PCE Sample Questions - SET 6 (ENG)

PCE Sample Questions (Eng) Set 6
SET 6: PCE SAMPLE QUESTIONS 1. Risk is defined as ______________. A. B. C. D. An uncertainty regarding loss suffered by an individual. A certainty regarding loss suffered by an individual. An uncertainty of how to fix premiums for products. An uncertainty in estimating returns from the life fund.
2. A Peril ______________. A. Is usually the cause of a loss C. Is usually a tool to measure a loss B. Is usually a solution to a loss D. None of the above
3. Some of the following are examples of Risk. Which one of the following is incorrect? A. Loss due to premature death C. Loss due to fire B. Loss of a ship at sea D. Investing in a house
4. The concept of the Law of Large Numbers ______________. A. States that we can only calculate a loss when there are large numbers of prospects. B. States that we can predict the growth of the life fund if only there are a large number of prospects. C. States that the probability of loss can be accurately predicted when there are a large number of policyholders. D. Is not an important consideration in life insurance. 5. For the Law of Large Numbers to operate, the following must apply: I. Large number of similar loss exposures. II. Random or chance occurrence of losses. A. I only C. II only B. I and II only D. None of the above
6. Examples of moral hazard will include ______________. A. Life style issues C. Age B. Physical condition D. Occupation
7. A fundamental risk is a risk that ______________. A. B. C. D. Affects life insurance agents only Affects the entire economy No relevance to insurance Does not affect people generally
Zurich confidential or proprietary information Prepared by: Agency Training & Development
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8. Which of the following statements are true? I. Pure risk exists when there is the possibility of either loss or no loss II. Speculative risk exists when there is the possibility of profit, loss or no loss A. I only C. II only B. I and II only D. None of the above
9. There are four methods of handling pure risks. One of the methods given below is incorrect. A. Risk avoidance C. Risk transfer B. Loss control D. Mortality control
10. In the absence of insurable interest, a policy becomes ______________. A. In force C. Legal B. Void D. Automatically assigned
11. For a life insurance contract, insurable interest must be present _____________. A. At all times during the contract C. At the inception of the contract B. At the time of claim D. None of the above
12. For a general insurance contract, insurable interest must be present __________. A. At all times of the contract C. At the time of inception B. At the time of claim D. At inception and at the time of claim
13. In property insurance, the following individuals will have insurable interest ________. I. II. III. IV. Trustee Mortgagee Owner Hirer B. II and III only D. All of the above
A. I and II only C. I, II and III only
14. The principle of contribution states that ______________. A. The insured, insurer and third party must contribute to the claim amount. B. The insurer who has indemnified an insured may call other insurers liable for the same loss to contribute proportionately to the claim. C. The insurer who has indemnified an insured may call the insured liable for the same loss to contribute proportionately to the claim. D. All of the above. 15. When there is an unbroken chain of events leading to a loss under a covered event ______________. A. The insured is liable C. The insurer is liable B. Nothing should be paid D. The third party will be liable
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16. When there is a broken chain of events and there is a loss due to the covered event ______________. A. B. C. D. We must first determine the proximate cause of the loss. We must determine which the first cause was. We must determine who started the chain of events. We must determine who broke the chain of events.
17. Takaful companies provide insurance based on ______________. A. The size of the life fund C. The principles of common law B. Syariah law D. None of the above
18. A proprietary company is owned by ______________. A. The participating policy owners C. The agency force B. The shareholders D. All policy owners
19. A mutual company is also called ______________. A. A proprietary company C. A co-operative society B. A composite company D. A brokerage
20. The association for life insurance agents in Malaysia is called ______________. A. LIAM C. ASM B. NAMLIFA D. AMLA
21. The association of general insurers is called ______________. A. LIAM C. NAMLIFA B. ASM D. PIAM
22. The concept of self-regulation has a two-fold objective that includes _______________. I. Instill discipline and promote healthy competition II. To force as many prospects as possible to buy life insurance A. I only C. Both I and II B. II only D. None of the above
23. A person who wishes to act as an insurance broker must be licensed by the ___________. A. B. C. D. General Insurance Association of Malaysia Life Insurance Association of Malaysia Actuarial Society of Malaysia Director General of Insurance
