1. The price of an agricultural property depends on the following factors: 5.

5. What is the second stage in the process of providing advice to customer?

I. The location A. Conducting the fact-find

II. The mortgage loan amount of the property B. Assessing and satisfying customer’s needs
III. The value of building C. After-sales services
IV. The quality and profitability of crops D. Making recommendation to the customer

A. I, II and III 6. Under traditional with-profit life insurance policy

B. I, II and IV
C. I, III and IV I. the life fund maintains a reserve to help level out the short term fluctuation
D. II, III and IV in value of the life fund’s investment
II. not maintaining a reserve could mean that the policyowner receive the full
2. Investment-linked Permanent Health Insurance value in a year of high investment gains.
III. not maintaining a reserve could mean that the policyowner suffer in a year
I. provide disability income
of poor investment conditions
II. contain cash value
IV. not maintaining a reserve could mean that the full impact of the changes in
III. no cash value
investment conditions will be directly borne by the policyowner
IV. price is more competitive when compared to traditional with-profit life
insurance product
A. I,II,III
B. I,II,IV
A. I, II, III
C. I,III,IV
B. I, II, IV
D. II,III,IV
C. I, III,IV
D. II, III,IV
7. Which one of the following statements about Investment Trust is true?
3. What is defined as “the management process for identifying, anticipating and
A. The unit price is recalculated once a week
satisfying customers requirement profitably”?
B. The unit price will be quoted every month in at least one national Bahasa
Melayu newspaper and one national English language newspaper
A. Investment
C. The price reflect the value of the underlying investment
B. Investment-linked
D. The unit price will not fluctuate in line with stock market prices
C. Marketing
D. Marketing investment
8. Switches between funds may:
4. For single premium Investment-linked life insurance policy, the death benefit is
either one of the following, depending on the company’s policy: I. be offered free of charge
II. be offered free of charge for a limited number of switches within a given
I. The minimum sum assured or the value of the units, whichever is higher. period and charges imposed for subsequent switches
II. The minimum sum assured plus the value of the units. III. incur a specific charge for each and every switch
III. The sum assured (chosen by the life assured) or the value of the units IV. incur a specific charge by monthly basis
whichever is higher.
IV. The sum assured (chosen by the life assured) plus the value of the units. A. I,II,III
A. I, II B. I,II,IV
B. I, III C. I,III,IV
C. I, IV D. II,III,IV
D. II,IV

E & OE (1-June-2000) 1
9. A cash contract 12. What are the advantages of unit trust?

I. calls for future delivery I. It allows small private investors who do not have sufficient funds to
II. is used by those who need a commodity now receive the benefit of a diversified range and spread of investments
III. cannot be cancelled unless both parties to the contract agreed II. It allows small private investors who do not have sufficient time to receive
IV. calls for immediate delivery the benefit of professional investment management
III. Extra cost or charges which must be paid for switching from one fund to
A. I,II,III another
B. I,II,IV IV. It could generate income in the form of dividends, interest and capital
C. I,III,IV gains
D. II,III,IV
A. I,II,III
10. The 4 basic forms of life insurance cover include B. I,II,IV
C. I,III,IV
A. whole life insurance, endowment insurance, mortgage insurance, key D. II,III,IV
person insurance
B. whole life insurance, endowment insurance, term insurance, annuities 13. In times of volatile stock market the policyowner may want to switch all or part of
C. term insurance, annuities, medical insurance, health insurance his investment
D. whole life insurance, endowment insurance, term insurance, personal
accident insurance A. in cash fund to equity fund
B. in managed fund to property fund
11. The Enhanced Investment Scheme (EIS) by the Central Provident Fund (CPF) in C. in equity fund to cash fund in order to protect the capital value if he thinks
1993 which contributed to the expansion in Singapore of the life insurance the stock market will crash
industry including Investment-link life insurance business enables D. in balanced fund to equity fund

A. all CPF members who retain at least the required minimum sum in their 14. The total relief allowable for all insurance premium on the life of individual on
CPF accounts invest in a new scheme known as the Investment Scheme his/her spouse and on contribution to approve provident funds (e.g. to EPF) in a
(IS) basis year is
B. all CPF members be provided with a prospectus that among others
discloses the identity and nature of the insurer's business, how the A. RM3,500
premiums are going to be invested, financial information of the insurer, B. RM3,500 plus RM2,000 for children education and medical policies
chargeable fees and expenses and rights of policyowners C. RM5,000
C. CPF members who have cash of at least S$50,000 in their ordinary account D. RM5,000 plus RM2,000 for children education and medical policies
to invest 80% of the excess in the ordinary account above S$50,000 in one
or more of the eligible investment instruments 15. Which one of the following statements which describe the rates of the tax and
D. all CPF members to invest in all types of life insurance policies except for relief of Investment-linked life insurance is true?
endowment policies
A. Reviewed biannually by Finance Minister and proposed for that year
B. Reviewed every quarterly by Bank Negara
C. Disposal of units in an Investment-linked life insurance should attract tax
as they are capital receipts
D. Proposed by Finance Minister in the budget for the year and then
incorporated in the Finance Act for that year

