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SET 5: PCEIA SAMPLE PRACTICE QUESTIONS A+ GRADED, Exams of Insurance Economics

Amridge University Insurance Economics

1. Which of the following provides for an annuitant to put in a lump sum at entry and on attainment of a specified age, the insurer will pay an annuity of a specified amount until death? A. Single life annuity B. Immediate annuity C. Deferred annuity D. Last survivor annuity 2. Backdating of the commencement date of insurance may be allowed in some cases of up to ____________ so that the proposer may benefit by paying a lower premium applicable to the lower age

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PCEIA Sample Questions (E) – Set 2

Version: 20 May 2015

Page 1

1. Which of the following provides for an annuitant to put in a lump sum at entry and on

attainment of a specified age, the insurer will pay an annuity of a specified amount until

death?

A. Single life annuity

B. Immediate annuity

C. Deferred annuity

D. Last survivor annuity

2. Backdating of the commencement date of insurance may be allowed in some cases of

up to ____________ so that the proposer may benefit by paying a lower premium

applicable to the lower age.

A. 3 months

B. 4 months

C. 5 months

D. 6 months

3. On August 1, Mr. Chong submitted a proposal form to an insurer. A letter of acceptance

was issued on August 8, and was delivered to Mr. Chong on August 10. Mr chong paid

the initial premium on August 17. A life insurance policy was issued and delivered to Mr.

Chong on September 4. Mr. Chong’s life insurance policy was effective on

A. August 8

B. August 10

C. August 17

D. September 4

4. In case of breach of utmost good faith, the aggrieved party can

A. Sue the damages

B. Waive the breach

C. Refuse to honour

D. Accept the cost

SET 5: PCEIA SAMPLE QUESTIONS

Partial preview of the text

Download SET 5: PCEIA SAMPLE PRACTICE QUESTIONS A+ GRADED and more Exams Insurance Economics in PDF only on Docsity!

Version: 20 May 2015

Which of the following provides for an annuitant to put in a lump sum at entry and on attainment of a specified age, the insurer will pay an annuity of a specified amount until death? A. Single life annuity B. Immediate annuity C. Deferred annuity D. Last survivor annuity
Backdating of the commencement date of insurance may be allowed in some cases of up to ____________ so that the proposer may benefit by paying a lower premium applicable to the lower age. A. 3 months B. 4 months C. 5 months D. 6 months
On August 1, Mr. Chong submitted a proposal form to an insurer. A letter of acceptance was issued on August 8, and was delivered to Mr. Chong on August 10. Mr chong paid the initial premium on August 17. A life insurance policy was issued and delivered to Mr. Chong on September 4. Mr. Chong’s life insurance policy was effective on A. August 8 B. August 10 C. August 17 D. September 4
In case of breach of utmost good faith, the aggrieved party can A. Sue the damages B. Waive the breach C. Refuse to honour D. Accept the cost

SET 5: PCEIA SAMPLE QUESTIONS

Version: 20 May 2015

An insurance agent who solicits or negotiates a contract of insurance should NOT A. Treat all information supplied by the prospective policyholder in confidence for the sole purpose of issuing an insurance policy B. Ensure as far as possible the policy proposed best meets the needs and resources of the prospective policyholder C. Discourage the prospective policyowner from stating material facts to the insurance company or induce the person not to state them D. Give advice only on insurance matters in which he is knowledgeable and seek or recommend other specialist advice if necessary
Underwritting guards against anti-selection and to ensure that the rates charges are A. Ratable B. Equitable C. Manageable D. Unsuitable
The secondary functions of insurance include the following: I. To provide a means of saving and reduction of lossess II. To stabilize cost stabilization and stimulate business entreprise III. To provide equitable distribution of financial losses IV. To provide a source of capital for investment A. I, II and III B. II, III and IV C. I, II and IV D. I, II, III and IV
The concept of ’tabarru’ refers to A. The agreement between the participants and the takaful operation for the purpose of business venture and both parties agree on a profit-sharing arrangement B. The sincere intention of the group members to help and support the needed C. The agreement by the participant to hand over as donation, a certain proportion of the takaful contribution, enabling him to fullfil his obligation as mutual help D. An agreement to jointly indemnify the loss or damage that may influence any of the contributors
Why are only pure risks insurable? A. Because there is no possibility of a loss B. Because of the need to maintain the principle of indemnity C. Because insurers prefer good risks only D. Because of the principle of utmost good faith

