PCIL SET 1

PCIL Questions 2021 v4.0

1. The first stage in Risk Management is

A. analysis
B.control
C.identification
D.transfer

2. An individual will benefit from as a result of putting aside funds for old
age afterbuying life insurance.

A. long life
B.good health
C.investment returns
D.compelled savings

3. Which of the following is the primary purpose of life and general insurance?

A. Financial Protection
B.Investment income
C.Financial gain
D.Saving for retirement

4. The three functions of insurance which are interrelated are:

A. Identify, analyse and control of risk management.

B.Risk transfer, equitable premiums and creation of common pool.
C.Financial protection, cost stabilization and compelled savings.
D.Retain, control and transfer of the identified risks.

5. Although are rare, they still can be considered for insurance and an
exception to theLaw of Large Numbers.

A. Space satellites
B.Interstate buses
C.House on hill slopes
D.Individual age 75 years old.

6. The role of a licensed financial adviser in the distribution of life insurance products is
to

A. undertake marketing through banking institutions.

B.provide independent advice on a whole range of insurance products.
C.provide independent assessment and the pricing of risks to be insured.
D.represent life insurance companies in the marketing of insurance products.
7. What is the difference between an insurance agent and insurance broker.

A. An insurance agent represents the best interests of his clients whereas the
insurance brokeracts on behalf of the insurer.
B.An insurance agent acts on behalf of the insurer to solicit new business
whereas aninsurance broker represents his client’s interest.
C.An insurance agent is independent while and insurance broker is employed by an
insurancecompany.
D. An insurance agent receives commissions whereas an insurance broker is paid a
brokeragefee by his customers.

8. Which of the following is correct of “Risk Control”.

A. Minor loss can be retained by an organization.

B.Risk can be prevented with the implementation of risk management.
C.Risk of major losses can be mitigated with suitable disaster recovery plans.
D.Risk can be avoided by not participating in the particular activity than gives rise to the risk.

9. The insurer is dependent on the other party to disclose necessary

information to
decide whether to accept the risk or not in the formation of an insurance
contract.

A. at the renewal stage

B.at the pre-contractual stage
C.at the time of making a claim
D.during the coverage tenure of contract

10. are the subject matter of insurance in a life or personal accident policy.

A. Life and limb

B.Funeral expenses
C.Salaries and wages
D.Medical cost and expenses

11. An individual complies with duty of disclosure under insurance contract by

A. volunteering useful information pertaining to the risk.

B.disclosing information that is of common knowledge.
C.answering all questions in the proposal form faithfully.
D.giving incomplete answers to specific questions in the proposal form.

12. A policy is not a contract of indemnity

A. fire
B.liability
C.personal accident
D.medical and health
13. Regarding of an assignee’s rights under an assignment, the following statement is
true:

A. Some rights still remain with the assignor.

B.The assignee has greater rights than the assignor.
C.The assignee takes over the same rights as the assignor.
D.Right of repudiation against the assignor will not apply to the assignee.

14. An insured is not required to disclose any fact that if the absence of
any specificquestions in proposal form.

A. increases the risk to the insurer

B.diminishes the risk to the insurer
C.affects insurer’s rating of the risk
D.influences the decision in acceptance of the risk

15. Which of the following is true of subrogation.

A. The insurer uses it primarily for loses paid under life insurance policies.
B.The insurer is allowed to sue its own insured for negligence caused by him.
C.The insurer is required to commence recovery action against its own insured.
D.The insurer is required to exercise its subrogation rights in the insured’s name.

16. is NOT a money laundering activity.

A. Layering
B.Placement
C.Integration
D.Consolidation

17. The role of Bank Negara Malaysia in the financial industry is to

A. enforce disciplinary action against the law-breaking agents.

B.promote the sales and distribution of financial products.
C.promote the financial stability to sustain economic growth.
D.intervene in the administration of financial institution.

