CFMAS Module 9

CFMAS MODULE 9
LIFE INSURANCE & INVESTMENT LINKED POLICIES
(5th Edition)

Mock Exam

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CFMAS Module 9 Mock Exam 1

Mock Exam 1
C1/ 1.1
1. Which of the following is NOT True of Speculative Risks and Pure Risks?

A. Pure risk involves no possibility of gain.

B. Speculative risk involves a possibility of loss, gain or no change.
C. Insurer will not insure speculative risk.
D. Insurer will insure pure risk and speculative risk.

C1/8
2. The concept of anti- selection means?

A. All individuals of the same gender and age have an equal likelihood of suffering a loss.
B. Those individuals who believe they have a greater likelihood of loss tend not to seek
insurance protection.
C. Those individuals who believe they have a less likelihood of loss tend to seek insurance
protection than those with a greater likelihood of loss
D. Those individuals who believe they have a greater likelihood of loss tend to seek greater
insurance protection to a greater extent than those who believe they have an average or
less than average likelihood of loss.

C16/3.3
3. In Singapore, income is taxed under the Income Tax Act. The amount of tax payable is
calculated from:

A. Assessable Income
B. Chargeable Income
C. Gross Income
D. Net Trade Income

C1/13.1(c)
4. For general insurance, when should the duty of disclosure be observed by the insured?

A. At inception, renewal, alteration

B. At inception & alteration
C. At inception
D. At alteration

C5/1.3(e)v
5. One of the criteria for Critical Illness Benefit to be paid is for the insured to survive the survival
period. The Survival Period would be :

A. 30 days from the date of issue of policy.

B. 30 days from the date of occurrence of the critical illness.
C. 90 days from the date of consultation on the critical illness.
D. 90 days from the date of commencement of critical illness

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C5/1.1(a)i
6. “Waiver Of Premium Upon Total & Permanent Disability(TPD)” will waive the
premium payments due on a policy, if the insured becomes TPD. Define TPD?

A. Loss of severance of one feet at or above the ankle.

B. Loss of fingers in both hands below the wrist.
C. Loss of one hand above the wrist and one foot at the ankle.
D. Loss of sight of one eye and loss of use of one limb below the ankle.

C1/14.3(e)
7. In a Trust Structure, some conditions are to be met for it to be valid. Who can
be the beneficiary in this structure?

A. Settlor
B. Trustee
C. Spouse
D. Son of any age.

C16/7.1
8. What is the SRS penalty charges for early withdrawal before retirement age?

A. 5%
B. 10%
C. 15%
D. 20%

C16/7.1
9. To enjoy a tax concession for funds withdrawn from SRS, the withdrawal must be on statutory
age and may be :

A. made in a lump sum or spread over a max of 10 years.

B. made in a lump sum
C. made over a min period of 10 years.
D. made in installment basis and spread over a lifetime.

C5/1.3(e)iv, 1.9
10. What is the similarities between Critical Illness Rider and Hospital Cash Income Benefit Rider?

A. Both impose a waiting period

B. Both impose a survival period
C. Both pays a fixed benefit based on period of hospitalization confinement.
D. Both expire at age of 60.

C1/5
11. ABC Trading took up a group policy to cover 40 employees in the company with Insurer. ABC
Trading is called:

A. Insured
B. Third Party Policy
C. Indemnity Policy
D. Policy Owner

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C1/5
12. If death occurs while the insurance policy is in force, the insurer will pay out a lump sum or the
policy’s face amount or face value, which is listed on the face or first page of the policy. This
amount is called:

A. Death Benefit
B. Sum Assured
C. Participating Policies
D. Guaranteed Amount

C4/2.4.2
13. Jon, your client would like to know how a term policy with a convertible option works. Agent
advised that he could have the right to convert his term policy to :

A. Whole Life Policy of higher sum assured as long as he can pay the premium.
B. Longer Term Policy of higher sum assured.
C. Whole Life Policy of lower sum assured.
D. Paid Up Policy of lower sum assured.

C1/3.2
14. Your client, John went to the Polyclinic to do a medical check up. This is an example of:

A. Avoiding Risk
B. Controlling Risk
C. Accepting Risk
D. Transferring Risk

C5/1.3(b)
15. Your client bought a Whole Life Policy of sum assured $100,000 at the age of 30 with the
following riders :
- Level term of 1 time the basic sum assured.
- Critical Illness Rider of 2 times the basic sum assured.
He contracted one of the covered critical illness under this policy, how much should the insurer
pays ?

A. $100,000
B. $200,000
C. $300,000
D. $400,000

C5/1.3(a)
16. Bless bought a Whole Life Policy of sum assured $200,000 with a 50% Acceleration Benefit
Critical Illness Rider. How much should the insurer pay if she is diagnosed with one of the
critical illness?

A. $100,000
B. $200,000
C. $300,000
D. $400,000

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C7/6.3
17. Insurer allows Policyowners to switch from one fund to another. Most fund switches are done
on what basis?

A. Offer to Bid
B. Offer to Offer
C. Bid to Offer
D. Bid to Bid

C1/13.1(a) & (b)

18. Proposers of life insurance policies are expected to disclose all material facts, failing which it
will give the insurer the right to void the insurance policy. Which is NOT a material fact?

A. Medical tests results which have yet to be released.

B. Insured’s insurance history
C. Insured’s previous criminal conviction
D. Outbreak of civil unrest in certain country

C2/1.2
19. Insurance Company uses which premium for calculating the amount needed just to pay for
insurance protection?

A. Net Premium
B. Gross Premium
C. Risk Premium
D. Loading Premium

C14/1.3d
20. Mr. Bong, your client is currently declared bankrupt, his policy taken 2 years ago would be:

A. used to pay up the loan

B. taken from him by the official assignee
C. protected from creditors
D. null and void.

C13/1.1
21. John, an orphan bought a policy and he dies before he could get married, who is the most
likely person the insurer will pay to:

A. His fiancée
B. His father
C. His spouse
D. His nephew

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C14/5a
22. Underwriter from an insurer went ahead to issue a policy when one of the questions in the
proposal form was unanswered. Insurer in this case:

A. Need not pay

B. Legally need to pay
C. Pro- rate payment as both parties are at fault
D. Pay up to $150,000 maximum under constructive trust.

C14/5b
23. Underwriter from an insurer approves a policy, subsequently the client went to enquire from
the claims officer regarding some claims issues, the claims officer indicates by his actions that
such claims will be paid. Insurer will be prevented from denying liability. This is an example of
:

A. Uberrima Fides
B. Principle of Utmost Good Faith
C. Principle of Waiver
D. Principle of Estoppel

C6/5
24. “Guide to Participating Policies” are provided to consumer at the point of sale on request. It
contains:

A. Description of what happens on early termination of the policy.

B. Description of how the assets for the plan are being invested.
C. Description of how the insurer actually carries out risk sharing for that particular par
product group.
D. Surrender penalties and use of market value reduction when the plan is surrendered early.

C3/7d
25. Sum assured of a group term policy is usually determined by:

A. Age and Gender

B. Seniority
C. Occupation
D. Employee Classes.

C15/6
26. Agent X acted outside of the apparent scope of his authority, what will happen?

A. Principal is not bound or liable for the act.

B. Principal is liable for the act as agency relationship exists
C. Agent X is not liable as he is indemnified by the insurer.
D. Agent X is liable, however he can be ratified by the insurer

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C17/13.3
27. What does an executor needs for him to execute a Will?

