pce sample questions - set 2 (eng)

PCE Sample Questions (Eng) – Set 2

Zurich confidential or proprietary information Version: Jan 2013

Prepared by: Agency Training & Development

1. The law of large numbers can operate efficiently if which of the following are fulfilled? I. large number of similar loss exposures II. loss exposures must be independent, III. random or chance occurrence of losses A. I , II only B. II, III only C. I , III only D. I , II , III

2. What are the primary function of insurance? A. equitable spread of the goodwill losses of a few who are insured among the many insured. B. equitable spread of the financial losses of a few who are insured among the many insured. C. equitable spread of the financial losses of the many who are insured among the few insured. D. equitable spread of the goodwill losses of the many who are insured among the few

insured.

3. Risks covered by life insurance include: I. premature death II. sickness or disability III. continuous stream of income during retirement(i.e. old age) A. I and II only B. II and III only C. I and III only D. I , II, III

4. The earliest beginnings of insurance were in what field? A. products insurance B. marine insurance C. life insurance D. aviation insurance

5. The measurement of risk is based on probability theory. 3 possible approach are as below EXCEPT

A. priori probability B. empirical probability C. speculative probability D. judgmental probability

SET 2: PCE SAMPLE QUESTIONS




6. It is determined on the basis of historical data. This approach is : A. priori probability B. empirical probability C. speculative probability D. judgmental probability

7. What is the definition of physical hazard? A. It is reduction or disappearance of economic value. B. It is a condition that increases the chance of loss. C. It is a physical chance that increases the condition of loss. D. It is a character defect in an individual that increases the chance of loss

8. What is the difference between pure risks and speculative risks? A. pure risks are more predictable than speculative risks B. speculative risks results to profit and loss, but pure risks only results to loss C. pure risks results to profit and speculative risks only results to loss D. speculative risks results to loss or no loss, and pure risks only results to profit

9. A house owner shifts the loss that will be incurred when his house is destroyed by fire through a fire insurance contract. This method of handling risks is:

A. risk avoidance B. risk retention C. risk transfer D. loss control

10. What is insurable interest? A. the legal right to insure arising from the legitimate financial interest which an insured has in a

subject matter of insurance. B. the right to transfer of rights and liabilities by insured to third party C. the legal right to assign the legitimate financial interest which an insured has in a subject

matter of insurance. D. the legal right to insure arising from the legitimate financial interest which a third party has in

a subject matter of insurance

11. When an insurer gives consent to the substitution of the insured by a new insured, a new contract is created between the insurer and the assignee of the policy. This alteration is termed :

A. substitution B. novation C. assignment D. change




12. What is the legal principle governing most commercial contracts? A. duress B. ultra-virus C. caveat emptor D. utmost good faith

13. What is a material fact? A. a fact which will influence an underwriter in deciding the acceptance of the risk or the

premium to be charged B. a fact which will influence an underwriter in deciding the acceptance of the risk or the

commission to be charged C. a fact which will influence a proposer in deciding the acceptance of the risk or the premium to

be charged D. a fact which will influence a proposer in deciding whether to insured the risk or not

14. Which of the following are methods of indemnifying? I. repair II. replacement III.reinstatement A. I , II only B. I , III only C. II , III only D. I , II , III

15. What are the essentials of contribution? I. two or more policies of indemnity must be in force II. must cover a common interest III. must cover a common peril IV. can only be exercised after the insured is indemnified A. I, II, III only B. I, II , IV only C. II, III, IV only D. I, II, III, IV

16. The insurer will be liable for the loss arising right immediately following the last interruption when there is a

A. concurrent causes B. chain of event C. broken chain of events D. broken of events




17. What are the functions of the Syariah Supervisory Council? A. to ensure that the operations of Takaful company are approved by the operator B. to ensure that the operations of Takaful company are approved by the Syariah C. to ensure that the operations of Takaful company are approved by the participants D. to ensure that the operations of Takaful company are approved by the investor

