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Question 1 of 30
1. Question
In general, which of the following feel the largest impact from the pooled fund’s investment returns?
Correct
Dividend amounts
In general, dividend amounts feel the largest impact from the pooled fund’s investment returns, which may or may not be consistent with the overall business performance of the insurer. A good dividend yield will vary with interest rates and general market conditions, but typically a yield of 4 to 6 percent is considered quite good.Incorrect
Dividend amounts
In general, dividend amounts feel the largest impact from the pooled fund’s investment returns, which may or may not be consistent with the overall business performance of the insurer. A good dividend yield will vary with interest rates and general market conditions, but typically a yield of 4 to 6 percent is considered quite good. -
Question 2 of 30
2. Question
When designing products with non-guaranteed benefits, the appointed actuary is obligated to ensure that there is a fair chance of achieving the non-guaranteed returns. In connection to this, the appointed actuary should submit which of the following?
I. A report to the board of directors
II. Recommending policy dividends/bonuses
III. Non-guaranteed benefits annually or more frequently
IV. Dividends/bonuses declarationCorrect
The appointed actuary should submit a report to the board of directors, recommending policy dividends/bonuses and other non-guaranteed benefits annually or more frequently, and the report should be made available to the IA upon request.
Incorrect
The appointed actuary should submit a report to the board of directors, recommending policy dividends/bonuses and other non-guaranteed benefits annually or more frequently, and the report should be made available to the IA upon request.
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Question 3 of 30
3. Question
Which of the following statements best describes pooled funds?
Correct
By “pooled fund”, it means the whole of the assets which the relevant insurer has created on its balance sheet as a result of granting the participating policies and which it then manages on behalf of such policies. The pooled investment account lets the investors be treated as a single account holder, enabling them to buy more shares collectively than they could individually, and often for better—discounted—prices.
Incorrect
By “pooled fund”, it means the whole of the assets which the relevant insurer has created on its balance sheet as a result of granting the participating policies and which it then manages on behalf of such policies. The pooled investment account lets the investors be treated as a single account holder, enabling them to buy more shares collectively than they could individually, and often for better—discounted—prices.
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Question 4 of 30
4. Question
The actuaries, in making recommendations, will consider the experience of which of the following?
I. Pooled funds
II. Economic outlook
III. Dividend amounts
IV. Equity between different classesCorrect
The actuaries, in making recommendations, will consider the experience of the pooled funds, the economic outlook and the equity between different classes and generations of policyholders within a single pooled fund.
Incorrect
The actuaries, in making recommendations, will consider the experience of the pooled funds, the economic outlook and the equity between different classes and generations of policyholders within a single pooled fund.
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Question 5 of 30
5. Question
Which of the following are ultimately responsible for interpreting the policyholders’ reasonable expectations and deciding on dividends/bonuses declaration?
Correct
Boards of directors
It is the board of directors who are ultimately responsible for interpreting the policyholders’ reasonable expectations and deciding on dividends/bonuses declaration, taking into account the principle of fair treatment of customers and the issue of equity between the shareholders and the policyholders.Incorrect
Boards of directors
It is the board of directors who are ultimately responsible for interpreting the policyholders’ reasonable expectations and deciding on dividends/bonuses declaration, taking into account the principle of fair treatment of customers and the issue of equity between the shareholders and the policyholders. -
Question 6 of 30
6. Question
The Insurance Authority has issued a Guideline on Underwriting Long Term Insurance Business to impose requirements applicable to participating policies on authorities. Which of the following are included in this?
I. Corporate directors
II. Relevant insurers
III. Actuaries they have appointed
IV. Boards of directorsCorrect
The Insurance Authority has issued a Guideline on Underwriting Long Term Insurance Business to impose requirements applicable to participating policies on relevant insurers, the actuaries they have appointed, and their boards of directors.
Incorrect
The Insurance Authority has issued a Guideline on Underwriting Long Term Insurance Business to impose requirements applicable to participating policies on relevant insurers, the actuaries they have appointed, and their boards of directors.
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Question 7 of 30
7. Question
In Hong Kong, policy dividends are generally distributed in three ways. Which of the following are included in this?
I. Cash dividend
II. Reversionary bonus
III. Terminal bonus
IV. Pooled fundsCorrect
A dividend policy is a policy a company uses to structure its dividend payout to shareholders. They can either retain the profits in the company (retained earnings on the balance sheet), or they can distribute the money to shareholders in the form of dividends. In Hong Kong, policy dividends are generally distributed in three ways. It includes cash dividends, reversionary bonuses, and terminal bonuses.