E & OE (1-June-2000) 2
16. Investors purchasing put option will be hoping that 20. Under the single pricing method of his single premium Investment-linked life
insurance policy, John allocated RM4,000 to buy units. The number of units that
A. the share price will rise when option is exercised, the premium and the John held was 3,800. After 10 years, the unit price was RM1.97. The mortality
fixed price will be less than the value of the share charge was 1% and the policy fee was RM100. The Ending value of Investment,
B. the share price will fall when option is exercised, the premium and the return on Gross premium and Annual Yield is
fixed price will be less than the value of the share
A. RM7,311.14/1.828 and 0.062 or 6.2%
C. the share price will rise when option is exercised, the premium and the
B. RM7,701.20/1.925 and 0.118 0r 11.8%
fixed price will be more than the values of the share
C. RM7,486.00/1.871 and 0.087 or 8.7%
D. the share price will fall when option is exercised, the premium and the
D. RM7,311.14/1.924 and 0.118 or 11.8%
fixed price will be more than the values of the share
21. Under the single pricing method of single premium Investment-linked insurance
17. Under the single pricing method, Joo Eng pays a premium of RM4,000 for his
policy, the amount of money an Investment-linked life insurance policyowner will
single premium Investment-linked life insurance policy. The price per unit is
get when withdrawals are made is
RM1.00. The life office deduct a charge of 5%. The number of units that Joo
Eng can buy is
A. the number of units withdrawn multiplied by the unit price or in the case of
a fixed monetary amount, the number of units that will be cancelled will
A. 4,200
equal to the amount withdrawn divided by the unit price
B. 4,000
B. the number of units withdrawn divided by the unit price or in the case of a
C. 3,800
fixed monetary amount, the number of units that will be cancelled will
D. 380
equal to the amount withdrawn multiplied by the unit price
C. the number of units withdrawn divided by the unit price and deduct
18. Under the dual pricing method, Mei Lin pays a premium of RM4,000 for her
mortality charge and policy fee or in the case of a fixed monetary amount,
single premium Investment-linked life insurance policy. The offer price is
the number of units that will be cancelled will equal to the amount
RM1.00 per unit. The bid-offer spread was 5%. There was an increase in the
withdrawn divided by the unit price
value of the offer price to RM1.20 per unit. The bid price and amount that Mei
D. the number of units withdrawn divided by the unit price and deduct
Lin will receive if she cash the policy will be
mortality charge and policy fee or in the case of fixed monetary amount,
the number of units that will be cancelled will equal to the amount
A. RM0.05 and RM2,400
withdrawn multiplied by the unit price
B. RM0.50 and RM2,400
C. RM0.114 and RM4,560
22. The benefits of investing in Investment-linked life insurance include
D. RM1.14 and RM4,560
I. Policyholders are relieved of the day to day administration of their
19. The formula for the circulation of Return on Gross Premium (RGP) is:
investment
II. The funds invested are managed by professional fund manager
A. Ending Value of Investment
III. Investment-linked funds do not offer the policyowner access to diversified
Beginning Value of Investment
portfolio of investment
IV. Policyowner cannot easily change the level of his premium payment, take
B. Beginning Value of Investment
premium holidays, add single premium top-ups, make withdrawals, and
Ending Value of Investment
switch his investment between funds
C. Offer Price
A. I,II
Bid Price
B. I,IV
C. II,III
D. Dual Pricing
D. III,IV
Single Pricing
E & OE (1-June-2000) 3
23. A major difference between traditional with-profit life insurance product and 26. The following statements about investment expertise in Investment-linked is
Investment-linked life insurance policy is FALSE
A. Traditional with-profit life insurance policy can reduce in value
A. Investment-linked funds have professional fund managers who have the
particularly when the life fund is being transferred to policy reserve
investment expertise to invest the fund to achieve high return over the long
B. Traditional with-profit life insurance policy can never reduce in value,
term
provided that the life office is solvent
B. Investment-linked funds have professional fund managers who have the
C. The value of traditional with-profit life insurance policy will fluctuate
investment expertise to invest the fund and always achieve high return
greatly depending on the investment performance of the life office
over the short term
D. The value of Investment-linked life insurance policy can never fluctuate
C. An ordinary policyowner does not normally has good knowledge of
once the units are added to the policyowner’s policy
financial market to invest his money effectively
24. A well-diversified Investment-linked fund has D. Investment-linked funds have professional fund managers to manage the
funds
A. many professional fund managers who take care of many funds
B. a better risk characteristic than a less-diversified fund 27. Customers who have purchased policies from an organisations who are sales-
C. a simple designed product which cater separately for investment and oriented, usually ended buying policies which
insurance protection
D. provision of flexibility to change the level of premium payment and take I. they do not understand
premium holidays II. cannot meet their needs
III. can meet their needs
25. Section 7(2)(b) of the Insurance Act, 1996 defines `Investment-linked insurance IV. they surrender for its value or paid-up
business’
A. I,II,III
A. To mean the effecting and carrying out of a contract of insurance on B. I,II,IV
human life only where the benefits are, wholly or partly, to be determined C. I,III,IV
by reference to the value of, or the income from, human life of any D. II,III,IV
description or by reference to fluctuations in, or in an index of, the value of
property of any description 28. Conducting the fact-finding requires an agent to obtain relevant information like
B. To mean the effecting and carrying out of a contract of insurance on
annuity only where the benefits are, wholly or partly, to be determined by A. what is the sex of the customer
reference to the value of, or by reference to fluctuation in, or in an index B. what are the customer’s hobbies
of, the value of property of any description C. what are the customer’s personal details
C. To mean the effecting and carrying out of a contract of insurance on D. what is the favorite fruit of the customer
human life or annuity where the benefits are wholly or partly, to be
determined by reference to the value of, or the income from, property of 29. What is the extra knowledge/requirement needed for an Investment-linked life
any description or by reference to fluctuations on, or in an index of, the insurance agent?
value of property of any description
D. To mean the effecting and carrying out of a contract of insurance on A. All relevant knowledge about technical aspect of life insurance, coverage
human life or annuity where the benefits are, wholly or partly, to be and scope
determined by reference to the value of, or the income from, human life of B. All aspects about life cover
any description or by reference to fluctuations in, or in an index of, the C. All aspects of life insurance and legal requirement
value of property of any description D. The financial advice in order to fulfill the customer’s needs

E & OE (1-June-2000) 4
30. Ethics should include 34. What are the criteria of Investment-linked Permanent Health Insurance

I. behaving with complete integrity in an Insurance Agent’s professional life I. Provides health coverage such as disability income
II. complying with Law and with the best principles and practices relating to II. Contains cash value unlike traditional health product that does not have
Financial Advice cash value
III. conducting in a Professional and Honorable Manner towards those with III. No cash values like traditional health products
whom Insurance Agent is in contact in Business Life
IV. observing and applying the relevant Codes of Good Practice A. I
B. II
A. I,II C. I,II
B. I,II,III D. All of the above
C. I,III,IV
D. All of the above 35. The policyowner may cash out all his units or partially from his units. These two
processes are known as __________ respectively
31. What are the three components of accessibility of fund?
A. withdrawal or surrender
I. If individual requires the fund in a short period of time B. surrender or withdrawal
II. Cost or penalty of realising the investment before the maturity period C. surrender
III. Individual’s attitude towards risk D. withdrawal
IV. The initial cost in setting up or buying into the investment
36. The phrase “Top-Up” in Investment-linked life insurance means:
A. I,II,IV
B. II,III,IV A. The policyowners pay further premium to purchase additional units of the
C. I,II,III Investment-linked fund which will be added to the existing units in the
D. I,III,IV policyowner’s account
B. The life office maintain reserves to level out short term fluctuation in the
32. What are the key considerations in investment? value of Investment-linked fund
C. When the Investment-linked fund value increases, the value of the fund
I. Fund for education will also increase
II. Improvement in their financial position D. The policyowner can change his investment fund to another fund which he
III. Income for retirement believes to have great opportunities for higher return
IV. Depositors’ academic qualification
37. With dual pricing method, Ahmad has paid RM4,000 premium to buy his single
A. I premium Investment-linked policy. The offer price is RM1 and bid offer spread
B. I,II is 5%. Assuming the unit price never change, what is the bid price and the
C. I,II,III amount that Ahmad will get if he cash in or claim the policy
D. All of the above
A. 0.095 and RM3,800 respectively
33. What if an investor has a small amount of free funds? B. 0.95 and RM3,800 respectively
C. 0.05 and RM2,000 respectively
A. Certain types of investment are not accessible to the investor D. 0.50 and RM2,000 respectively
B. Most types of investment are not accessible to the investor
C. All types of investment are accessible to the investor
D. Only variable life insurance is accessible to the investor

