PRE-CONTRACT FOR INSURANCE

AGENTS EXAMINATION AND

INVESTMENT-LINKED LIFE INSURANCE
(PCIL)

Sample Question 2

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 1. An agent must account to the principal for all monies received on his behalf. If the breach is fraudulent,
the principal may rescind any contract made through the agent and ______ commissions (PCEIA C5)
a) pay
b) increase
c) refuse
d) reduce

2. A hospital and surgical insurance (HSI) policy provides ________ by the policy owner for necessary
medical treatment due to illness, sickness, disease or injury. (PCEIA C6)
a) Stream of income for the period of temporary disablement
b) Lump sum payment upon diagnosis of a critical illness
c) Payment of the sum assured on permanent total disablement or death
d) Reimbursement of medical expenses incurred

3. Apart from medical and family history, Which of the following is an important underwriting factor in
deciding whether to accept a medical and health insurance proposal? (PCEIA C6)
a) Marital status
b) Age
c) Education level
d) Hobbies

4. The standard Hospital and Surgical Insurance policy covers is referring to _______. (PCEIA C6)
a) kidney dialysis
b) organ transplant
c) ambulance fees
d) outpatient day care surgery

5. Below are some of the methods used by an insurer when dealing with sub-standard lives, excluding
______. (PCEIA C6)
a) Offering a premium discount
b) Imposing a contingent debt or a lien
c) Alternative form of contract
d) Charging an extra premium

6. If the group policy owner has no ______ in the persons insured, the insurer is required to provide details
of such coverage, rights and obligations to each of the persons insured. (PCEIA C6)
a) utmost good faith
b) insurable interest
c) personal interest
d) contractual capacity

7. Some of the ways how insurers handle adverse risks to avoid ant-selection when dealing with sub-
standard risks or high-risk individuals includes: (PCEIA C14)
I. Waiver of pre-existing illness exclusion
II. Exclusion endorsement for special illness
III. Extra-premium or loading
IV. Limitations on benefits
a) I,II, and III
b) I, III, and IV
c) II, III and IV
d) I, II, III and IV

8. Part 3 of Schedule 9 of the Financial Service Act 2013 on non-contestability for life insurance contract
states that ______. (PCEIA C11)
a) where a life insurance contract has been in effect for more than two (2) years, the contract can be
avoided by bringing the case to court.
b) where a life insurance contract has been in effect for more than two (2) years, the contract can be
avoided if a material fact was fraudulently omitted.
c) where a life insurance contract has been in effect for more than two (2) years, the contract can be
avoided if a material fact was mistakenly left out.
d) where a life insurance contract has been in effect for more than two (2) years, the contract cannot
be avoided at all.

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 9. A medical hospitalization plan can include additional benefits with additional premium. Which of the
following is NOT normally extended to be included into such a policy? (PCEIA C6)
a) Organ transplant
b) Accidental death benefit
c) Outpatient day care surgery and consultation
d) Cover for migration overseas

10. Modification to medical and health insurance coverage is called ______ where the amount of benefit
payable is reduced or the payment period of disability income is shortened, or a larger deductible is
imposed on medical expense policy for high-risk individuals. (PCEIA C6)
a) ‘Cover restrictions’
b) ‘Extra premium or loading’
c) ‘Exclusion endorsement’
d) ‘Benefit limitations’

11. A _______, if known by the insurer, would have led to its refusal to issue a life policy to the policy
owner. (PCEIA C11)
a) material fact
b) special fact
c) simple fact
d) common fact

12. A policy owner may within _______ after the delivery of a life policy, return it to his insurer and the
insurer will have to immediately refund any premium which has been paid after deduction for expenses
incurred for the medical examination of the life insured. (PCEIA C11)
a) 30 days
b) 15 days
c) 60 days
d) 45 days

13. The life insurer will refund the money if over payment to the insured _______. (PCEIA C11)
a) if the insurer makes more profit more than expected.
b) if the insured can prove that the insurer is making more profit than declared.
c) if the real age of insured is less than that stated in the policy.
d) if the insured can prove that he is healthier now than before.

