PCE SAMPLE QUESTIONS 1. Which of the following is NOT a method of handling risk? A. Risk Avoidance C. Risk Transfer 2.

Insurance is the ____________of risk. A. Avoidance C. Transfer B. Retention D. Prevention B. Risk Retention D. Investment

3. 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. 4. Under policy conditions, the duty of disclose as required under the utmost good faith must be observed by all parties at ___________. A. B. C. D. The inception of the policy The time of claim The expiry or renewal of policy All the time while the insurance policy is enforceable and at renewal

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

6. What do you understand when a companys operation is said to be centralized? A. When the preparation of all policies, renewal, claim processes and etc are carried out at the head office. B. When the preparation of all policies, renewal, claim processes and etc are carried out at the branch. C. When there are no branches. D. When all the underwriting and claims processes are handled at the branches.

7. Which of the following is NOT the objective of MIB? A. To ensure that the governments 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 impose 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. 8. ___________ accept part of the risk from another insurer. A. Reinsurers C. Insurance agent B. Loss adjuster D. Insured

9. An agency may be terminated by the following act, EXCEPT: A. B. C. D. Expiration of the period stipulated in the contract of agency Mutual agreement Death of the principal or agent Ratification

10. The Insurance Act allows person above _______ of age to purchase insurance contracts on their own lives. A. 21 years old C. 16 years old B. 18 years old D. 20 years old

11. Concept of takaful is a scheme that upholds the principles of ________________. A. B. C. D. Not helping the participant who suffered an unexpected loss. Shared responsibility, mutual help and cooperation. Individual responsibility and self venture. Contractual agreement between two parties not to share the profit.

12. Which of the following should be considered the basic marketing decisions for the insurance agents? A. The class of business to develop C. The realistic sales quota so set B. The category of customer to cultivate D. All of the above

13. 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.

14. Marketing emphasizes _________. A. Proper planning C. Improved marketing practices B. Improved service to customers D. All of the above

15. A composite insurer is a company which transacts _______________. A. B. C. D. Only life business Both life and general business Both ordinary life and home service business Only reinsurance

16. Which of the following factors is NOT very significant in underwriting an insurance policy? A. Current physical condition C. Family history B. Occupation factors D. Medical history

17. Which of the following are the roles of an insurance agent? I. II. III. IV. Bring financial relief to aggrieved dependents in insured people Inculcate the discipline of saving amongst the working population Bring profit in the event of property loss Provide other forms of insurance related services to the public B. I, II & III only D. All of the above

A. I, II & IV only C. II, III & IV only

18. Notification of loss as stipulated in a health policy contract is usually ________. A. Between 14 days to 24 days C. Between 14 days to 60 days B. Between 14 days to 30 days D. Between 14 days to 90 days

19. Stated below are the legal requirements of insurance contract EXCEPT: A. Offer and acceptance C. Utmost good faith B. Consideration D. Intention to create legal relationship

20. Which of the following is NOT a feature of a life insurance contract? A. B. C. D. Aleatory contract Long term contract Can be cancelled by the insurer at any time Based on utmost good faith

21. There are _____ stages in the consumer buying decision process. A. Three C. Five B. Four D. Six

22. This policy is issued on the life of the parent, the child is named as the beneficiary and the policy money are payable on the child attaining as specified age as mentioned in the policy. This referred to ________. A. Protected educational policy C. Family income insurance B. Children deferred assurance D. Whole life insurance

23. In the medical and health insurance risks, the underwriters consider the following in risk selection, EXCEPT: A. Medical factor C. Occupational factor B. Financial factor D. Professional factor

24. Identify the examples of moral hazard from the list given. I. II. III. IV. Dangerous occupation Heavily indebted Over-Insurance Unsatisfactory medical history B. II & III only D. III & IV only

A. I & II only C. I & III only

25. In any insurance plan, the insured is required to make a contribution known as premium into a common fund which is used to pay losses. To ensure that sufficient funds will be available to pay claims, the insurer has to: I. II. III. IV. Guard against anti-selection Encourage anti-selection Adequacy of premium Inadequacy of premium B. I & III only D. III & IV only

A. I & II only C. II & IV only

26. A legal transaction that effectively transfers all the ownership rights of a life insurance policy from the assignor to the assignee is called _______. A. Collateral assignment C. Irrevocable assignment B. Absolute assignment D. Conditional assignment

27. A medical and health insurance policy is automatically terminated on the earliest happening of the following event, EXCEPT: A. On the death of an insured. B. On the policy anniversary immediately following the insureds maximum eligibility age. C. If the total benefits paid under the policy since the last policy anniversary exceeds the maximum limit specified in the benefits schedule for the respective policy year. D. Treatment in hospital.

