PCEIA Sample Questions (E) – Set 2

SET 5: PCEIA SAMPLE QUESTIONS

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

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5. 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

6. Underwritting guards against anti-selection and to ensure that the rates charges are
A. Ratable
B. Equitable
C. Manageable
D. Unsuitable

7. 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

8. 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

9. 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
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10. In the context of the law of contract, the term ’caveat emptor’ is
A. Let the seller beware
B. Let the buyer beware
C. Utmost good faith
D. Representation

11. Accidental dealth benefits is a form of

A. Basic benefit
B. Supplementary benefit
C. Permanent benefit
D. Bonus

12. Policies generally issued for the purpose of mortgage protection are usually in the nature
of __________________ insurance.
A. Convertible term
B. Decreasing term
C. Increasing term
D. Whole life

13. Term insurance is different from other forms of permanent insurance as it doesnt NOT
provid any
A. Protection
B. Survival benefit
C. Convertibility
D. Renewability

14. __________ are NOT categorized as being in hazardous occupations.

A. Quarry workers
B. Office workers
C. Construction labourers
D. Race car drivers

15. Premiums for participating policies are higher due to the right to share in the profits of
the operation of a life insurance company. This additional premium is known as
A. Profit premium
B. Risk premium
C. Bonus risk
D. Bonus loading

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16. 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

17. 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

18. 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)

19. Which type of policy does NOT have a cash value?

A. Term
B. Endowment
C. Whole life
D. Children’s deferred insurance

20. 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. RM1,400
B. RM1,600
C. RM1,800
D. RM2,000

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21. 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

22. 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

23. 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

24. 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

25. 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

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26. If the agent is authorised to collect monies in accordance with the terms of his agency
appointment, the agent shall NOT
A. Keep a proper account of all financial transactions with his policy owners
B. Remit any such monies so collected to the insurer in strict conformity with his
agency appointment
C. Use the money collected for agency use until such time the premiums are due for
payment
D. Acknowledge receipt of all money received in connection with an insurance policy
and distinguish the premium from any other payment

27. The following are the underlying princeiples of the code of ethics and conduct:
I. To avoid conflict of interest
II. To avoid misuse of position
III. To prevent misuse of information
IV. To prevent competition between agents
A. I, II and III
B. I, III and IV
C. I, II and IV
D. I, II, III and IV

28. Choose one practice which is ethical.

A. Investing the insured premium and sharing the profit together
B. Holding in trust information on the prospect such as weight, salary and past medical
history
C. Holding all information about the prospect’s previous surgery from the underwriters
D. Paying the 1st premium for the prospect

29. The law of agency, an agent is a person who acts on behalf of another person whom he
represents and the person whom he represents is called as the
A. Broker
B. Principle
C. Intermediary
D. Insured

30. “Agents must not conceal any relevant information, must maintain confidentiality, not
accept secret commissions, and generally act in the principal’s best interest.”
This statement refers to agents’ duty
A. To obey the principal’s instructions
B. To account for monies received on behalf of the principal
C. To act in good faith towards the principal
D. To exercise proper care and skill

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31. 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

32. 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

33. 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

34. 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

35. 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

36. 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

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37. 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

38. 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

39. 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

40. 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

41. 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

42. 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
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43. _______________ is NOT essential for an insurance contract.

A. Offer and acceptance
B. Consensus ad idem
C. Consideration
D. Ratification by a lawyer

44. Which part of the insurance policy sets out the perils insured against and circumstances
in which the insurer will be liable?
A. The recital clause
B. The operative clause
C. The schedule
D. Conditions

45. Exclusions are inserted into policies for the following reasons, EXCEPT:
A. Cover can be provided under more appropriate policies
B. The insurer requires additional premium for such cover
C. The cover is not demanded by the insured
D. The risks are uninsurable

46. Under policy conditions, the duty of disclosure must be observed

A. During the negotiation of the insurance contract
B. During the currency of the insurance contract
C. At the time of renewal of the insurance contract
D. During the negotiation, currency, and at the time of renewal of the insurance
contract

47. The person works for an insurance company and his primary responsibility is to assess
all applications to determine the risk they present to the company and to decide whether
to accept these applicants.
A. Underwriter
B. Medical examiner
C. Claims executive
D. Accountant