18. Who are the 'proprietors' of the proprietary company? A. shareholders B. policy owners C. foreign-incorporated company D. Malaysian-incorporated company

19. Who are the intermediaries or middlemen in the insurance market? A. insurance agents and underwriters B. insurance agents and brokers C. loss adjusters and brokers D. insurance agents and loss adjusters

20. Which of the following statements regarding an agent is TRUE? A. a life insurance agent may not represent more than one life insurance company B. a life insurance agent must represent both life insurance and general insurance company C. a general insurance agent may represent more than two general insurance companies D. a general insurance agent may not represent more than two general insurance companies

21. This department generally concentrates its efforts on identification of field officers, recruiting , motivating and supervising the sales force. This department refers to:

A. marketing department B. underwriting department C. agency or sales department D. customer service department

22. What are the advantages of a decentralized insurance company? A. uniformity in practice B. economies in administration C. make good use of resources D. satisfy needs of customers




“It's mission is to promote HR Development in the insurance industry through exams, training, information, exchange & ideation.” 23. The above statement is referred to the objective of which of the following insurance

institutions? A. The Malaysian Insurance Institute ( MII ) B. The Actuarial Society of Malaysia ( ASM ) C. Persatuan Insurans Am Malaysia (PIAM) D. National Association Of Malaysian Life Insurance and Financial Advisors ( NAMLIFA)

24. Which of the following are the basic rights of consumers? I. right to satisfaction II. right to information III. right to redress IV. right to be heard A. I, II, III only B. I, II, IV only C. I, III, IV only D. I, II, III, IV

25. On 1 July 1998 , what has been established by BNM to be a center to resolve all complaints & inquiries on insurance matters from the public?

A. Customer Services Bureau ( CSB ) B. Insurance Complain Bureau ( ICB ) C. Public Complain Bureau ( PCB ) D. Insurance Mediation Bureau ( IMB )

26. Which of the following are the advantages of self-regulation? I. helps to instill discipline among insurance companies II. avoids the need to introduce legislation to regulate the industry III. bureaucratic backup to enforce laws that are passed IV. measures can respond to the changing needs faster than legislation A. I, II, III only B. I, II, IV only C. I, III, IV only D. I, II, III, IV




27. Policyowner are allowed to return a life policy within how many days after delivery without any reason ?

A. 10 days B. 15 days C. 20 days D. 30 days

28. In insurance, the offer is usually made by: A. the insurer B. the proposer C. the agent D. the insurer and the proposer

29. In some instances, the insurer may not accept a proposal on its original terms but may offer to provide insurance on different terms. This is a:

A. counter acceptance B. a counter-offer C. extra offer D. an invitation to offer

30. Section 153 of the Insurance Act 1996 further provides that a minor between ages 10 to 16 can affect a life policy on his own life under which of the following conditions?

A. with the verbal consent of his parent or guardian B. with the written consent of his parent or guardian C. with the written consent of the insurer of the agent D. with the verbal consent of the insurer of the agent

31. Which of the following statements regarding the express authority of an agent is TRUE? A. only be given to an agent orally B. only be given to an agent in writing C. may be given to an agent orally or in writing D. must be given to an agent orally and in writing

32. In addition to his express contractual obligations , which of the following are some of the duties imposed on an agent ?

I. no conflict of interest II. to render accounts to the principal III. not to take any secret profit or bribe IV. not to disclose confidential information obtained from other parties




A. I, II, III only B. I, II, IV only C. II, III, IV only D. I, II, III, IV

33. The contract of agency between the principal and agent may be in I. writing II. verbal III. action A. I and II only B. I and III only C. II and III only D. I, II, III

34. Agents hold agency contract with: A. the recruiter B. insurance company C. insurance Association D. policy owner

35. If the agent helps the proposer by filling up the personal proposal form or personal statement, then at that particular point of time, whom is he acting on behalf?

