PRE-CONTRACT FOR INSURANCE

AGENTS EXAMINATION AND

INVESTMENT-LINKED LIFE INSURANCE
(PCIL)

Sample Question 2

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 1. The objective of life insurance is ________. (PCEIA C1)
a) make profit from insurance claims.
b) help insurance companies grow
c) To provide financial security against the uncertainty of losses.
d) avoid losses arising from accident

2. Requirements under Guidelines on Medical and Health Insurance Business to enhance policy owner
protection, cost-sharing provisions shall not be mandatory and where applicable, shall be limited to the
lower of ________ (excluding deductibles) or ________ (inclusive of deductibles) on every claim, and shall
not be mandatory (PCEIA C6)
a) 20%, RM3,000
b) 20%, RM5,000
c) 30%, RM3,000
d) 30%, RM5,000

3. Conversion from term insurance to permanent life insurance is subject to _______. (PCEIA C12)
a) Premium payable will be effected based on the attained age basis or original age basis.
b) Insured continues to pay the same premium.
c) Premium must be paid on a single premium basis.
d) Premium rate review on conversion.

4. A ________ is applied in almost all ordinary and individual life insurance contracts with premiums
remaining constant throughout the duration of the insurance period (PCEIA C13)
a) Level payment system
b) Level premium system
c) Constant premium system
d) Uniform payment system

5. PIDM complements the prudential regulatory and supervisory role Protection of Bank Negara Malaysia
by __________. (PCEIA C3)
a) By providing a safety net for depositors and insurance policy owners in the event of insolvency
b) By protecting financial consumers against unscrupulous agents
c) By providing immediate resolution to customer complaints.
d) By protecting insurance companies against financial losses.

6. The following documents are relevant sources of information for the underwriting of life insurance:
(PCEIA C14)
I. Proposal form
II. Medical examiner’s report
III. Agent’s report
IV. Attending physician's statement.
a) I, II, III
b) I, II, IV
c) I, III, IV
d) I, II, III, IV

7. Prohibited business conduct for insurers as well as insurance agents are _________. (PCEIA C5)
I. Persuading or attempting to persuade a financial consumer to dishonestly conceal, omit or provide
material facts ambiguous
II. Offering or assuming to act on behalf of an insurer in negotiating a policy.
III. Making any statement, illustration, promise, forecast or comparison which is misleading.
IV. Carrying out any other act on behalf of an insurer in relation to the issuance, renewal or
continuance of a policy.
a) I, II
b) I, III
c) I, IV
d) II, III, IV

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 8. A life insurer shall not void a life policy or refuse a claim by reason only of _________. (PCEIA C11)
a) Misstatement of age.
b) Misrepresentation of condition of health.
c) Misrepresentation of medical history
d) Non-disclosure of hazardous hobbies.

9. The charge for covering the cost of mortality and interest is called ____ premium. (PCEIA C13)
a) Gross
b) Net
c) Risk
d) Written

10. Pure risks is insurable _________. (PCEIA C1)

a) Because there is no possibility of a loss.
b) Because of the need to maintain the principle of indemnity
c) Because insurers prefer good risks only.
d) Because of the principle of utmost good faith.

11. A regular premium policy acquires surrender value if the policy holder has paid the premium
continuously for ______ years (PCEIA C11)
a) 2
b) 3
c) 4
d) 5

12. Which of the following will not be charged with extra premiums? (PCEIA C14)
a) Blasters
b) Underground mine workers.
c) Clerks
d) Deep sea divers.

13. In life insurance, 3 types of claims can arise, which are they? (PCEIA C15)
I. Claims against supplementary contract.
II. Performance claims
III. Death claims
IV. Maturity claims
a) I, II, III
b) I, II, IV
c) I, III, IV
d) II, III, IV

14. Assignment is the mechanism to transfer the ______ of an insured to another person. (PCEIA C2)
a) Rights
b) Liabilities
c) Insurable interest
d) Rights and liabilities

15. What is the main reason why people buy insurance? (PCEIA C1)
a) want to profit from making insurance claims
b) worry about the effects of misfortune.
c) want to claim income tax deductions for the premium paid by them.
d) feel obliged to the insurance agent

16. Policy states that the proposal and declaration shall be the basis of the contract between the insured
and company. This section refers to ___________.? (PCEIA C4)
a) Representation clause
b) Recital clause
c) Operative clause
d) Attestation clause

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 17. Caveat emptor means ________. (PCEIA C2)
a) Let the seller beware
b) Let the buyer beware
c) Utmost good Faith
d) Representation

18. _________ bonus is only paid on policies resulting into claims either by maturity or death, provided the
policies concerned had been kept fully in force by payment of premiums until such date of claim.
(PCEIA C12)
a) Terminal
b) Interim
c) Special
d) Simple

19. If there has been misrepresentation of age, which of the following measures will be taken? (PCEIA C11)
a) If True age as shown by the proof is greater, vary the sum assured and the bonuses in proportion to
the amount of premiums paid and on the true age
b) The policy will be cancelled and no premium will be refunded
c) The policy w be canceled and a premium paid will be refunded
d) The age has been understated, the premium based on the true age will need to be paid together
with interest.

