Financial Planning Association of Malaysia

Web Sample 2008

Module 2 Sample Questions
Q1. A risk averse individual is likely to have _________________.
A. More insurance.
B. More self insurance.
C. Greater deductibles.
D. Under insurance.
Q2. Conditions that increase either the frequency or severity of loss are called:
A. Etenuatin! circu"stances.
B. #isks.
C. Hazards.
D. $erils.
Q3. %hich of the follo&in! state"ents is not true re!ardin! "ortality and
"orbidity'
A. A!e for a!e( assured lives "ortality rates are lo&er than )o)ulation
"ortality rates.
B. For a given population age !or age t"e incidence o! !emale
mor#idit$ is lo%er t"an male mor#idit$.
C. A!e for a!e( fe"ales e)erience lo&er "ortality than "ales.
D. *n costin! life annuities( it is i")ortant to )rovide for e)ected future
i")rove"ents in annuitants+ "ortality.
Q&. ,he )re"iu" rates for &hich class of insurance is "ost sensitive to the
interest rate assu")tion'
A. %hole-of-life )olicies.
B. 'ndo%ment policies.
C. ,e")orary Assurance )olicies.
D. Disability *nco"e )olicies.
Q(. ,he su" that a life insurance )olicyholder "ust contribute as his share of
the death clai"s in any )articular )olicy year is called the ____________.
A. Benefit of survivorshi).
B. Mean actuarial reserve.
C. .et level )re"iu".
). Cost o! insurance.
Financial Planning Association of Malaysia
Web Sample 2008
Q*. A contract for invest"ent linked life insurance "ay be characteri/ed as
a0an __________________.
*. Unilateral contract.
**. Aleatory contract.
***. Conditional contract.
*1. $ersonal contract of adhesion.
A. *( **( ***
B. *( ***
C. **( *1
). All o! t"e a#ove.
Q+. ,he follo&in! are ea")les of )ay"ents incurred by a deceased )erson+s
estate:
*. 2ettle"ent of the deceased+s debts.
**. $robate and ad"inistration costs.
***. *nsurance clai"s costs.
A. , ,,
B. *( ***
C. **( ***
D. All of the above.
Q-. $ersonal accident insurance does not cover __________________.
A. ,e")orary or )er"anent disable"ent.
B. Sel! a!!licted in.uries.
C. Corrective sur!ery.
D. 3uneral e)enses.
Q/. 4*t is )ossible to )redict the a))roi"ate nu"ber of deaths or frequency of
disabilities &ithin a certain !rou) over a s)ecific ti"e.5
%hich of the follo&in! insurance conce)ts describes the above
state"ent'
A. ,he 6uantu" *nsurance $rinci)le.
B. ,he $rinci)le of lar!e loss.
C. 0"e 1a% o! large num#ers.
D. ,he 7a& of di"inishin! return.
Financial Planning Association of Malaysia
Web Sample 2008
Q12. Eclusions are inserted into )olicies for the follo&in! reasons ece)t:
A. Cover can be )rovided under "ore a))ro)riate )olicies.
B. ,he risks are uninsurable.
C. 0"e cover is not demanded #$ t"e insured.
D. *nsurers require hi!her )re"iu"s to )rovide such cover.
Q11. $eter( a!ed 88( is the no"inee of his "other+s #M9::(::: life insurance
)olicy. ,he insurer has requested hi" to select a settle"ent o)tion for
)ay"ent of the )roceeds. %hat factors should he consider before "akin!
the selection'
*. ;is current inco"e needs.
**. ;is asset "ana!e"ent ability.
***. ;is net &orth.
*1. ,he ta liability on the #M9::(:::.
A. *( **( *1
B. , ,, ,,,
C. *
D. *1
Q12. ,he "ain )ur)ose for &hich insurance co")anies are required by statute
to undertake annual valuation of their liabilities is to:
A. Enable the" to deter"ine the )rofits arisin! fro" insurance
o)erations.
B. Enable the *nland #evenue to char!e the a))ro)riate ta on the
insurance co")anies+ )rofits.
C. Enable investors to for" an o)inion on their "ana!e"ent.
). 'sta#lis" t"eir solvenc$ position.
Q13. ,he )rofits of an insurer &ill decrease &hen _____________.
A. #evenue increase.
B. $olicyo&ner dividends decrease.
C. 0a3es increase.
D. E)enses decrease.
Financial Planning Association of Malaysia
Web Sample 2008
Q1&. _____________ is the a"ount that is added to the risk )re"iu" to cover
the )ossible variability of clai"s cost.
A. $ure )re"iu".
B. E)enses loadin!.
C. $rofit loadin!.
). Contingenc$ loading.
Q1(. %hich of the follo&in! Acts has i")act on the insurance industry in
Malaysia'
*. *nsurance Act( <==>.
**. #oad ,rans)ort Act <=?@.
***. Co")anies Act( <=>8.
A. *( **
B. , ,,,
C. **( ***
D. All of the above.
Q1*. An the occurrence of a loss( a valued contract is one &here the
)olicyholder is ______________.
A. *nde"nified.
B. 4aid an amount agreed at t"e outset.
C. $aid the re)lace"ent value.
D. $aid the re)lace"ent value less the a))licable deductible.
Q1+. %hich of the follo&in! is not an essential ele"ent of a valid contract'
A. ,he intention to create le!al relations.
B. An o!!er made in %riting.
C. Acce)tance of an offer.
D. Consideration.
Financial Planning Association of Malaysia
Web Sample 2008
Q1-. %hich of the follo&in! state"ents is not true )ertainin! to the econo"ic
value of an individual'
A. ,t re!ers to t"e contri#ution o! an individual to societ$.
B. 3or insurin! an individual( the )roBected flo& of inco"e to his fa"ily should
be discounted i!norin! "ortality.
C. A ty)ical individual+s econo"ic value di"inishes as )otential inco"e is
converted into actual inco"e.
D. 3or insurin! an individual( the )roBected flo& of inco"e to his fa"ily should
be discounted allo&in! for invest"ent inco"e.
Q1/. A )olicyholder la)sed her #M<8:(::: non)artici)atin! &hole life
insurance )olicy. ,he annual )re"iu" on this )olicy &as #M8::. %hen
the )olicy la)sed( its reduced )aid-u) insurance non-forfeiture )rovision
took effect. At the ti"e the )olicy la)sed( there &ere no outstandin! )olicy
loans( and the a"ount of the )olicy+s net cash value &as #M8(:::. *n this
situation( the effect of the non-forfeiture o)tion &as that:
A. A net sin!le )re"iu" of #M8(::: &as used to )urchase &hole life
insurance in an a"ount less than #M<8:(:::.
B. A net sin!le )re"iu" of #M8(::: &as used to )urchase &hole life
insurance in an a"ount equal to #M<8:(:::.
C. 0"e insurer automaticall$ paid t"e overdue premium #$ ma5ing a
6M(22 loan against t"e polic$7s cas" value.
D. #M8(::: &as )aid in a lu") su" to the )olicyholder.
Q22. %hich of the follo&in! is usually the )ri"ary source of internally !enerated
ca)ital Csur)lusD for a life insurance co")any'
A. Favoura#le deviations o! actual e3perience !rom assumed
e3perience on esta#lis"ed policies.
B. 3unds raised by sellin! bonds in traditional ca)ital "arkets.
C. ,he effective use of reinsurance to transfer risk to others.
D. 1oluntary )olicy ter"inations at early durations &hen )olicy surrender
values are less than their reserves.
'nd o! Sample Questions