28. In life insurance, backdating of commencement of policy is allowed up to a maximum of ______. A. 3 months C. 1 year B. 6 months D. 30 days

29. Comprehensive hospitalization and surgical insurance policies are also called _____ policies in Malaysia. A. per charged C. excess major charged B. as charged D. comprehensive charged

30. After completing and signing the proposal form for the whole life insurance, your client asks you when he would be covered and your reply will be __________. A. When the life insurance company issues a letter of acceptance. B. When the life insurance company receives a duly completed form. C. When the life insurance company received the first installment premium after the issuance of the acceptance letter. D. When the whole life policy has been issued and delivered to him. 31. When a dispute arises between the claimant and the insurer, it may be resolved through the following channels: I. II. III. IV. Negotiation and compromise settlement Litigation Mediation Arbitration B. III & IV only D. All of the above

A. I, II & III only C. II & IV only

32. The chance of dying in a year at a specified age is commonly termed as ________. A. Rate of morbidity C. Rate of interest 33. Conditions for a valid claim included: I. II. III. IV. Is the policy in force? Has been paid premium? Is the loss caused by an insured peril? Has notice of loss been given with undue delay? B. I, II & IV only D. II, III & IV only B. Rate of mortality D. Rate of surviving

A. I, II & III only C. I, III & IV only

34. The charge for covering the cost of mortality and interest is called _______. A. Gross premium C. Risk premium B. Net premium D. Written premium

35. The following statements which are related to the validity of claims are true, EXCEPT: A. B. C. D. A claim is valid when the person making the claim is the rightful claimant. A claim is valid when the loss is caused by a peril insured under the policy. A claim is invalid when the loss does not fall within the scope of an exclusion of the policy. The person making the claim is the insureds parent.

36. The following are the various settlement options available to the policy holder on the maturity of the policy, EXCEPT: A. B. C. D. Acceptance of the proceeds in cash. Conversion of the proceeds into life annuity. Conversion of the cash sum into a paid up whole life insurance. Payment of the entire sum to the department of inland revenue.

37. Once notice of loss is received, the claim official makes a preliminary check to see if a valid claim exists. When making a preliminary check on a claim, the claim official may, among others, check the following: I. Condition for a valid claim II. Claim form III. Claim register A. I only C. I & III only B. I & II only D. I, II & III only

38. What is the amount to which RM8,000 invested for 3 years would accumulate at a compound interest rate of 7.5% per annum? A. RM8000.38 C. RM8600.00 B. RM8003.38 D. RM9938.38

39. The following are the reasons why insurers review histories of previous conditions, EXCEPT: A. B. C. D. Normal progression of any impairment. Possible interaction with a future disability from an unrelated cause. Morbidity risk increases with age. Possibility of recurrence.

40. Which of the following is NOT a function of insurance? A. Spreading risk C. Providing employment B. Providing aid to obtaining credit D. Means of saving

41. Life insurance insured on own life is not considered as a contract of indemnity because: A. Insurance provides guaranteed protection to a 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 D. Insurer promises to pay an agreed amount irrespective of the actual amount of loss

42. Which of the following is the evidence of premium payment for the policy holder? A. Official receipt C. Policy register B. Premium notice D. Proposal form

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

44. A contract where one party provides something of value to another party in exchange for a promise that the other party will perform a stated act if a specified, uncertain event occurs is called an: A. Investment contract C. Unilateral contract B. Aleatory contract D. Offering contract