20. Switching facility in investment-linked life insurance policies enable ________ (IL C2)
a) A life office to switch a single premium investment-linked whole life insurance plan to regular
premium investment-linked whole life insurance plan
b) A life office to switch an investment-linked life insurance policy to a traditional with-profit
endowment policy.
c) Policyowners to switch part or all of their investment from one life office’s policy to another life
office’s policy at the same premium.
d) Policy owners to switch part or all their investment from one investment-linked fund to another
investment-linked fund.

21. The insurer shall pay the monies due under the policy directly to __________ if the group policy owner
has no insurable interest in the lives of the persons insured by the group policy,. (PCEIA C12)
a) Nominee
b) Administrator
c) Insured persons
d) Employer

22. The non-forfeiture condition in a life insurance policy is a valuable privilege to the policy owner who
may have overlooked to pay the premium or is going through financial hardship and is temporarily
unable to pay the premium. There are two options available under the policy: (PCEIA C11)
I. Convert to a paid up policy, which means no further premiums will be payable but for a reduced
sum assured
II. Shorten the duration of the term or period of cover but for the full sum assured
III. Convert to a paid up policy, continue to make premiums for a reduced sum assured
IV. Shorten the duration of the term or period of cover and increase the sum assured
a) I, II
b) I, III
c) I, IV
d) I, II, III

23. The guidelines on investment-linked business states that the valuation of units shall be carried out
every _________. (IL C8)
a) Business day
b) Week
c) Business week
d) Day

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 24. The information contained in the schedule of the fire policy does NOT include: (PCEIA C4)
a) The name of the insurer, period of insurance
b) The name and address of the insured, the amount of premium
c) The businesses occupation, location of property insured
d) The details of claims, conditions and procedures

25. The role of the agent is to explain the main provisions of the insurance contract by letting the client’s
know the following important points. (PCEIA C16)
I. any extra charges imposed and purpose of such charges
II. Other insurance policies with the lowest premiums available in the market.
III. Policy restrictions, limitations and exclusions applicable.
IV. Scope of coverage, terms and conditions of the policy.
a) III, IV
b) I, II, III
c) I, III, IV
d) II, III, IV

26. Which of the following is not the key regulatory objectives of Bank Negara Malaysia in relation to the
insurance sector? (PCEIA C3)
a) To foster fair, responsible and professional business conduct of financial institutions.
b) To keep a close watch on solvency and market conduct to enhance professional standards and
consumer confidence
c) To promote monetary and financial stability conducive to the sustainable growth of the economy
d) To protect shareholders of insurance against bankruptcies and insolvencies

27. Which of the following situations is correct when a group insurance can be bought? (PCEIA C12)
a) A creditor buying group insurance on the life of the debtor
b) Employees buying group insurance for their employer
c) A father buying group insurance for his family members
d) An employer buying group insurance for his/her employees

28. The term ‘deductible’ in health insurance refers to _______. (PCEIA C6)
a) The policyholder have to pay a pre-agreed amount first before the balance of eligible expenses are
reimbursed or paid by the insurance contract
b) The agent have to pay a pre-agreed amount first before the balance of eligible expenses are
reimbursed or paid by the insurance contract
c) The insurer have to pay a pre-agreed amount first before the balance of eligible expenses are
reimbursed or paid by the insurance contract
d) Special payment arrangements made by the insurer with certain insured.

29. An insured is allowed to collect the full claim pertaining to the loss of his stock from the insurers and
then collect again from the person responsible for the ________. (PCEIA C2)
a) Liability
b) Indemnity
c) Good behavior
d) All the above

30. ________ is the legal right to insure a legitimate financial interest in a subject matter of insurance.
(PCEIA C11)
a) Subrogation
b) Contribution
c) Insurable interest
d) Utmost good faith

31. The information contains in the customer fact find form does not include: (IL C9)
a) Customer’s risk profile
b) Medical history
c) Cash flow analysis
d) Life and financial priorities and goals.