Version: 20 May 2015

If your client effects an ordinary whole life policy on his own life at age 25, he has to pay premium until A. His dealth or when he reaches the age of 85 and above B. He converts the policy into paid-up policy C. He surrender the policy D. Any of the above happens
An endowment policy pays the sum assured of the policy when the life insured A. Dies anytime or survives up to the age 85 or more B. Dies anytime within a specified perios or survives at the end of that period C. Survives at the end of the specified period D. Dies within the specified period
Term insurance is sold at a relatively low premium because it provides temporary death protection and A. Has no cash surrender value at the end of the period B. An increasing commission rate is paid to agents C. The mortality rate is lower D. Involves a small face amount (sum assured)
Which type of policy does NOT have a cash value? A. Term B. Endowment C. Whole life D. Children’s deferred insurance
Nathan was hospitalized for 3 days in a private hospital this year. The hospital bill amounted to RM3,000. This is his 1st claim on his hospital and surgical insurance policy this year. Given that the policy has an annual deductible of RM1,000, a co-payment requirement of 20% and assuming that the whole hospital bill is eligible for insurance reimbursement, how much will the hospital and surgical insurance policy reimburse Nathan? A. RM1, B. RM1, C. RM1, D. RM2,

Version: 20 May 2015

The common health insurer underwritting decisions are A. Standard (issued exactly as applied for), declined, postponed B. Standard (issued exactly as applied for), postponed, sub-standard (issued on other than applied for basis) C. Standard (issued exactly as applied for), declined, sub-standard (issued on other than applied for basis) D. Standard (issued exactly as applied for), postponed, change plan
Which of the follwing circumstances doesnt NOT require further medical investigations, and/or documentation in the process of underwriting medical and health insurance? A. A pre-existing condition which increases the probability of a recurrence B. A medical condition which is capable of prolonging the recover period C. An accidental injury which had caused temporary disablement D. An impaired risk which adverse medical history
Which section of the policy states that the proposal and declaration shall be the basis of the contract between the insured and the insurer? A. Representation clause B. Recital clause C. Operative clause D. Attestation clause
Adam was killed while robbing a goldsmith shop. When his nominee filed a claim for death benefit under a personal accident policy, the insurer declined the claim because A. There was no consideration B. There was no intention to create a legal relationship C. He died while committing an illegal act D. There was no offer and acceptance
For personal accident policy, the doctrine of __________ is important, as more than one condition can operate leading to a claim. A. Utmost good faith B. Proximate cause C. Contribution D. Subrogration

Version: 20 May 2015

The type of policies that provide for a lump sum payment upon the claimant being diagnosed as having any one of the specified critical illness are known as A. Critical illness policies B. Investment-linked policies C. Permanent health insurance policies D. Permanent disability insurance policies
Group health premium rates may be influenced by which of the following factors? I. Age II. Financial situation III. Occupation A. III only B. I and II C. I and III D. I, II and III
When an agent invites any person or individual to make an offer or proposal to enter into a contract of insurance, the agent is NOT required to disclose A. The amount of premium charged by the licensed insurer B. The name of the licensed insurer C. His relationship with the insurer D. Any discount offered by the licensed insurer
Why are ethical conduct and behavior crucial? A. To increase sales of insurance policies B. To preserve the trust on which insurance transactions are based and to preserve public trust in the life insurance industry C. To abide Bank Negara’s Code of Ethics for the insurance industry D. To prevent an increase in claims
A maturity claim arises upon the A. Death of the life insured while the policy is in force B. Survival of the life assured up to the stipulated date of maturity of the policy C. Hospitalization of the life insured D. Suffering of a dreadful disease by the life insured
Which one of the following would NOT require for the settlement of a maturity claim? A. Proof of death B. Proof of ownership C. Proof of survivorship D. Proof of age

Version: 20 May 2015

Upon survival of the life assured at the end of the policy term the payment of policy proceeds is known as a _______________ claim. A. Death B. Revival C. Disability D. Maturity
Which of the following statements is true? A. Risk remains the same throughout the duration of the policy B. Risk increases as age increases C. Risk decreases as age increases D. Risk first increases and then levels as age increases
Health insurers are very careful not to accept unhealthy persons at standard premium rates as these results in a less favorable underwriting result. This occurs when an applicant who knows that he has a very high probability of loss submits a proposal for health insurance. This situation is known as A. Poor selection B. Anti-selection C. Averse selection D. Risk selection
The four main classes of health insurance contract are A. Home service, clinical, maternity and dental insurance B. Medical expenses, disability income, home service and critical illness insurance C. Disability income, hospital income insurance, medical expenses and critical illness insurance D. Dental, medical expenses, maternity and home service insurance
The minimum paid-up capital or surplus of assets over liabilities prescribed by law for local/foreign direct insurers shall not be less than A. RM50 million B. RM75 million C. RM100 million D. RM120 million
The function of the Financial Mediation Bureau (FMB) is to A. Serve as a central registry for all health policies issued on a medically sub-standard basis B. Inform its members of specific underwriting actions taken by its members C. Assist its members in detecting non-disclosures of facts by applicants D. Provide an independent service for dealing with disputes between insurers and personal policyholders