Incorrect
A dividend policy is a policy a company uses to structure its dividend payout to shareholders. They can either retain the profits in the company (retained earnings on the balance sheet), or they can distribute the money to shareholders in the form of dividends. In Hong Kong, policy dividends are generally distributed in three ways. It includes cash dividends, reversionary bonuses, and terminal bonuses.
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Question 8 of 30
8. Question
Which of the following statements is TRUE about cash dividends?
Correct
As a cash dividend, many policyholders choose to leave cash dividends on deposit with their insurers. It is the distribution of funds or money paid to stockholders generally as part of the corporation’s current earnings or accumulated profits. Cash dividends are paid directly in money, as opposed to being paid as a stock dividend or other form of value.
Incorrect
As a cash dividend, many policyholders choose to leave cash dividends on deposit with their insurers. It is the distribution of funds or money paid to stockholders generally as part of the corporation’s current earnings or accumulated profits. Cash dividends are paid directly in money, as opposed to being paid as a stock dividend or other form of value.
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Question 9 of 30
9. Question
Which of the following statements is TRUE about a reversionary bonus?
I. It adds value to the total amount payable to the policyholder or nominee.
II. It is offered to the policyholders for keeping the policy till its maturity date.
III. It is where policy benefits are permanently increased by the declared amounts.
IV. It is usually declared at the end of every financial year and is payable at the time of a claim.Correct
As a reversionary bonus, where policy benefits are permanently increased by the declared amounts. It adds value to the total amount payable to the policyholder or nominee. It is usually declared at the end of every financial year and it is payable at the time of a claim.
Incorrect
As a reversionary bonus, where policy benefits are permanently increased by the declared amounts. It adds value to the total amount payable to the policyholder or nominee. It is usually declared at the end of every financial year and it is payable at the time of a claim.
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Question 10 of 30
10. Question
Which of the following statements is TRUE about the terminal bonus?
Correct
Terminal bonus (final bonus) is declared and added only for policies, which attain maturity. This bonus is offered to the policyholders for keeping the policy till its maturity date. These are paid at the discretion of the life office and usually take the form of a percentage of the sum assured.
Incorrect
Terminal bonus (final bonus) is declared and added only for policies, which attain maturity. This bonus is offered to the policyholders for keeping the policy till its maturity date. These are paid at the discretion of the life office and usually take the form of a percentage of the sum assured.
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Question 11 of 30
11. Question
Which of the following are usually declared on an annual basis?
I. Cash dividends
II. Reversionary bonuses
III. Terminal Bonuses
IV. Interim bonusesCorrect
Cash dividends and reversionary bonuses are usually declared on an annual basis while terminal bonuses are usually declared at policy maturity or when the policy has been in force for a given number of years.
Incorrect
Cash dividends and reversionary bonuses are usually declared on an annual basis while terminal bonuses are usually declared at policy maturity or when the policy has been in force for a given number of years.
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Question 12 of 30
12. Question
Which of the following is the main advantage of participating policies is that apart from the availability of cash values and death benefits guarantees?
Correct
The main advantage of participating policies is that apart from the availability of cash values and death benefits guarantees, the policyholder can participate in any favorable experience of the pooled fund in the form of dividends.
Incorrect
The main advantage of participating policies is that apart from the availability of cash values and death benefits guarantees, the policyholder can participate in any favorable experience of the pooled fund in the form of dividends.
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Question 13 of 30
13. Question
Which of the following is the second advantage of participating policies?
Correct
A second advantage is that the risk of return to the policyholder is lower than with investment-linked policies, owing to the said guarantees. With investment-linked policies, the policyholder selects the underlying investments and will have the full upside if they perform well but also the full downside if they perform badly because such policies generally make no guarantees.
Incorrect
A second advantage is that the risk of return to the policyholder is lower than with investment-linked policies, owing to the said guarantees. With investment-linked policies, the policyholder selects the underlying investments and will have the full upside if they perform well but also the full downside if they perform badly because such policies generally make no guarantees.
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Question 14 of 30
14. Question
Which of the following policies where the policyholder selects the underlying investments and will have the full upside if they perform well but also the full downside if they perform badly?