A. Letter of Administration
B. A Grant of Probate
C. Intestate Succession Act
D. Proper Claimant’s Statement

C1/14.3
28. Which relationship needs to prove insurable interest?

A. One’s own life

B. One’s child
C. One’s spouse
D. One’s illegal son

C2/1.3
29. Where does the insurance charges and expenses to provide for a margin of profit
comes from ?

A. Loading
B. Net Premium
C. Gross Premium
D. Level Premium

C4/8.4f
30. A man bought a policy and went insane. He committed suicide within the first year. Insurer
should:

A. Pay nothing
B. Refund Premium with interest
C. Pay partial sum assured
D. Pay sum assured

C12/12
31. What will cause a policy to lapse?

A. Poor service rendered by the representative

B. Poor feedback given by the client
C. Poor policy support provided by the insurer
D. Poor claims payment

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C10/1
32. Mavis’s grandmother lived a long life. She is worried about herself now and she as
no intention of getting married. She has no dependants, hence what kind of policy
should she get ?

A. Whole Life
B. Term
C. Endowment
D. Annuity

C16/7.1
33. Under SRS, participants who withdraw prematurely on medical grounds, how many percent
will be subject to tax?

A. 100%
B. 50%
C. 20%
D. 5%

C6/3.2
34. Which of the following statement is true on Bonus Vesting?

A. Vesting and allocation of bonus mean the same thing.

B. Bonuses allocated may not vest immediately.
C. Bonuses allocated are vested when the insurer declared them yearly.
D. Allocation of bonuses must be vested fairly among all policyholders.

C1/2.5
35. Which of the following is not true of characteristics of insurable risks?

A. The loss must be definite

B. The loss must be significant
C. The loss must not be catastrophic to the insured
D. The loss rate must be predictable

C14/6.1
36. Which of the following describes omission to disclose a material fact inadvertently or because
the party thought it was not material ?

A. Concealment
B. Negligent Misrepresentation
C. Fraudulent Misrepresentation
D. Non Disclosure

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C1/17.4.2
37. What is the jurisdiction of Financial Industry Disputes Resolution Centre (FIDReC) in
adjudicating disputes between the banks and consumers, capital market disputes and all other
disputes?

A. Up to S$50,000
B. Up to S$75,000
C. Up to S$100,000
D. Up to S$125,000

C4/3.4
38. The cash value built up in a whole life insurance policy provides Non Forfeiture Options to the
policyholders. Which is Not considered a Non Forfeiture Option?

A. Surrender cash value

B. Use case value to purchase a Paid Up Whole Life Insurance
C. Use case value to purchase Extended Term Insurance
D. Use case value to purchase a Policy of Insured’s Choice.

C10/4.1a
39. How much should Mr. Tan’s family claim after Mr. Tan died within the payout period of a pure
life annuity?

A. Refund all premium

B. No more payment
C. Pay lump sum after deducting tax
D. Pay monthly to his beneficiary

C4/App 4a
40. Which of the following is the premium lowest assuming all parameters are the
same?

A. Whole Life Insurance

B. Term Insurance
C. Annuity
D. Endowment

C13/3.6
41. If the death is a result of an accident, which document is especially needed to make a claim?

A. Death Claim Forms

B. Copy of Pay Slip
C. Police Report
D. Copy of NRIC.

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C7/5.2c
42. What is the advantage of an Investment Link Annuity?

A. Protection against inflation

B. Protection against pre mature death
C. Protection for living too long
D. He will receives more as unit prices tend to fluctuate.

C7/13
43. Number of units that are purchased or sold are determined by reference to the price
established on the next valuation date. This is known as :

A. Forward Pricing
B. Bid Price
C. Offer Price
D. Single Pricing

C1/17.4.3-17.4.4
44. Financial Industry Disputes Resolution Process comprises of :

A. Mediation and Adjudication, which the consumer needs to pay a case fee.
B. Mediation which is offered free of charge to consumers, adjudication which consumers
need to pay a case fee.
C. Mediation which consumers need to pay a case fee, adjudication which is offered free of
charge to consumers.
D. Mediation and adjudication are both offered free of charge, unless a resolution cannot be
reached, a fee is charged to the consumer who wish to pursue the complaint through
other channels.

C3/2.2, C4/Appendix 4A
45. “Participating Policies” cannot be applied to:

A. Universal Life Insurance Policies

B. Whole life insurance
C. Endowment insurance
D. Annuity

C5/1.1
46. If a waiver of premium is in place and the client recovered from TPD, what will happen?

A. No need to pay premium

B. Pay premium from the time client recovers
C. Pay from the first premium
D. Premium is reinstated

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C5/1.9
47. On 1 Jan 08, Ben bought an Endowment Plan with a Hospitalisation Cash Benefit Rider of
$100 per day. On 15 Jan 08, he had a heart attack and was hospitalised for 5 days. How
much is claimable ?.

A. $500
B. Actual charges of his hospital bill
C. Lower of $500 or actual charges
D. $0

C14/4.1
48. The rule, that states where there is ambiguity in terms of an insurance contract, it will be
construed against the party who prepare the contract. This rule or principle is:

A. Principle of Utmost Good Faith

B. Principle of Estoppel
C. Basis Clause Rule
D. Contra Proferentem Rule

C4/2.4
49. For term insurance, whole life and endowment, which of the following is not true?

A. Cover death and TPD

B. Single Premium and Regular Premium allowed
C. Convertible and renewable options available
D. Sum assured (plus bonus if any) for death benefit

C14/3
50. What is true of a warranty and a representation?

A. A warranty is a statement guaranteed to be true in all aspects, a representation need not

be true in all respects but need only be true as to facts material to the risk.
B. A representation is a statement guaranteed to be true in all aspects, a warranty need not
be true in all respects but need only be true as to facts material to the risk.
C. Warranty and representation has the effect of the insurer rescinding, whether or not the
misrepresentation fact was material to the risk.
D. The basis clause is made of the warranty and representation.

C6/4.3
51. The Annual Report Update to be given to existing participating policy owners annually
contains :

A. Past and best performance

B. Updated Sales Benefit Illustration
C. Your Guide to Participating Policies
D. Revised projected maturity values or surrender values.

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C8/5.1
52. Managed Fund consists of a portfolio of :

A. 70% equities and 30% corporate bonds

B. 80% equities and 30% money market securities
C. 70% derivatives and 30% corporate bonds
D. 80% derivatives and 20% money market securities

C12/9.2
53. Assignment for valuable consideration is commonly used when :

A. A policy owner wishes to see the policy proceeds go his mother.

B. A policy owner borrows from a bank.
C. A policy owner dies, and his estate will vest in the trustees.
D. A policy owner is a bankrupt, all his assets will vest in the official assignee.

C11/4.3
54. The means and sources of income of the applicant, the physical appearance of the applicant
are reflected in which document?

A. Attending Physician’s Report

B. Agent’s Report
C. Medical Report
D. Financial Questionnaire

C17/13.5
55. Mr. Koo died without a will, to whom will his assets go to?

A. His Uncle
B. Executor
C. Employer
D. Grandparents

C14/1.3a
56. At what earliest age can a person purchased a policy without the written consent of his parent
or guardian?

