PCE-1-Textbook

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PCE-1-Textbook

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32 Terms

1
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What is the purpose of the Pre Contract Examination (PCE)?

To license individuals as insurance agents.

2
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What type of insurance mechanism is Takaful based on?

Mutual assistance and protection among participants.

3
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What are the four types of risk classified in insurance?

Pure risk, Speculative risk, Fundamental risk, Particular risk.

4
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What is Risk Management defined as?

Identification, analysis, and control of risks threatening assets.

5
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What does 'Utmost Good Faith' mean in insurance contracts?

Both parties must act honestly and disclose all relevant information.

6
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According to the Financial Services Act 2013, what happens if an insurance policy lacks insurable interest?

The policy becomes void.

7
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Under what conditions can a minor take up a life insurance policy?

With consent from a parent or guardian, starting from age 10.

8
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What is the main function of the insurance market?

To provide coverage for various risks to individuals and businesses.

9
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What are the essential elements for a valid insurance contract?

Offer and acceptance, consideration, legal capacity, intention to create legal relations.

10
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What is the definition of 'indemnity' in insurance?

Restoration of the insured to the same financial position as before the loss.

11
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What does 'moral hazard' refer to in insurance?

The risk of loss when the insured may have the opportunity to act in ways that increase the likelihood of a loss.

12
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What is the purpose of ‘subrogation’ in insurance?

It allows insurers to recover costs from third parties after paying a claim.

13
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What constitutes the ‘consideration’ in an insurance contract?

The premiums paid by the insured in exchange for coverage.

14
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How is 'insurable interest' defined?

A financial interest in the insured subject matter.

15
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What do insurance agents have to do to ensure compliance with good practices?

Follow ethical standards, disclose relevant information, and ensure proper documentation.

16
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What type of insurance covers loss from fire, theft or other perils?

Property Insurance.

17
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What is the significance of the cooling-off period in insurance contracts?

Allows policyholders to cancel their policies within a specified time for a full refund.

18
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What does life insurance provide to the beneficiaries upon the death of the policyholder?

A sum assured as specified in the policy.

19
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What are the key Distinctions between pure risk and speculative risk?

Pure risk involves only the possibility of loss while speculative risk involves potential gain.

20
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What is the minimum paid-up capital required for local insurers as per the Insurance Act?

RM100 million.

21
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What role does the Malaysia Deposit Insurance Corporation serve?

Protect depositors by insuring deposits in banks against losses.

22
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What are the three categories of general insurance claims?

Death, maturity, and critical illness.

23
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What must an insured provide for a death claim?

Proof of death and the original policy document.

24
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Which documents are required for Total and Permanent Disability claims?

Claim form, medical report, original policy document.

25
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What is an agent’s duty to the principal in an insurance context?

To obey instructions and act in the best interest of the principal.

26
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What is ‘group insurance’?

Insurance coverage provided under a single master policy for a group, typically by an employer.

27
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When must the insurer pay policy monies if death is not contested?

Within 60 days of notification.

28
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What distinct feature does investment-linked life insurance offer?

Combination of investment and insurance protection.

29
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What does the term 'premium' refer to in life insurance?

The amount paid by the policyholder to the insurer for coverage.

30
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What is a main feature of Whole Life Assurance?

It remains in force for the lifetime of the insured, as long as premiums are paid.

31
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What is the main purpose of insurance underwriting?

Risk assessment, evaluation, and classification.

32
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What factors influence the pricing of life insurance premiums?

Mortality rates, investment returns, and expense expectations.