E & OE (1-June-2000) 5
38. Under single premium pricing method, Joo Hin bought a single-premium 43. The switching facility in Investment-linked fund allows
Investment-linked policy. He hold 3,800 units at RM1.00 unit price. With 1%
A. a life office to switch an Investment-linked life insurance policy to a
mortality charge and policy fee of RM100, what is the cash value of his policy?
traditional with profit endowment policy
B. a life office to switch a single premium Investment-linked whole life
A. RM3,938
insurance
B. RM3,800
C. a policyowner to switch part or all of his investment from one Investment-
C. RM3,700
linked fund to another
D. RM3,662
D. policyowner to switch part or all of his investment from one life office’s
policy to another life office’s policy at the same premium
39. If the offer price in an Investment-linked policy is RM2.50 and the premium
amount of RM250.00 is used to buy units it will buy 44. The performance of an investment depends on
I. a country’s economic factors and past experience of the invested company
A. 0.01 unit
II. the competencies and capability of the invested company management
B. 10 units
team
C. 100 units
III. the number and spread of small-time investors choosing to invest
D. 100 units less the unallocated premium
IV. the invested company’s level of cost and the life cycle of the investment
40. Investment-linked funds can be structured into 2 ways A. I,II,III
B. I,II,IV
A. Warrant units and right units C. I,III,IV
B. Investment units and mortality units D. II,III,IV
C. Accumulation units and distribution units
45. The factors that may influence the choice of deposits in a bank include
D. Term units and annuity units
I. funds available for investment
41. As the value of Investment-linked policy depends on the performance of financial
II. the length of time the funds can be in the account fund available
instrument in which the investment is invested
III. whether emergency withdrawal are likely
IV. the age of depositor
A. fund manager bears the risk and the policyowner bears the benefit of the
policy A. I,II,III
B. the life office bears the risk and policyowner bears the benefit of the policy B. I,II,IV
C. the invested company bears the risk and life office bears the benefit of the C. I,III,IV
policy D. II,III,IV
D. policyowner bears both risk and benefit of the policy
46. Among the advantages in investing in shares are
42. Currently, financial instrument which Investment-linked Funds are invested
I. Investors are able to participate directly in the future of the invested
include
company
II. Shares provide good dividends and capital appreciation
I. Cash fund
III. Shares are very liquid and can be traded in open market
II. Equity fund
IV. The value of the shares can never go beyond the price at which the share
III. Property fund
bought
IV. Balanced fund
A. I,II,III
A. I B. II,III,IV
B. I,II C. I,II,IV
C. I,II,III D. I,III,IV
D. I,II,III,IV
E & OE (1-June-2000) 6
47. Unit trust is essentially for 51. Regular Premium Investment-linked Whole Life Insurance has one or more of the
following characteristics :
A. two-way arrangements between the investors and the fund manager
B. two-way arrangements between the investors and the trustee
I. premium payment in a lump sum
C. three-way arrangements among the investors, the trustee and the fund
II. premium payment at a regular interval
manager
III. serves as investment and life protection
D. three-way arrangements among the investors, the trustee and the super
IV. no provision for top-ups
anthority
A. I, II & III
48. What are the benefits available when investing in Investment-linked funds ?
B. I only
I. the Investment-linked funds offer policyowners an access to a pooled or C. II & IV
diversified portfolio D. II & III
II. the Investment-linked policyholder can vary his premium payments, take
premium holidays, add single premium top-ups and change the level of 52. The value of an Investment-linked insurance can be estimated depending on
sum assured easily _________.
III. the Investment-linked policyholder can have access to a pool of qualified
and trained professional fund managers I. the value of each of the units
II. the value of the invested shares
A. I & II
III. the number of units the policy has accumulated to-date
B. I & III
IV. the number of shares the policyowner holds in hand
C. II & III
D. I, II & III
A. I & II
B. III & IV
49. Which of the following IS NOT the characteristics of the debenture stocks :
C. I & III
D. None of the above
A. If the company defaults on the loan, the investor can take over the charged
properties for sale
53. Investment-linked life insurance products are known for its flexibility. The
B. Debenture stocks pay a variable interest according to the base lending rate
followings are its flexible options EXCEPT :
set by Bank Negara Malaysia
C. Trustees are appointed to supervise the company performs its obligation
A. Top-ups
D. Corporate stocks are less secured compared to government Bonds
B. Withdrawal of units
C. Take premium holidays
50. In United Kingdom, Abbey Life Company marketed one of the most successful
D. Fixed unit price
types of Investment-linked life insurance known as _______________.
54. A policyowner invested RM5,000 in Single Premium Investment-linked life
A. Investment-linked Individual Pension Plan
insurance product. The unit price is RM1, the mortality charge is 1% and the
B. Investment-linked Permanent Health Insurance
policy fee is RM100. In Single Pricing Method, the cash value calculated is
C. Investment-linked Dread Disease Insurance
____________.
D. Single Premium Investment-linked Whole Life Insurance Plan
A. RM5,000
B. RM4,850
C. RM4,950
D. RM4,900

E & OE (1-June-2000) 7
55. A policyowner invested RM5,000 in Single Premium Investment-linked life 59. “Fixed Income Securities” are a group of investment vehicles in which the
insurance. The unit price is RM1, bid-offer spread is 5%, the mortality charge is investor has lent money to the issuer. Which of the followings best describe
1% and the policy fee is RM100. In the Dual Pricing Method, the cash value “Fixed Income Securities”
calculated is
I. It generates a fixed income
A. RM4,700.50 II. It can be traded in Secondary Market
B. RM4,750.50 III. It is guaranteed by Bank Negara Malaysia
C. RM4,650.50 IV. It may be in short or long term
D. RM4,602.50
A. I & IV
56. A policyowner bought a Single Premium Investment-linked life insurance product B. I & II
The death cover is RM50,000. The life office implements the “unit value or death C. I, II & IV
cover” method of compensation. The policyowner passed away, after the policy D. II, III & IV
has been in force for two years and the units accumulated were 35,000 in his
investment. The unit price is RM1.25 while bid and offer spread of 5%. In “Dual 60. Government bonds are financial instruments used by government to borrow
Pricing Method”, the policy death benefit compensation will be money from the public. The bonds usually generate low return and popularly
________________. sought by investors because _____________________.

A. RM41,562.50 I. The bonds are considered very safe

B. RM50,000 II. The bonds can be converted to Government shares
C. RM91,562.50 III. Trustees are appointed to supervise the payments
D. None of the above IV. The bonds are very marketable

57. Traditional Life Insurance policy has the following features EXCEPT: A. I, II & III
B. II & III
A. A reserve to smoothen the fluctuations of the investment C. I & IV
B. Never reduce in value unless the life company becomes insolvent D. II, III & IV
C. Investors may choose a particular investment area which he believes can
offer a good return at that time 61. The following statements are the benefits and advantages of Investment-linked
D. The value of the sum assured is guaranteed at inception life insurance EXCEPT:

58. A range of investment choices is available to individual investors. Which of the A. The policyowner has access to a “pooled” or “diversified portfolio” of
following investment choices are considered as liquid assets : investments
B. policyowner can easily change the level of premium payment and enjoy
I. cash premium holiday
II. term deposit C. regardless of the share market condition, policyholders still get the same
III. current account cash value as at inception
IV. Malaysian Government Securities D. policyowner gains the benefit of a well diversified Investment-linked funds
managed by professional investment managers with proven track records
A. II & III
B. I & II
C. I, II & III
D. IV only