Version: 20 May 2015

Which of the following comprise prohibited business conduct for insurers as well as insurance agents? I. Persuading or attempting to persuade a financial consumer to dishonestly conceal, omit or provide material facts ambiguously II. Offering or assuming to act on behalf of an insurer in negotiating a policy III. Making any statement, illustration, promise, forecast or comparison which is misleading IV. Carrying out any other act on behalf of an insurer in relation to the issuance, renewal or continuance of policy A. I and II B. I and III C. I and IV D. II, III and IV
The expenses of running an insurance business can be categorized as the following EXCEPT A. Initial expenses B. Renewal expenses C. Management expenses D. Termination expenses
Insurers employ the mortality table as a A. Means of not paying death claims B. Practical tool to estimate the mortality for groups or lives for premium calculation C. Table of calculation for administrative expenses D. Chart to foresee the mortality of a person
The chance of dying in a year at a specified ages is commonly termed as rate of A. Morbidity B. Mortality C. Interest D. Surviving
The charge for covering the cost of mortality and interest is called _________ premium. A. Gross B. Net C. Risk D. Written

Version: 20 May 2015

Which of the following relationships about insurable interest is FALSE? A. A creditor has an insurable interest in the life of the debtor to the extent of the debt B. A company has an insurable interest in the life of a director or a manager who occupies a key position in the company C. Insurable interest can never exist among partners in a partnership D. A husband has an insurable interest on the life of his wife
What is insurance? A. A risk transfer mechanism B. A method of selling a tangible product C. A method of collecting contribution from members for investment D. A method of reducing losses and their subsequent occurrence
Which of the following is NOT a method of handling risk in insurance A. Risk avoidance B. Risk transfer C. Risk speculation D. Risk retention
An insurable risk must have the following characteristic : I. Pure risk and not speculative risk II. Catastrophic loss which is widespread III. Particular risk capable of being measured in terms of financial IV. Fortuitous risk with homogeneous exposures A. I, II and III B. II, III and IV C. I, III and IV D. I, II, III and IV
In life insurance, the duty of utmost good faith is to be observed by? A. Insurer only B. Insured only C. Both insured and insurers D. Life insurance agent only
This policy pays a pre-agreed amount for each day the insured person hospitalized? A. Disability income insurance B. Medical expense insurance C. Hospital income insurance D. Clinical insurance

Version: 20 May 2015

Surplus is distributed to the policyholders in the following ways I. Cash bonus II. Terminal bonus III. Interest IV. Reversionary bonus A. I, II and III B. I, II and IV C. I, III and IV D. None of the above
Among the essential elements of a contract is/are A. Consideration B. Legality of the contract C. Legal capacity to contract D. All of the above
Which one of the following documents is the evidence of premium payment by the policyholder? A. The signed proposal form B. The letter of the acceptance C. The official receipt D. The premium notice
Medical underwriting seeks to assess the extent of ______ hazard in connection with the applicant when providing insurance coverage A. Moral B. Physical C. Financial D. Medical
The agents duties are A. To obey the instruction of the principal B. To use proper care and skill in exercising his authority C. To act honestly and not in any way that determined to the principals interactional D. All of the above

Version: 20 May 2015

The following documents are essential to process a total and permanent disability (TPD) claim I. The original policy document II. The discharge disability form III. A duly completed TPD claim form IV. A total and permanent disability medical report A. I, II and III B. I, III and IV C. II, III and IV D. I, II, III and IV
Upon survival of the life assured at the end of the policy term the payment of policy proceeds is known as a _____ claim A. Death B. Revival C. Disability D. Maturity
The details of the insured and the subject matter of insurance are normally found in the following section of the policy A. Attestation B. Schedule C. Exclusion and condition D. Heading
Which one of the following would NOT require for the settlement of the maturity A. Proof of death B. Proof of ownership C. Proof of survivorship D. Proof of age
Which type of health insurance policy is designed to pay for treatment costs when an insured person is hospitalized or surgically treated? A. Major medical expense B. Hospitalization and surgical insurance C. Clinical insurance D. Hospitalization cash benefit insurance
Under a group medical and health insurance scheme, the parties to the contract are A. The employees and employer B. The employees, the employer and the insurance company C. The employer and the insurer D. The beneficiary, the employees, the employer and the insurance company