A. Below 16 years of age

B. Below 18 years of age
C. Above 18 years of age
D. Above 16 years of age

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C4/App 4a
57. Which of the following policies do not acquire cash value?

A. Whole Life Insurance

B. Term Insurance
C. Endowment Insurance
D. Annuities

C17/14.1, 14.4
58. What is the advantage of arranging a Trust over having a Will?

A. A Trust enables the executrix to administer the deceased’s estate quickly.

B. A Trust can overrides a Will.
C. A Trust allows single ownership, as the Trustee is the legal owner of the property that has
been transferred to him, hence it provides confidentiality and the estate is not open to
public scrutiny.
D. A Trust can avoid the problems of probate

C17/1.1
59. Mr. Jan, a policyholder dies holding a Section 73 Policy, who should the insurer pays to?

A. Proper Claimants
B. Wife and Child
C. Nominees
D. Executor

C8/3.2
60. This fund experiences the same level of fluctuation in terms of unit price movements as
another fund. This fund is

A. Mirror Fund
B. Feeder Fund
C. Portfolio Fund
D. Property Fund

C14/1.3a
61. What is the earliest age a minor can give a valid discharge for policy money payable to him?

A. Over the age of 10 years

B. Over the age of 16 years
C. Over the age of 18 years
D. Over the age of 21 years

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C8/4.5
62. ‘Units redemptions, except on death can be deferred by the manager for up to 12
months’ refers to :

A. Property Funds
B. Specialised Unit Funds
C. Geographically Specialised Unit Funds
D. Portfolio Funds

C14/7.2
63. A contract may not be valid, if a party is under coercion to consent by using actual harm or a
threat to harm. This is an example of :

A. Undue influence
B. Duress
C. Mistake
D. Non Est Factum

C5/1.3a
64. Joe bought an ILP Policy with a DB4 death cover. Details as follows:
Chosen death cover : $100,000
Rider : 50% Acceleration Benefit Critical Illness Rider
Value of Units : $50,000
Joe is diagnosed with a covered critical illness, how much should the insurer pays?

A. $100,000
B. $150,000
C. $75,000
D. $50,000

C3/7a
65. Which of the following is true of Group Term Life Insurance?

A. 24 hours worldwide coverage

B. Riders are not allowed
C. Assignment is allowed
D. Employee is covered after he had left the company.

C13/1.1
66. Husband died, as his wife is too busy to make a claim from the insurer. His brother
went instead and kept the proceeds for himself. Subsequently, the wife went to
the insurer to make a claim. The insurer :

A. Pay full assured.

B. Pay partial sum assured
C. Refund premium
D. Do not need to pay anything

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C17/1.1
67. Husband bought a life policy in the year 2005. He had nominated his wife and his children as
beneficiary. Today insurer informed him that it is not possible to change his beneficiaries to
his parents. Why?

A. A statutory trust is created

B. A express trust is created
C. Constructive trust is created
D. Applied Trust is created

C14/7.1
68. At common law, in order for a contract to be invalidated, it must be shown that the
misrepresentation:

A. was a statement about a promise in the future.

B. was immaterial.
C. made by a party to the contract.
D. was false statement, but the other party did not relied on it to enter the contract.

C4/4.3a
69. Which of the following offers the least protection?

A. Pure Endowment
B. Investment Linked Policies
C. Section 73 Policy
D. Anticipated Endowment

C12/15.1
70. Who should the agent inform first if he found out that his client is a bankrupt?

A. Official Assignee
B. Assignor
C. Creditors
D. Insurer

C13/3.1
71. Where a death claim is concerned, who should fill up the form for the insurer to process the
death claim?

A. Proper Claimants
B. Physician
C. Coroner
D. Executor

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C5/1
72. If a policy has lapsed and the client would like to reinstate the policy as well as the riders,
insurer :

A. allow, subject to premium received in full

B. allow only the basic policy to be reinstated
C. not allow as policy has already lapsed
D. not allow as non forfeiture option would be inforce

C17/T17.3
73. Which of the policy proceeds are protected against creditors in the event of a bankruptcy?

A. Revocable Nomination
B. Assignment
C. Trust nomination
D. Constructive trust policy

C6/App 6b(2)
74. The difference between “Value of Premiums Paid Todate” and Total Surrender Value in the
Benefit Illustration represents:

A. Effect of deductions to date

B. Volatility of the investments
C. The total costs insurer expects to incur
D. Effect of premiums paid to date at the projected Investment rate of return.

C6/App 6b
75. Which of the following item found in the Benefit Illustration, the agent need not explain to the
client?

A. Projection of rates
B. Mechanism of fund switch
C. Distribution Cost
D. Effect of deduction

C16/2.1
76. With effect from Year of Assessment 2012, which of the following is NOT taxable under the
Income Tax Act?

A. Alimony
B. Gains from employment
C. Dividends
D. Pension

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C16/4.9
77. Life Insurance Premium Relief is allowed under which situation?

A. Male taxpayer on his own life

B. Male taxpayer on child’s life
C. Female taxpayer on child’s life
D. Female taxpayer on husband’s life

C17/4
78. A Trust nomination can be made earliest at what age?

A. Age of 10 with parental consent

B. Age of above 16
C. Age of 18
D. Age of 21

C17/13.2
79. Who under the age of 21 can write a will?

A. Married persons
B. Mariner
C. With parental consent
D. Will written by a lawyer

C13/3.1a
80. Under what situation is the Coroner’s Report Needed?

A. Gender cannot be determined

B. Suicide within one year
C. Unregistered Death
D. Death at sea

C3/2
81. Which of the following insurance funds is not a requirement for insurer to maintain in respect
of their insurance business?

A. Investment Link
B. Participating
C. Non Participating
D. Premium Income

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C7/16.6
82. Which of the following best describes Regular Premium ILPs that are back end load?

A. They are also called Surrender Charge.

B. Less than 100% of premium is allocated to purchase units.
C. More than 100% of premium is allocated to purchase units.
D. Charges are deducted at the beginning before units are purchased.

C14/8.4e
83. For mis statement of age, what can the insurer do?

A. Refund premium without interest

B. Rescind contract
C. Not pay sum assured
D. Ask policyholder to pay more premium

C13/3.1a
84. Under the Statutory Presumption of Death, the court will normally pronounce the
person to be dead if he disappeared for how many years?

A. 5 years or more
B. 7 years or more
C. 9 years or more
D. 15 years or more

C15/6
85. Which of the following is Not an example of agent’s authority?

A. Canvass for new business

B. Arrange for client to be examined by insurer’s doctor
C. Insurer allow agent to give impression that he has more authority than he actually has.
D. Induces insurer to issue a policy through falsification.

C1/14.3c
86. Which of the following does not need to prove insurable interest?

A. In one’s ward
B. Debtor – Creditor
C. Keyman
D. A person whom one is not wholly or partly dependant on at the time of application for the
insurance policy.

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C11/1.2d
87. The “Backdated to” section in the proposal form needs to be completed if the proposed life
insured wishes to :

A. enjoy a lower premium by backdating their birthday to just before commencement of the
policy.
B. enjoy a lower premium by backing their birthday to a maximum of six months just before
commencement of the policy
C. enjoy a lower premium by backdating the commencement date to just before their last
birthday.
D. enjoy a lower premium by backdating the commencement date of the policy to start six
months after the birthday.