24. The examples of self-regulation by insurance companies include _____________. A. Voluntary codes of practice for members C. Instil self-discipline B. Draw up inter-company agreements D. All of the above
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25. The disadvantages of self-regulation include ______________. I. Voluntary codes of practice that do not have the force of law. II. The decisions made by the companies regarding claims are final with no course of appeal to the courts. A. I only C. I and II only B. II only D. None of the above
26. An insurance contract is a legally binding contract between ______________. A. An insured and the agent C. An insured and the insurer B. An insured and the agency D. An insured and Bank Negara Malaysia
27. For a contract to be legally binding, the following must be observed ________________. I. II. III. IV. Offer and acceptance Consideration Legal capacity to contract Intention to create legal relations B. I and II only D. All of the above
A. I only C. I, II and III only
28. The consideration of the insured in an insurance contract is called the ______________. A. Sum assured C. Bonuses B. Premiums D. Dividends
29. In General Insurance, the contract is deemed to be legal when ______________. A. B. C. D. The agent collects the premium The cover note is issued The applicant thinks of renewing the policy None of the above
30. As far as minors are concerned, Section 153(1) of the Insurance Act, 1996 allows children between the age of_______ and _______ to buy life insurance with the written consent of the parent or guardian. A. 10 and 18 C. 10 and 16 31. Who is an agent? A. B. C. D. A person who acts on his own behalf. A person who acts on behalf of another person. A person who represents all the middlemen. None of the above. B. 18 and 21 D. 16 and 18
32. A person who appoints another to act on his behalf is called ______________. A. An agent C. A principal
B. An intermediary D. Nobody
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33. An agent can do one of the following ______________. A. B. C. D. Act as he wishes. Act with the permission of Bank Negara Malaysia. Act within the authority granted by the principal. Do anything within his emergency powers.
34. There are generally three classes of agents. One of the following classes is incorrect. A. Special agent C. General agent B. Express agent D. Universal agent
35. The knowledge of an insurance agent during the course of contracting business is deemed the knowledge of the insurer. This is covered under Section________ of the Insurance Act, 1996. A. 150 C. 152 B. 151 D. 153
36. When we refer to the pricing of a life insurance policy, we are referring to _________________. A. The bonuses C. The dividends B. The premiums D. The cash surrender value
37. The main distribution channel for life insurance products is ______________. A. The agency force C. Through brokers 38. A distribution channel is ______________. A. B. C. D. A channel through which money flows. A system of printing life insurance policies. A channel through which a company distributes /sells its products. A channel through which complaints are handled. B. Through the banks D. Through the general public
39. An agent must have a sales goal because ______________. A. B. C. D. It will make the agent feel good. It will make the agency manager happy. The agent can measure the results against goals. None of the above.
40. What is a sales strategy? A. B. C. D. It is a plan of achieving the sales goal. It allows an agent to sell policies to everybody. It is not an important element of planning. The agent only does it to please the manager.
41. The first case of life insurance was issued on the life of ______________. A. William Tilbon C. William Gybbon B. William Gaebon D. Wilson Gaebon
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42. In 1762, the Equitable Society issued life insurance policies based on all of the following except one. A. B. C. D. Health requirements. Level premium system. No extra premiums were charged for additional risk. Upon issuance of policy, no further proof of continuing good health was required.
43. The premium rates for a life insurance policy are based on ______________. A. The mortality rate C. The investment income B. The expenses of the company D. All of the above
44. A contract in which one party provides something of value to another party in exchange for a promise that the other party will perform a stated act is called ______________. A. A contract uberrima fides C. A conditional contract B. An aleatory contract D. A contract of insurable interest
45. In life insurance contracts, the amount that can be claimed upon death is _____________. A. B. C. D. Fixed at the beginning of the contract. To place the beneficiary in the same financial position as before the insureds death. Decided at the time of death only. None of the above.
46. Insurable interest does not exist in the following situations ______________. A. B. C. D. An insured on his/her own life A husband on the life of his wife A parent on the life of his youngest daughter A man on the life of his fianc