Version: 20 May 2015

Which one of the following is a special feature of reducing term insurance? A. The death benefit is constant throughout the policy year except the last year B. The death benefit decrease each year until there is no amount left at the end of the term C. The cash value of the policy decrease as the net amount of risk decrease D. The premium decreases each year until there is no premium left to pay
If the insurer proposes to reduce the premium amount and refund as over-payments to the policy owner because of misstatement of age that the A. True age as shown by the proof is less than that stated in the proposal form B. True age as shown by the proof is greater than that stated in the proposal form C. True age as shown by the proof is equivalent to the age is stated in the proposal form D. True age as shown by the proof is commensurate with the premium paid
Which of the following statement is true A. Risk remain the same throughout the duration of the policy B. Risk increase as age increase C. Risk decrease as age increase D. Risk first increases then levels as age increases
Using a broad definition, which of the following is NOT health insurance A. A critical illness insurance plan B. A workers compensation insurance plan C. A disability income insurance plan D. A major medical expense insurance plan
Which of the following are appointed by insurance companies to represent them? A. Reinsurers B. insurers C. insurance brokers D. insurance agents
Which of the following is NOT a method of handling risks in insurance A. Risk avoidance B. Risk transfer C. Risk speculation D. Risk retention

Version: 20 May 2015

The role of the agents is to explain the main provisions of the insurance contract by drawing the clients attention to I. Any extra charges imposed and purpose of such changes II. Other insurance policies with the lowest premium available in the market III. Policy retention, limitations and exclusions applicable IV. Scope of coverage, term and condition of the policy A. III and IV B. I, II and III C. II, III, and IV D. I, III and IV
The guidelines on medical and health insurance business (revised) which came into effect on 1 January 2006, aim to: A. Enhance consumer awareness and enable consumers to make informed decisions B. Promote more equitable and consistent treatment of consumers covered under MHI policies C. To complement employees health benefit compensation package D. Provide specified benefits against risk of persons becoming totally or partially incapacitated
In which of the following situations does insurable interest NOT exist? A. A husband insuring the life of his wife B. A creditor insuring the life of his debtor C. A brother insuring the life of his sister D. A father insuring the life of his child
An insurance contract is a legally binding agreement between an insured and A. The government B. His agent C. His insurer D. His broker
Perils which are expressly exempted from a policy called _____ perils A. Insured B. Excluded C. Uninsured D. Unknown

Version: 20 May 2015

The following statements relating to selection of lives are true EXCEPT A. Adverse selection leads to an increase in death claims B. All applications have to undergo medical examination C. Some substandard risks may be accepted while some may be deferred or rejected D. The agents report is a useful source of information in the selection of lives
To ensure that professional ethics prevail among agents, the life insurance association of Malaysia (LIAM) has drawn up the I. Code of ethics for agents II. Code of professional selling for agents III. Code of conduct for agents A. I and II B. II and III C. I and III D. I, II and III
With regard to the principle of indemnity, payment for loss or damage is A. Limited to the actual amount of the loss or damage, subject to the adequacy of the sum assured B. The sum assured C. Limited to the actual amount of the loss or damage, irrespective of the sum insured D. Subject to negotiation between parties to the contract
Why are ethical conduct and behavior crucial? A. To increase sales of insurance policies B. To preserve the trust on which insurance transaction are based and preserve trust C. To abide by bank Negara’s code of ethics for the insurance industry D. To prevent an increase in claims 103.In life insurance, there are essentially three kinds of claims that can arise. They are I. Claims against supplementary contract II. Performance claims III. Death claims IV. Maturity claims A. I, II and III B. I, III and IV C. II, III and IV D. I, II and IV

Version: 20 May 2015

This is a method of distributing surplus: A. Simple or compound reversionary bonuses B. Simple or compound interest bonuses C. Extra or surpluses bonuses D. Common and general bonuses
A 20 year endowment policy was issued to Encik Ahmad on 1 April 1981. If the premium has been regularly paid and Encik Ahmad is alive 2001, the policy A. Will become paid up and the proceeds will be held by the insurance company to be paid at the time of Encik aAhmad death B. Proceeds will become payable on that date to Encik Ahmad C. Will automatically be converted to a whole life insurance on Encik Ahmad ‘s life D. Will continue till Encik Ahmad’s death
Which of the following is a common requirement for the processing of both death and maturity claims? A. Proof of age B. Proof of tittle and ownership C. Proof of death D. Proof of age, tittle and ownership
Indemnity in property insurance can be provided in the following way A. Cash only B. Cost of repair only C. Cost of replacement and repair only D. Cost of repair, replacement or reinstatement.
What must all registered agents sign to ensure they conduct business with utmost good faith? A. The agency agreement B. A health declaration C. The code of practice D. The statutory declaration
Medical underwriting seeks to assess the extent of_________________ hazard in connection with the applicant when providing insurance coverage. A. Moral B. Physical C. Financial D. Medical

SET 5: PCEIA SAMPLE PRACTICE QUESTIONS A+ GRADED, Exams of Insurance Economics

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Partial preview of the text

Download SET 5: PCEIA SAMPLE PRACTICE QUESTIONS A+ GRADED and more Exams Insurance Economics in PDF only on Docsity!

SET 5: PCEIA SAMPLE QUESTIONS