E & OE (1-June-2000) 8
62. Loan stocks offer higher interest rate compared to Government Bonds. Investors 66. Which of the following is/are TRUE descriptions of “shares” ?
still have the preference towards government bonds as for loan stocks _________
Ordinary Shares Preference shares
A. If the company defaults, the investors has no security and may not recover
I. Dividend is not fixed I. Dividend is fixed
the capital
II. May get higher dividend than II. It would not receive more
B. It is not supervised by Government
preference share if profit is dividend than what has already
C. The company may repay earlier if it wishes
more than enough to cover stated
D. It cannot be converted into ordinary shares
preference shares dividend
III. May not recover any capital if III. Definite recovery of capital
63. Convertible stocks offer lower interest rate compared to other fixed income
company becomes insolvent during insolvency
securities such as loan stock. However, it is still popular among the investors
IV. It has market volatility risk IV. It has no market volatility risk
because _________.
A. I & II
A. The Government guarantees the performance of the company in interest
B. I, III & IV
payment
C. I, II, III & IV
B. A trustee is appointed to ensure the solvency of the company
D. none of the above
C. Investors are given the privilege to redeem capital if the company defaults
D. It may be converted into ordinary share within a stated period
67. “Unit Trusts’’ are useful vehicles for small private investors. “Unit Trust” refers
to
64. Shares of all major public companies are traded in KLSE. Which of the
followings best describe “share” ?
A. Some form of loyalty expressed by the public to the Government
B. A type of trust deed signed by an apartment unit owner
I. It entitles the shareholders to decide on major issues and vote for directors
C. A pool of funds contributed by many investors held on trust by a trustee
II. Investors owning the shares are the company shareholders
and managed by a professional fund manager
III. The value of the shares is fixed
D. A trust signed between a remisier and a shareholder
IV. Shareholders investment are secured by government
68. One of the basic forms of life insurance cover is annuity. It may be described as
A. I, II & III
the opposite of insurance protection. Annuity refers to ________________
B. I & II
C. I, II & IV A. a contract between insurer and life annuitant whereby a stipulated sum
D. I, II, III & IV shall be paid periodically for the duration of survival of the designated life
B. a type of life insurance whereby the policy proceeds is paid in a lump sum
65. Physical commodities and financial instruments are typically traded in cash C. a type of life insurance whereby the policyholder is subject to underwriting
markets. There are two types of cash markets i.e. market for immediate delivery annually
and market for deferred delivery. These are respectively referred to as D. a type of life insurance whereby the premium gets certain percentage of
___________ and ____________. discount annually
A. Future market, Forward market 69. The sum assured is payable only upon the death of the life assured within a
B. Spot market, Future market specified period ________________.
C. Forward market, Foreseeable future market
D. Spot market, Forward markets A. Endowment Insurance
B. Whole Life Insurance
C. Term/Temporary Insurance
D. Annuity

E & OE (1-June-2000) 9
70. The first Investment-linked life insurance contract in the U.K. introduced by 74. Bank Negara Malaysia’s circular JPI: 1/1997 on “Specification of Assets for the
London & Manchester Assurance Company Ltd in 1957 is __________________. Purpose of a Licensed Insurers Margin of Solvency” is not applicable to the
Investment-linked funds and subject to following restrictions:
A. Whole Life plan for the self-employed
I. Investments in securities in any one investee should not exceed 5% of the
B. Retirement Plan for the blue-collar group
paid up capital of the investee company
C. Individual retirement annuity for the self-employed
II. Investment in securities in any one investee should not exceed 5% of the
D. Dread Disease Investment-linked insurance for the potentially ill group of
total value of the assets of the fund
public
III. I & II above depends on whichever is lower
IV. Investments in loans or debentures to any one borrower or group of
71. In 1977, the first Whole Life Investment-linked life insurance product was
borrows should not exceed 5% of the total value of the assets of the fund
introduced in U.K. It is known as __________________________.
A. I, II & IV
A. London & Manchester Whole Life Plan B. III & IV
B. Spectacular Whole Life Plan C. II, III & IV
C. Hambro Whole Life Plan D. None of the above combination
D. Skandia Whole Life Plan
75. “Transparency” is one of the advantages of Investment-linked life insurance
72. Warrants are seldom issued on their own but are often issued free as sweetener to product. The life office must ensure that the sales materials and policy forms
loan stock. Warrantholders have the option to subscribe the shares in the contain the following information:
company: I. Objective of the fund and the mode of investment income must be
disclosed
I. at a pre-determined ratio II. Policyowner must be informed clearly that investment risk must be borne
II. at a pre-determined exercise price by policyowner
III. within a specified time period III. The basis and frequency of valuation of assets underlying the fund
IV. at a negotiable price IV. A maximum amount of initial charge, management fee and etc. to be borne
by policyowner must be stated
A. I & II
B. I, II & III A. I, II & IV
C. I & IV B. I, II & III
D. I, II, III & IV C. I, II, III & IV
D. None of the above combination
73. Section 7(2)(b) of Insurance Act 1996 defines “Investment-linked insurance
business” to mean ________________ 76. Fund Performance Report of the Investment-linked policies forwarded to the
policyowner must clearly include the following information :
I. as effecting & carrying out of an insurance contract on human life I. A summary of the audited financial statement of the fund
II. benefits are wholly or partially determined by the income from investment II. Trend analysis of the next 2 years
III. benefits are wholly guaranteed by the insurer III. List down the potential composition of investments
IV. only guarantees payment under certain pre-determined circumstances IV. Any charges levied against the fund during the year

A. I & II A. I & IV
B. I, II & IV B. II & III
C. I & IV C. I, II & III
D. I, II, III & IV D. I & II

E & OE (1-June-2000) 10
77. The third and final stages of the processes in providing financial advice are 81. En. Ahmad is a teacher and his wife is a Government Servant. They paid
making recommendations. When recommending to the customers, agents must RM10,000 each as Investment-linked insurance premium annually. For tax relief
state clearly the following explanation on : in the basis year, En. Ahmad and his wife can claim respectively the following :
A. the options available and the relative advantages and disadvantages
B. the potential income according to the agents view I. A paid insurance premium up to RM10,000
C. the chances (in percentage) of meeting the goals of the customers II. Partial sum on his wife’s insurance premium up to RM5,000
D. the advantages and disadvantages of all the share counters in KLSE III. Partial sum of the Ahmad’s insurance premium up to RM5,000
IV. Both II & III above
78. Which of the following describes “Investment-linked life insurance”?
A. I & II
I. The policyowner premiums are used to purchase units of investments after B. I, II & III
deduction of all the life office expenses C. I, II, III & IV
II. The value of the units directly reflect the values of the underlying fund D. II, III & IV
III. The benefits are expressed in investment at their market value at the time
the benefits are paid 82. The policyowner noted the possibilities of high return on Fund A compared to
IV. The policyowner may switch within the funds that they wish to invest Fund B and Fund C. However, he decides to invest 40% in Fund A, 30%
respectively in Fund B and Fund C. The policyowner splits the investment capital
A. I, II & III to several funds instead of putting 100% investment into Fund A after taking the
B. I, II & IV following into consideration :
C. II, III & IV
D. All the above A. He trusted all the 3 investment fund managers as they have proven track
records
79. The following Laws are governing the Investment-linked life insurance in B. Fund B & C investment returns are as attractive as Fund A and not so
Malaysia EXCEPT: volatile
A. Insurance Act 1996 C. Fund B & C investment portfolios are his favourite investments and the
B. Companies Act 1965 returns are within his expectations
C. Income Tax Act 1967 D. He is diversifying the risk of investment in order to reduce the possibility
D. Companies Act 1956 of losing all his investment capital

80. Which of the following are NOT TRUE as regards the characteristics of 83. Investment-linked Individual Pension Plan has the following features :
Investment-linked life insurance Products :
I. Policy value varies according to the value of the underlying assets of the I. High allocation of the premiums to investments through accumulation of
investment fund until retirement
II. Premium is fixed based on the chosen sum assured of the policy at II. A “one-off” premium payment at inception
inception III. Provide life insurance cover and annuity payments to the policyowners
III. Policyowner has the flexibility in changing the premium payments, taking IV. A guaranteed investment return
premium holidays and making top-ups A. II & IV
IV. The Death Benefit is fixed at the inception of policy B. I & III
A. I & IV C. III only
B. II only D. None of the above
C. II & IV
D. I & III

E & OE (1-June-2000) 11
84. The following statements are the main objectives of Insurance Act 1996 89. The fundamental differences between traditional with profit life insurance policies
EXCEPT: and Investment-linked life insurance policies include _______________.

