PCE SET C

PRE-CONTRACT EXAMINATION (Section A & C)

SET C

1. How insurance provides protection?

A. By underwriting the risk.
B. By having the losses experience by the unfortunate few compensated by the contribution i.e. the
premium of the many who are expose to the same risk.
C. By controlling risk.
D. By avoiding losses. C1

2. Which of the following is NOT the function of insurance?

A. Allow fund being use for financial protection against losses and avoid the necessity of freezing the
capital.
B. Sources of capital for investment.
C. As a guarantee for small business enterprises.
D. A form of gambling. C1

3. Which of the following is NOT a method of handling risk?

A. Risk avoidance.
B. Risk retention.
C. Risk transfer.
D. Investment. C2

4. In insurance, risk can be defined as

A. A certainty regarding losses.
B. An uncertainty regarding losses.
C. Both certainty and uncertainty regarding loss.
D. None of the above. C2

5. What is “Risk Management”?

A. To transfer all type of risk to insurer.
B. To eliminate all type of risk.
C. A systematic approach to dealing with risks that threatens the assets and learning of a business or
enterprise.
D. A method used by insurer in handling risk. C2

6. Pure risk exists when there is .

A. A loss.
B. A profit.
C. Either profit, loss or no loss.
D. Either loss or no loss. C2

7. LIAM is .
A. Representative body of the Life Insurance Company.
B. Life Insurance agents and their supervisor.
C. Actuarial Society of Malaysia.
D. Non of the above. C5

8. Malaysia Insurance Institute was established to .

A. Introduce new insurance product in Malaysia
B. Encourage Malaysians to buy insurance.
C. Conduct basic, intermediate and advanced level courses and professional examinations in insurance
and related discipline.
D. Answer A and B. C4

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PCE SET C

9. In insurance industry ASM stands for?

A. Association of Surveyors Malaysia.
B. Actuarial Society of Malaysia.
C. Amanah Saham Malaysia.
D. None of the above. C4

10. All General Insurers shall be a member of an association of insurers listed below which is approved by
the Finance Minister.
A. LIAM.
B. ASM.
C. PIAM.
D. MII. C4

11. Who has insurable interest?

A. In property insurance, a trustee has insurable interest on the property held in trust
B. In liability insurance, anyone who has potential legal liability and legal costs and expenses
associated with it has insurable interest
C. In life insurance, a person has unlimited insurable interest in his own life and limbs
D. All of the above C3

12. Which of the following is NOT the objective of MIB.

A. To ensure that the government‟s policy on secure an insurance policy on vehicle is achieved.
B. To provide compensations to victims of motor accidents where the “uninsured drivers” are unable to
meet their liability from their own personal resources.
C. To imposed lives on its members (motor insurers) to raise funds required to fulfill its function.
D. To underwrite the high risk motor insurance which the traditional insurance market is not willing to
insure. C4

13. A decentralized organization means …………….

A. When policy drafting, renewals and other type of services is handled at the headquarters.
B. When policy drafting and renewal policy only handle at the branches.
C. When there is no branch office.
D. When performing underwriting, settling claims, issuing policies and branches operation are handled
at branches with granted authority to make decision as agree upon. C4

14. Function related to the used of computer and their operation, procedure, programs and control are
managed by
A. Electronic Data Processing Department.
B. Administration Department.
C. Marketing Department.
D. Investment Department. C4

15. Selection of risks, acceptance or rejection of new business and renewals are the responsibility of
A. Underwriting Department.
B. Marketing Department.
C. Investment Department.
D. Administration Department. C4

16. An agent loses his entitlement to claim compensation if .

A. He complies with his principal‟s instruction.
B. He refuses to perform his responsibility as an agent.
C. He uses his care, skill and diligence when perform his work.
D. He renders account to the principal and not to let his own interest conflict with his obligation to the-
principal. C7

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PCE SET C

17. Which of the following is NOT the responsibility of an agent towards principal?
A. Responsible for receiving money/ premium on behalf of his principal.
B. Diligence when performing his work and not letting his own interest conflict with his obligation to his
principal.
C. Comply with his principal‟s instructions.
D. To assure the principal that claims proceed will not happen. C7

18. Essentials of an insurance contract are :-

A. Consideration.
B. Legality of the contract.
C. Legal capacity to contract.
D. All of the above. C6

19. Which of the following people are appointed by the insurance companies to represent them?
A. Reinsurers.
B. Insurers.
C. Insurance Brokers.
D. Insurance agents. C4

20. An agency may be terminated by the following act, EXCEPT:

A. Expiration of the period stipulated in the contract of agency.
B. Mutual agreement.
C. Death of the principal or agent.
D. Ratification. C7

Questions 21 to 23 are matching questions. Each question is an example of a method of handling risks.
Please choose the correct answer.
A. Risk Avoidance
B. Loss Control
C. Risk Retention
D. Risk Transfer