C1/14.2
88. Which of the following is true of insurable interest?

A. Insurable interest must be present at inception for all classes of insurance.

B. Insurable interest must be present at inception for marine and casualty insurance.
C. Insurable interest must be present at inception for life insurance.
D. Insurable interest must be present at the time of loss of life insurance.

C2/1
89. Which of the following factors is the least concern for an Actuary when he is setting premium
rates?

A. Frequency of premium payment

B. Investment income
C. Smoking Status
D. Financial means

C7/17.3
90. Dollar Cost Averaging:

A. investing more in a fund when unit price is low and less when it is high.
B. involves timing the market
C. involves investing the same amount in a fund at regular intervals
D. offers affordability to small investors.

C11/1.3
91. If a mistake is found in the application form, what can happen?

A. Ask the client to initial against the changes made

B. Complete a new application form
C. Agent may alter the form on behalf of the client
D. Underwriters may contact the client to make the corrections

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C13/3.1c,(iv)
92. Insurer will pay the proceeds for policyholder who dies leaving a will upon the production of :

A. Letter of Affirmation.
B. Letter of Administration
C. A Grant of Probate
D. Letter of Intestacy

C14/8.4j
93. All insurance companies are required to include a free look provision in their contract. How
many days are given to t he policyholders to cancel by written request to the insurer?

A. 14 days
B. 28 days
C. 7 days
D. 21 days

C14/8.4j
94. What is the main difference between freelook provision of an ILP and a Traditional Life
Policy ?

A. The free look period differs

B. Only Traditional Life Policy offers free look provision
C. Premium refunded less medical fees applies to Traditional Life Policy only.
D. Amount refunded under ILP policy depends on the prevailing market price of the
underlying assets of the funds.

C16/7.1
95. What is the penalty imposed for premature withdrawal of fund before statutory retirement age
under the Supplementary Retirement Scheme?

A. 3%
B. 5%
C. 7%
D. 10%

Prudential Assurance Company Singapore (Pte) Limited 20

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CFMAS Module 9 Mock Exam 1

C11/5
96. Mrs Lim bought a juvenile policy for her daughter with a lien. Explain what it means
to her ?

A. In the event of death of the life insured within the lien period, insurer will pay the sum
assured.
B. In the event of death of the life insured within the lien period, insurer will pay the sum
assured less 20% of the sum assured.
C. In the event of death of the life insured within the lien period, insurer will pay the sum
assured plus attached bonus.
D. In the event of death of the life insured within the lien period, insurer will not pay the sum
assured.

C9
97. For all calculation questions in this set, use the interest table from the textbook to compute the
answer.

Mr. Tan invested $70,000 in a Single Premium ILP 5 years ago. If he surrenders today, how
much has he gained?
Given :
OP : $3 ; BOS: 4% ; Growth Rate: 5%
DB2 : $100,000 or higher
Policy Fee : $60
Mortality Charges : $1.90 per thousand
End of Year 5 : 21,771 units
Assumption : All premiums are used to purchase units before charges are deducted.

A. $80,335
B. $75,763
C. $5,763
D. $10,117

C9
98. Rosy bought a regular premium ILP and the death benefit is the higher of the value of
the units or $100,000. Assuming that the annual rate of cost of life cover is $1.00 per
thousand, what is the monthly mortality cost if there are 900 units in the account and the
bid and offer prices at that time are $1.52 and $2.00 respectively?

A. $8.18
B. $8.22
C. $8.33
D. $98.52

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CFMAS Module 9 Mock Exam 1

C9
99. Use the following data for question 99 and 100..

Single premium = $20,000

Bid Price = $1.50
Bid Offer Spread = 5%
Policy Fee = $150
Admin & mortality charges = 2% of single premium
Sum assured = 125% of single premium or value of units
whichever is higher
Minimum top-up = $3000
Top-up fee = $60 plus 2% of the top-up premium

Assume that the unit price grows at a constant rate of 6% p.a. and all the premiums are
used to purchase units before deducting any charges.

99. How many units can Mr. Lim purchased with data given?

A. 13,668 units
B. 12,310 units
C. 12,292 units
D. 12,508 units

C9
100. If Mr. Lim adds a Single Premium top-up of $5,000 after 3 years, what would be his total
units after top-up?

A. 14,848 units
B. 15,078 units
C. 16,238 units
D. 2,570.18 units

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CFMAS Module 9 Mock Exam 1

Answers- Mock Exam 1

Question Answer Question Answer Question Answer Question Answer

1 D 26 A 51 D 76 A
2 D 27 B 52 A 77 A
3 B 28 D 53 B 78 C
4 A 29 A 54 B 79 B
5 B 30 A 55 D 80 B
6 C 31 A 56 D 81 D
7 C 32 D 57 B 82 A
8 A 33 B 58 D 83 A
9 A 34 B 59 B 84 B
10 A 35 C 60 B 85 D
11 D 36 D 61 C 86 A
12 B 37 A 62 A 87 C
13 C 38 D 63 B 88 C
14 B 39 B 64 D 89 D
15 B 40 B 65 A 90 C
16 A 41 C 66 D 91 A
17 D 42 A 67 A 92 C
18 D 43 A 68 C 93 A
19 A 44 B 69 A 94 D
20 B 45 A 70 D 95 B
21 D 46 B 71 A 96 B
22 B 47 D 72 B 97 D
23 D 48 D 73 C 98 B
24 A 49 C 74 A 99 C
25 B 50 A 75 B 100 A

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CFMAS Module 9 Mock Exam 1

Workings

97.
BP = OP x (1 – BOS)
= $3 X 0.96
=$2.88

BP (5) = $2.88 X 1.2763 (attached table 5% ; year 5)

= $3.68

Value of units at end of year 5 = 21,771 X $3.68 = $80,117

Gain he made = $80,117 - $70,000
= $10,117 (ans : D)

98
Value of units = 900 x $1.52 = $1,368
Monthly mortality charge = 1/12 x ($1/1000) x ($100,000 - $1368)
= $8.22 (ans : B)

99
OP = 1.50/0.95 = $1.58
Units purchased = $20,000/1.58
= 12,658.23
Charges deducted = $150 + (2%x$20,000)
= $550
No. Of units deducted to pay for charges = $550/1.50
= 366.67
Net units purchased = 12,658.23 – 366.67 = 12,292 ( ans : C)

100
Top-up premium: $5,000 after 3 years at 6%
OP3 = 1.58 x 1.1910 (from table) = $1.88
BP3 = 1.50 x 1.1910 = $1.79

No. of units purchased with top-up premium = $5,000/1.88

= 2,645.50 units

Top-up fee = $60 + (2% x 5,000)

= $160

No. of units deducted to pay for top-up units = $160/1.79 = 89.39 units

Net top-up units = 2,645.50 – 89.39

= 2,556.11 units

Total units = 12,292 + 2556.11 = 14,848 (ans : A)

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CFMAS Module 9 Mock Exam 2

Mock Exam 2
C1/6,14.1
1. What is the difference between insurance and gambling?

A. Gambling and insurance are techniques to handle pure risk.

B. Gambling is socially unproductive, while insurance is socially productive as the gain of the
winner comes at the expense of the loser.
C. Both requires insurable interest to be present.
D. Insurance requires insurable interest otherwise it is more or less as gamble, since the
policyowner will not actually be at risk with the insured peril.