I. The protection of public interest I. Investment-linked life insurance policies are less likely to offer more
II. The promotion of fairness and equity choice in terms of the type of investment funds
III. Encourage economic development of the country II. the investment element of Investment-linked life insurance policies is
IV. Fostering high level of professional competence made known to the policyowner at the outset and is invested in a
separately identifiable fund which is made up units of investment
A. I, II & III III. Investment-linked life insurance policies offer the potential for higher
B. I, II & IV returns
C. I & III IV. traditional with profits life policies aim to produce a steady return by
D. None of the above combination smoothing out market fluctuation.

85. Term insurance __________________________. A. I, II & III

B. I, II & IV
A. provides for payment of the sum assured when the life assured survives a C. I, III & IV
specific period D. II, III & IV
B. is one that if the life assured survives the specified period, the policy
ceases and no return of the premium is given 90. The switching facility under Investment-linked life insurance policies is very
C. is the most complex and expensive of all the life insurance useful ______________.
D. provides for surrender or cash values on early termination of the insurance
A. for the purpose of assets planning by the trustee
86. In U.S.A, the marketing of variable life product as early as 1976 was pioneered by B. for the purpose of profit planning by the life policies
______________. C. for the purpose of financial planning by the policyowners
D. for the purpose of sales planning by the fund managers
A. Prudential Life Insurance Company
B. Hambro Life Insurance Company 91. Investment-linked funds can be invested in any financial instruments including
C. Skandia Life Insurance Company cash funds, bond funds, property funds, specialised funds and balanced funds.
D. Equitable Life Assurance society Equity funds _______________.

87. Surrender charges under the investment-linked life insurance policy __________. A. invest in stocks and shares and the magnitude of the change in unit prices
will depend on the quantity only of the equities held
A. are deducted from the value of units at surrender B. invest in stocks and shares and are inherently of lower risk in nature and
B. are deducted from the value of units at the commencement of the policies the prices of the stocks and shares are stable
C. are applicable to policies with no uniform allocation C. invest in stocks and shares and investor who buy such assets usually aim
D. represent initial expenses which have already been incurred and recovered for capital appreciation
D. invest in stocks and shares and during market recession, such assets are
88. The offer price under an Investment-linked life insurance policy is ____________ usually the last to depreciate

A. a fixed amount throughout the life of the policy

B. also known as the bid price
C. the price at which units under the policy are bought back by the life office
D. the price at which units under the policy are offered for sale by the life
office

E & OE (1-June-2000) 12
92. Under the dual pricing method of single premium policies, ________________. 96. Traditional with-profit life insurance products, the allocation to policyowners in
the form of bonuses _____________________.
A. the policyowner buys the units at the life office’s buying price and sells the
units at the life office’s selling price I. are not directly linked to the life offices investment performance
B. the policyowner buys the units at the offer price and sells the units at the II. have already been smoothened by the life offices
bid price III. do not have the peaks and troughs of investment return as in good
C. there is only one price quoted whether the policyowner is buying or selling investment years of life offices, contributions have been made to reserves
his units and vice versa
D. the bid price is always higher than the offer price IV. are not fixed at the inception of the policy, but are greatly dependent on the
investment performance of the life offices
93. Investment-linked life insurance policyowners may make withdrawals in term of
_____________. A. I, II & III
B. I, II & IV
A. number of units through cancellation of units C. I, III & IV
B. fixed monetary amount only through reduction of the life cover sum D. II, III & IV
assured
C. number of units or fixed monetary amount through reduction of the life 97. The administrative fee, insurance charge, fund management fee and the like under
cover sum assured an Investment-linked life insurance policy are ____________________.
D. number of units or fixed monetary amount through cancellation of units
A. usually guaranteed
94. The number of units under a single pricing method single premium Investment- B. not subject to review
linked life insurance policy is 3,800 with a sum assured of RM5,000. The offer C. subject to change by the life office after written notice is given
price when the policyowner first pays his premium is RM1.00. The unit price at D. always up-front charges
the time of the policyowner’s death is RM1.22. Under the unit value plus sum
assured type of death benefits, this will result in a death benefit of ____________. 98. The characteristics of an Investment-linked life insurance policy include _______.

A. RM9,636 I. its cash value and protection benefits are determined by the investment
B. RM8,800 performance of the underlying assets
C. RM5,000 II. its protection costs are generally met by implicit charges
D. RM4,636 III. its commissions and office expenses are met by a variety of explicit
charges with normally 6 months notice given by the life offices prior to
95. A market-oriented insurance company would undertake the following functions to any change
identify and satisfy the marketing strategy. Which of the following is the correct IV. its cash value is normally the value of units allocated to the policyowner
arrangements to qualify as a market-oriented insurance company : calculated at the bid price

A. Planning & control – product development – market identification –pricing A. I, III & IV
–promotion – selection of distribution channel B. I, II & III
B. Planning & control- market identification –product development – C. I, II & IV
selection of distribution channel – pricing promotion D. II, III & IV
C. Planning & control – market identification – product development –
pricing – selection of distribution channel – promotion
D. Planning & control – market identification – pricing – product
development – selection of distribution channel

E & OE (1-June-2000) 13
99. Reversionary bonus under traditional with profit life insurance policies ________. 103. Which of the following statements about diversification in portfolio management
is FALSE?
A. is paid at the time of death under the life policies or on maturity of the
A. diversification can completely eliminate the risk of investing in stocks in a
policies
portfolio
B. can either be simple (base purely on the original sum assured ) or
B. diversification helps to spread the portfolio risk by investing in different
compound (based on the sum insured less previous bonuses )
categories of investment in a portfolio
C. once allocated can, however, be removed or reduced when the life office
C. diversification can involve purchasing different types of stocks and
cannot afford to sustain it
investing in stocks of different countries
D. is usually expressed as a percentage of the sum assured and will vary in
D. a diversified portfolio provides greater security to an investor having to
accordance with the performance of the underlying assets of the unitied
sacrifice the return for the portfolio
fund
104. Which of the following statements about fixed income securities are FALSE?
100. The duties of the trustee of unit trust do not include ______________
I. the interest rate is directly proportional to the price of the bonds
A. ensuring that the fund manager adhere to the provision of the trusts deeds II. the coupon rate is directly proportional to the price of the bonds
B. acting generally to protect the unit-holders III. the longer the maturity period, the more volatile the price of the bonds will
C. holding the pool of money and assets in trust on behalf of the investors be
D. managing the portfolio of investments and administering the buying and
selling of shares in the unit trust itself A. I & II
B. I & III
101. The following statements about taxation are true, EXCEPT C. II & III
D. I, II & III
A. capital gain is not taxable
B. capital losses is not tax deductible 105. What are the advantages of investing in preference shares?
C. dividend income is not subjected to withholding tax according to the
I. it gives shareholder the right to a fixed dividend
prevailing corporate tax rate
II. has priority over company assets during dissolution
D. if personal tax rate is less than corporate tax rate, shareholder is entitle to
III. they enjoy benefit of capital appreciation
rebate on the portion of the dividend paid as tax
A. I, II
102. Different types of Investment vehicles enjoy or suffer a wide range of tax B. I, III
treatment. The following financial instruments attract tax : C. II, III
D. I, II & III
I. Government Security
II. Rated corporate bonds
106. For life insurance agent to provide effective financial advice when marketing
III. Bonds issued by a company listed in KLSE
Investment-linked life insurance product, the following steps must be observed
IV. Convertible Loan Stock
I. Conducting the fact-finding
A. I & II II. Assess customer’s needs
B. I, II & III III. Satisfy customer’s needs
C. IV only IV. Decide the best solution for the customer
D. All the above
A. I, III & IV
B. I, II & III
C. I, II & IV
D. II, III & IV