21. An individual wants to avoid from lung cancer by not smoking. C2

22. The installation of an automatic sprinkler system to reduce the amount of fire losses in a factory. C2

23. A house owner transfers the loss that will incur when his house is destroyed by fire through an fire
insurance contract. C2

24. Why does the Principle of Utmost Good Faith so important in insurance?
A. Because only the insurer knows all the material facts related to the proposed life.
B. Because only the proposed knows all the material facts related to the proposed life.
C. Because it saves the time needed for the insurer to do the investigation.
D. Because most of the proposed do not understand the words in the policy. C3

25. The definition of “Material Fact” is .

A. A fact which will influence a prudent underwriter in deciding whether to accept the risk.
B. A fact which was known by the insurer after negotiation.
C. A fact which was known by both the insurer and the insured.
D. All of the above. C3

26. The breach of Utmost Good Faith will cause the contract to become .
A. Void.
B. Voidable.
C. Enforceable Contract.
D. Contribution. C3

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PCE SET C

27. The Principle of Indemnity in the insurance contract can be defined as .

A. Self-regulation.
B. Gather the financial resources.
C. A way to gain profit. C3
D. A way to restore the insured to the same financial position as he had enjoyed immediately before
the loss.

28. Which of the following methods are NOT applied by the insurer as a method of indemnifying.
A. Reinstatement.
B. Replacement.
C. Cash payment
D. Assignment C3

29. Proximate Cause is .

A. Unrelated cause.
B. First cause.
C. Last cause.
D. Effective cause. C3

30. Concept of Takaful is a scheme that upholds the principles of .

A. Not helping the participant who suffered an unexpected loss.
B. Shared responsibility, mutual help and co-operation.
C. Individual responsibility and self venture.
D. Contractual agreement between two parties not to share the profit. C3

31. Which of the following statements should an agent consider in making a marketing decision.
A. Class of business, which must be expanded.
B. Category of customer which can be targeted.
C. Practical sales quota which must be set.
D. All of the above. C8

32. The President of United State announced the following consumer rights EXCEPT
A. Right to safety.
B. Right to information.
C. Right to get the lowest price.
D. Right to be heard. C5

33. Research shows that the factors influencing the consumer in choosing an insurer are .
A. Reputation and quality of protection provided.
B. Benefit of the policy and ability to purchase.
C. Quality of protection and consumer‟s experience.
D. All of the above. C8

34. What is the last stage in the consumer buying decision process.
A. Post evaluation.
B. Evaluation of alternative.
C. Information search.
D. Purchase. C8

35. What is the main distinction between proprietary and mutual companies?
A. Proprietary companies transact a greater volume of life business than mutual companies.
B. Proprietary companies are composite insurers whereas mutual companies are life insurers.
C. Proprietary companies are owned by shareholders but mutual companies are owned by
policyholders.
D. Proprietary companies transact ordinary life business whereas mutual companies transact home
service business. C4

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PCE SET C

36. What is the disadvantage of “selling concept” in marketing the insurance product?
A. It emphasizes on sales and may ignore the consumer‟s satisfaction.
B. It does not ensure the company‟s expansion.
C. It does not allow research and development.
D. It allows the consumer to make a complain C8

37. The principle of subrogation provides that .

A. an insurer who has indemnified an insured for a loss may claim from the third party in respect of the
loss
B. an insurer who has indemnified an insured may call upon other insurers to contribute
proportionately to the cost of the indemnity payment
C. an insurer can deny a claim if the claim already compensated by another insurer
D. the insurer is not obligated to indemnify payment C3

38. What are the duties of an insurance agent?

I. To exercise judgment in selecting clients for the company he represents.
II. To provide information to the consumer, explaining the features of the coverage provided in the
insurance contract.
III. To provide services to clients before and after a claim has occurred.
IV. To motivate prospects to take up a life insurance policy by outlining the needs for financial
protection for the individual and his family.
A. I, III and IV
B. I, II and III
C. II, III and IV
D. All of the above C4

39. In order to provide quality service: what knowledge do an agent require to have?
I. Product knowledge.
II. Knowledge to help the public to understand the importance of life insurance and suggest them to satisfy
those needs.
III. Knowledge of life insurance in terms of economy, legal and social aspects.
A. I and II
B. I and III
C. II and III
D. I, II and III C8

40. Removal of extra premiums may be considered due to .

A. change of occupation to a less hazardous one
B. change of beneficiary
C. the insured has become uninsurable due to deteriorating health
D. subsequent improvement in health condition C20

41. The Insurance Act of Malaysia, 1996 is an example of .

A. Common Law
B. Civil Law
C. Statute Law
D. Criminal Law C20

42. A life office does not accept all applicants for insurance automatically. They will examine for this purpose
all the elements of risk carefully. This process is called .
A. ascertaining standards
B. adverse selection
C. selection
D. acceptance C19