18. The followings are money laundering activity used by the criminals to hide
illegal proceeds,EXCEPT:

A. Layering
B.Integration
C.Placement
D.Gambling
19. Insurers are regulated by BNM due to following reasons, EXCEPT:

I. To liaise with the professional organizations in the insurance industry.

II. To address the issue of insufficient insurance knowledge.
III. To offer insurance to the public.
IV. To ensure insurer solvency and reasonable rates.

A. I and III
B. I and IV
C. II and III
D. III and IV

20. Which of the following is NOT the reason why insurance company are regulated.

A. Protect consumer.
B.Promote financial stability.
C.To ensure insurers are solvent.
D.Spreading adequate insurance knowledge.

21. The possibility if a house being burnt down by fire is an example of risk.
A. Pure
B. Speculative
C. Moderate
D. Subjective

22. Which of the following is NOT a characteristic of insurable risk?

A. A large number of similar risks
B. Insurable interest
C. Reasonable Premium
D. Illegal and against public policy

23. During claims settlement, a life insurer may reject or delay a claim on
A. The grounds of non-disclosure or misrepresentation
B. Late submission of accompanying documents
C. A claim reported after the time limit for notification
D. Non-payment of claim processing fees.

24. Gross premium is the combination of the following elements:

I. Profit
II. Management expenses and contingencies
III. Net Premium
IV. Renewal expenses

A. I and II
B. II and III
C. I, II and III
D. I, III and IV
25. The shortfall between the basic sum assured and the account value is termed
A. Cost Value
B. Risk Party
C. Sum at Risk
D. Yield

26. Select the statement that is correct

A. Malaysians who contribute to the Employees Provident fund (EPF) are allowed
to utilizea portion of the EPF account to invest in funds offered by
B. If we want to compare single premium investment-linked (SP-IL) life insurance
with unittrusts (UTs), we can find no differences at all between them
C. The array of funds available for selection in the unit trust industry may
generally besmaller than that offered by an insurance company
D. Withdrawals from EPF may not be made on a regular basis

27. Investment-linked policies normally consist of what kinds of funds?

I. Cash fund
II. Bond fund
III. Equity fund
IV. Property fund

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

28. The insured can file for an ‘objection to life policy' within 15 days of
obtaining thepolicy. What is the name of this time period?
A. cooling-off period
B. cancel period
C. free to return period
D. right to refund period

29. Before the insurer cover the risk, what is the fundamental criteria
under the lifeinsurance contract is required,
A. duty of disclosure
B. signing the proposal
C. medical check up
D. premium payment

30. This policy pays a pre-agreed amount for each day the insured person is
hospitalized:
A. Clinical insurance
B. Medical expense insurance
C. Hospital income insurance
D. Disability income insurance
31. Which of the following is NOT an option for the modification of medical
and health policy benefits:

A. Imposition of a larger deductible

B. Guaranteed renewal without premium review
C. Reduction of the amount of benefit payable
D. Shortening of the period of payment of disability income

32. is a legal contract creating a trust relationship whereby the insurer

agrees tobind the actions of the agent with principal.

A. Agency by ratification
B. Agency by agreement
C. Agency by necessity
D. Agency by filtered

33. Agency by is a relationship when an agency and principal

relationship is formretrospectively.

A. necessity
B. ratification
C. mandatory
D. agreement

34. What is the minimum age for a minor to take up life insurance on his
own life or onthe life of another is which he has insurable interest
without the consent of his parents?

A. 16 years
B. 17 years
C. 18 years
D. 21 years

35. Identify the risk category under medical and health insurance that will
be imposedspecial terms, higher premiums or limitations in coverage
or both.