14. Misstatement of age when proof of the true age is shown to be greater, Insurer will _______. (PCEIA 11)
a) Avoid the policy by reason of a breach of duty
b) Vary the sum assured in proportion to the premium paid
c) Reduce the premiums paid in accordance with the true age
d) Refuse a claim on grounds of misrepresentation

15. Schedule 9 of FSA 2013 states that where a contract of life insurance has been in effect for a period of
more than two years during the lifetime of the insured, such a contract shall not be avoided by the life
insurer on the following grounds EXCEPT for (PCEIA C11)
a) a statement relating to a pre-existing health condition not disclosed.
b) a careless misrepresentation regarding age made in the proposal form.
c) a statement omitted in the proposal form leading to an inaccuracy on the policy issued.
d) a statement omitted in the medical report submitted with the proposal form, leading to an
inaccuracy in the policy issued

16. Stages of the consumer buying decision process includes ________. (IL C9)
I. Problem recognition
II. Information search
III. Evaluation of alternative policies
IV. Sales
a) I and III
b) I, II and III
c) I, III and IV
d) II, III and IV

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 17. Any person effecting a life insurance policy on the life of another must have insurable interest at the
time of effecting the policy; otherwise, the policy is _______. (PCEIA C2)
a) voidable
b) void
c) illegitimate
d) unenforceable

18. The life insurance policy has been in force for a period of more than two (2) years, the insurer will not
be able to contest the validity of the policy if there was erroneous or careless misrepresentation in the
proposal form (PCEIA C11)
a) Three
b) Five
c) two
d) four

19. Which of the following is NOT a method of distributing surplus? (PCEIA C12)
a) Non-par maturity claim
b) Cash bonus
c) Guaranteed bonus
d) Interim bonus

20. What happens to a critical illness policy after the sum assured is paid upon the diagnosis of a critical
illness listed in the policy. (PCEIA C12)
a) The policy remains in force if premiums paid are up to date
b) The policy will cease after the insured’s death
c) The policy continues until another illness is detected
d) The policy is automatically terminated.

21. The term ‘assurance’ means coverage of an event that is ________ to happen. (PCEIA C12)
a) predicted
b) certain
c) impossible
d) uncertain

22. An _______ is a life insurance that combines protection and investment. (IL C4)
a) life-annuity plan
b) endowment life assurance
c) investment-linked life plan
d) term life insurance

23. Which of the following is the earliest and simplest form of life insurance for a fixed term or period and
is not permanent? (PCEIA C12)
a) Term
b) Investment-linked
c) Endowment
d) Whole life

24. Group term life insurance maybe either on contributory or non-contributory basis. ‘Non-contributory
basis’ means premiums are _______. (PCEIA C12)
a) paid entirely by the employer
b) subsidized by the employer
c) paid by the government
d) paid entirely by the employee

25. The cash value in investment linked insurance is not guaranteed and can go up or down depending on
the performance of the allocated fund. The ___________ will bear the investment risk and the potential
reward. (IL C4)
a) policy owner
b) insurance company
c) insurance agent
d) fund manager

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 26. The eligibility criteria to automatically add new employees to a group life policy is _______. (PCEIA C12)
a) permanent and temporary workers with valid work permits
b) healthy employees under a contract of service regardless of age
c) all employees selected by an internal recruitment process
d) permanent employees between the ages of 16 to 60

27. Premiums for endowment insurance are higher than whole life and term insurance _______. (PCEIA C13)
a) because of extra premium to cover the survival benefit
b) because there is a ‘guaranteed insurability’ option
c) because of extra premium payable for investment purposes
d) because it is guaranteed yearly renewable

28. Which of the following is considered as physical hazard in medical underwriting? (PCEIA C14)
a) employment history
b) personal and family medical history
c) history of medical claims
d) previous life and medical insurance

29. Identify why although life insurance companies use the same factors to determine premium rates,
premium differ. (PCEIA C13)
a) Because of different distribution channels, branding and target markets.
b) Because of different capital reserve structures and investment methods.
c) Because of different cost structures, assessment of risk and investment returns.
d) Because of different asset valuation methods and provisions for liabilities.

30. Premium for participating endowment policies is comparatively higher due to ______. (PCEIA C13)
a) higher risks involved and bonus.
b) survival benefit and bonus payable
c) longer terms and bonus covered
d) ease of policy proceeds payable in the event of death.

31. Higher-risk individuals will have to pay more in premiums in the same level of protection as compared
to lower-risk persons. This kind of risks are classified as _______. (PCEIA C6)
a) uninsurable risks.
b) standard risks.
c) below average risks.
d) sub-standard risks.

32. When an initial premium is paid together with a completed proposal form and for which an official
receipt has been issued by the insurer, the proposer will be covered against ________ for a stipulated
period of time. (PCEIA C14)
a) Accidental death
b) Illness
c) Commit suicide
d) Critical illness

33. Where the policy owner dies without having made a nomination, the insurer will pay the _______.
(PCEIA C15)
a) Policy moneys will be paid to the lawful nominees.
b) Policy moneys will be shared between the lawful spouse, children and parents.
c) Policy moneys will be paid to the lawful executor or administrator of the estate.
d) Policy moneys will be paid to the lawful beneficiaries.