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PCE SET C

43. For effecting an alteration the mode of premium payment, the insurer would require
.
A. payment of stamp duty
B. the written request by the insured
C. submission of a fresh proposal form
D. recommendation from the agent C18

44. The first person responsible for the process of life insurance selection is the
A. Underwriter at the head office
B. Medical examiner
C. Agent
D. Branch Manager C19

45. The main disadvantage of an ordinary whole life policy is that .

A. the policyholder is required to pay the premium throughout his life.
B. the policyholder may not get any surrender value.
C. the accrued bonuses will not accumulate to a sizable amount.
D. the policy does not give maximum life cover at minimum cost. C17

46. A composite insurance company is engaged in .

A. life insurance business only
B. life and general insurance business only
C. ordinary and home-service insurance business
D. reinsurance only C4

47. For evidencing a Group Insurance Cover provided for the employees of a corporation, the insurer issues
.
A. only a certificate listing the names of all insured employees
B. a master policy to be retained by the employer
C. an undertaking to all insured employees of future privileges of the policy
D. policies to individual employees who join the scheme C17

48. If no insurable interest existed at time a life policy was taken out, the policy becomes
A. Voidable; depending on the judgment of the High Court.
B. Void; the company is not obliged to pay a claim under the policy. C3
C. Viodable; the company may or may not be obliged to pay a claim under the policy depending on the
discretion of management.
D. Unenforceable; the policy is still recognized by the court as still subsisting but no claim can be made.

49. Mr. Lee effects a life policy on the life of his wife. In accordance with this policy, Mr. Lee is known as
.
A. Policyowner.
B. Assignee.
C. Life assured.
D. Assignor C3

50. Without a letter of probate or administration, the insurer may pay for death claim on a life
policy of RM l50, 000.
A. 9/10 of the total sum assured or RM60.000, whichever is lesser.
B. RM50.000
C. RM100,000
D. 100% of the death claim proceeds. C23

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PCE SET C

51. Life insurance contract requires the proposer to disclose all material facts to the life insurance company.
How long does this duty last?
A. Until the submission of the proposal form.
B. Until the first premium payment.
C. Until the policy has acquired cash value.
D. During the entire term of the policy. C19

52. Life insurance contract pays an agreed amount irrespective of the actual loss. What type of contracts it
is?
A. Contract of Indemnity
B. Fixed Amount Contract
C. Valued Contract
D. Aleatory Contract C17

53. Insurable Interest needs to exist .

A. At the inception of the policy.
B. At the time of claim.
C. When there is an amendment.
D. During the term of the policy. C17

54. In 1995, Mr. A income was RM50, 000. He paid the tax for that particular income in 1996. According to
this situation, what is the name used for year 1996?
A. Basic Term
B. Days of Grace
C. Year of Assessment
D. Reinstatement Date C20

55. What do you understand by the phrase “High Persistency”?

A. It means that a high percentage of potential insured sent in the proposal form.
B. It means that a high percentage pf claims arise.
C. It means that a high percentage of policies stay in force to the end of the period of cover.
D. It means that a high percentage of agents dropped out from the sales force. C22

56. Why is it important that the age of a life to be insured should be correctly stated in the proposal form?
I. To determine the rate of premiums to be charged.
II. To determine whether reinsurance is available.
III. To determine whether insurance can be granted to the applicant.
IV. To determine whether and what form of medical evidence is requires.
A. I and II
B. II and III
C. I, III and IV
D. All of the above C20

57. The loan value which a company may grant on a policy is based on a percentage of the
.
A. Reversionary Bonus.
B. Cash Value of the policy.
C. Cash Value of the Bonuses at the last anniversary.
D. Sum Insured and Bonuses at the date of application. C18

58. What is Duplicate Policy?

A. It is a policy issued by an insurance company to replace a lost policy.
B. It is an additional policy issued by insurance company as a reference for the assignee or trustee.
C. It is an assign policy, which is reassigned again.
D. It is a policy, which provides coverage for more one life. C18

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PCE SET C

59. Anti-Selection in insurance can be defined as .

A. The tendency of people who have higher possibility of losses to apply for or continue insurance
protection.
B. The failure to employ good workers which causes the failure of the company.
C. The wrong selection of good investment methods which spoil the insurance company‟s reputation.
D. The selection of a good agency location which results in increased sales. C19

60. Claim for life insurance will not be paid under one of the following circumstance
.
A. The insured dies during the grace period and premiums are not paid.
B. Misstatement of insured‟s age.
C. There is a wrong material fact in the proposal form.
D. The policy has changed to paid up policy. C23

61. Life insurance insured on own life is not considered as a contract of indemnity because
.
A. Insurance provides guaranteed protection to contingency which is not certain to occur at sometimes
in the future.
B. The contract involves a large amount of money.
C. Insurance is a long term contract. C17
D. Insurer promises to pay an agreed amount irrespective of the actual amount of loss.