45. The long term nature of the contract requires the insurer to adopt a cautious view of the many factors that enter into the premium rate calculations. Principals amongst these factors are the following: I. II. III. IV. Mortality Expenses Rate of investment returns Tax B. I, II & IV only D. All of the above

A. I, II & III only C. I, III & IV only

46. Participants in family takaful plans may elect to incorporate any of the following supplementary benefits: I. II. III. IV. Permanent total disability Critical illness benefit Personal accident Hospitalization benefit B. I, III & IV only D. All of the above

A. I, II & III only C. II, III & IV only

47. The risk covered by life insurance can be grouped under the following: I. II. III. IV. Premature death Permanent/temporary disability Retirement benefits Financial guarantees B. I, II & IV only D. All of the above

A. I, II & III only C. I, III & IV only

48. Section 156 of the Insurance Act 1996 provides that where a life policy has been in force for three (3) years or more, it shall not lapse by reason of non-payment of premiums but shall have effect subject to such modification as to the period for which the policy is to be in force, or of the benefit receivable under it, or both. This statement is referring to: A. Automatic premium loan C. Non-forfeiture benefit B. Incontestability clause D. Reinstatement condition

49. ________ policy provides not only the payment of the face value of the policy upon the death of the life assured during a fixed term of years, but also the payment of the full face amount at the end of the said term if the life assured is living. A. Whole life C. Endowment B. Term D. Annuity

50. The earlier life insurance contract was found in England in 1583 on the life of _______. A. Edmund Halley C. William Cybbon B. William Gybbon D. William Halley

51. Which of the following plans are generally in use as non-forfeiture provisions? I. II. III. IV. Automatic premium loan Paid up policy Extended term insurance Policy loans B. I, II & IV only D. All of the above

A. I, II & III only C. II, III & IV only 52. Which of the following statement is NOT true? A. B. C. D.

The life insurance contract terminates when a claim is settled. The insured may make a claim upon the maturity of the insurance policy. The reputation of an insurer lies in the sum of claims to be settled. None of the above.

53. Which of the following documents are generally acceptable as proof of age by life offices in Malaysia? I. II. III. IV. International passport Certified extract from Baptism Register School leaving certificate from government or government aided school Extract from service record of government, semi government, public sector undertakings and reputed commercial firms B. I,II & IV only D. All of the above

A. I, II & III only C. I, III & IV only

54. Which of the following policy offers the lowest initial outlay for the highest protection of the same sum assured? A. 20 year double endowment C. 5 year convertible term plan B. Whole life participating D. Pure endowment

55. To deal with sub-standard lives, the insurer usually employs any one of the following method: I. II. III. IV. Increasing premium Decreasing death benefit Alternative policy plan Bonus adjustment B. I, II & III only D. II, III & IV only

A. All of the above C. I, III & IV only

56. The highest government officials specially responsible for the orderly operation of the life insurance policy industry is the _______________. A. B. C. D. Government Actuary Ministers of Finance Director-general of insurance President of the Life Insurance Association Malaysia

57. When the premium charge is computed after taking into account the elements of mortality and interest, it is called the _________. A. Pure premium C. Risk premium B. Net premium D. Gross premium

58. An individual who applies the mathematical theory of probability and statistics to the life insurance business is called an ________. A. Underwriter C. Assessor B. Actuary D. Adjuster

59. Under this type of regular premiums, the premium payments cease on death and no deduction is made from the claim amount. A. True premiums C. Periodical premiums B. Installment premiums D. Regular premiums

60. Mr Steve Ong purchased a participating life insurance policy. As a direct result of such a purchase, Mr Steve Ong is entitled to ________. A. B. C. D. Own common stock in the insurance company. Share in the insurance companys surplus from operation. Waive insurability requirements. Request for a higher loan amount from the insurance company.