C1/2
2. When the insurer applies the law of large numbers to life insurance, it enables them to:

A. predict confidently, the final cost of claims and profit in any one year
B. predict the frequency and severity of losses
C. predict how many risks they can insure called “risk pooling”
D. predict losses so it can charged a higher premium to cover losses.

C5/1.3b
3. Client bought a Whole Life Policy of sum assured $100,000. He had attached the Critical Illness
Additional Benefit Rider of up to 2 times the basic sum assured. He contracted one of the
covered critical illness. How much should the insurer pay ?

A. $100,000
B. $200,000
C. $300,000
D. $0

C4/2.3.2
4. Which of the following is NOT a Decreasing Term Insurance?

A. Family Income Insurance

B. Mortgage Insurance
C. Convertible Term
D. Credit Life Insurance

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CFMAS Module 9 Mock Exam 2

C.14/8.4(d)(ii)
5. Jenny’s premium for her life policy was due on 1 Jan 2010. She did not receive any premium
notices from the insurer. By the time she realised and paid the premium it was already 28 Feb
2010. What is likely to happen?

A. She needs to pay interest on overdue premium calculated from premium due date.
B. She needs to pay interest on overdue premium calculated from end of grace period.
C. She needs not pay interest; only premium due as insurer did not sent her any notification
to pay.
D. She needs not pay any interest as it is still within the grace period.

C1/14.3e
6. In order for the validity of a trust component in a insurance policy, life insured must be the :

A. Applicant
B. Settlor
C. Nominees
D. Trustees

C16/7.1
7. Upon the death of the SRS participant, what will happen?

A. 50% of the amount withdrawn is subject to tax.

B. 100% of the amount withdrawn is subject to tax.
C. 50% of the amount withdrawn is taxed and there is a penalty charged imposed.
D. 100% of the amount withdrawn is not subject to tax and there is no penalty.

C5/1.9
8. Susan bought a $100,000 Whole Life Policy with a Hospital Cash (Income) Benefit rider of $200
per day. Six months later Susan was hospitalised for 4 days with actual charges amounting to
$100 per day. How much can she claim from the Insurer?

A. $400
B. $800
C. $100,000
D. $0

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CFMAS Module 9 Mock Exam 2

C5/1.9
9. Under what situation would a Hospital Cash (Income) Benefit Rider automatically terminates?

A. When insured reaches the limit on amount payable per hospitalization.

B. When insured reaches the maximum amount he may claim.
C. At the age of 55.
D. Self inflicted injury or attempted suicide, while sane or insane.

C16/7.1
10. What is the withholding tax imposed on withdrawals by foreigners who are not Singapore tax
residents under the SRS Scheme?:

A. 5%.
B. 10%
C. 15%
D. 20%

C6/2.1.1b
11. Mr. Sim bought a $50,000 Whole Life Policy which pays a compound reversionary bonus of
$10 per $1000 sum assured. What is the death benefit at the end of the 3rd year?

A. $51,000
B. $51,515
C. $52,000
D. $52,030.

C1/3.3
12. Buying a group insurance policy to provide medical expense benefits to its employees is an
example of :

A. Avoiding Risk
B. Controlling Risk
C. Retaining Risk
D. Transferring Risk

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CFMAS Module 9 Mock Exam 2

C7/6.3, C11/1.2g
13. What is the difference between product switch and fund switch?

A. Product switch is to replace current policy with a new one, where as fund
switch applies to ILP Polices which allows policy owner to switch from one fund
to another.
B. Product switch applies to change on type of policies, where as fund
switch applies to ILP Polices which allows policy owner to switch from one fund
to another.
C. Product switch refers to switching from a current policy to another form of
investment, where as fund switch is to allow Policyholder to switch from ILP
Fund to Life Fund.
D. Product switch refers to lapsing one’s policy to buy from another insurer and
fund switching means to switch from current insurer’s fund to another insurer’s
fund.

C5/1.1a(i)
14. Most policies pay on Total & Permanent Disability (TPD). Which of the following
constitutes “TPD”?

A. Loss of sight of one eye.

B. Loss of sight of one eye and severance of fingers.
C. Loss of sight of both eyes.
D. Loss of severance of one hand at or above the wrist.

C 4/2.4.2
15. Miss Tan bought a term insurance policy with a convertible option. This option gives Miss Tan
the right to change her term insurance policy to :

A. Permanent Policy of the same amount

B. Paid Up Policy
C. Extended Term Policy
D. Endowment Policy of any amount.

C4/3.4
16. Endowment Insurance Policies are suitable for:

A. Retirement Purposes
B. Children’s Education
C. Long term and permanent needs
D. Investment purposes

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CFMAS Module 9 Mock Exam 2

C16/4.11
17. People who are self employed in Singapore need to contribute to Medisave. This amount is
calculated from:

A. Assessable Income
B. Chargeable Income
C. Gross Income
D. Net Trade Income

C1/16
18. The buyers of insurance are:

A. Sole proprietors
B. Direct insurers
C. Reinsurers
D. Captive Insurer

C1/17.4.2
19. What is the jurisdiction of Financial Industry Disputes Resolution Centre (FIDReC) in
adjudicating disputes between the insured and the insurance companies?

A. Up to S$50,000
B. Up to S$75,000
C. Up to S$100,000
D. Up to S$125,000

C14/1.3d
20. Mdm Tan has bought a policy few years ago under Section 73. Today, Mdm Tan is a
bankrupt, what will happen to the policy ?

A. used to pay up the loan

B. taken from her by the assignee
C. protected from creditors
D. null and void

C14/5a
21. Which is true of the Doctrine of Waiver?

A. It is a non intentional relinquishment of a known right.

B. It can be based on an express waiver.
C. It can be based on an implied waiver.
D. It can be both express or implied waiver.

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 CFMAS Module 9 Mock Exam 2

C10/3.2
22. The annuities which CPF members can purchase with their minimum sum are :

A. Single Premium Deferred Annuities

B. Single Premium Immediate Annuities
C. Periodic Premium Immediate Annuities
D. Periodic Premium Deferred Annuities

C10/4.4
23. Santa is concerned with receiving retirement fund yearly that can hedge against inflation.
What is the most suitable for Santa?

A. Participating Annuities
B. Variable Annuity
C. Increasing Rate Annuity
D. Joint and Survivor Annuity.

C3/7d
24. Sum assured of a group term policy is determined by:
A. Basic monthly salary multiply by a standard factor
B. Employee classes multiply by a standard factor
C. Level of Participation
D. Age and Gender

C15/6
25. An insurer issued a policy based on an application form filled up by the agent who falsifies the
details. This is an example of :

A. Apparent Authority, hence insurer is liable

B. Acts outside of authority, hence insurer is not liable
C. Implied Authority, hence agent is liable
D. Ratification, hence agent is not liable

C17/13.5
26. Bill engaged to Jill, dies without a Will. What will happen to his policy?

A. Pay to Jill, his fiancée

B. Pay according to the Intestate Succession Act
C. Pay to the person produces the letter of Probate
D. Pay to the Policy owner.

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CFMAS Module 9 Mock Exam 2

C1/14.2
27. Which kind of policy, insurable interest needs to be proven at the time of loss?