62. The Insurance Act 1996 requires anyone who effects a life policy on the life of another person to posses
insurable interest in that person. Which of the following relationships does not has Insurable Interest?
A. A husband insuring the life of his wife.
B. A creditor insuring the life of his debtor.
C. A brother insuring the life of his sister.
D. A father insuring the life of his child. C3

63. Mr. Zakaria is a sole-proprietor. He doesn‟t contribute to EPF. He has an endowment policy with sum
insured of RM40, 000 and the annual premium is RM 4,150. Under the Income Tax Act, how much is the
income tax relief allowed on his premium?
A. RM 4,150
B. R.M 3,500
C. RM 2,800
D. RM 4,000 C20

64. In order to ascertain the chargeable income of an individual, it is necessary to deduct certain allowable
deductions from his gross income. Which of the following are allowable deduction?
I. Personal Relief
II. Children Relief
III. Provident Fund Contribution
IV. Insurance Premiums
A. I & II
B. I, II & III
C. I, II, III & IV
D. III, IV C20

65. The purpose of the insurable interest requirement in a life insurance business is to .
A. Reduce the chance that an individual will be over insured.
B. Ensure that the insurance company can pay out the death benefit.
C. Establish that a genuine risk of loss exists at the time of purchase. C11
D. Ensure that the beneficiary has an insurable interest in the insured at the time of death.

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PCE SET C

66. The Incontestable Clause in a life insurance policy .

A. Prohibits the insurer from contesting any misrepresentation by an insured from the inception of the
policy.
B. Restricts the insurer as to the time it can take in settlement of claims.
C. Limits the time during which the policyholder has the right to cancel the policy.
D. Limits the period during which the insurer can deny claims on the basis of statements made in the
application. C18

67. Life insurance can be classified into 3 main classes of business. What are they?
A. Temporary Insurance Business, Ordinary Life Insurance and Home Service Business
B. Ordinary Life Insurance, Home Service Business and Group Insurance
C. Ordinary Life Insurance, Annuity and Group Insurance
D. Ordinary Life Insurance, Annuity and Superannuation Scheme C7

68. Which type of policy DOES NOT have cash values?

A. Term
B. Whole Life
C. Endowment
D. Children Deferred Insurance C17

69. Premiums charged for a term policy is other policies with the same face amount at
identical age.
A. The same as
B. Lower than
C. Higher than
D. None of the above answers C17

70. Your client borrows RM30, 000 from the bank for 10 years (repayable by equated installments) and
wants to assure pa of the loan should death occur during the 10 years period. What kind of policy would
you recommend your client?
A. Limited-payment whole life.
B. Decreasing term insurance.
C. Endowment.
D. Annuity. C17

71. Renewable Term Insurance allows the protection extended to one certain period with the insured have
to pay .
A. Same premiums
B. Discount premiums
C. Premiums base on renewal date attained age
D. Premiums base on the age when the term insurance start to enforce C17

72. Your customer needs a policy which:

I. provides cash payment according to regular interval of time
II. pays death benefit should death occur during certain period, and /
III. pays the balance of the installment payment if he survives till the end of the policy term
Which of the following selection would you recommend to him?
A. Whole Life Endowment
B. Convertible Term Insurance
C. Juvenile Endowment
D. Anticipated Endowment C17

73. Identify the policy issued on the life of the mother or father with the child named as a beneficiary. The
policy money is payable to the beneficiary upon attaining a specified age.
A. Protected Education Policy.
B. Anticipated Endowment Policy.
C. Family Income Policy.
D. Joint Life Policy. C17

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PCE SET C

74. Which one of the following is NOT a characteristic of Group Life Insurance?
A. The policy insures the lives of a group of people under a single contract.
B. A master policy is issued to the employer.
C. Lives assured required to undergo medical examination.
D. The premium rate is lower than that charged on individual life in contract. C17

75. Your prospect wants to buy a Children‟s Deferred Insurance for the benefit of his only son aged 10.
Since he will pay the premiums, he worries that the policy will lapse if he dies. How would you advise
your prospect?
A. The prospect is required to buy a term insurance and if death occurs, the proceed policy will be used
to defense children policy‟s premiums payment.
B. The prospect has to pay a single premiums for the Children‟s Deferred Policy.
C. The prospect pays extra premiums to get a waiver of premiums rider attaches to the Children‟s
Deferred Insurance.
D. Surrender the policy when the prospect dies. C17

76. When a Convertible Term Insurance converts to a permanent insurance, .

A. The premium required to pay „is based on attained age or original age.
B. The insured continues to pay the same premium.
C. The policy must be paid by single premium.
D. The premium is paid according to attained age. C17