A. the proposer B. the insurer C. the reinsurer D. the proposer's nominee

36. Under the common agency system, what is the purpose of an insurance agent who is appointed by the insurer?

I. for the primary purpose of canvassing for new business II. to increase the image of the insurer III. to carry out other tasks or duties as may be required by the insurer from time to time. A. I and II only B. II and III only C. I and III only D. I, II, III




37. Which of the following is NOT the function of the marketing department? A. pricing B. promotion C. selection of distribution channel D. selling product to customer

38. What is the principal aim of a market-oriented agent? A. set sales goal B. deliver policy to customer C. achieve the company's goal D. meet his client's insurance needs

39. Which of the following is the correct sequence of the customer buying decision process? A. purchase, problem recognition ,post -purchase evaluation, information search, evaluation of alternative policies B. purchase, problem recognition ,information search, evaluation of alternative policies, post -purchase evaluation C. problem recognition ,information search , evaluation of alternative policies, purchase, ,post -purchase evaluation , D. problem recognition , information search ,purchase, post -purchase evaluation , evaluation of alternative policies

40. The agent identifies a need, draws the customer's attentions to this need and makes a sale. It is useful in situations where the customer is able to recognize the need immediately. This selling technique is referred to as:

A. order processing B. creative selling C. missionary selling D. objection handling selling

41. Medical and health insurance policies may be divided into which of the following? A. indemnity policies only B. benefit policies only C. indemnity and benefit policies D. none of the above




42. Under the "cashless" hospital admission arrangement, the hospital deposit may be eliminated and admission to a panel hospital is by the issuance of which of the following document?

A. a letter of assignment B. a letter of consent C. a letter of administration D. a letter of guarantee

43. In what form is the claim to a basic hospitalisation and surgical insurance policy usually paid?

A. co-sharing B. pay from the first dollar C. impose some form of deductible D. pay a lump sum

44. Which of the following policy provides broad coverage and substantial protection from large and unpredictable healthcare expenses?

A. Hospitalisation Cash Benefit Insurance B. Critical Illness Insurance C. Disability Income Insurance D. Major Medical Expenses Insurance

45. A situation where more sub-standard risks are accepted for insurance resulting in a less favourable underwriting result refers to:

A. anti-risk B. anti-acceptance C. anti-selection D. anti-insurance

46. Medical evaluation for medical and health insurance begins with: A. a review of the health condition of the applicant by the agent B. an attending physician's statement C. a review of statements on the application form D. a review of statements from the servicing agent

47. The financial status of the applicant is a prime consideration in underwriting what type of medical and health insurance?

A. Medical Expenses Insurance B. Hospital Cash Benefit Insurance C. Critical Illness Insurance D. Disability Income Insurance




48. Why will insurers usually not issue disability income coverage to applicant whose total income consists of a high percentage of "unearned" income?

A. because such income will increase during the insured's disability B. because such income will decrease during the insured's disability C. because such income will continue during the insured's disability D. because such income will not continue during the insured's disability

49. The document drafted by the insurer in the form of questionnaires for each class of insurance to assist the insurer in gathering information required to assess a risk being proposed is referred as

A. a reinstatement form B. a claim form C. a proposal form D. an assignment form

50. When making a preliminary check on a claim, the claim official may, among others, check which of the following?

I. claim history II. claim form III. claims register IV. conditions for a valid claim A. I, II, III only B. I, III, IV only C. II, III, IV only D. I, II, III & IV

51. Which of the following statements regarding a modern life insurance contract is TRUE? A. which secures the payment of a post agreed sum of money before the happening of a

contingency, or of a variety of contingencies, dependent on a human life B. which secures the payment of a pre agreed sum of money before the happening of a

contingency, or of a variety of contingencies, dependent on a human life C. which secures the payment of a pre agreed sum of money on the happening of a

contingency, or of a variety of contingencies, dependent on a human life D. which secures the payment of a pre agreed sum of money on the happening of a

contingency, or of a variety of contingencies, dependent on a non human life




52. What does Life insurance provide in the event of premature death? A. provide effective solution for disputes B. provide effective solution for emotional trauma C. provide effective solution for financial security D. provide effective solution for financial growth