A. Special risk
B. Standard risk
C. Decline risk
D. Sub-standard risk

36. Although a life insurance policy has been in force for a period of more
than (2) twoyears, the insurer can still contest the validity if;

A. The medical report from the doctor is misleading

B. There is erroneous misrepresentation
C. The statement made in the proposal form is inaccurate
D. There is deliberate non-disclosure of a material fact
37. Insurance brokers, financial advisors and registered adjusters are
required to beincorporated as:

A. Private companies
B. Public companies
C. Unlimited companies
D. Registered companies

38. Insurance agencies in Malaysia are created through .

A. implied agreement
B. agency by ratification
C. creation of agency necessity
D. appointment by express agreement

39. Agent is required to act of good faith dealing with an insurance

company, which isNOT act of good faith

A. Reluctant to accept secret commission

B. Not hiding any relevant information
C. Acting for own personal interests at all times
D. Maintaining confidentiality of customer data

40. In addition to the agreed commissions, the principal must pay any
expenses to theagent while performing his duties. This the agents’
right to .

A. Indemnity
B. Contribution
C. Remuneration
D. Compensation

41. The value of an investment-linked insurance policy

A. Guarantees a fixed return in investment

B. Depends on the performance of the insurance company
C. Fluctuates according to the value of the units the policy holds
D. Depends on the country’s economic situation

42. Accidental death benefit is a form of

A. Permanent benefit
B. Bonus
C. Basic benefit
D. Supplementary benefit
43. Following the death of the insured, a claimant mustto begin the claim
andpay-out process.

A. make a police report

B. complete a claim form
C. submit the death certificate
D. notify the insurance company or agent

44. The advantage of an investment-linked policy compared to other

investmentproducts available in the market is that it allows an
individual to invest in

A. multiple unit trust companies in Malaysia

B. a diversified portfolio in the Malaysian and overseas market
C. a diversified portfolio with a minimum of RM1,200 a year
D. a guaranteed return investment

45. An important consideration in the pricing of life insurance premiums is

the insurer’sability to pay management expenses which comprise

A. staff salaries and agents’ commissions

B. advertising and branding costs
C. office maintenance charges
D. corporate tax and levies

46. The following is a consequence of replacing a policy of the same type:

A. The insured will enjoy a lower premium

B. The new policy will provide better benefits to the policy owner
C. The new policy will be an improved one and be cheaper, benefiting the policy owner
D. Any replacement of the same type of policy will be at a higher premium rate
as theinsured’s age will have increased

47. The following can be used as proof of death, EXCEPT;

A. Identity card
B. The coroner’s report
C. An order pronouncing a statutory presumption of death
D. Death certificate

48. What is a true statement of fixed deposits

A. They are guaranteed by the government

B. The shorter the period, the higher the return
C. The longer the period, the higher the return
D. They are only issued with the government’s approval
49. What type of cover can be extended under a hospital and surgical insurance
policy with thepayment of additional premium

A. Life insurance
B. Disability income
C. Overseas cover
D. Mental disorder

50. An agent is prohibited from, “engaging in conduct that is misleading or

deceptive, or is likelyto mislead or deceive in relation to the nature, features,
terms or price of any financial service or product.”

A. Schedule 7 of the Financial Services Act 2013

B. Schedule 8 of the Financial Services Act 2013
C. Schedule 10 of the Financial Services Act 2013
D. Schedule 11 of the Financial Services Act 2013

51. Which of the following is correct?

A. Debenture stock- The company has an option not to repay the debenture stocks earlier.
B. Convertible Stocks- The decision to convert depends on whether capital
appreciation &dividend income in share price are better than the fixed interest
given.
C. Loan Stocks- If the company defaults, the investor has all the collateral and
thus is in abetter position compared to other unsecured creditors of company.
D. Treasury Bills- The main difference between government bonds and treasury
bills is thetenure. Treasury bill are issued with a maturity of longer tenure
compared to bonds.

52. is a type of fixed income securities

A. Stocks
B. Warrant Shares
C. Ordinary Shares
D. Preference Shares

53. “The investor may convert investment from a fixed interest loan to being part-
owner who isthen entitled to a share of the company’s profit through dividends
declared.” This refers to
stocks.