61. When assessing the risk, which of the following factors is the most uncertain to an underwriter? A. Health history C. Moral hazard B. Physical hazard D. Occupation hazard

62. Policy holder of medical and health insurance are required to inform insurer in writing of any claim within a reasonable period. The reasonable period is ________. A. Immediately after the incident C. Between 30 days to 60 days B. Between 14 days to 30 days D. After the insured is getting well

63. The extra bonus payable during the payment of sum insured is _________. A. Interim bonus C. Single reversionary bonus B. Compound reversionary bonus D. Cash bonus

64. A cooperative society transacting insurance business may be termed as a ___________. A. Multi-level insurers C. Mutual insurer B. International insurer D. Universal insurer

65. Claim investigation involves ascertaining the following, EXCEPT: A. B. C. D. The person making the claim is related to the claimant. Loss is caused by a peril insured under the policy. Existence of loss. Loss does not fall within the scope of an exclusion of the policy.

66. A _______ contract will remain valid until the aggrieved party exercises the option to treat it void. A. Void C. Unenforceable B. Voidable D. All of the above

67. Accidental death benefits are under which benefits? A. Supplementary benefits C. Hospitalization benefits 68. What is cost price? A. B. C. D. This is the value for which the assets can be sold in the open-market. This is the value placed on the assets in the companys account books. This is the price determined by the manufacturer. This is the price at which the asset was acquired. B. Basic benefits D. None of the above

69. Which of the following best defines surplus? A. B. C. D. Surplus is the difference between life insurance fund and all policy liabilities. Surplus is profit. Surplus is the difference between revenues and cost. Surplus is input minus output.

70. Which of the following is NOT relevant to the common settlement option for an endowment plan? A. B. C. D. Convert the maturity proceeds into annuity. Continue deposit the maturity proceeds with the insurer. Withdraw 90% of the proceed without the letter of probate. Withdraw the proceed by installment.

71. A life insurance is a contract between __________. A. B. C. D. The insurer and beneficiary The insurer and insured The insurer, insured and beneficiary The insurer, insured, beneficiary and the agents

72. Interest charge will occur when the policy holder _________. A. Reinstate a lapsed policy C. Repay a policy loan B. Repay the outstanding premium D. All of the above

73. If the date of birth of a person was January 22, 1964 and he had purchased a life insurance policy on July 28, 2001. What would be his age at the nearest birthday? A. 35 C. 37 B. 36 D. 38

74. A policy holder has certain rights and privileges under the terms and conditions of the policy contract. Which one of the following is not a right or a privilege? A. B. C. D. To change the plan of assurance. To change the mode of premium payment. To withdraw his cash value. To add supplementary contract or riders to his basic policy.

75. The three basic insurance policies are: I. II. III. IV. Group policy Whole life policy Endowment policy Term policy B. I, II & IV only D. II, & III only

A. I, II & III only C. II, III & IV only

76. Below are the criteria for a cashless medical and health insurance EXCEPT: A. B. C. D. Hospital deposit may be waived. Insured are not required to pay anything. Letter of guarantee will be issued upon admittance to a panel hospital. All eligible expenses will be taken care of by the insurer.

77. Three common methods to value the assets of a life office are ______________. I. II. III. IV. Cost price Book value Actuarial valuation Market value B. II, III & IV only D. I, II & IV only

A. I, II & III only C. I, III & IV only

78. Mr Ahmad owns a medical and health insurance. However, he has not paid his premium due on 1st of June 2004. On 10th of June, he met an accident and was confined in hospital for 2 weeks. How much can Mr Ahmad claim from his policy? A. All eligible expenses incurred C. Up to the amount of premium paid B. Expenses up to 5th of June only D. Not payable at all

79. In a proposal form, the following information are normally required: I. II. III. IV. Personal particular Details of insurance Personal and family history Occupation, residence, travel and hazardous pursuits B. I, III & IV only D. All of the above

A. I, II & IV only C. I, II & III only

80. When an insurance company organizes its department on a functional basis, the basic function and decision making tend to be centralized at the head office. What is the disadvantage of centralization? A. Faster in making quotation C. Delay in making quotation B. Prompt service to the public D. Uninsured perils

81. The section of policy which is signed by certain officers of the company authorized to do so is _________. A. The proviso C. The preamble B. The schedule D. The attestation

82. The surplus of a mutual insurance company is shared among _________ and the profits made by the operations of the proprietary company are distributed among its __________. A. Share holder, policy holder C. Contract holder, shareholder B. Policy holder, share holder D. Policy holder, brokers