53. What is the main purpose of the non-participating contracts? A. for protection B. for savings C. for protection and savings D. for investment

54. Which of the following benefits is provided under a term insurance? A. cash value B. loan facility C. paid up value D. none of the above

55. What is the objective of the limited payment whole life policy? A. to appeal to the assured to purchase a higher premium policy B. to appeal to the agents to sell a higher premium policy C. to appeal to the assured to buy more policies at one time D. to appeal to the assured with the idea of paying up the premium during his working lifetime

56. The endowment insurance can be viewed as a combination of what types of policies? A. an increasing term insurance and an decreasing investment component. B. an increasing term insurance and an increasing investment component. C. a decreasing term insurance and an decreasing investment component. D. a decreasing term insurance and an increasing investment component.

57. Which of the following statements regarding Anticipated Endowment Insurance is TRUE? A. installment dividend payments by the insurers to the policyholder, payable at regular intervals

during the term of the policy B. installment dividend payments by the insurers to the policyholder, payable at regular intervals

after the term of the policy C. installment cash payments by the insurers to the policyholder, payable at regular intervals

after the term of the policy D. installment cash payments by the insurers to the policyholder, payable at regular intervals

during the term of the policy




58. What is the purpose of an annuity? A. to protect against the loss of income through premature death B. to protect against the outliving of one's income for the youngsters C. to protect against the outliving of one's income D. to protect against the outliving of one's investment

59. The annuitant pays a lump sum at entry, or a periodical premium for a defined period. On the attainment of a specified age, or on the survival by the annuitant of a defined period, the insurer pays an annuity of a specified amount until death. This annuity is called:

A. deferred annuity B. guaranteed immediate annuity C. joint life annuity D. single life immediate annuity

60. This contract pays out a lump sum on the diagnosis of any of a number of specified diseases. This is a :

A. endowment policy B. dread diseases covers C. permanent health insurance D. investment linked policy

61. The premium of investment-linked policies can be divided into which of the following components?

I. expense related II. investments related III. mortality and/or morbidity cost related A. I , II only B. I , III only C. II , III only D. I , II , III

62. The contract of group insurance is between which of the following parties? A. the insurance company and the employer B. the employer and the life insured C. the reinsurer and the employer D. the reinsurer and the life insured




63. Which of the following is NOT payable under the Accidental Death Supplementary Benefit of the policy?

A. death as a result of a fall down a flight of steps. B. death cause by a stampede during the outbreak of a fire. C. death cause by falling debris from a military aircraft that has crashed. D. death as a result of collision during motorbike race between friends.

64. Which of the following are the uses of joint life insurance? I. on the lives of husband and wife II. on the lives of business partners III. on the lives of brothers A. I , II only B. I , III only C. II , II only D. I , II , III

65. The policy is issued on the life of the parent. The child is designated as the beneficiary and moneys are payable on the child attaining a specified age mentioned in the policy. This is refers to :

A. term insurance B. joint life policies C. children's deferred insurance D. protected educational policies

66. Each Takaful installment made by the participants shall be divided and credited by the company into 2 separate accounts namely Participant's Account (PA) and Participant's Special Account (PSA). What is the main function of the PA?

A. Tabaruk ( contribution ) B. saving only C. investment only D. saving and investment

67. An ordinary life policy does provide a condition and privilege which allows the payment of premium without any forfeiture or penalty provided it is paid within a number of days after the due date. This period is known as

A. reinstatement B. lapsation C. grace period D. waiting period




68. The policyholder becomes entitled to loan under which of the following conditions? A. after the policy has been paid-up B. after the policy has been in force C. after the policy has acquired a cash value D. after the policy has utilized a cash value

69. Which of the following is NOT a non-forfeiture condition? A. grace period B. paid-up policy C. automatic premium loan D. extended term assurance

70. When the policy cash value is used to settle the outstanding premium plus interest, it is called:

A. automatic paid-up policy B. automatic premium loan C. automatic loan conversion D. none of the above

71. If the insured commits suicide within a stated period of time (usually a year to two years) from the date of inception or reinstatement of the policy, what will happen to the policy?