Correct
Investment-linked Policies
With investment-linked policies, the policyholder selects the underlying investments and will have the full upside if they perform well but also the full downside if they perform badly because such policies generally make no guarantees. The fact that returns on participating policies are generally smoothed is another advantage.Incorrect
Investment-linked Policies
With investment-linked policies, the policyholder selects the underlying investments and will have the full upside if they perform well but also the full downside if they perform badly because such policies generally make no guarantees. The fact that returns on participating policies are generally smoothed is another advantage. -
Question 15 of 30
15. Question
Which of the following are included in the major areas covered by GL16?
I. Product design
II. Provision of adequate and clear information
III. Promotions and publicity work
IV. Suitability assessmentCorrect
The major areas covered by GL16 are:
• Product design
• Provision of adequate and clear information
• Suitability assessment
• Advice to customers
• Appropriate remuneration structure
• Ongoing monitoring
• Post-sale controlIncorrect
The major areas covered by GL16 are:
• Product design
• Provision of adequate and clear information
• Suitability assessment
• Advice to customers
• Appropriate remuneration structure
• Ongoing monitoring
• Post-sale control -
Question 16 of 30
16. Question
Every application for a new life insurance policy must be accompanied by a financial need analysis (FNA) form if that is a policy of the nature specified in Class C under the Insurance Ordinance, or in Class A under the Insurance Ordinance except which of the following?
I. Term insurance policies
II. Refundable insurance
III. Yearly renewable insurance policies
IV. Whole life insurance policiesCorrect
Every application for a new life insurance policy (including a rider and top-up) must be accompanied by a financial need analysis (FNA) form, if that is a policy of the nature specified in Class C under the Insurance Ordinance, or in Class A under the Insurance Ordinance except:
• Term insurance policies
• Refundable insurance
• Yearly renewable insurance policies
• Group policiesIncorrect
Every application for a new life insurance policy (including a rider and top-up) must be accompanied by a financial need analysis (FNA) form, if that is a policy of the nature specified in Class C under the Insurance Ordinance, or in Class A under the Insurance Ordinance except:
• Term insurance policies
• Refundable insurance
• Yearly renewable insurance policies
• Group policies -
Question 17 of 30
17. Question
Which of the following must require the insurance intermediaries to carry out an FNA with the customers before recommending to them any life insurance products and signing the application?
Correct
Member Companies
Member Companies must require the insurance intermediaries to carry out an FNA (including the comparison of different insurance options) with the customers before recommending to them any life insurance products and signing the application.Incorrect
Member Companies
Member Companies must require the insurance intermediaries to carry out an FNA (including the comparison of different insurance options) with the customers before recommending to them any life insurance products and signing the application. -
Question 18 of 30
18. Question
Which of the following are included in the FNA form?
I. Family commitments
II. Investors
III. Disposable assets
IV. LiabilitiesCorrect
The FNA form should include the following:
• Personal particulars (name, date of birth, marital status, occupation, education level, etc.)
• Financial outgoings (monthly living expenses, rent/mortgage redemption, etc.)
• Disposable assets (savings, stock/securities/bonds, etc.)
• Liabilities (mortgage loan, debts, etc.)
• Family commitmentsIncorrect
The FNA form should include the following:
• Personal particulars (name, date of birth, marital status, occupation, education level, etc.)
• Financial outgoings (monthly living expenses, rent/mortgage redemption, etc.)
• Disposable assets (savings, stock/securities/bonds, etc.)
• Liabilities (mortgage loan, debts, etc.)
• Family commitments -
Question 19 of 30
19. Question
Under what circumstances there is no need for Mainland customers to sign the IFS-MP for top-up or rider addition?
Correct
The IFS-MP needs only be conducted once for one policy. There is no need for Mainland customers to sign the IFS-MP for top-up or rider addition if the basic plan was taken out after the implementation of the IFS-MP.
Incorrect
The IFS-MP needs only be conducted once for one policy. There is no need for Mainland customers to sign the IFS-MP for top-up or rider addition if the basic plan was taken out after the implementation of the IFS-MP.
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Question 20 of 30
20. Question
Which of the following are included in the major contents of Guidance Note on Conducting “Know Your Client” Procedures for Long Term Insurance Business?
I. Assessment
II. Record-keeping and Verification
III. Identification
IV. Needs AnalysisCorrect
The major contents of Guidance Note on Conducting “Know Your Client” Procedures for Long Term Insurance Business includes:
• Record-keeping and Verification
• Identification
• Needs AnalysisIncorrect
The major contents of Guidance Note on Conducting “Know Your Client” Procedures for Long Term Insurance Business includes:
• Record-keeping and Verification
• Identification
• Needs Analysis -
Question 21 of 30
21. Question
In CIB-GN, which of the following statements are included in identification?