48. The contribution condition in the policy requires the insured to claim _______________
from each insurer involved.
A. Proportionately
B. In installments
C. Periodically
D. The total loss

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49. 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

50. 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

51. 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

52. 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

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

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54. 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

55. 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

56. 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

57. 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

58. 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

59. 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

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60. Murugan had overstated his age in his application for a life policy. Five year later, he
died in a car accident. How much should the company pay the beneficiary?
A. The sum assured
B. The sum assured together with the excess premium paid
C. The company need not to pay anything as Murugan breached the principle of good
faith
D. The surrender value on the date of death

61. The assignment is the transfer of _____________ by an insured to another

A. Rights
B. Liabilities
C. Insurable interest
D. Rights and liabilities

62. 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 insured
D. Suffering of the dreadful disease by the life insured

63. A proposal form completed by an applicant contains:

I. Detail of occupation
II. Chest and abdomen measurements
III. Sum insured required
IV. Details of hazardous pursuits
A. I, II and III
B. I, III and IV
C. I, II and IV
D. I, II, III and IV

64. A policy shall NOT be invalidated by reason of only?

A. Misrepresentation of condition of health
B. Misrepresentation of medical history
C. Misstatement of age
D. Non – disclosure of hazardous hobbies

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65. 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

66. 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

67. 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

68. 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

69. 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

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70. 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

71. 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

72. 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

73. 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

74. 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

75. 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

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76. A composite insurance company deals in?

A. Life business
B. General business
C. Life and general business
D. Single class of business

77. How does Perbadanan insurance deposit Malaysia (PIDM) complement the role of the
central bank of Malaysia?
A. By providing a safety net for depositors and insurance policy owner in the event of
insolvency
B. By protecting financial consumers against unscrupulous agents
C. By providing immediate resolution to customer complaints
D. By protecting insurance companies against financial losses

78. In which of following situation can group insurance be bought?

A. A father buying group insurance for his family members
B. A creditor buying group insurance on the life of a debtor
C. Employees buying group insurance for their employer
D. An employer buying group insurance for his/her employees

79. Regulations pertaining to disclosures requirement state that no person shall invite any
person to make an offer or proposal to enter into a contract insurance without disclosing
I. The terms, conditions and exclusions of the policy
II. His relationship with the insurer
III. The name of the licensed insurer
IV. The premium charged by the licensed insurer
A. I and II
B. II and III
C. II, III and IV
D. I, II, III and IV

80. Under the common law, insurers can exercise their subrogation rights
A. At any time
B. After having settled the insured’s claim
C. At no time
D. Before setting the insured’s claim

81. Premiums for participating policies are higher due to the right share in the profits of the
operation of a life insurance company, the addition premium is known as.
A. Profit premium
B. Risk premium
C. Bonus risk
D. Bonus loading

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82. 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

83. 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

84. 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

85. 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

86. Which of the following are appointed by insurance companies to represent them?
A. Reinsurers
B. insurers
C. insurance brokers
D. insurance agents

87. 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

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88. 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

89. 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

90. 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

91. An insurance contract is a legally binding agreement between an insured and

A. The government
B. His agent
C. His insurer
D. His broker

92. Perils which are expressly exempted from a policy called _____ perils
A. Insured
B. Excluded
C. Uninsured
D. Unknown

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93. Which of the following statement is NOT true about an insurance agent?
A. An agent sets the amount of premium to be paid
B. An agent solicits a contract of insurance for the purpose of the formation of the
contract
C. Statements made by the agent shall be deemed to be statements made by the
insurer
D. Agents should obtain specialist advice (from experts or underwriter) to explain the
scope of coverage

94. Standard mortality tables are derived from the

A. Combined mortality experience of life insurers operating in the territory
B. Mortality experience of the policyholders of the insurer
C. Mortality experience of policyholders according to race
D. Mortality experience according to occupation

95. The agent can act within the authority granted to him by the principal, where such
authority may be
A. Expressed
B. Implied
C. Apparent
D. All of the above

96. Under the guidelines on medical and health insurance business, cost sharing provisions
shall be limited to the lower _______(excluding deductibles) or ______(inclusive
deductibles) and shall not be mandatory
A. 20% or RM 3000
B. 20% or RM 5000
C. 30% or RM 3000
D. 30% or RM 5000

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

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

98. Which of the following does NOT form part of the recital clause of an insurance policy?
A. That the insured has proposed to the company
B. That the insured has paid or agreed to pay the premium
C. The company’s name, address and place of incorporation
D. A reference to the written proposal, declaration and any other statements made by
the insured

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99. 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

100. 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

101. 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

102. 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

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104. 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

105. 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

106. 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

107. 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.