34. If a person has a heart attack while driving his car and as a result collides into a tree and dies. To
establish if the death was deemed accidental as required under the personal accident policy he took up,
insurers will apply _______. (PCEIA 15)
a) the Principle of Indemnity
b) the Principle of Insurable Interest
c) the Doctrine of Proximate Cause
d) the Principle of Subrogation

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 35. As stipulated in the Financial Service Act 2013, the policy monies will be given to the lawful
beneficiaries without a grant of probate or letter of administration and the balance to the lawful
executor ______. (PCEIA C13)
a) if the policy monies exceed RM5,100,000.
b) if the policy monies exceed RM1,000,000.
c) if the policy monies exceed RM 100,000.
d) if the policy monies exceed RM50,000.

36. In making comparisons with other types of policies or forms of investment, an agent should _______.
(PCEIA C16)
a) make clear distinction between the different characteristics of each policy or investment
b) induce the prospective policy owner to by his products even if they are inferior to other products.
c) make biased comparisons with the benefits, terms and conditions of policies from other insurers.
d) persuade the prospective policy owner to cancel his existing policy of insurance.

37. Underlying principles for an insurance agent In obtaining underwriting information is to ensure the
completion of the proposal form and the __________. (PCEIA C16)
a) relevance of questions
b) accuracy of relevant records
c) integrity of personal data
d) credibility of the medical report

38. Life insurance business is based on trust and honesty, requiring a high degree of responsibility and
professionalism by insurance __________. (PCEIA C16)
a) Intermediaries
b) brokers
c) companies
d) consumers

39. Which of the following characteristic of an investment-linked policy does NOT exist in any traditional
life insurance policy? (IL C1)
a) An investment-linked policy protects policyholders from investment risk.
b) An investment-linked policy is directly linked to the investment performance.
c) An investment-linked policy is guaranteed by the government.
d) An investment-linked policy only allows investment without insurance cover.

40. Agent need to ensure confidentiality of communication and transactions _______. (PCEIA C3)
a) To avoid contravening the Pre-Contractual Duty of Disclosure.
b) To avoid contravening the Financial Services Act 2013.
c) To avoid contravening the terms of the agency contract.
d) To avoid contravening the Personal Data Protection Act 2010.

41. As stated in the code of practice, the agent should NOT _______. (PCEIA C16)
a) give advice on insurance matters in which he is knowledgeable and seek or recommend other
specialist advice.
b) inform the client that his/her name has been given by another person, unless he is prepared to
disclose that person’s name if requested to do so by the prospective policyholder and has that
person’s consent to make that disclosure.
c) ensure unsolicited or unarranged calls are made at a time suitable to the client.
d) ensure that the policy proposed is suitable to the needs and resources of the client.

42. Select correct statement regarding the Sum Assured Multiple Rule (SAM). (IL C2)
a) For a policyholder aged 1 to 16 years, the SAM factor must be 15 times the basic annual regular
premium.
b) For a policyholder aged 56 and above, the SAM factor must be 15 times the basic annual regular
premium.
c) A regular premium-paying rider must be included together with the basic annual premium in the
multiple factor for calculation
d) Regular top-up premium is included in the SAM factor for calculating the minimum sum assured.

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 43. Choose the correct statement. (IL C4)
a) Traditional insurance products offer a better investment return.
b) Investment-linked insurance products offers a guaranteed return on investment.
c) Investment-linked insurance product cater for more flexibilities and transparencies.
d) Traditional insurance products are more transparent and flexible.

44. Which of the following can be distributed in non-participating policies? (PCEIA C12)
a) Guarantee bonus
b) Cash bonus
c) Interim bonus
d) None of the above

45. Standard mortality tables are derived from the ______ and usually different mortality tables are used for
different types of policies. (PCEIA C13)
a) mortality experience according to occupation
b) combined mortality experienced of life insurers operating in the territory
c) mortality experience of policyholders according to race
d) mortality experience of the policyholders of the insurer

46. What is a rider? (PCEIA C12)

a) A whole life policy with accidental death and disability benefits.
b) A supplementary benefit which can be added to the basic policy through payment of additional
premiums.
c) An additional commission paid to agency managers.
d) A clause inserted in a life policy that overrides a policy condition.

47. Insurable interest NOT exist if ________. (PCEIA C2)

a) A father insuring the life of his child.
b) A creditor insuring the life of his debtor.
c) A husband insuring the life of his wife.
d) A brother insuring the life of his sister.

48. Which of the following is not a basic need of life insurance? (PCEIA C12)
a) yearly profit of the insurance company.
b) retirement.
c) educational needs of children.
d) loss of income on death.

49. Which of the following is NOT a characteristic of insurable risk? (PCEIA C1)
a) Reasonable premium
b) Illegal and against public policy
c) A large number of similar risks
d) Insurable interest

50. ______ in investment is the process of investing across different asset categories and across different
market segments. (IL C5)
a) Hedging
b) Risk control
c) Profit maximization
d) Diversification

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

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