A. the policy is valid and the insurer is liable to pay the claim, but will not return all premiums

paid. B. the policy is valid and the insurer is liable to pay the claim and return all premiums paid. C. the policy becomes void and the insurer is not liable to pay the claim, except to return all

premiums paid. D. the policy becomes void and the insurer is not liable to pay the claim, and will not return all

premiums paid.

72. Admission of age varies depending on the insurer. Generally, which of the following documents are acceptable as proof of age by the life office?

I. certificate of birth II. identity card III. international passport IV. school leaving certificate A. I , II , III only B. I , II , IV only C. II , III , IV only D. I , II , III , IV




73. Which of the followings are the major factors which influence mortality? I. age II. ethnicity III. occupation IV. social status A. I , II , III only B. I , III , IV only C. II , III , IV only D. I , II , III , IV

74. Underwriting for life insurance contracts can be considered under which of the following headings:

I. financial underwriting II. medical underwriting III. moral underwriting A. I , II only B. I , III only C. II , III only D. I , II , III

75. Hazardous or unhealthy occupation example, liquor trade is under which of the following extra risk categories?

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

76. When the proposal is approved, what type of document is issued by the insurer to the proposer requesting him to make the necessary payment of premium within a certain number of days?

A. letter of acceptance B. proposal form C. letter of declaration D. insurance policy

77. The extra risks are allowed by the following methods, EXCEPT A. increasing premium B. increasing death benefit C. exclusion of a particular hazard D. alternative policy plan




78. What is the principal legal document regulating Income Tax in Malaysia? A. Insurance Act, 1996 B. Income Tax Act, 1967 C. Inland Revenue Act, 1962 D. Personal Revenue Act, 1969

79. Which of the following is most suitable to descript this concept: if a considerably large number of lives are insured, the fluctuation in the rate of death from year to year, under normal circumstances will not be very significant.

A. law of large fluctuation B. law of large risk C. law of mortality D. law of large number

80. Which of the following statements regarding level premium is TRUE? A. for an initial period, level premiums are less than yearly renewable premiums B. for an initial period, level premiums are in excess of yearly renewable premiums C. for the later period, level premiums are in excess of yearly renewable premiums D. for the later period, level premiums are equal to yearly renewable premiums

81. Which of the following is/are the initial expenses of life insurance? A. advertising costs B. medical examination expenses C. first year commission D. all of the above

82. A life aged 40, the rate of mortality at age 40 is 5.62 per thousand lives, if there 100,000 proposers all aged 40, how many deaths can the insurance company expect?

A. 462 B. 5620 C. 56.2 D. 562

83. What is Gross Premium? A. net premium + loading for contingencies + loading for operation B. net premium + loading for profits + loading for operation C. net premium + loading for expenses + loading for profits D. net premium + loading for expenses + loading for operation




84. In the event of death occurring before all the premium payments for that particular policy year have been paid, the remaining installments of that year are deducted from the claim amount payable under the policy. This type of periodical premium is called:

A. true premium B. installment premiums C. terminal premium D. combined premium

85. What is the purpose of an actuarial valuation? A. to calculate the premium of a policy B. to test if the mortality is too high C. to test the solvency of a company. D. to test if the claim payment is too high

86. What is cost price? A. value for which the assets can be sold in the open-market. B. price at which the asset was acquired. C. depreciated value after the valuation D. value placed on the assets in the company's account books

87. Which of the following statements regarding surplus is TRUE? A. the difference between the cost price and market value B. the difference between the book value and market value C. the difference between the cost price and book value D. the difference between the total assets and total liabilities