I. Examples of personal particulars of clients that should be recorded and verified are given in CIB-GN(4).
II. Where a client is seeking insurance in the capacity of a trustee, the procedures of client identification and needs analysis should be conducted on the prospective beneficial owner of the policy.
III. CIB Members should develop and use their own forms to conduct the said procedures.
IV. The IA’s Guideline on Anti-Money Laundering and Counter-Terrorist Financing (GL3) should be followed in obtaining and verifying the particulars of corporate clients.Correct
In CIB-GN, identification includes:
• Examples of personal particulars of clients that should be recorded and verified are given in CIB-GN(4).
• Where a client is seeking insurance in the capacity of a trustee, the procedures of client identification and needs analysis should be conducted on the prospective beneficial owner of the policy.
• The IA’s Guideline on Anti-Money Laundering and Counter-Terrorist Financing (GL3) should be followed in obtaining and verifying the particulars of corporate clients.Incorrect
In CIB-GN, identification includes:
• Examples of personal particulars of clients that should be recorded and verified are given in CIB-GN(4).
• Where a client is seeking insurance in the capacity of a trustee, the procedures of client identification and needs analysis should be conducted on the prospective beneficial owner of the policy.
• The IA’s Guideline on Anti-Money Laundering and Counter-Terrorist Financing (GL3) should be followed in obtaining and verifying the particulars of corporate clients. -
Question 22 of 30
22. Question
In CIB-GN, which of the following statements are NOT included in the “need analysis”?
Correct
“Needs Analysis” includes
• In assessing clients’ needs, CIB Members should understand such circumstances of the clients as include their existing and potential financial commitments, their income streams, and their various financial needs and priorities.
• CIB Members should ensure that the financial information of the client to be collected would enable them to assess and advise the client on his capability to commit to any new or additional long-term insurance policy.
• CIB Members should specifically ask for details of the client’s long-term insurance policies that are in force, paid-up, suspended, or under premium holiday.
• Where a CIB Member is allowed by an insurer to use its own Financial Needs Analysis form instead of that of the insurer, it should comply with the requirements as set out in the latest version of the Initiative on Financial Needs Analysis of the HKFI.Incorrect
“Needs Analysis” includes
• In assessing clients’ needs, CIB Members should understand such circumstances of the clients as include their existing and potential financial commitments, their income streams, and their various financial needs and priorities.
• CIB Members should ensure that the financial information of the client to be collected would enable them to assess and advise the client on his capability to commit to any new or additional long-term insurance policy.
• CIB Members should specifically ask for details of the client’s long-term insurance policies that are in force, paid-up, suspended, or under premium holiday.
• Where a CIB Member is allowed by an insurer to use its own Financial Needs Analysis form instead of that of the insurer, it should comply with the requirements as set out in the latest version of the Initiative on Financial Needs Analysis of the HKFI. -
Question 23 of 30
23. Question
Physical hazard concerns largely objective factors that are likely to increase the risk of the insured event (death) happening. Which of the following are included in the obvious features such as known health dangers?
I. Significantly overweight
II. Heavy smoker
III. Very dangerous occupation or leisure pursuits;
IV. Uncertain deathCorrect
Physical hazard concerns largely objective factors that are likely to increase the risk of the insured event (death) happening. These will include obvious features such as known health dangers, including:
• Significantly overweight
• Heavy smoker
• Substance abuse (alcohol, drugs, etc.)
• Very dangerous occupation or leisure pursuits
• Adverse inheritable family or personal medical historyIncorrect
Physical hazard concerns largely objective factors that are likely to increase the risk of the insured event (death) happening. These will include obvious features such as known health dangers, including:
• Significantly overweight
• Heavy smoker
• Substance abuse (alcohol, drugs, etc.)
• Very dangerous occupation or leisure pursuits
• Adverse inheritable family or personal medical history -
Question 24 of 30
24. Question
Which of the following statements best describes the moral hazards?
Correct
Moral hazard concerns rather more subjective factors surrounding the basic honesty or honorable intentions of the applicant/proposer. Whilst suicide is not a common potential problem, there are other considerations. It also may mean a party has an incentive to take unusual risks in a desperate attempt to earn a profit before the contract settles. It can be present at any time two parties come into agreement with one another.