77. Identify the major difference between an Ordinary Whole Life and the Limited Payment Whole Life
Policy.
A. An Ordinary Whole Life gives protection for a lifetime while the Limited Payment Whole Life provides
protection for a limited period.
B. An Ordinary Whole Life policy accumulates cash value faster than the Limited Payment Whole Life.
C. Premiums on the Ordinary Whole Life policy are payable for the remaining lifetime of the insured
whilst premiums on the Limited Payment Whole Life policy are payable for a limited period.
D. An Ordinary Whole Life policy is non-participating whereas Limited Payment Whole Life policy is
participating. C17

78. Which of the following statement best describes Joint Life Insurance?
A. A group life insurance insuring two or more lives under a master policy.
B. A life insurance provides death benefit. to two or more beneficiaries.
C. A life insurance insuring two or more lives which death benefit is payable after the death among the
lives insured.
D. A life insurance insuring two or more lives which death benefit is payable after the death of all lives
insured. C17

79. If your client needs a definite amount of money by a specified time and a death protection is needed for
the same period of time, you should recommend .
A. Endowment Insurance.
B. Renewable and Convertible Term Insurance.
C. Whole Life Insurance.
D. Pure Endowment. C17

80. An annuity contract provides for income payments during the lifetime of the annuitant is a/ an
.
A. Life Annuity.
B. Guaranteed Annuity.
C. Annuity Certain.
D. Reversionary Annuity. C17

81. Immediate Annuity normally taken by an annuitant with .

A. Payment of installment premiums.
B. Payment of single premium.
C. Change of permanent insurance contract to annuity contract.
D. Attachment of “superannuation” scheme. C17

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PCE SET C

82. An arrangement whereby individual losses are shared by members of a group facing similar risk
exposure is called .
A. Risk
B. Contract
C. Insurance
D. Investment C1

83. What is a Rider?

A. A clause inserted in a life policy that overrides the policy condition.
B. An overriding commission paid td agency managers.
C. A whole life policy with accidental death and disability benefits.
D. A supplementary benefit which can be added to the basic policy. C17

84. Which of the following is NOT an exclusion of the Accidental Death Benefit?
A. Death by suicide.
B. Death cause by pregnancy or delivery.
C. Died in the flight as a farepaying passenger.
D. Death cause by a violation of law. C17

85. Mortality rate is

A. The number of deaths in a group of peoples with a specific age.
B. The number of deaths in a group of insured with insured risk.
C. The number of deaths caused by accident in one year.
D. The number of death claims per one thousand of claims. C20

86. What are the three basic major factors that affect the premium rates?
A. Death Rate, Interest Factor and Expense Factor.
B. Death Rate, Interest Factor and Surrender Rate.
C. Disability Rate, Interest Factor and Expense Factor.
D. Disability Rate, Interest Factor and Surrender Rate. C20

87. The most popular mode of premium payment in Malaysia is .

A. Single Premium.
B. Pure Premium.
C. Level Premium.
D. Increasing Premium C20

88. The following are correct descriptions of premium rates, EXCEPT

A. Net premium calculations are based on Mortality Rate and Interest Factor.
B. Gross premium is based on Net Premium and Expense Factor.
C. The premium rates suggested by an insurer must be adequate, competitive, equitable and
consistent.
D. The premium tables of the participating policies and non-participating policies of a life insurer are
similar. C20

89. Which of the following correctly describe a Single Premium?

A. To buy a life policy by just paying one premium.
B. The premium for a Term Plan.
C. The premium for one of the insured in a Joint Life Plan.
D. The premium for single people. C20

90. Mr. Lim bought a RM100, 000 Whole Life Policy with RM50,000 Accidental Rider attached. He passed
away in an accident one week later. How much should be Mr. Lim‟s death claim?
A. RM 50,000
B. RM 100,000
C. RM 150,000 C17
D. No payment shall be made to the Whole Life Policy as it does not cover accidental death.

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PCE SET C

91. Which of the following are Hospital and Surgical Benefits?

I. Daily Room and Board.
II. Surgical fee.
III. Legal expenses arising from a civil suit.
A. I and II
B. II and III
C. I, II and III
D. I and III C17

92. For life policies, the premium rate for a male is higher than for a female. However, for annuity policies,
the premium rate for a female is higher than for a male, because .
A. Female has lower mortality rate than male, so female is expected to receive annuity for a longer
period.
B. Female has lower mortality rate than male, so female is expected to receive annuity for a shorter
period.
C. Female has same mortality rate as male, so annuity should not be payable to female at all
D. Female has same mortality rate as male, so annuity will only be payable to male. C20

93. The extra bonus payable during the policy anniversary of sum insured is .
A. Interim Bonus
B. Compound Reversionary Bonus.
C. Single Reversionary Bonus.
D. Cash Bonus. C21

94. The following are information extracted from an application form and agent report. Please identify the
physical hazard.
I. The insured smokes two packages of cigarettes per day.
II. The insured is overweight.
III. The insured always gamble.
IV. The insured has criminal record.
A. I and II
B. I and III
C. I, II and III
D. All of the above. C19