E & OE (1-June-2000) 14
107. Investment Trusts ______________________. 111. A person’s investment horizon will greatly depend on
I. Dependents of the investor
I. Pool contributions from investors, and total fund is managed by
II. Investment objectives of the investor
professional fund managers, whose function is to buy and sell shares of the
III. The age of the investor
trust to make investment profits.
IV. The current financial condition of the investor
II. Diversified fund to investors, and total fund is managed by investors,
whose function is to buy and sell shares of the trust to make investment A. I & II
profits. B. I, III & IV
III. Makes investment much simpler, more accessible and more cost effective C. II, III & IV
for small investors. D. All the above
IV. Uses closed-end funds and do not have to dispose of assets if large
numbers of investors sell their shares. 112. The ABC Company uses the Single Pricing method for its Single Premium policy.
A. I & II The offer price of each unit is RM2.50. If the premium amount used is RM5,000
B. I, III & IV to buy units, calculate how many units can be purchased?
C. II, III & IV
D. All of the above A. 1,000
B. 2,200
108. In Malaysia, unit trusts are authorised and supervised by ________________. C. 2,100
D. 2,000
A. Clearing House
B. Securities Act, 1933 113. Which of the followings are related to Investment-linked policy?
C. Securities Commission
D. Securities and Exchange Commission I. The value of the Investment-linked policy is linked to units in a special
unitised fund managed by the life office or to the units of an authorised
109. Which one of the following fund is of the highest risk and highest return? unit trust.
II. The unit values of Investment-linked policy directly reflect the values of
A. Cash Fund the underlying funds and fluctuate according to the performance of these
B. Managed Fund investments.
C. Equity Fund III. The value of the Investment-linked policy is linked to units in a special
D. Bonds Fund unitised fund managed by the policyowner or to the units of an authorised
unit trust.
110. The risks of investing in Investment-linked funds are IV. The premiums paid by the policyowner are used to purchase units in one of
the insurance company’s investment funds.
I. Value of units of an Investment-linked life insurance policy is not
guaranteed. A. I, II, III
II. Stock markets are volatile, the cash values or maturity values of an B. II, III, IV
Investment-linked insurance policy will rise or fall drastically. C. I, II, IV
III. greater risk of investment. D. All of the above
IV. Policyowner is relieved of the day-to-day administration of his
investments, which can be complicated affair. 114. _______ is market for deferred delivery.
A. I, II & III A. Forward market
B. II, III & IV B. Future market
C. I, III & IV C. Primary market
D. All of the above D. Secondary market
E & OE (1-June-2000) 15
115. Mr. Jackie Chan wishes to deposit his fund in bank account, he needs to consider; 119. The Annual Yield is: -
A. (RM1.69)1/15 – 1
I. Funds available for investment
B. (RM1.67)1/15 – 1
II. How long the funds can remain in the account
C. (RM1.76)1/15 + 1
III. Whether emergency withdrawals are likely
D. (RM1.74)1/15 + 1
IV. Prevailing market conditions.
120. There are 2 types of death benefit offered by Investment-linked Life Insurance
A. I & II Policies: -
B. I, III & IV
I. Unit value or sum assured or cash bonuses
C. II, III & IV
II. Unit value plus sum assured
D. All of the above
III. Unit value or sum assured
IV. Cash Bonus plus sum assured
116. A “share option” refers to;
A. I & II
A. A financial instrument that gives the investor the right to buy or sell a B. I, III & IV
given number of shares of the underlying stock at a regular price at future C. II, III, & IV
market. D. II & III
B. A financial instrument that gives the investor the right to buy or sell a
given number of shares of the underlying stock at a fixed price within a 121. Which of the following are NOT TRUE:
specified time period.
I. Investment-linked life insurance products guarantee a fixed rate of return.
C. A financial instrument that gives the investor the option to buy or sell a
II. Investment-linked life insurance products are determined by reference to
given number of share of the underlying stock at a regular price within a
the value of or the income from property of any description or by reference
specified time period.
to fluctuation, or in an index if, the value of property of any description.
D. A financial instrument that gives the investor the option to buy or sell a
III. Under Investment-linked life insurance products, the death benefit is a
given number of shares of the underlying stock at a fixed price at future
fixed sum assured plus whatever bonuses accumulated up to the date of
market.
death and less whatever outstanding policy loans and automatic premium
loans, inclusive of interests.
Under the dual pricing method of the Single Premium Investment-linked life insurance
IV. Under Investment-linked life insurance products the amount payable does
policy, Elina invested RM5,000 to buy units. The number of units that Elina held were
not depend on the investment performance of the company as it is fixed at
4,850 units. 15 years later, the unit price went up to RM1.85. The mortality charge is 1%
the inception of the policy.
and the policy fee is RM100. The bid-offer spread is 5 %. Based on the text, provide
answers for questions 117, 118 & 119.
A. I & II
B. I, III & IV
117. The Ending value of the investment is: -
C. II, III & IV
A. RM8,338.64 D. II & III
B. RM8,438.67
C. RM8,780.68 122. Under Investment-linked life insurance policy, the life office must provide a
D. RM8,782.77 statement of the investment performance of the fund for the past ________, where
available.
118. The Return on Gross Premium is: -
A. RM1.76 A. 3 years
B. RM1.74 B. 1 years
C. RM1.67 C. 5 years
D. RM1.69 D. 10 years
E & OE (1-June-2000) 16
123. Under the business of Investment-linked insurance, which of the followings are 126. The following statements about investment expertise in Investment-linked life
not involved in regulating this business. insurance is FALSE:

I. Insurance Act 1996 and Regulation A. Investment-linked funds have professional fund managers who have the
II. Legal provisions governing the common law of agency investment expertise to invest the fund to achieve high return over the long
III. Companies Act, 1965 term
IV. Contracts Act, 1950 B. Investment-linked funds have professional fund managers who have the
investment expertise to invest the fund and always achieve high return
A. I, II & III over the short term
B. I, III & IV C. An ordinary policyowner does not normally has good knowledge of
C. II, III & IV financial market to invest his money effectively
D. None of the above combinations D. Investment-linked funds have professional fund managers to manage the
funds
124. Mr. Boon wishes to sell off his coconut plantation. He needs to consider several
127. When an agent misrepresents and induces the policyowner to discontinue an
factors while he is pricing his plantation. The factors are: -
insurance policy or to have an insurance policy made paid-up in order to purchase
a new policy with another company or the same company, without clearly
I. The location of the land
informing the policyowner of the differences between the two policies and the
II. The cows and the workers at the plantation
financial consequences of replacing the original policy, it is known as _________.
III. The quality of land as reflected on the quality and profitability of the
coconuts it grows A. Switching
IV. The value of the buildings on the land B. Explaining
C. Investing
A. I & II D. Twisting
B. I, III & IV
C. II, III & IV 128. Mr. Mark invested RM6,000 in Single Premium Investment-linked life insurance
D. All of the above of Assurance Berhad. The price of each unit is RM1.50, bid-offer spread is 5%,
the mortality charge is 1% and the policy fee is RM100. Use the Dual Pricing
125. Which of the following are the features of traditional with-profit life insurance method to calculate the cash value.
products?
A. RM5,540
I. Premium is determined and fixed at inception and is based on the sum B. RM5,843
assured and the expected bonuses payable. C. RM5,543
II. “Profits” are added to the sum assured in the form of bonuses D. RM5,840
III. Sum assured is chosen by the policyowner at inception and is stated in the
policy schedule 129. How does the “accumulation units” method of Investment-linked life insurance
IV. Policyowners are allowed to “top-up” the sum assured at anytime. works?
A. I & II A. Income is ploughed back into the fund and the unit price will increase over
B. II & III the long term
C. I, II, III B. Income is distributed to policyowner as additional units; the number of
D. All of the above units will increase over long term when unit price remains unchanged.
C. Income is ploughed back into the fund and the number of the units increase
over the long term
D. Income is distributed to the policyowner, both unit price and number of
units increase over the long term.