A. convertible
B. debenture
C. ordinary
D. loan

54. Insurance deals with fortuitous losses which are;

A. Physical hazards
B. Intentionally damage
C. Accidental and unintentional losses
D. Risks, the severity which is within the control of the insured person
55. Property which is partially saved from a loss or damage is called;

A. Left over
B. Salvage
C. Constructive loss
D. Partial loss goods

56. This is a method of passing on to the policyholders some of the benefits of

unrealized capitalappreciation of ordinary shares and property holding of the
company;

A. Cash bonus
B. Terminal bonus
C. Interim bonus
D. Guarantee bonus

57. Identify the list of investments that is arranged in the order of lowest risk to highest
risk.

A. Equity funds, derivative funds, property funds

B. Derivative funds, equity funds, property funds
C. Equity funds, property funds, derivative funds
D. Property funds, equity funds, derivative funds

58. People usually invest for the following objectives:

I. Providing child education funds

II. Delaying retirement age
III. Hedging inflation
IV. Liabilities cancellation

A. I, II & III
B. I, III & IV
C. II, III & IV
D. All of above

59. Mr. A wants to give up his policy. The insurer will determine the
value of thesurrender

I. In accordance with premiums paid principles.

II. In compliance with standards business conduct.
III. In a way that ensuring treatment for the customer fairly.
IV. In accordance with generally accepted actuarial principles.

A. II, III & IV

B. I, III & IV
C. I, II & IV
D. I, II & III

60. A single person in his twenties has invested solely in bonds or a 70 years old
man is found toown very aggressive funds, it shows that

A. the single person is risk averse

B. the 70 years old is not risk averse
C. risk profiling exercise may not have been conducted
D. older people are more aggressive in their investment strategy.
61. Policy owners of an investment-linked policy have the right to increase the sum
assured
, subject to underwriting approval.

A. without requiring a medical check-up

B. with a corresponding increase in annual premium
C. without a corresponding increase in annual premium
D. with slight adjustment in the existing regular premium structure

62. The primary purpose of life insurance is to provide for dependents.

A. credit facility
B. medical expenses
C. financial protection
D. emotional protection

63. insurance is the earliest and simplest form of life insurance for fixed term or
period.

A. Term
B. Whole life
C. Endowment
D. Investment-linked

64. Policy owners are relieved the daily administration of their investment portfolio
which canbe a perplexed issue. They just have to monitor of their investment
through .

A. insurance agent
B. branch office of an insurance company
C. the relationship manager of an insurance company
D. the unit statements provided regularly by insurance company

65. If a policy owner makes top-ups on a single premium investment-linked policy.

A. each top-up will increase the amount of coverage by 125%.

B. each top-up will be used to purchase unit.
C. each top-up will be calculated as bonus units.
D. The charge for each top-up will be 5% and the balance will be used to purchase
units inselected funds.

66. Select the correct statement.

A. Traditional insurance products offer a better investment return.

B. Traditional insurance products are more transparent and flexible.
C. Investment-linked insurance products cater for more flexibilities and transparencies.
D. Investment-linked insurance products offer a guaranteed return on investment
67. An insurance agent who solicits or negotiates a contract of insurance should NOT;

A. Treat all information supplied by the prospective policyholder in confidential.

B. Discourage the prospective policyholder from stating material facts to
insurer.Give advice only on insurance matter in which he is knowledgeable and
seekspecialist advice if necessary.
C. Ensure as far as possible the proposed policy meets the need of
prospectivepolicyholder.

68. The common health insurer underwriting decision are

A. Standard, declined, postponed

B. Standard, declined, sub-standard
C. Standard, postponed, change plan
D. Standard, postponed, substandard

69. With regard to personal accident claims arising from supplementary contracts
to life insurance, insurers apply the doctrine of to establish the death or
disability caused byaccident, especially there were more than one concurrent
cause.