108. 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

109. 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

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110. Ostensible authority can arise in the following situations:

i. Where the agents performs those acts which are usually performed by persons in
the agent’s position or usual in a particular trade.
ii. Where the principle has restricted the authority of a validity appointed agent.
iii. Where unknown to the third party the authority of the agent has been terminated.
iv. Where the instructions have been given to the agent stating what is required and
what is allowed.
A. I and II
B. II and III
C. III and IV
D. I,II and III

111. The option that allows the insured of a term assurance to convert the policy into
permanent assurance like whole life or endowment evidence of insurability but subject
only to proper adjustment in the premium changed is known as the guaranteed
_____________ option.
A. Insurability
B. Permanent
C. Suitability
D. Convertibility

112. A principle agent relationship CANNOT be created by the following ways:

A. Ratification
B. Revocation
C. Consent
D. Apparent authority

113. There is a specific form of bonus which is payable when the policy results into a claim.
This bonus is called ___________ bonus.
A. Terminal
B. Interim
C. Special
D. Simple

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

I. Net premium
II. Management expenses and contingencies
III. Profit
IV. Renewal expenses
A. I and II
B. II and III
C. I, II and III
D. I,III and IV

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115. Which of the following statements is true regarding a term policy?

A. It provides protection for an unlimited period of time.
B. Premiums are comparatively higher.
C. A small cash value is payable at the end of the policy term.
D. The sum assured is not payable if the life assured survives the policy term.

116. Which of the following is the key feature of a term assurance policy?
A. Payment of the sum assured is at the end of the said term if the life assured is living,
paid up value is applicable, and premiums are not normally reviewable.
B. Payment of the sum assured is only in the event of death, there is no surrender or
maturity value and it provides cheap guaranteed protection.
C. Payment of the sum assured is at the end of the said term if the life assured is living,
surrender or maturity value is applicable, and premiums are reviewable.
D. Payment of the sum assured is only in the event of death, the suicide exclusion is
uncommon and premiums are reviewable.

117. If death occurs accidentally or suddenly without a known cause or prior medical
attention which of the following is among the documents that can be used to show
proof of death?
A. Medical certificate
B. Certificate of death
C. Post mortem report
D. Statutory declaration

118. A regular premium policy acquires surrender value after the policyholder has paid the
premiums continuously for _______________ years.
A. 2
B. 3
C. 4
D. 5

119. What is the system applied in charging a uniform premium throughout the duration of a
life insurance policy despite increased mortality with age?
A. Level payment system
B. Level premium system
C. Constant premium system
D. Uniform payment system

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120. Which of the following are elements of gross premium?

I. Mortality
II. Loading for expenses
III. Interest
IV. Loading for profits and contingencies
A. I,II and III
B. I,II and IV
C. I,III and IV
D. I,II,III and IV

121. Many policies contain a provision that the policy shall not immediately lapse for non-
payment of premium if it has acquired a
A. Cash value
B. Policy loan
C. Non lapse value
D. Letter of non- lapse provision

122. The payment of money by the insured to a common fund is called

A. fund money
B. shares
C. Interest
D. Premium

123. An example or examples of unfavorable physical risk

A. Are sprinkler system and hydrant system.
B. Are poor wiring and open burning
C. Is fire extinguisher.
D. Is automatic fire alarm.

124. As evidence of a group insurance cover provided for the employees of a corporation
the insurance issues
A. Only a certificate listing the names of all insured employees.
B. A master policy to be retained by the employer
C. An undertaking to all insured employees of future privileges of the policy
D. Policies to individual employees who join the scheme.