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 32. Amanda, 35 years old, has bought a single premium investment-linked life insurance by paying an
initial premium of RM50,000.00. Two years later, he paid an additional RM30,000.00 as top up.
The total sum assured in Amanda’s policy after the top up is ________. (IL C3)
a) RM50,000
b) RM62,500
c) RM80,000
d) RM100,000

33. A composite insurance company carrying on ________. (PCEIA C1)

a) Both life and general insurance business
b) General insurance business
c) Single class of insurance business
d) Life insurance business

34. In marine insurance, insurable interest in a contract of general insurance exists at the time of ________.
(PCEIA C2)
a) Not required at all
b) Loss
c) Effecting the policy only
d) Inception and at the time of loss

35. An insurer may not accept a proposal on its original terms but may offer to provide insurance on
different terms and this is called __________. (PCEIA C14)
a) Acceptance
b) Consideration
c) Consent
d) Counter offer

36. Characteristic of insurable risks excludes ________. (PCEIA C1)

a) Illegal and against public policy
b) A large number of similar risks
c) Insurable interest
d) Reasonable premium

37. There is a ___________ between expected return and risk that should prevail in a rational environment.
(IL C5)
a) Reverse proportion
b) Correlation
c) Relationship
d) Trade off

38. Funds that are invested in particular geographical regions or industries are known as _________ fund.
(IL C2)
a) Bond
b) Balanced
c) Specialized
d) Managed

39. Risks can be catergorized as: (PCEIA C1)

a) Pure and fundamental risks
b) Pure and speculative risks
c) Fundamental and particular risks/pure and speculative risks
d) Speculative and particular risks

40. Which of the following statement is INCORRECT about unit trust? (IL C6)
a) They are authorized and supervised by Bank Negara Malaysia
b) They are useful vehicles for private investors
c) They are useful for people who do not have sufficient fund and/or time
d) They provide access to a diversified range and spread of investments which are not readily available
to individual investors

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 41. Types of real estate investments does not include: (IL C6)
a) Domestic property
b) Liquid assets
c) Commercial property
d) Agricultural property

42. What is important before getting into any investment decision? (IL C9)
a) Cash flow analysis
b) Net worth analysis
c) Cash flow analysis and net worth analysis
d) Personal budget and cash flow analysis

43. The initial offer period of a new fund shall not exceed ______ months as stated in the guideline of
investment-linked business. (IL C8)
a) Two
b) Four
c) Three
d) One

44. The investment linked insurance business provides _______. (IL C1)
a) Investment in properties
b) Investment in human life
c) Life coverage and investment return
d) Life insurance

45. Life insurer may reject or delay a claim base on _______ in claims settlement. (PCEIA C9
a) A claim reported after the time limit for notification
b) The ground of non-disclosure or misrepresentation
c) Late submission of accompanying documents
d) Non-payment of claim processing fees

46. Which of the following is only payable when a life policy becomes matures or death claim? (PCEIA C12)
a) Policy dividend
b) Interim bonus
c) Terminal bonus
d) Cash bonus

47. Which of the following is guaranteed under an investment linked policy? (IL C4)
a) The annual investment income
b) The fixed value of units
c) The investment under property fund
d) The sum assured

48. Which of the following are the underlying principles of the code of ethics? (PCEIA C16)
I. To avoid conflicts of interest
II. To avoid misuse of position.
III. To prevent misuse of information.
IV. To prevent competition between agents
a) I, II and III
b) l and IV
c) I, Il and IV
d) I, II, III, IV

49. Which of the following statement is not true for implied actual authority? (PCEIA C5)
a) Acting in good faith and interpreting express instructions in a reasonable way.
b) Doing anything which Is incidental to the carrying out of the agent's express instructions.
c) Performing those acts which are usually performed by persons in the agent's position.
d) Performing those acts which are usually performed or usual in a particular trade or profession

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 50. If Emily withdraws RM2,000 from the 10,000 units of his investment-linked fund and assuming the unit
price is RM2, how many units does she still have? (IL C2)
a) 1,000 units
b) 8,947 units
c) 9,000 units
d) 10,543 units

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 1. C
2. A
3. D
4. B
5. A
6. A
7. B
8. A
9. B
10. B
11. B
12. C
13. C
14. D
15. B
16. B
17. B
18. A
19. A
20. D
21. C
22. A
23. A
24. D
25. C
26. D
27. D
28. A
29. B
30. C
31. B
32. B
33. A
34. B
35. D
36. A
37. D
38. C
39. C
40. A
41. B
42. C
43. A
44. C
45. B
46. C
47. D
48. A
49. A
50. C

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