Incorrect
Moral hazard concerns rather more subjective factors surrounding the basic honesty or honorable intentions of the applicant/proposer. Whilst suicide is not a common potential problem, there are other considerations. It also may mean a party has an incentive to take unusual risks in a desperate attempt to earn a profit before the contract settles. It can be present at any time two parties come into agreement with one another.
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Question 25 of 30
25. Question
Classifying proposed risks into appropriate categories enables the insurer to determine an equitable premium. Insurers tend to have four categories of risks. Which of the following are included in this?
I. Standard risks
II. Sub-standard risks
III. Declined risks
IV. Economic risksCorrect
Classifying proposed risks into appropriate categories enables the insurer to determine an equitable premium. Insurers tend to have four categories of risks. It includes:
• Standard risks
• Sub-standard risks
• Declined risks
• Preferred risksIncorrect
Classifying proposed risks into appropriate categories enables the insurer to determine an equitable premium. Insurers tend to have four categories of risks. It includes:
• Standard risks
• Sub-standard risks
• Declined risks
• Preferred risks -
Question 26 of 30
26. Question
Which of the following refer to risks that a particular insurer has found to be unacceptable?
Correct
Declined risks
As the name indicates, these are risks that a particular insurer has found to be unacceptable. Insurers generally try to give cover if they reasonably can, but obviously, there are some applications where health or other factors make it impossible to accept.Incorrect
Declined risks
As the name indicates, these are risks that a particular insurer has found to be unacceptable. Insurers generally try to give cover if they reasonably can, but obviously, there are some applications where health or other factors make it impossible to accept. -
Question 27 of 30
27. Question
Which of the following are TRUE about sub-standard risk?
I. It is sometimes called special class risks.
II. It implies an above-average risk application that merits a discount or other favorable terms.
III. It is expected to produce a higher mortality rate than a group of normal lives.
IV. It is insurable but only subject to certain considerations.Correct
Insurers tend to have four categories of risks. Sub-standard risks are sometimes called special class risks, they are expected to produce a higher mortality rate than a group of normal lives. They are insurable but only subject to certain considerations.
Incorrect
Insurers tend to have four categories of risks. Sub-standard risks are sometimes called special class risks, they are expected to produce a higher mortality rate than a group of normal lives. They are insurable but only subject to certain considerations.
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Question 28 of 30
28. Question
Further information is required from qualified medical practitioners. The source of such inquiry may be an attending physician or an examining physician. A number of factors need to be considered. Which of the following factor is NOT included in this?
Correct
Further information is required from qualified medical practitioners. The source of such inquiry may be an attending physician or an examining physician. A number of factors need to be considered. It includes a sensitive subject, specialized medical questionnaire, confidentiality, and Attending Physician’s Statement (APS).
Incorrect
Further information is required from qualified medical practitioners. The source of such inquiry may be an attending physician or an examining physician. A number of factors need to be considered. It includes a sensitive subject, specialized medical questionnaire, confidentiality, and Attending Physician’s Statement (APS).
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Question 29 of 30
29. Question
Attending Physician’s Statement (APS) is the most frequently required medical report. Which of the following are the usual reasons for requesting it?
I. Specific medical disclosures on the application need further inquiry
II. The amount of insurance requested is high
III. It is required or requested by the policyholder
IV. The applicant is at a fairly advanced age (say, over 50)Correct
Attending Physician’s Statement (APS is the most frequently required medical report and the usual reasons for requesting it are:
• Specific medical disclosures on the application need further enquiry
• The amount of insurance requested is high
• The applicant is at a fairly advanced age (say, over 50)Incorrect
Attending Physician’s Statement (APS is the most frequently required medical report and the usual reasons for requesting it are:
• Specific medical disclosures on the application need further enquiry
• The amount of insurance requested is high
• The applicant is at a fairly advanced age (say, over 50) -
Question 30 of 30
30. Question
Which of the following may be considered with policy issuance as the two are very closely connected?
Correct
Policy Delivery
Policy Delivery may be considered with policy issuance as the two are very closely connected. Using modern technology, policy documents can be produced with great speed and accuracy. It involves delivering the policy to the applicant and collecting any outstanding premium. It is usually delivered by an agent in person, but insurance companies may also permit the delivery by registered mail or courier.Incorrect
Policy Delivery
Policy Delivery may be considered with policy issuance as the two are very closely connected. Using modern technology, policy documents can be produced with great speed and accuracy. It involves delivering the policy to the applicant and collecting any outstanding premium. It is usually delivered by an agent in person, but insurance companies may also permit the delivery by registered mail or courier.