A. Subrogation
B. Contribution
C. Proximate cause
D. Indemnity

70. A life insurer can handle anti selection of risks by .

A. referring the potential client to other insured

B. rejecting the potential client with no questions asked
C. proposing additional life policies to be taken up
D. reducing the death benefit or sum assured but on standard rates and premium

71. In respect of Customer Due Diligence under the Anti Money Laundering
and CounterFinancing of Terrorism compliance guidelines, insurers must

A. submit a report on any suspicious transaction to BNM.

B.report all cash transactions exceeding RM50,000 to BNM.
C.implement risk management commensurate with the level of money
laundering andterrorism financing risks.
D. verify and be satisfied with the identity of the customer or beneficial owner through
reliabledocumentation when establishing business relationship.

72. What is an insurance contract?

A. a promise by an insurer to pay a fixed sum of money.

B. an agreement to protect the well-being of an insured person.
C. a guarantee by an insurer to insure all types of risks.
D. a legally binding agreement between an insured and the insurer.
73. The is the ‘consideration’ given by an insured in return for insurance coverage.

A. Policy
B. Premium
C. Proposal
D. Promise

74. Exclusions are incorporated into policy for many reasons, EXCEPT:

A. the risks are uninsurable.

B. the cover is not demanded by the insured.
C. the insurer requires extra premium for such cover.
D. cover can be provided under more appropriate policies.

75. The of an insurance contract contains the insured’s particulars, details of

the risk andsubject matter.

A. policy cover
B. policy conditions
C. policy schedule
D. policy exclusions

76. “ before assumption of risk of the insurer” is a fundamental

condition of a lifeinsurance contract.

A. duty of disclosure
B. payment of premium
C. medical examination
D. signing the proposal

77. Insurance agencies in Malaysia are created only through appointment by

A. a verbal agreement
B. an express agreement
C. a implied agreement
D. a standard agreement

78. Apparent or ostensible authority of an agent can arise through

A. the explicit instruction of the principal.

B. the apparent agent never being appointed at all.
C. instructions forming part of the agency agreement.
D. acts which are usually performed by persons in the agent’s position.

79. A contract of agency is NOT allowed to be terminated

A. upon the expiry of the contract period.

B. by the notice of revocation by the principal.
C. by the agent giving notice of temporary absence.
D. by operation of a law that renders the contract illegal.
80. As stipulated under Schedule of the Financial Services Act 2013, an agent is
prohibitedfrom, “engaging in conduct that is misleading or deceptive, or is likely
to mislead or deceive in relation to the nature, features, terms of any financial
service or product”.

A.7
B. 9
C. 10
D. 12

81. A principal may terminate an agency by giving one of the following

notices the agentEXCEPT:

A. extension
B. revocation
C. completion
D. renunciation

82. refers to the fixed amount the policyholder of a Medical and Health
Insurance (MHI)must pay regardless of the total cost if an eligible benefit.

A. Deductible
B. Cost-sharing
C. First Expenses
D. Minimum Cost

83. Employers provide health care benefits to their employees which normally
comprise anessential part of the remuneration package by

A. arranging a group term life insurance policy.

B. arranging a group savings scheme for retirement.
C. arranging a group personal accident insurance policy.
D. arranging a group medical and health insurance policy.

84. The followings are medical and health insurance product, EXCEPT:

A. Disability Income insurance

B. Hospital and surgical insurance
C. Permanent disability income insurance
D. Critical illness or dread disease insurance

85. Which of the following methods is NOT used by insurance company when
dealing with sub-standard lives?

A. Charging extra premium

B. Offering a premium discount
C. Provide alternative form of contract
D. Imposing a contingent debt or a lien
86. BNM has issued Guidelines on Medical and Health Insurance Business, and
Guidelines onProduct Transparency and Disclosure to

I. Increase competition among private health care providers.

II. Reduce mis-selling to consumers.
III. Enhance access to healthcare through private insurance.
IV. Contain costs to promote long-term sustainability of the private health insurance sector.

