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PCE-1-Textbook
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What is the purpose of the Pre Contract Examination (PCE)?
To license individuals as insurance agents.
What type of insurance mechanism is Takaful based on?
Mutual assistance and protection among participants.
What are the four types of risk classified in insurance?
Pure risk, Speculative risk, Fundamental risk, Particular risk.
What is Risk Management defined as?
Identification, analysis, and control of risks threatening assets.
What does 'Utmost Good Faith' mean in insurance contracts?
Both parties must act honestly and disclose all relevant information.
According to the Financial Services Act 2013, what happens if an insurance policy lacks insurable interest?
The policy becomes void.
Under what conditions can a minor take up a life insurance policy?
With consent from a parent or guardian, starting from age 10.
What is the main function of the insurance market?
To provide coverage for various risks to individuals and businesses.
What are the essential elements for a valid insurance contract?
Offer and acceptance, consideration, legal capacity, intention to create legal relations.
What is the definition of 'indemnity' in insurance?
Restoration of the insured to the same financial position as before the loss.
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.
What is the purpose of ‘subrogation’ in insurance?
It allows insurers to recover costs from third parties after paying a claim.
What constitutes the ‘consideration’ in an insurance contract?
The premiums paid by the insured in exchange for coverage.
How is 'insurable interest' defined?
A financial interest in the insured subject matter.
What do insurance agents have to do to ensure compliance with good practices?
Follow ethical standards, disclose relevant information, and ensure proper documentation.
What type of insurance covers loss from fire, theft or other perils?
Property Insurance.
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.
What does life insurance provide to the beneficiaries upon the death of the policyholder?
A sum assured as specified in the policy.
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.
What is the minimum paid-up capital required for local insurers as per the Insurance Act?
RM100 million.
What role does the Malaysia Deposit Insurance Corporation serve?
Protect depositors by insuring deposits in banks against losses.
What are the three categories of general insurance claims?
Death, maturity, and critical illness.
What must an insured provide for a death claim?
Proof of death and the original policy document.
Which documents are required for Total and Permanent Disability claims?
Claim form, medical report, original policy document.
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.
What is ‘group insurance’?
Insurance coverage provided under a single master policy for a group, typically by an employer.
When must the insurer pay policy monies if death is not contested?
Within 60 days of notification.
What distinct feature does investment-linked life insurance offer?
Combination of investment and insurance protection.
What does the term 'premium' refer to in life insurance?
The amount paid by the policyholder to the insurer for coverage.
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.
What is the main purpose of insurance underwriting?
Risk assessment, evaluation, and classification.
What factors influence the pricing of life insurance premiums?
Mortality rates, investment returns, and expense expectations.