E & OE (1-June-2000) 17
130. The followings are the examples of Unit Trusts: 134. Diversification in investment involves _______________.

I. Amanah Saham National A. reducing the risks of investment by putting the fund under management
II. Kuala Lumpur Mutual Fund into several categories of investment
III. Amanah Saham Wawasan B. reducing the risks of investment by putting all one’s egg in one basket
IV. Mayban Management Bhd C. putting all the funds under management into one category of investment
D. spreading the risks of investment by not putting the fund into several
A. I, II, III categories investment
B. I, II, IV
C. II, III, IV 135. The investment returns under an Investment-linked life insurance policy _______.
D. I, III, IV
I. are not guaranteed
131. What is the extra knowledge/ requirement needed for an Investment-linked life
II. are fixed at policy inception
insurance agent?
III. are linked to the performance of the investment fund managed by the life
A. All relevant knowledge about technical aspect of life insurance, coverage office
and scope IV. fluctuate according to the rise and fall of market price
B. All aspects about life cover
C. All aspects of life insurance and legal requirement A. I, II & III
D. The financial advice in order to fulfill the customer’s needs B. I, II & IV
C. I, III & IV
132. People generally invest their money to provide :
D. II, III & IV
I. an improvement in their financial position 136. Which of the following investment vehicles are mainly for capital appreciation
II. a less comfortable standard of living purpose?
III. income during retirement
IV. funds for paying necessary expenses and taxes by the deceased’s family A. corporate bonds and preference shares
B. preference shares and ordinary shares
A. I, II & III
C. corporate bonds and ordinary shares
B. I, III & IV
D. ordinary shares and option
C. I, II & IV
D. II, III & IV
137. Under the Securities Exchange Act 1934 of US ___________________.
133. What is/are the characteristics of warrants? I. insurance agents and agency office employees dealing in variable life
I. warrants give the holder the option to subscribe for ordinary shares at a insurance must register with the National Association of Securities Dealers
pre-determined conversion ratio II. insurance companies or the sales company dealing in variable life
II. warrants give the holder the option to subscribe for ordinary shares at a insurance must register as a broker-dealer
pre-determined exercised price III. insurance agents and agency office employees dealing in variable life
III. warrants are usually detached from the loan stock and traded separately in insurance must pass an examination in securities business
securities market IV. a prospectus disclosing the identity and nature of the insurer’s business
IV. warrants are issued on their own among others must be provided by the insurers to potential client

A. I only A. I, II & III

B. I, II & III B. I, II & IV
C. I, III & IV C. I, III & IV
D. I, II, III & IV D. II, III & IV
E & OE (1-June-2000) 18
138. The term ‘Investment-linked’ in Malaysia shall be similar to the term ‘________’ 143. What are the disadvantages in investing in ordinary shares?
in the United Kingdom and to the term ‘_____________’ in the United States.
I. dividends repaid not more than the fixed rate
A. Unit-linked and Unit Trust II. investors are exposed to market and specific risks
B. Unit-linked and Variable Life III. shares can become worthless if company becomes insolvent
C. Unit Trust and Variable Investment A. I, II
D. Investment Trust and Variable Linked B. I, III
C. II, III
139. Investing in bonds offers the following advantages EXCEPT D. I, II & III
A. it is a place of temporary refuge when the investor foresee that the market 144. Which of the following is the true statement about warrants or Transferable
outlook is uncertain Subscriptions Rights (TSR)
B. it offers protection to the principal and guaranteed steady stream of income
C. it enables the investor an opportunity for capital gain A. Investors have to put in a large initial outlay to establish an exposure to the
D. it allows the investor a chance for capital preservation shares
B. on expiry, warrants which are not exercised lose their value completely
140. Which of the following fixed income securities yield the highest return? C. like ordinary shares, there is no chance for price recovery
A. government bonds D. by selling the warrants given to an investor in the first instance, the
B. debenture stocks investor cannot benefit from the capital gain
C. convertible bonds
D. loan stocks 145. Which of the following investment instruments has both the advantages of capital
appreciation liquidity and inflation hedge?
141. Spot market, a type of cash market is___________________. A. cash
B. bond
A. market which quote prices referred to the current market price of an item C. futures
available for immediate delivery D. ordinary shares
B. market for deferred delivery of commodities
C. market that are traceable only from the late 20th century 146. Under a regular premium Investment-linked whole life insurance plan
D. to establish forward contracts featuring the contract price and future ___________.
delivery dates
I. premium top-ups and holidays, subject to the life office’s administrative
142. The charge on the initial units under the Investment-linked life insurance policies rules are usually allowed
_________. II. life protection is the main objective of the plan with investment as a
I. will have higher annual management charges such as 6% per annum nominal purpose
throughout the term of the policy contract III. withdrawals and surrenders usually after the payment a few years premium
II. means that their cash value of the initial units is much lower than their face are allowed
value for the years IV. a “one-off” premium contribution is made to the policy which uses the
III. is much less commonly used these date than in the past premium to purchase units in an Investment-linked fund and to provide
IV. bears lighter discontinuance charges certain level life cover
A. I, II & III
A. I, II & III
B. I, II & IV
B. I, II & IV
C. I, III & IV
C. I, III & IV
D. II, III & IV
D. II, III & IV
E & OE (1-June-2000) 19
147. Which of the following is/are the main characteristics of Investment-linked life 150. The criteria for comparing traditional life insurance products with Investment-
policies? linked life insurance products include______________.