83. When a claimant is unhappy with the outcome of his/her discussion/negotiation with the claim official, he/she may take court action against the insurer. The insurer can consider which channels as a last resort and therefore would try to bring about an out-of-court settlement. A. Negotiation and compromise settlement C. Arbitration B. Litigation D. Mediation

84. 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 C. Selection B. Adverse selection D. Acceptance

85. In the case of endowment insurance, the amount payable in the event the policy holder survives to the end of the term of the contract is called ________. A. Settlement options C. Probate of will B. Maturity claims D. Annuity

86. Removal of extra premiums may be considered due to _________. A. B. C. D. Change of occupation to a less hazardous one. Change of beneficiary. The insured has become uninsurable due to deteriorating health. Subsequent improvement in health condition.

87. All of the following plans are generally in use as non-forfeiture provisions, EXCEPT: I. II. III. IV. Automatic premium loan Paid up policy Extended term insurance Policy loans B. II & III only D. IV only

A. I only C. II & IV only

88. Mr Lee affects a life policy on the life of his wife. In accordance with this policy, Mr Lee is known as _________. A. Policy owner C. Life assured B. Assignee D. Assignor

89. Taxable/assessable income constitutes such items as __________. I. II. III. IV. Salary Leave pay Gratuity Commissions B. I & III only D. All of the above

A. I & II only C. I, III & IV only 90. Mortality rate is ________________. A. B. C. D.

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

91. The term life insurance used in the code of ethics and conduct covers the following types of insurance, EXCEPT: I. II. III. IV. Annuities Pension contracts Home-service Permanent health insurance B. III only D. None of the above

A. II & III only C. III & IV only

92. 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 C. Disability claim B. Survival claim D. Maturity claim

93. Suhaimi bought a 5 year personal accident term policy with the sum assured of RM10,000 on January 2000. On January 2007, he met with a car accident and died on the spot. His beneficiary can claim _______. A. The sum assured of RM10,000 C. Refunds of all premiums paid B. Cash value of the policy D. Nothing at all

94. Collecting premiums at regular interval such as once a week is the privilege of a __________. A. Family income business C. Ordinary life business 95. Essentials of an insurance contract are: A. Consideration C. Legal capacity to contract B. Legality of the contract D. All of the above B. Home service business D. Annuity business

96. Investing stock market is considering which type of risk? A. Fundamental risk C. Speculative risk B. Pure risk D. Particular risk

97. An agent losses his entitlement to claim compensation if __________. A. B. C. D. He complies with his principals instruction. He refuses to perform his responsibility as an agent. He uses his care, skill, diligence when perform his work. He renders account to the principal and not to let his own interest conflict with his obligation to the principal.

98. In 1762, Equitable Society issued life insurance policies based on the following principles: I. Once accepted for insurance, further proof of continuing good health was not needed. II. Level premiums were to be payable throughout the term of the contract. III. Cover was available to anyone who satisfied the initial health requirements and continued to pay the contractual premiums. IV. Extra premiums were not charged. A. I, II & III only C. I, III & IV only B. I, II & IV only D. All of the above

99. After independence in 1957, a few life insurance companies wound up because of their unsound operation. This unhealthy trend culminated in the government through: A. B. C. D. The enactment of the Insurance Act 1963 The introduction of New Economic Policy Domestication of insurance companies D. All of the above

100. Agents are classified to different classes in accordance with the authority provided to them: I. General agent II. Special agent III. Senior agent IV.Universal agent A. I, II & III only C. I, III & IV only B. I, II & IV only D. All of the above

ANSWER 71. B 72. D 73. D 74. C 75. C 76. B 77. D 78. D 79. D 80. C 81. D 82. B 83. B 84. C 85. B 86. A 87. D 88. A 89. D 90. A 91. D 92. D 93. D 94. B 95. D 96. C 97. B 98. A 99. A 100.B

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

41. D 42. A 43. B 44. B 45. D 46. B 47. D 48. C 49. C 50. B 51. A 52. B 53. D 54. C 55. A 56. C 57. B 58. B 59. A 60. B 61. C 62. C 63. B 64. C 65. A 66. B 67. A 68. D 69. A 70. C