125. When an insurance company encounters an applicant with substandard risk, the
company can
A. Report the applicant to the health authorities.
B. Accept the applicant with additional premium.
C. Impose quarantine on the applicant
D. Suspend the agent who brought in the application.

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126. Insurance brokers, financial advisers and registered adjusters are required to be
incorporated as
A. Public companies
B. Unlimited companies
C. Registered companies
D. Private companies

127. Where the group owner has no insurable interest in the lives of the persons insured by
the group policy the insurer shall pay the monies under the policy directly to the
A. Employer
B. Administrator
C. Insured persons
D. Nomine

128. When a convertible term insurance is converted to a permanent insurance, the

A. Premium payable will be affected based on the attained age basis or original age
basis.
B. Insured continues to pay the same premium.
C. Premium must be paid on a single premium basis.
D. Premium payable will be subject to age loading.

129. The schedule of the fire policy does NOT contain

A. The name of the insurer, period of insurance.
B. The name and address of the insured, the amount of premium.
C. The business/occupation, location of property insured.
D. The details of claims conditions and procedures.

130. Possibility of loss often termed as

A. Risk
B. Probability
C. Priority
D. Judgment

131. An agency relationship may be created in the following way(s)

i. By express appointment
ii. By implication of law
iii. By subsequent ratification of an agents unauthorized act.
A. I only
B. I and II
C. II and III
D. I, II and III

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132. A contribution condition stipulates that where two or more policies cover the same risk,
the insured
A. Can claim from one policy only
B. Cannot make any claim at all
C. Can claim from all policies recovering a rateable proportion from each insurer
D. Can claim from all the policies twice for the same cost.

133. What is a speculative risk?

A. A risk with possibility of profit, loss or no loss.
B. A risk with possibility of loss or a gain only
C. A risk with possibility of loss or no loss only
D. A risk which is insurable.

134. The following information is extracted from a proposal form and the agents report
identify the features suggesting the presence of physical hazard
i. The life proposed smokes two packs of cigarettes a day
ii. The life proposed is overweight
iii. The life proposed has a criminal record.
A. I only
B. II only
C. I and II
D. I,II and II

135. After taking delivery of the life policy, what remedy is available for a policy owner who
has any objections to the policy terms and conditions?
A. Return the policy to the insurer within 30 days and request cancellation of the policy.
B. Return the policy to the insurer within 30 days and demand a premium refund.
C. Return the policy within 15 days and expect a refund of premium minus all
expenses incurred by the insurer for issuing the policy.
D. Return the policy within 15 days and expect a full refund less expenses incurred for
medical examination.

136. Which one of the following is NOT a form of bonus?

A. Interim bonus
B. Compound revisionary bonus
C. Policy loan bonus
D. Maturity bonus.

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PCEIA Sample Questions (E) – Set 2

Answer

1C 26 C 51 B 76 C 101 A 126 A
2D 27 A 52 B 77 A 102 B 127 D
3C 28 B 53 B 78 D 103 B 128 A
4C 29 B 54 C 79 D 104 C 129 C
5C 30 C 55 A 80 D 105 B 130 A
6A 31 A 56 C 81 A 106 D 131 D
7C 32 C 57 C 82 B 107 D 132 C
8C 33 D 58 C 83 A 108 A 133 A
9B 34 B 59 C 84 B 109 B 134 C
10 B 35 B 60 B 85 B 110 A 135 D
11 B 36 A 61 D 86 D 111 D 136 C
12 B 37 D 62 B 87 C 112 B
13 B 38 B 63 B 88 D 113 A
14 B 39 B 64 C 89 B 114 C
15 A 40 C 65 B 90 C 115 D
16 D 41 C 66 D 91 C 116 B
17 D 42 D 67 C 92 B 117 C
18 A 43 D 68 B 93 A 118 B
19 A 44 B 69 D 94 B 119 B
20 B 45 C 70 B 95 D 120 B
21 C 46 D 71 D 96 A 121 A
22 C 47 A 72 B 97 D 122 D
23 B 48 A 73 A 98 D 123 B
24 C 49 B 74 B 99 A 124 B
25 B 50 C 75 C 100 C 125 B

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