I. the policies can be used for investment, as source of regular savings and I. the life offices management expertise
protection II. the products investment returns and risks
II. the cash values and protection benefits are determined by the investment III. the policies premium computation
performance of the underlying assets IV. death benefit provided under the policies
III. the net cash values of the policies are the gross cash values shown in the
policy that include reversionary bonus up to the date of the surrender, less A. I, II & III
all indebtedness include interest. B. I, II & IV
C. I, III& IV
A. I
D. II, III & IV
B. II
C. I & II
151. Policy fee payable by an Investment-linked life insurance policyowner is to cover
D. I, II & III
_____.
148. The protection costs under an Investment-linked life insurance policy _________.
A. the mortality costs of the Investment-linked life insurance policy
B. the administrative expenses of setting up the Investment-linked life
I. are met by a flat initial charge for regular premium plans
insurance policy
II. are generally covered by cancellation of units in the fund
C. the handling charges by professional investment managers
III. are generally met by explicit charges stipulated openly in the policy terms
D. the price for each unit bought under the Investment-linked life insurance
IV. vary with age of policyowner and level of cover
policy
A. I, II & III
152. Which one of the following BEST describes the policy benefits of an Investment-
B. I, II & IV
linked policy?
C. I, III & IV
D. II, III & IV A. the policy benefits are guaranteed
B. the policy benefits are payable only on death or disability
149. Which of the following statements about switching is/are NOT TRUE? C. the policy benefits will depend on the long-term investment of the life
office
I. switching facility allows a policyholder the freedom to move part or all of D. the policy benefits are directly linked to the investment performance of the
his money from one fund to another underlying assets
II. if the company offers only one fund to its policyholders, it will normally
include a switching facility 153. The risk/return profile of the following funds in the order of lower to higher level
III. it is advisable for policyholders to switch funds from equity fund to cash of risks.
funds in times of volatile stock market
I. Bond funds
A. I & III II. Cash funds
B. II III. Property funds
C. III IV. Managed funds
D. II & III
A. I, II, III, IV
B. II, I, III, IV
C. II, III, I, IV
D. III, II, I, IV
E & OE (1-June-2000) 20
154. Investing in properties can ____________________. 157. Which one of the following statements about Investment-linked policies and
endowment policies are FALSE?
A. provide good capital appreciation and a poor flow of income
B. be high risks investment especially if good repayment methods are I. the policy values of Investment-linked and endowment policies directly
obtained reflect the performance of the fund of the life office
C. result in easy disposal of the properties during economic recession II. the premiums and benefits of the endowment policies are determined at the
D. result in free capital gain through proper mortgaging of the properties inception of the policy whereas Investment-linked policies are flexible as
they are account driven
155. Investment-linked funds can be invested in any financial instruments including III. the benefits and risk of Investment-linked and endowment policies are
cash funds, bond funds, equity funds, property funds, specialised funds, balanced directly transferred to the policyholders
funds and managed funds. Managed funds _____________________.
A. I & II
A. include funds invested only in equities and bonds B. I & III
B. include funds invested in fixed proportion of specialised assets, for C. II & III
example, 70% of the funds are in equities and 30 % in bonds D. I, II & III
C. include funds that are restricted to investment in a particular country only
such as the ASEAN Fund, the Emerging Markets Fund and the 158. Under the dual pricing method of her single premium Investment-linked life
International Bond Fund insurance policy, Agnes had allocated an amount of RM4,000 premium to buying
D. investing in a wide variety of assets, their allocation of funds will depend units. The number of units that Agnes holds is 4,000. After 10 years, the offer
on the fund managers’ views of the future prospects of the financial price is now RM1.97. The bid-offer spread is 5%. The mortality charge is 1% and
markets involved the policy fee is RM100. The ending value of investment, the return on gross
premium and the annual yield under Agnes’s policy are _______________.
156. The following statements are features of Investment-linked life insurance policies
_________. A. RM7, 701.20, RM1.925 and 0.118 or 11.8% respectively
B. RM 7,486, RM1.871and 0.087 or 8.7% respectively
I. there is no guaranteed minimum sum assured for the purpose of declaring C. RM7, 311.14, RM1.828 and 0.062 or 6.2% respectively
bonuses D. RM7, 311.14, RM1.924 and 0.118 or 11.8% respectively
II. there is no guaranteed minimum sum assured as a level of life insurance
protection 159. Which of the following statements about single premium Investment-linked
III. each of the policyowner’s money will be used to purchase units, the policies are TRUE?
number of which is dependent on the offer price of each unit
IV. top-up can be made in order to purchase more units from the Investment- I. the amount of insurance protection is a percentage of the single premium
linked fund itself paid and is subject to a minimum amount
II. top-ups or single premium injections are allowed in the plans
A. I, II & III III. the emphasis is normally on investment and life protection
B. I, II & IV IV. single premium policies must at least have a minimum premium of
C. I, III & IV RM5,000
D. II, III & IV
A. I & II
B. II & III
C. I, II & IV
D. II, III & IV

E & OE (1-June-2000) 21
160. Which one of the following statements about the flexibility features of 163. One of the followings is true about Investment-linked insurance policy?
Investment-linked policies is FALSE?
A. has no guaranteed minimum death benefit
A. policyowners have the flexibility of switching from one fund to another B. has cash value like the traditional life insurance policies
provided it satisfies the companies switching criteria C. must be issued with a minimum premium of RM4,000
B. policyowners may request for a partial surrender of the policy and the D. must be issued with a minimum death cover of RM5,000
withdrawal amount will be met by cashing the units at bid price
C. policyowners can take loans against their Investment-linked policies up to 164. Which one of the following statements about the benefits of Investment-linked
the entire cash value of their policies fund is FALSE?
D. policyowners have the flexibility of increasing or decreasing their
premiums for regular premium Investment-linked policies A. the fund provides a highly diversified portfolio, thus lowering the risk of
investment
161. Which one of the following statements is FALSE? B. the fund relieves the investor from the hassle of administering his/her
investment
A. for traditional with-profit life insurance, the life office will carry out a C. the fund ensures definite high yield for an investor since it is managed by
valuation of its assets and liabilities yearly and any surplus may be professionals who are well-versed in the management of risks of
allocated to policyholders in the form of bonuses investment portfolio
B. Investment-linked life insurance policies offer investors policies with D. the fund enables small investor to participate in a pool of diversified
values indirectly linked to the investment performance of the life office portfolio in which he/she, with low investment capital is unlikely to have
C. the investment element of Investment-linked policies varies according to access
underlying assets of the portfolio
D. both Whole Life and Endowment policies can be used as an investment
vehicle which the benefits become payable at a future date, either death or
maturity

162. One of the following statements about surrender value under traditional with
profit life insurance products is TRUE.

A. the amount of the surrender value is usually lower than the amount under
without profit policies and it varies with the age of the assured, being
lower at older age
B. the amount of the surrender value is usually equal to the amount under
without profit policies and it varies with the age of the assured, being
lower at older age
C. in the case of with profit life insurance policies, the net cash surrender
value includes the surrender value of the reversionary bonus up to the date
of surrender
D. in the case of with profit life insurance policies, the net cash surrender
value excludes the surrender value of the reversionary bonus up to the date
of surrender

E & OE (1-June-2000) 22
1. C 41. D 81. D 121. B 161. B
2. B 42. D 82. D 122. C 162. C
3. C 43. C 83. B 123. D 163. D
4. A 44. B 84. D 124. B 164. C
5. B 45. A 85. B 125. C
6. A 46. A 86. D 126. B
7. C 47. C 87. A 127. D
8. A 48. D 88. D 128. C
9. D 49. B 89. D 129. A
10. B 50. C 90. C 130. B
11. C 51. D 91. C 131. D
12. B 52. C 92. B 132. B
13. C 53. D 93. D 133. B
14. D 54. B 94. A 134. A
15. D 55. D 95. C 135. C
16. D 56. B 96. A 136. B
17. C 57. C 97. C 137. A
18. D 58. C 98. A 138. B
19. A 59. C 99. A 139. B
20. A 60. C 100. D 140. D
21. A 61. C 101. C 141. A
22. A 62. A 102. C 142. A
23. B 63. D 103. A 143. C
24. B 64. B 104. A 144. B
25. C 65. D 105. D 145. D
26. B 66. A 106. B 146. A
27. B 67. C 107. B 147. C
28. C 68. A 108. C 148. D
29. D 69. C 109. C 149. B
30. D 70. C 110. A 150. D
31. A 71. C 111. C 151. B
32. C 72. B 112. D 152. D
33. A 73. A 113. C 153. B
34. C 74. B 114. A 154. D
35. B 75. C 115. D 155. D
36. A 76. A 116. B 156. C
37. B 77. A 117. A 157. B
38. D 78. D 118. C 158. C
39. C 79. D 119. B 159. A
40. C 80. C 120. D 160. C

E & OE (1-June-2000) 23