A. Whole Life Policy

B. Term Policy
C. Key Person Insurance
D. Travel Insurance

C14/8.4f
28. A man bought a policy several years ago. When he committed suicide, he was insane.
Insurer should:

A. Pay nothing
B. Refund premium with interest
C. Refund premium without interest
D. Pay sum assured

C14/1.3d
29. The wife bought a policy on the husband’s life. Subsequently the wife went bankrupt, what will
happen to the policy?

A. Goes back to the husband

B. Vested with the Public Trustee
C. Vested with Official Assignee
D. Goes to pay the creditors

C6/3.2
30. A man who bought a Participating Policy, is concerned with when he will get his Bonus. Which
of the following is true?

A. Immediately upon purchase

B. After the 3rd year of the policy
C. Upon policy anniversary when the insurer allocate them
D. When he has paid the premium upon policy anniversary year.

C14/8.4e
31. Life Insured stated that he is 40 instead of 42 years old in the application form. What can the
insurer do?

A. Reduce sum assured

B. Increase sum assured
C. Refund Premium without interest
D. Pay more premium

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CFMAS Module 9 Mock Exam 2

C11/5
32. Under what situation, will an underwriter accepts a case at ordinary rate subject to a lien?

A. Applicant with a specific hazard like diving.

B. Applicant with an impairment.
C. Usually common for juvenile policies.
D. Usually for some risks that require higher premium.

C10/3.1
33. How long after the issue of an Immediate Annuity Policy will the payout begin?

A. Starts immediately on the day contract is issued.

B. Starts immediately one annuity period after the annuity is purchased.
C. Starts immediately no later than 2 years from the date of purchased.
D. Starts immediately when the Purchase Price has been received by the insurer.

C3/7b
34. “Extended Benefit ” under a Group Term Life Insurance provides insurance coverage for an
employee

A. if his service is terminated by the employer on medical ground for another 12 months.
B. if his service is terminated by the employer on medical ground for another 2 years.
C. if his service has been extended beyond the statutory retirement age.
D. if he pays part of the premium called Contributory Plan.

C13/3.8(b)
35. In the event of the death of an annuitant whose annuity is with a refund feature under CPF
Minimum Sum Scheme, who has to inform the insurer as soon as possible to settle the claim?

A. Executor
B. Administrator
C. Beneficiary/Nominee
D. Proper Claimants

C17/T17.1
36. Which of the following type of policies is not allowed under Trust Nomination and Revocable
Nomination?

A. Dependant Protection Scheme

B. Supplementary Retirement Scheme
C. Minimum Sum Plus Scheme Annuity
D. Minimum Sum Scheme Annuity

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CFMAS Module 9 Mock Exam 2

C17/13.5
37. Which is Not True of the Intestate Succession Act?

A. Provides for transfer of property

B. It spells out the rules for distributing the deceased’s property to his spouse, children and
relatives.
C. The decease could vary the proportion of the distribution to certain relatives.
D. It could delay the distribution of his estate to the beneficiary.

C14/8.4j
38. Upon activation of the free look provision for a Traditional Life Policy, Insurer have to :

A. Refund all premiums paid without interest

B. Refund all premiums paid less medical fees incurred
C. Refund all premiums paid based on the prevailing market price of the fund.
D. Refund all premiums after selling the units in the fund

C1/13.1
39. Insurance contracts are subject to:

A. Principle of Caveat Emptor

B. Principle of Utmost Good Faith
C. “Let the buyer be aware” principle
D. Proper disclosures

C15/5.4
40. Which of the following best describes ostensible authority?

A. Agent arranging to collect other than the first premium and insurer accepts it despite their
prohibition.
B. Agent arranging for client to be examined by insurer’s doctors.
C. Agent issuing of cover notes
C. Agent fills up an application form and cause the insurer to issue a contract.

C2/1.1.9
41. In setting life insurance premium, which of the following factor is the most important?

A. Morbidity Rate
B. Mortality Rate
C. Expenses
D. Age and Gender

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CFMAS Module 9 Mock Exam 2

C4/4.4b
42. Kate would like to buy a plan for saving. What would you recommend?

A. Investment Linked Policy

B. Whole Life
C. Endowment
D. Annuity

C4/3.1, C5/1
43. Mary has a limited budget for a policy. She would like the policy to offer life protection at the
same time as comprehensive as possible. Which is the most suitable for her?

A. Term
B. Whole Life
C. Investment Linked Policy with Riders
D. Whole Life with Riders

C5/1.8
44. Which of the following riders is especially suitable for blue collar workers?

A. Accidental Death Benefit Rider

B. Accidental Death & Dismemberment Rider
C. Hospital Cash (Income) Benefit Rider
D. Guaranteed Insurability Option Rider

C5/1.7
45. Toby dies in a car accident at the age of 65. He has bought a policy with the following details:
Whole Life :$100,000
Rider : Accidental Death Benefit of $200,000
How much should the insurer pay?

A. $100,000
B. $200,000
C. $300,000
D. $0

C10/4.3.3
46. Mr. Tan, a banker believes in providing for his wife’s retirement fund should he dies before
her. What kind of plan is most suitable?

A. The Last Survivor Life Insurance

B. First To Die Life Insurance Policy
C. Joint Life Annuity
D. Joint and Last Survivor Annuity

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CFMAS Module 9 Mock Exam 2

C15/7.2
47. Any ratification by the insurer is considered effective on:

A. the date of the agent’s act and not the date of the insurer’s ratification.
B. the date insurer ratify agent’s act.
C. the date when the act has been ratified
D. not more than 14 days after the act has taken place

C17/14.2b
48. A bank taking out a policy on the life of the debtor, and the premium is paid by the debtor, is
an example of:

A. Constructive Trusts
B. Partnership Trusts
C. Implied Trusts
D. Official Trusts

C1/13.1(a) & (b)

49. Proposers of life insurance policies are expected to disclose all material facts, which is an
example of material fact?

A. Facts which the insurer ought to know

B. Facts which the insurer already knows
C. Facts which lessen the risk
D. Facts which can cause the underwriter to deal with the case differently

C8/4.9
50. Which ILPs fund consists of potentially multiple funds managed by one investment manager?

A. Managed Fund
B. Managed Portfolios
C. Balanced Fund
D. Capital Guaranteed Fund

C10/4.3.2
51. Mr. Sammy bought a Joint Life Annuity. The payment will end when:

A. Mr. Sammy die

B. Mr. and Mrs. Sammy die
C. Neither dies
D. Mr. and Mrs. Sammy survive

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CFMAS Module 9 Mock Exam 2

C1/14
52. Which of the following on insurable interest is False?

A. Certain family relationships are assumed by law to create insurable interest.

B. An insurable interest is not presumed when the policy owner is more distantly related to the
life insured.
C. The policy owner must have an insurable interest in the life that is insured.
D. The policy owner is likely to benefit if the insured dies, as he suffer some financial loss.

C11/4.3
53. Which of the following report is to help the insurer detect the presence of moral and physical
hazards?

A. Adviser’s Report
B. Financial Questionnaire Report
C. Life Style Questionnaire Report
D. Specialist Medical Tests

C1/14.3
54. Under which situation is the contract void?