47. A whole life insurance policy is one where ___________. A. B. C. D. Protection is provided for a period of 20 years only. Protection is provided for the whole duration of life. Where payment is made on the 20th year or when death occurs, if earlier. Premiums are only paid for the first 20 years.
48. A whole life policy where premiums are paid for a limited period of time is ____________. A. A limited payment whole life policy C. A limited dividend whole life policy 49. A limited payment whole life policy can be: I. One where premiums are paid for a limited period. II. One where the premiums are paid up to a certain fixed age. A. I only C. Both I and II B. II only D. None of the above B. A limited sum assured whole life policy D. A limited bonus whole life policy
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50. The characteristics of an endowment policy are listed below. Choose the correct combination. I. II. III. IV. Payment of the face value upon death Payment of the face value upon survival to the end of the policy term Payment of the face value upon death or survival to the end of the policy term No riders can be attached to such policies B. I, II and IV only D. I, III and IV only
A. I and II only C. I, II and III only 51. A joint life annuity provides _______________. A. B. C. D.
A contract for an unlimited amount of income for two or more persons. A contract for a minimum of five persons. For a specified income for two or more persons with payment ceasing upon the first death. For the payment to end only when all the annuitants die.
52. One of the following is not an annuity contract. A. Annuity Certain C. First Survivor Annuity B. Last Survivor Annuity D. Reversionary Annuity
53. An annuity contract which provides for guaranteed payments over a fixed period and thereafter till death is called _________________. A. A Guaranteed Annuity C. A Joint Life Annuity B. A Deferred Annuity D. An Annuity Certain
54. The Last Survivor Annuity provides that the annuity payments will ____________. A. B. C. D. Continue as long as the first of two or more lives dies. Continue as long as the last of two or more lives dies. Continue for a fixed number of years irrespective of the insureds survival. Ends when the dividends are all paid out.
55. It is normal for Permanent Health Insurance policies to be designed with a deferred period. The deferred period is ___________________. A. B. C. D. A period of disability where the disability benefits is paid. A period of disability where no disability benefits is paid. A period where only the rider benefits are paid. None of the above.
56. A policy that pays out a lump sum on the diagnosis of a dread disease is called ______________. A. A Permanent Health Plan C. A Major Accident Plan B. A Disability Plan D. A Dread Disease Plan
57. The surrender value can be explained as follows: A. B. C. D. The value of the policy when it is surrendered at any time. The cash value of the policy after 3 years. The cash value of the policy after 5 years. None of the above.
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58. Section ____________, of the Insurance Act 1996 covers the fact that a policy in force for more than 3 years shall acquire a cash value. A. 154 C. 156 59. Policy loans are ______________. A. B. C. D. Granted to any person who wants a loan from the insurance company. Granted to any policy owner who wants a loan from the company. Granted to policy owners whose policy has acquired a cash value. Granted to policy owners of participating policies only. B. 155 D. 157
60. The conditions in a policy that add to the benefits of the life insurance cover are called privileges. One of the following is not a policy privilege. A. Days of Grace C. Paid-up Policy B. Surrender value D. Incontestability clause
61. A paid-up policy comes into existence when ______________. A. B. C. D. The cash value is used as a single premium to provide for insurance coverage. When the policy owner decides to pay all outstanding premiums in one lump sum. When the policy expires. When the policy owner does not wish to continue and all premiums paid are refunded.
62. An Automatic Premium Loan will ______________. A. B. C. D. Only come into effect when the policy owner signs the loan form. Only come into effect if the policy has acquired a cash value. Only come into effect if the company gives the approval. All of the above.
63. The objective of the non-forfeiture clause is to ______________. I. Protect the interest of the life insured. II. Give free cover to policy owners who can no longer continue the plan. A. I only C. Both I and II B. II only D. None of the above
64. In life insurance there are many factors that can affect mortality. These factors include ______________ I. II. III. IV. Age Occupation Sex Height B. I and II only D. All of the above
A. I only C. I, II and III only
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65. As far as mortality is concerned, which one of the following statements is true? A. B. C. D. Female lives have higher mortality than males. Females have lower mortality than males. There is no difference between the mortality of male and female lives. None of the above.