88. Divisible surplus will be shared by I. the participating policyholders II. the shareholders. III. all the policyholders A. I , II only B. I , III only C. II , III only D. I , II , III




89. This is a method of passing on to the policyholders some of the benefits of the unrealized capital appreciation of ordinary shares and property holdings of the company. This type of surplus distribution is:

A. cash bonus B. maturity bonus C. simple reversionary bonus D. compound reversionary bonus

90. This report gives specific answers to the insurance company's queries relating to the treatment given to the applicant in the past. This report is referred to as:

A. the medical report B. the insured report C. the attending physician statement D. agent's report 91. What is stated in the operative clause ? A. the name and address of the company B. the event/s upon which the policy becomes operative C. the name and address of the insured person D. a declaration that information given in the proposal form and medical report forms shall form the basis of the contract 92. The following particulars are usually mentioned in the schedule, EXCEPT? A. date of commencement of insurance B. date of proposal C. name and address of the insurer D. name and address of the life assured 93. Which of the following statements regarding endorsements is TRUE? A. only can be done after the issuance of policy B. only can be done at the time of issuance of policy C. can be done either at the time of issuance or after issuance of the policy D. can be done either at the time of issuance or before issuance of the policy 94. These details must be provided to the insurer upon a death claim, EXCEPT A. policy number B. date and cause of death C. policyholder's name and identity card number D. nominee's name and identity card number




95. Under which section of the Insurance Act, 1996 provides for the payment of claim proceeds

to the proper claimant without letters of probate or administration? A. Section 166 B. Section 167 C. Section 168 D. Section 169 96. When the policyholder is not the life insured, which of the following are usually required in

settling maturity claims? A. a letter of administration B. a probate of the will C. a simple statement on death of the insured D. a deed of assignment or any other title document 97. Which of the following statements regarding using the rate book for premium calculations is

TRUE? A. applicable only to standard lives B. applicable only to sub standard lives C. applicable to all lives D. applicable to standard and sub standard lives 98. Born : January 10, 1980 and submission : August 14, 2004. Based on age nearest birthday

,what is his age? A. 24 B. 25 C. 26 D. 27 99. Which of the following statements regarding the statements of philosophy of the code of

conduct is NOT TRUE? A. the life insurance business is based on the philosophy of profit sharing B. the life insurance business is requires a high degree of responsibility and professionalism. C. the life insurance business is based on trust and honesty D. life insurers shall at all times ensure safety of policyholders' savings and the credibility of their

companies 100.Below are the detriments of twisting, EXCEPT A. the agent do not provide continuous service to the policyholder. B. any replacement of the same type policy will be at a higher premium rate C. the suicide and incontestable clause will begin anew in a new policy. D. the policyholder must commence again the qualifying period of 2 or 3 years before the policy

can become eligible for surrender value and under the non-forfeiture system.




Answer

1 D 26 D 51 C 76 A

2 B 27 B 52 C 77 B

3 A 28 B 53 A 78 B

4 B 29 B 54 D 79 D

5 C 30 B 55 D 80 B

6 B 31 C 56 D 81 D

7 C 32 D 57 D 82 D

8 A 33 A 58 C 83 C

9 C 34 B 59 A 84 B

10 A 35 A 60 B 85 C

11 B 36 C 61 C 86 B

12 C 37 D 62 A 87 D

13 A 38 D 63 D 88 A

14 D 39 C 64 A 89 B

15 A 40 A 65 D 90 C

16 C 41 C 66 D 91 B

17 B 42 D 67 C 92 C

18 A 43 B 68 C 93 C

19 B 44 D 69 A 94 D

20 D 45 C 70 B 95 D

21 C 46 C 71 C 96 D

22 D 47 D 72 D 97 A

23 A 48 C 73 D 98 B

24 D 49 C 74 A 99 A

25 A 50 C 75 B 100 A

pce sample questions - set 2 (eng)

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