A. Husband bought a policy on wife’s life

B. Wife bought a policy on son’s life
C. Trustees of a trust to purchase policy on life of the settlor
D. Debtor’s on creditor’s life

C16/4.9
55. Compute the amount of Life Insurance Premium Relief Jonathan can claim, given:
Total Income : $42,000
CPF contribution: 20%
Personal income relief : $1000
Premium paid based on a policy of sum assured of $10,000 = $1000 per annum

A. 0
B. $700
C. $1000
D. $5000

C6/2.1.1b
56. Jamie bought a whole life policy with compound reversionary bonus, the amount of bonus
credited to a policy depends on :

A. basic sum assured and attaching bonus

B. surrender Value
C. how long the policy has been in force
D. the amount of existing bonus attached to the policy

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CFMAS Module 9 Mock Exam 2

C8/4.3
57. Types of Investment Linked Funds that is likely to offer protection against fall in capital values
is

A. Cash Fund
B. Bond Fund
C. Equity Fund
D. Money Fund

C4/2.3.2
58. The premium for a Decreasing Term Insurance Policy

A. Level premium, usually terminates a few years before the expiry of the policy.
B. Level premium, usually payable throughout the entire term of the policy.
C. Premium decreases with the amount of cover
D. Premium increases throughout the term of the policy

C11/2.2
59. Which is not an underwriting factor for life insurance?

A. Age
B. Nationality
C. Occupation
D. Medical History

C1/17.4.4
60. Under Financial Industry Disputes Resolution (FIDReC), the decision of the adjudicator or
panel is final and binding on :

A. Both the financial institution and the consumer.

B. On the consumer, but not financial institution.
C. On the financial institution, but not on the consumer.
D. On the financial institution and consumer, however the consumer has the option to
continue to pursue the complaint through other channels if he is not satisfied with the
decision.

C16/4.9
61. Self employed makes voluntary contribution of $4000 to CPF account. How much can he
claim in total for reliefs, if he takes up an insurance policy with an annual premium of $4000?

A. 0
B. $5000
C. $8000
D. $1000

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CFMAS Module 9 Mock Exam 2

C5/1.5
62. Which of the following best describes the advantage of a Payor Benefit Rider?

A. Payment upon diagnosis of critical illness

B. Waiver Of Premium Rider
C. Pays the premium for the juvenile’s sum assured till he is 21 years old.
D. Does not have any surrender value

C10/4.3.3
63. Mr. Tan bought a joint and survivor annuity for himself and his wife. The payout will start
when:

A. both die
B. both survive after one annuity period
C. both survive and continue until both die
D. both survive until one dies

C8/5.2
64. Which ILP fund adopts a strategy of maximizing capital growth?

A. Managed Fund
B. Equity Fund
C. Bond Fund
D. Property Fund

C4/2.2
65. Term insurance has a feature in which _____________

A. death benefit will be given at the end of the policy if he survives till the end.
B. the owner will be given death benefit during the term of the policy.
C. can have policy loan
D. can have riders attached

C4/4.3b
66. For anticipated endowment policy ___________

A. bonus will be calculated based on cash payments

B. death benefit is affected by cash payments
C. cash payments will be the sum assured less bonus payments payout
D. cash payments can be left with the insurer to accumulate interest

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CFMAS Module 9 Mock Exam 2

C13/1.1
67. For an event of a death claim, who are the proper claimants?

A. grandparents
B. parents in law
C. uncles and aunties
D. nephews and nieces

C12/2.1(a)i
68. Mr. Lum bought a policy in June and pay yearly premium. Later in June, he wants to change
the mode of payment to monthly. The effect will take place

A. from next year July

B. from the following month July
C. immediately by changing the premium due date
D. from next year August

C2/1.4
69. Choose the false statement.

A. Riders are only attached to permanent policy not to term insurance.

B. The premium for male is higher than females for Dread Disease Insurance.
C. For pure endowment, the payments are made only at the end of the term.
D. Endowment Insurance Policy is a combination of term insurance and pure endowment.

C12/2.1a(ii)
70. A change of premium from more frequent to less frequent basis can only take effet on :

A. the next policy anniversary date

B. the next premium due date
C. end of grace period
D. after the waiting period

C14/1.3
71. Who can enter a contract?

A. Handicapped
B. Minor
C. Drunkard
D. Undischarged Bankrupt

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CFMAS Module 9 Mock Exam 2

C5/1.1
72. Which of the following is not a Juvenile Rider?

A. Family Income Benefit Rider

B. Waiver of Premium Rider
C. Payor Benefit Rider
D. Guaranteed Insurability Option Rider

C5/1.9
73. Under what circumstances will the insurer pays under Hospital Cash (Income) Benefit Rider?

A. As a result of sickness
B. As a result of sickness and accident
C. After a waiting period from the issue date
D. After the survival period from the occurrence date

C5/1,C14/8.4k(ii)
74. Maria bought a Whole Life Policy with some riders. As she was unable to pay her premium
after a number of years, she chose the Reduced Paid Up Option. What is likely to happen?

A. Her riders will all be terminated.

B. Sum assured remains unchanged.
C. She has to pay interest on the loan taken.
D. The term of the policy will depends on the cash value accumulated.

C17/2
75. What is NOT the aim of the Nomination Framework?

A. To provide the policy owners greater choice and flexibility in how they want the proceeds
from their insurance policies to be distributed.
B. To eliminate Section 73 of the CLPA.
C. The allow the policy owners to deliberately choose their spouse and or children as
beneficiary, yet not creating a statutory Trust.
D. To allow policy owners greater clarity in respect of nominations of beneficiaries.

C11/4.4c
76. Which of the following questionnaires should be used if the sum assured applied for is large?

A. Medical Questionnaire
B. Financial Questionnaire
C. Lifestyle Questionnaire
D. Occupation Questionnaire

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CFMAS Module 9 Mock Exam 2

C17/8.1
77. Which of the following is false?

A. To make a nomination over a policy, policyowner must have attained the age of 18 years.
B. The witness of a trust nomination must be at least 18 years old.
C. A person of age 21 can write a will.
D. A person buying ILP Policy must have attained the age of 18 years.

C11/4.4d
78. Life Style Questionnaire is used for the purpose of:

A. Determining how much sum assured a person can insure

B. Assessing risk exposure, like diving
C. Assessing AIDs Risk
D. Assessing life style risk like smoking and drinking

C11/4.1
79. Which report gives the history of illness life insured has suffered or is still suffering?

A. Specialist Medical Test

B. Attending Physician’s Report
C. Agent’s Report
D. Questionnaires

C11/4.2d
80. Which test gives information on liver failure?

A. Electrocardiogram
B. Chest X Ray
C. Micro - urinalysis
D. Blood Profile Analysis

C10/3.1(a)
81. Jeff bought an Immediate Annuity and he dies before the annuity payment begins. What will
happen?

A. Policy terminates
B. Insurer will not refund the purchase price
C. Insurer will refund the purchase price with or without interest
D. Insurer will refund the purchase price

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CFMAS Module 9 Mock Exam 2

C12/7.5
82. To increase the sum assured which report is necessary?

A. Fill up the Agent’s Report

B. Fill up a Health Declaration Form
C. Fill up a Financial Questionnaire
D. Fill up an Indemnity Form.

C12/14
83. Jimmy would like to surrender his policy bought 10 years ago, what will he get back?

A. Sum assured less any indebtedness

B. Premiums paid
C. Cash Value
D. The difference between “Value of Premiums Paid” – “Total Surrender Value”

C11/4.3
84. Which report helps the insurer to detect the presence of any moral and physical hazards?