66. As far as morbidity is concerned, which one of the following statements is true? A. B. C. D. Female lives have higher morbidity than males. Females have lower morbidity than males. There is no difference between the morbidity of male and female lives. None of the above.
67. Which one of the following statements is true for life insurance? A. B. C. D. Females are generally less insurable than males. The premium rates for males are lower compared to females of equal age. The premium rates for female lives are lower then males of equal age. There is no difference in the premium rates between male and female lives of equal age.
68. An insurer underwrites proposals for life insurance ______________. A. B. C. D. To protect the agents good work in bringing business. To ensure anti-selection exists. To fulfil the requirements of the agency force. To avoid anti-selection.
69. The aim of financial underwriting is to ______________. A. B. C. D. Detect the presence of moral hazard. Detect the presence of irrelevant information. Detect the presence of statements made by the agent. None of the above.
70. The purpose of medical underwriting is to ______________. A. B. C. D. Determine if the proposed life can be insured at standard rates. Determine if extra premium must be loaded for the proposed life. Determine if the proposed life is a standard or sub-standard life. All of the above.
71. Medical underwriting seeks to determine the extent of ______________. A. Moral Hazard C. Occupational Hazard B. Physical Hazard D. Every kind of hazard
72. Generally, a life insurance company incurs three categories of expenses in respect of each policy. These expenses include all the following of except one. A. Initial expenses C. Termination expenses B. Renewal expenses D. Monitoring expenses
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73. An example of initial expenses is ______________. A. First year commission C. Litigation expenses B. Policy servicing expenses D. Premium collection expenses
74. Which of the following statement(s) is/are true of Risk Premium? I. It covers the cost of mortality only. II. It is also called the natural premium. A. I only C. I and II only B. II only D. None of the above
75. The level premium system requires _____________. A. B. C. D. The payment of level commissions. The payment of level sum assured among policies. The payment of level premiums during the policy term. The payment of level dividends during the policy term.
76. When a prospect is involved in hazardous occupations, a life insurance company will impose ______________. A. Extra health loading C. Large sum assured loading B. Occupational loading D. Bonus loading
77. The premium rates for female lives is usually lower than male premium rates for the same policy at the same sum assured because ______________. A. B. C. D. Females like to enjoy life more than males. Females are sicklier than males. Females generally have longer life spans than males. Females are weaker than females.
78. The premiums charged for a life insurance policy are based on the following factors except one: A. Mortality C. Investment income B. Expenses incurred D. The number of agents in the market
79. The actuarial valuation of a life insurance company includes ______________. I. Calculating the present value of liabilities under all inforce policies. II. Calculating the present value of capital gains and income produced from the assets of the life fund. A. I only C. I and II B. II only D. None of the above
80. The purpose of an actuarial valuation is to determine if a life insurance company is ______________. A. Solvent C. Having a professional agency force B. Selling reasonable products D. Liked by its policyholders
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81. The assets of a life insurance company will include ______________. A. Cash in the bank C. Investments in securities B. Properties that it owns D. All of the above
82. When we say a company is solvent, what we mean is ______________. A. B. C. D. There is a surplus of assets over its liabilities. Its liabilities exceed its assets. Its assets are equal to its liabilities. All of the above.
83. For an underwriter to assess risk properly, it is necessary to consider _________. I. Moral hazards II. Physical hazards A. I only C. Both I and II B. II only D. None of the above
84. The information for the proper assessment of risk is obtained from ___________. I. II. III. IV. The proposal form Medical reports School records Attending physician statements B. I and III only D. I, II and IV only
A. I and II only C. I, II and III only
85. The information contained in the proposal form includes the following. One of the following is incorrect. A. Personal particulars of the proposed life C. Personality of the proposed life B. Personal and family history D. Details of insurance
86. There are two forms of life insurance policy. These are ______________. I. II. III. IV. The Narrative type The Schedule type The Sectionalised type The Preamble type B. I and II only D. II and IV only