95. Your prospect is a manager of a trading company, he intends to purchase a Whole Life policy. You were
informed that he is a non-smoker and just celebrates his 30th birthday 7 months ago. The premium for
him if insurer use nearest birthday is .
A. 30 year old male rate.
B. 30 year old male rate with non-smoker discount.
C. 31 year old male rate.
D. 31 year old male rate with non-smoker discount. C24

96. When the underwriter receives an application from a sub-standard applicant, what should he do?
I. Reject the application.
II. Accept the application but ask for extra premium.
III. Delay the application to another date.
IV. Accept the application at normal rate but pay attention to the changes in the applicant‟s health
status.
A. I
B. I and II
C. I, II and III
D. All of the above C19

97. When assessing the risk, which of the following factors is the most uncertain to an underwriter?
A. Health History.
B. Physical Hazard.
C. Moral Hazard.
D. Occupation Hazard. C19

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PCE SET C

98. When a policy matures, if the insured is still alive but the sum insured is payable, this type of situation is
called .
A. Death Claim.
B. Survival Claim.
C. Disability Claim.
D. Maturity Claim. C23

99. Based on the clause 148 of Insurance Act 1996, what is a “cooling off” period?
A. The policyowner within 15 days of receipt of the policy can return the policy with a notice in writing
objecting to a term of condition of the policy.
B. The policyowner can make a claim against the insured hazard covered by the policy.
C. “Cooling off‟ period is the waiting period where the policyowner does not receive any coverage, this
period is generally 15 days.
D. “Cooling off‟ period is the period where the life company refuses to entertain any claims, this period
is generally 6 months. C18

100 A policyowner with participating policy can share part of the company‟s surplus through .
A. Interest of bonus.
B. Increase in sum insured without health examination.
C. Reduction in sum insured.
D. A contract with additional clauses. C21

101 Collecting premiums at regular interval such as once a week is the privilege of a .
A. Family Income Business.
B. Home Service Business.
C. Ordinary Life Business.
D. Annuity Business. C17

102. Which of the following is/are the usage(s) of term insurance?

I. to provide the largest amount of insurance protection for a temporary period at the lowest
possible outlay of find.
II. to protect the family from loss of income and to raise the young children until the age of their
self-sufficient.
III. to provide an additional death cover in a pension plan.
IV. to provide an investment vehicle for old age.
A. I
B. I and II
C. I, II and III
D. I, II, III and IV C17

103. The Conditions and Privileges of a life policy can be divided into
A. Conditions limiting the scope of contract.
B. Conditions providing benefits and privileges.
C. Conditions explaining claims procedure.
D. A and B. C18

104. The Code of Ethics and Conduct applies to intermediaries. The intermediaries refer to .
I. employees of a life insurance company
II. life insurance agent
III. insurance broker
IV. policyholder
A. I and II.
B. I, II and III.
C. 1,11 and IV C24
D. I, II, III and IV

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PCE SET C

105. Adam only paid his premium 14 days after the due date, which means his policy would .
A. Lapse.
B. Not lapse.
C. Be terminated.
D. Expire. C18

106. How can an agent provide assistance to the policyowner‟s family on his/her death?
A. Pay RM 10.00 to the policyowner‟s family.
B. Report the death claim to the companv request for a claim form to be completed by the
policyowner‟s family.
C. Assist the policyowner‟s family in obtaining the Death Certificate and original policy document.
D. B and C. C23

107. A life insurance agent can enjoy monetary reward and job satisfaction. Job satisfaction includes
.
I. Job independence.
II. Providing service to individuals and society.
III. Personal development.
A. I and II.
B. I and III
C. II and III
D. I, II and III C25

108. A 20-year endowment policy was issued to Encik Ahmad on April 1, 1968. If the premium has been
paid and Encik Ahmad is alive on April 1, 1 988, the
A. policy will become paid-up and the proceeds will be held by insurance company to be paid at
the time of Encik Ahmad‟s death.
B. policy proceeds will become payable on that date to Encik Ahmad or to someone he designates.
C. policy will automatically convert to a whole life insurance on Encik Ahmad‟s life.
D. company will renew the policy for and additional term of 20-years. C23

109. Which of the following are features of a reduced paid-up policy?

I. Sum assured decreases
II. No need to pay anymore premium
III. New riders can be added
IV. Cannot change beneficiary
A. I & III
B. I & II
C. I, III and IV
D. All of the above C18

110. Information relating to the date of birth, occupation and type of policy plan applied for is generally
obtained from
A. The agent‟s Report
B. The Employer
C. The Medical Declaration form
D. The Proposal form C19

111. A life insurance policy is a legal contract between

A. the agent and the insurer
B. the agent and the insured
C. the insured and the insurer
D. agent and sub-agent C22

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PCE SET C

For questions 74 and 75, please refer to the following information.

