman to insure the life of his wealthy girlfriend for RM5,000,000
D. An application by a wife to insure the life of her husband for RM60,000
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Answers for PCE Trial Exam 5 – Parts A & C
Q = Question; A = Answer
QAQAQAQAQA
1 D 21 B 41 B 61 B 81 B
2 C 22 C 42 B 62 D 82 C
3 B 23 D 43 B 63 D 83 B
4 D 24 C 44 A 64 A 84 D
5 D 25 D 45 D 65 C 85 C
6 C 26 D 46 D 66 D 86 B
7 A 27 C 47 B 67 B 87 D
8 A 28 B 48 C 68 B 88 D
9 D 29 A 49 D 69 D 89 C
10 A 30 A 50 B 70 D 90 B
11 D 31 C 51 B 71 A 91 C
12 B 32 A 52 C 72 D 92 D
13 D 33 B 53 A 73 D 93 D
14 D 34 D 54 A 74 D 94 D
15 B 35 D 55 B 75 D 95 C
16 A 36 B 56 A 76 D 96 B
17 C 37 D 57 D 77 D 97 B
18 A 38 B 58 B 78 D 98 A
19 C 39 B 59 B 79 C 99 A
20 A 40 C 60 B 80 D 100 C
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CEILLI
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PCE Trial Exam 1

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PCE Trial Exam 2 – Part A

1 The Insurance industry in Malaysia is regulated by Insurance Act _____ .

2 The secondary functions of Insurance include

3 Which of the following is NOT a function of insurance?

4 Insurance business can be classified into

5 Which of the following is NOT a method of handling risks?

7 Below are the steps of risk management, EXCEPT

9 Which of the following is not a pure risk?

11 Perils covered in insurance policy are also known as

14 Lack of insurable interest will

16 The legal term ‘caveat emptor” means

18 Which of the following are insurance professionals?

20 This department generally concentrates its efforts on identification of field officers,

21 What is the basic advantage of centralization?

24 Which of the following are the advantages of self-regulation?

26 Which of the following are the basic rights of consumers?

30 If a proposer submits a completed and signed proposal form to an insurer, he is making

35 What is the agent’s most important right?

37 A sales plan must include which of the following?

40 The after sales service is important to an agent because

41 Through which department of an insurance company is medical and health insurance

43 A supplemental major medical insurance cover is usually an extension to what type of

44 Who can be covered under a group medical and health insurance?

PCE Trial Exam 2 – Part C

103. What is the disadvantage of a whole life assurance?

104. Whole life insurance is suitable for a person with

105. Which of the following are the uses of endowment Insurance?

109. What are the benefits of an ordinary whole life insurance?

110. What is the main function of the PSA?

112. Which of the following statements regarding group insurance is TRUE?

120. Which of the following has no non-forfeiture provision?

127. Which of the following are examples of physical hazard?

133. Which of the following statements regarding risk premium is TRUE?

136. Which of the following are the main sources of surplus?

138. What is book value?

140. What information is provided in the agent’s report?

141. What is the information in the heading?

144. The following can serve as proof of death, EXCEPT

147. Your prospect is an accountant of a trading company. He intends to purchase a whole

149. An agent leaves Company A and joins Company B. He advises a customer to

PCE Trial Exam 4

PCE Trial Exam 5

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