A. I and III only C. I and IV only
87. Which one of the following is not included as a section of a policy document? A. The Preamble C. The Proviso B. The Heading D. The Retention Clause
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88. In a life insurance policy, claims can arise through ______________. I. Death II. Maturity A. I only C. Both I and II B. II only D. None of the above
89. Why is proof of age required at the time of death claims? A. Because if the age is incorrect, there is no need to pay claims. B. Because the age would have determined whether insurance would have been offered in the first place. C. To determine if there has been a misstatement of age. D. Because a misstatement of age constitutes a breach of Utmost Good Faith. 90. Upon making a claim, the beneficiary or claimant must provide the following details to the life company except one ______________. A. Name of life assured C. Policy number B. Identity card number D. Number of relatives and children
91. Proof of death can be made through ______________. A. Death certificate C. A statutory presumption of death B. Coroners report D. All of the above
92. Some of the documents showing proof of title and ownership of a life policy are ______________. I. II. III. IV. A deed of assignment A letter of administration issued by the company A probate of the will obtained from a court of law A letter written by the beneficiary B. I and III only D. All of the above
A. I and II only C. II and III only
93. All of the following documents are required for the settlement of maturity claims, except ______________. A. Proof of age C. Proof of survival B. A probate of the will D. The policy document
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For Questions 94 to 96, please refer to the following information. Age Next Birthday. Premium for RM1,000 sum assured. Age (Next Birthday) 24 25 26 27 28 29 30 Premium / RM1,000 Sum Assured 39.50 40.00 40.50 41.00 41.50 42.00 42.50
94. If the prospect wishes to purchase a policy for a sum assured of RM10,000, how much of premium must the prospect pay for the policy if his age next birthday is 30 years? A. RM 42.50 C. RM 4,250.00 B. RM 425.00 D. RM 4.25
95. If Mr. Jason was born on June 1, 1975, and has agreed to sign the proposal for a sum assured of RM100,000 on June 15, 2000. What is the premium that Mr. Jason must pay? A. RM 3,950.00 C. RM 4,050.00 B. RM 4,000.00 D. RM 4,150.00
96. If Mr. Tan has just turned 29 years old and has paid RM2100.00 for his premium. What is the sum assured of Mr. Tans policy? A. RM 40,000.00 C. RM 50,000.00 B. RM 45,000.00 D. RM 55,000.00
97. If Mr. Rama was born on September 20, 1960 and his policy commenced on December 25, 1999. What is the age last birthday used for the calculation of the premium rates? A. 38 years C. 40 years B. 39 years D. 41 years
98. In Question 97, if the premium is calculated based on age next birthday; what age will be used for the calculation of premiums? A. 39 years C. 41 years B. 40 years D. 42 years
99. The unethical practice of encouraging a policy owner to surrender a policy and buy a new one in its place is called ______________. A. Rebating C. Selling in competition B. Twisting D. None of the above
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100. A. B. C. D.
An agent should not do one of the following practices ______________. Sell a policy at all cost Sell according to needs Avoid conflict of interest Ensure confidentiality of all communication with the prospect
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ANSWERS
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
A A D A B A B B D B C D D B C A B B C B D A D A A
26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
C D B B C B C C B B B A C C A C A D B A D B A C C
51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75
C C A B B D B B C D A B C C B A C D A D B D A C C
76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100
B C D C A D A C D C B D C C D D B B B C C B B B A
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PCE Sample Questions - SET 6 (ENG)

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PCE Sample Questions (Eng) Set 6

Version: Jan 2013

PCE Sample Questions (Eng) Set 6

A. I and II only C. I, II and III only

Version: Jan 2013

PCE Sample Questions (Eng) Set 6

Version: Jan 2013

PCE Sample Questions (Eng) Set 6

A. I only C. I, II and III only

PCE Sample Questions (Eng) Set 6

Version: Jan 2013

PCE Sample Questions (Eng) Set 6

Version: Jan 2013

PCE Sample Questions (Eng) Set 6

PCE Sample Questions (Eng) Set 6

A. I only C. I, II and III only

Version: Jan 2013

PCE Sample Questions (Eng) Set 6

Version: Jan 2013

PCE Sample Questions (Eng) Set 6

Version: Jan 2013

PCE Sample Questions (Eng) Set 6

A. I and II only C. I, II and III only

A. I and III only C. I and IV only

Version: Jan 2013

PCE Sample Questions (Eng) Set 6

A. I and II only C. II and III only

Version: Jan 2013

PCE Sample Questions (Eng) Set 6

Version: Jan 2013

PCE Sample Questions (Eng) Set 6

Version: Jan 2013

PCE Sample Questions (Eng) Set 6

Version: Jan 2013

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