I. Date of birth life insured - 1st October, 1957
II. Date of commencement of policy - 1st June, 1985

112. Calculate the “age nearest-birthday” of the life assured at the time when the policy starts to
commence?
A. 27
B. 28
C. 29
D. 26 C24

113. What is the “age next-birthday” of the life assured at the commencement date of the policy?
A. 26
B. 27
C. 29
D. 28 C24

114. If the date of birth of a person falls on December 1, 1 941, and he purchased a life insurance policy on
July 1, 1 984. What is his age at the next birthday?
A. 43
B. 33
C. 45
D. 44 C24

115. Once a policy has lapsed, the insured usually can reinstate the policy provided
A. proof of insurability is shown, all back premiums due plus interest have been repaid.
B. proof of insurability is shown, all back premiums due have been repaid.
C. proof of insurability is shown, all back premiums due plus loan taken have been repaid.
D. proof of insurability is shown, all back premiums due, loan taken plus interest have been
repaid. C18

116. When can a life insurance company cancel a life policy?

A. When an unpaid policy loan plus interest, equals the cash value of the policy.
B. When the unpaid policy loan plus interest, equals the face value of the policy.
C. When the policyowner ceases to make payments on the loan.
D. When the policy loan has not been repaid within a specified time. C18

117. The main purpose of delivering life policy through the agent is
A. to enable the agent to provide a better service.
B. to enable the agent to stress the importance of the policy and to explain again the various
conditions and privileges contained in the policy.
C. to enable the agent to close more cases.
D. to enable the agent to collect the first premium due. C25

118. Lim, an agent for the XYZ company, has offered to share part of his commission with Ali, a prospective
buyer if. Au will purchase a life insurance policy from his company. Lim‟s offer to Ali is an example of a
prohibited sales practice called
A. Twisting
B. Misrepresentation
C. Rebating
D. Coercion C25

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PCE SET C

119. Some of the alterations that can be made to a life policy are listed below.
I. Reduction in Sum Assured
II. Change in mode of premium payment
III. Increase in the Sum Assured
IV. Change of name of the life assured
A. I and II only
B. II and III only
C. I, II and III only
D. All of the above C22

120. The payment of the proceeds of a policy in other than a lump sum cash payment is called
A. settlement option
B. non-forfeiture value
C. dividend
D. facility of payment C23

121. Which of the following is not classified under after-sales service?

A. Policy delivery
B. Reinstatement or revival
C. Prospecting
D. Claims C8

122. Twisting is
A. beneficial to the policyholder
B. beneficial to the insurer of the policyholder
C. beneficial to the agent of the said policyholder
D. None of the above are correct C25

123. Most proposal forms usually seek the following information:

I. personal particulars like age, sex, occupation
II. particulars of other insurance
III. particulars of the proposed insured‟s hobbies and interests
IV. particulars of the beneficiaries
A. I, II
B. II, III
C. III, IV
D. I, II, III, IV C19

124. When an agent discovers that an existing life insurance plan does not cater for all the client‟s present
needs, he should .
A. ask the client to terminate his existing insurance plan and to effect a new policy.
B. design an insurance plan to cover the deficiency.
C. notify the insurer immediately.
D. advise the client to take the agent to task for unprofessional advice. C25

125. Maturity benefits are usually made up of

A. sum assured only.
B. sum assured plus bonuses.
C. sum assured plus bonuses and disability benefit.
D. sum assured, vested bonuses and terminal bonus. C23

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PCE SET C

126. When a policyholder intends to surrender his policy, an agent should suggest the following
alternatives:
I. Buy a new policy with a lower premium
II. Get a policy loan
III. Surrender the existing bonuses for cash
IV. Effect an Extended Term Insurance coverage
A. I, II & III
B. II, III & IV
C. I, III & IV
D. All of the above C25

127. Section 161 of the Insurance Act 1996 provides that where a claim upon death of the policyowner is
not paid within days of receipt of intimation of the claim the insurer should pay a minimum
compound of per annum
A. 90 days, 7%
B. 60 days, 3%
C. 60 days, 4%
D. 30days, 3.5% C23

128. Which of the following is not a provision of the Insurance Act?

A. All insurers must be registered
B. Every insurer is required to maintain a specific solvency margins at all time
C. BNM must approve all training programs of the insurance companies
D. Only fit and proper persons can be appointed as the Managing Director. C5

129. Section 44(A) of the Insurance Act 1963/96 states that any act performed by an agent is deemed to
be of knowledge to the insurer unless:
A. He is an agent of the insurer
B. There is a collusion or connivance between the agent and the proposer
C. He is soliciting new business
D. He acts on behalf of the insurer C7

130. Which of the following policies is not eligible for income tax relief in respect of the premium paid?
A. Whole life insurance
B. Endowment insurance
C. Personal accident insurance
D. Term insurance C19