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

87. Benefit Limitation are modifications to medical card and health insurance
coverage. Thefollowing limitation does NOT fall in this category.

A. Reduction of the amount of benefit payable.

B. Shortening of the payment period of disability income.
C. Option to reduce coverage at the time of a claim.
D. Imposition of a larger deductible on a medical expense.

88. The maximum amount of disability income that can be purchased under a
disability incomeinsurance policy is of occupational earnings.

A. 50-60%
B. 60-70%
C. 70-80%
D. 80-90%

89. Modification to medical and health insurance coverage where the amount of
benefit is reduced or the period disability income is shortened or a larger
deductible is imposed forhigh risk individuals is termed

A. cover restrictions
B. benefit limitations
C. exclusion endorsement
D. extra premium or loading

90. A hospital and surgical insurance (HSI) policy can be extended to include the
below benefitswith extra premium, EXCEPT:

A. cosmetic surgery
B. organ transplant
C. accidental death benefit
D. insured child’s daily guardian allowance
91. is one of the options available under the non-forfeiture condition in a life
insurancepolicy.

A. End the cover provided

B. Hold the cover provided
C. Shorten the period of cover
D. Convert to a free policy for life

92. Linda arranges a group life insurance policy for a person. She can be violating
the disclosurerequirement if she

A. show her identity card to the person.

B. informs the person of the premium payable.
C. discloses the name of the licensed insurer.
D. does not reveal her relationship with the insurer.

93. If the group policy owner has no insurable interest on the life of the persons
insured, aninsurer should pay the monies due under the group policy
directly to

A. unclaimed monies.
B. the person insured.
C. the employer of the insured person.
D. the intermediary who arranged the policy.

94. Choose one of the non-forfeiture condition options available in a life insurance policy.

A. Lengthening the duration of the cover period.

B. Conversion to a paid-up policy.
C. Stop cover policy.
D. Hold cover policy.

95. What is the best option if the policy owner is not able to pay future premium
and his lifepolicy provides for surrender value?

A. Apply for policy loan

B. Convert to a term policy
C. Apply for premium exemption
D. Convert to a paid-up policy.

96. The non-forfeiture condition on life insurance policy available is either for
period
forcover for the full sum assured or conversion to a paid-up policy.

A. a shorter
B. an increased
C. five years shorter
D. five years longer
97. If an investment-linked policyholder decides to surrender the
policy in the first 3 years, thepolicyholder

A. will lose a very small insurance fee as the premium allocation

charges in this schemeare very low.
B. will not lose anything as the premium allocated is invested into the
investment.
C. will not lose anything as the premium is considered capital
guaranteed if the policyis discontinued.
D. will lose a great deal as the premium allocation charges in
this scheme is frontloaded.

98. An insurer will of the true age if the life insured is found to
be less than the agedeclared.

A. reduce the premium and refunds over payments

B. reduce the period of coverage in accordance with the true age
C. increase the premiums and recover the short-payments
D. extend the period of insurance and vary the premium

99. insurance is the earliest and simplest form of life insurance

for a fixed term and notpermanent.

A. Term
B. Whole life
C. Endowment
D. Investment-linked

100. Which statement is NOT correct concerning a rider.

A. It provides bonus for customer.

B. It is an additional coverage at customer’s choice.
C. It supplements a basic policy with additional coverage.
D. It includes additional benefits at an extra cost on top of basic premium.
 ANSWERS SET 1

1. C 11. C 21. A 31. B 41. C

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

51. B 61. B 71. D 81. A 91. C

52. D 62. C 72. D 82. A 92. D
53. A 63. A 73. B 83. D 93. B
54. C 64. D 74. B 84. C 94. B
55. D 65. D 75. C 85. B 95. D
56. B 66. C 76. B 86. D 96. A
57. D 67. B 77. B 87. C 97. D
58. B 68. B 78. B 88. B 98. A
59. A 69. C 79. C 89. B 99. A
60. C 70. D 80. A 90. A 100. A