131. On March 1, Mr. Chong submitted a proposal form to an insurer. A letter of acceptance was then
issued on March 8 and subsequently was delivered to Mr. Chong on March 10. Mr. Chong paid the
initial premium on March 17. A life insurance policy was issued and delivered to Mr. Chong on April 5.
Mr. Chong life insurance policy became effective on
A. March 8
B. March 10
C. March 17
D. April 5 C22

132. Insurers do not when dealing with sub-standard lives.

A. charges an extra premium
B. offers an alternate form of contract
C. imposes a debt or lien
D. provides a premium discount C19

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PCE SET C

133. is simply an additional clause to the policy or variation of one or more of the conditions.
A. An endorsement
B. A declaration
C. A letter of extension
D. A letter of acceptance C22

134. A life proposed with hazardous occupation is said to have

A. an increasing extra mortality
B. a level mortality
C. a decreasing extra mortality
D. none of the above C19

135. Mr. and Mrs. Chong both aged 70 & 60 respectively received income payment from an annuity
company. The income will be paid as long as either one annuitant is alive. The income payment shall
cease upon death of the last annuitant. What type of annuity contract has the couple acquired?
A. Deferred annuity
B. Single life annuity
C. Last survivor annuity
D. Joint life annuity C17

136. Mr. Chong, 25 years old, has effected a term policy of RM100,000 for 30 years. When he reached 55
years old, he will receive
A. RM100,000 and the policy shall be terminated
B. RM100,000 and the policy shall continue for another 30 years
C. nothing and the policy shall be terminated
D. nothing and the policy shall continue for another 30 years C17

137. En. Kamaruddin purchased a RM100,000 Whole Life non-participating policy on his own life. The
agreed sum insured of RM100,000 will be payable in the event of death of En.Kamaruddin. This type
of contract is known as
A. contract of indemnity
B. valued contract
C. contract of adhesion
D. unvalued contract C16

138. What is a reversionary bonus?

A. Bonus usually takes the form of cash distribution and is usually contingent upon payment of the
next premium
B. Bonus is declared as proportion of the sum assured and the bonuses accumulated under the same
circumstances as the original sum assured
C. Bonus allocated is in proportion to the sum assured and the bonuses accumulated under the policy
D. Bonuses are normally declared on the valuation date of the policy year preceding that date, which
is in arrears C21

139. The 'burden of proof of death of a life assured caused by suicide' is laid on the
A. Court
B. Claimant
C. certified doctor
D. insurance company C23

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PCE SET C

140. Which of the following best defines 'surplus'?

A. Surplus is the difference between the life insurance fund and all policy liabilities
B. Surplus is profit
C. Surplus is the difference between revenues and costs.
D. Surplus is input less output C22

141. Maturity benefits are made up of the

A. sum assured plus bonus
B. sum assured plus disability benefits
C. sum assured plus disability benefits and bonus
D. bonus plus disability benefits C22

142. The net premium in life insurance is the

A. amount of premium sufficient to pay total claims, as and when they arise
B. gross premium less expense
C. premium charged on riders attached to a basic policy
D. premium charged to the policyholder C20

143. Which of the following is a privilege in the life insurance contract?

A. Incontestability clause
B. Days of grace
C. Suicide clause
D. Assignment C18

144. If an agent acts beyond his authority, a principal may subsequently the act and makes it
valid.
A. ratify
B. rectify
C. notify
D. dismiss C7

145. Which of the following is an important provision of the Insurance Act 1996?
A. Registration of insurers
B. Solvency of the insurer
C. Compulsory deposit by the insurer
D. All of the above C5

146. A burglar who has a personal accident policy suffers injury during a burglary job. The insurance
company is not liable to pay for the claim because:
A. it is a self-inflicted injury
B. the risk is of illegal nature
C. the risk is expected
D. he attempted suicide C2

147. How do insurers encourage loss reduction and prevention?

A. By offering rates of discount to those who take such measures
B. By loading the premium of those who take such measures
C. By having more agents
D. All of the above C2

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PCE SET C

148. What do you understand when the organization of a company is said to be decentralized?
A. When the preparation of policies and renewals & etc. is being carried out in the head office
B. When only the preparation of policies and renewals of policies are carried out in the branches
concerned
C. When the company has no branches
D. When the underwriting, claims ad servicing of the branch business are handled at the respective
branches up to a pre-arranged limit C4

149. The principle of contribution stipulates that when two or more policies covering for the same risk, the
insured
A. can claim under one policy
B. cannot make any claim
C. must claim under all policies, recovering a ratable proportion from each insurer
D. None of the above C3

150. Which of the following is NOT a role of an insurance agent?

A. An agent inculcates the discipline of saving amongst the public
B. An agent falsifies claims in order for claimants to obtain money
C. An agent brings financial relief in the event of property loss C1
D. An agent brings financial relief to grieving dependents of the insured who may meet an untimely
death

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PCE SET C

ANSWER - SET C

1. B 26. B 51. D 76. D 101. B 126. B

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

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