A. Agent’s Report
B. Financial Questionnaire
C. Life Style Questionnaire
D. HIV Antibody Test Report

C10/5
85. Which of the limitations on annuities is false?

A. Do not have any features to counter the effects of inflation.

B. Cannot be used to provide for major illness.
C. Cannot be use for death protection.
D. Should be provided before provision for premature death is in place.

C14/8.3
86. What can you find in a Policy Schedule?

A. Free Look Provision

B. Endorsements
C. Name and address of the insurer
D. Grace period

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CFMAS Module 9 Mock Exam 2

C14/1.1
87. What constitutes acceptance in an insurance contract?

A. The proposal form given by the agent to the client.

B. Insured accepts the terms in the contract.
C. Insurer accepts the proposal’s form and issues the policy document.
D. Insured fills up the proposal form with the premium

C2/1.8
88. Adviser must consider premium affordability and product suitability when advising their clients.
Which type of plan is most suitable to advise the client to pay on a single premium basis?

A. Endowment Plan
B. Convertible Term
C. Mortgage Decreasing Term
D. Investment Linked Policies

C11/1.1c
89. What is the purpose of the warning statement in the Application Form?

A. To highlight the importance of disclosure of all facts.

B. To highlight that insurer will not pay for pre existing conditions
C. To measure insurable interest
D. To prevent moral hazard

C6/6.1
90. Under MAS 320, insurers should establish an Internal Governance Policy (IGP) on
participating fund management. What is Not True of the IGP?

A. Insurers are not required by MAS to disclose IGP to the consumers.

B. IGP is approved by its board of directors.
C. IGP is for enhancing internal governance and management of the par fund, hence it
cannot be too technical for the layperson to understand.
D. Par fund is managed according to the rules and principles set out in the IGP.

C6/4.3
91. Insured will receive Bonus Update from the insurer______

A. Yearly
B. 3 Yearly
C. When there is a change in medium, to long term investment return.
D. At policy anniversary and premium due is paid.

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CFMAS Module 9 Mock Exam 2

C17/6.2
92. What is true of Nomination Framework on Muslim Policy Owners?

A. It does not apply to them, as they are governed under the Muslim Law of Inheritance.
B. For revocable nominations, they are subject to “Faraid”
C. Restrictions on making Trust Nominations for CPF funded policies do not apply.
D. They must be at least 21 years old to make a nomination.

C6/5
93. Under MAS Notice 320 which document is not compulsory, but have to be made available to
consumers upon their request at the point of sale?

A. Your Guide To life Insurance

B. Your Guide to Participating Policies
C. Product Summary
D. Benefit Illustration

C14/8.4
94. What are attached to the policy to make up the Entire Contract?

A. Proposal form, policy contract, endorsement

B. Proposal form, policy contract, general provisions
C. Proposal form, policy contract, payment of premium
D. Proposal form, policy contract, incontestability clause

C17/8.3
95. Which is NOT true of a Trust Nomination?

A. Policy owner can name himself as trustee.

B. A Trustee must be at least age 18.
C. When a nominee dies before the policyowner, his share of the policy proceeds will go to
the policy owner.
D. A Trust Nomination can be revoked and a new trust nomination or revocable nomination
can be made over the policy

For all calculation questions in this set, use the interest table from the textbook to compute the
answer.
C9
96. What would be the return on gross premium of the Single Premium ILP in 5 years’ time?
Single premium = $58,000
Offer price at the end of 5 years = $2.70
Bid-offer spread = 5%
Number of units purchased at policy inception (after deduction of all charges and
fees) = 26, 391 units

A. 3%
B. 4%
C. 5%
D. 6%

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CFMAS Module 9 Mock Exam 2

C9
97. Eton owns a Regular Premium Investment-linked Policy. He wants to know the total number of
units he has at the end of the 8th year.

Regular premium = $2,500 at the beginning of each year

Fund growth = 8%
Offer price at inception= $1.80
Bid price at inception = $1.73
Sum assured = Value of units or $160,000 (DB2)
th th
Allocation for 4 -9 yr = 100%
Annual rate of life cover = $2.00/1000
Annual policy fee = $50
Number of units at the end of the 7th year = 5,000 units

All charges are deducted after the regular premium has been invested into the account.

A. 3,196.69 units
B. 5,969.69 units
C. 5,696.69 units
D. 5,600 units

C9
98. Information to be used for Q98 and 99
Single premium = $100,000
Offer price = $2.90
Bid price = $2.80
Bid-offer spread = remains the same throughout
Policy Fee = $150
Admin and mortality charges = 3% of single premium
Top up fee = $60 plus 2% of top-up premium

Assume that the unit price grows at a constant rate of 9% per annum.
Charges and fee are deducted before the single premium is used to purchase units.

98. How many units can be purchased by the single premium?

A. 33,396.55 units
B. 33,772.41 units
C. 32,686.21 units
D. 32,582.76 units

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CFMAS Module 9 Mock Exam 2

99. Assuming that there is no movement in prices, how much would the policy-owner lose if he
wishes to cash in the policy?

A. $6,489.66
B. $5,437.25
C. $3,339.65
D. $3,150

C9
100. Michael has regular premium ILP that’s pays a death benefit, which is the higher value of units
or $80,000. If the annual rates of cost of life cover is $1.00 per thousand. What is the monthly
mortality cost if there are 2000 units in the account? The Bid and Offer price at that time are
$1.52 and $1.60 respectively

A. $3.91/ month
B. $6.41/month
C. $6.66/month
D. $7/month

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CFMAS Module 9 Mock Exam 2

Answers – Mock Exam 2

Question Answer Question Answer Question Answer Question Answer

1 D 26 B 51 A 76 B
2 B 27 D 52 D 77 B
3 B 28 D 53 A 78 C
4 C 29 C 54 D 79 B
5 A 30 D 55 A 80 D
6 B 31 A 56 A 81 C
7 A 32 C 57 A 82 B
8 B 33 B 58 A 83 C
9 B 34 A 59 B 84 A
10 D 35 C 60 C 85 D
11 B 36 D 61 B 86 B
12 D 37 C 62 C 87 C
13 A 38 B 63 C 88 C
14 C 39 B 64 B 89 A
15 A 40 A 65 B 90 C
16 B 41 B 66 D 91 A
17 D 42 C 67 D 92 B
18 A 43 D 68 A 93 B
19 C 44 B 69 B 94 A
20 C 45 A 70 A 95 C
21 D 46 D 71 A 96 A
22 A 47 A 72 B 97 C
23 C 48 C 73 C 98 A
24 A 49 D 74 A 99 A
25 B 50 B 75 B 100 B

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CFMAS Module 9 Mock Exam 2

Workings

Q. 96
BP = 0.95 x $2.70 = $2.57
Value of units = 26,391 X $2.57 = $67,824.87
5
(1 + i) ($58,000) = $67, 824.87
5
(1 + i) = $67,824.87 / $58,000)
= 1.169
i = 3% (interest table; year 5) (ans : A)

Q 97
Offer Price = $1.80 x 1.7138 = $3.08 (interest table year 7, 8%)
Bid Price = $1.73 x 1.7138 = $2.96
Annual Mortality Charge = 2/1000 x [160,000 – (5,000 x 2.96)]
= $290.40
Total Charges = Policy Fee + Mortality Charges
= $50+ $290.40
= $340.40
Units cancelled to meet charges = $340.40/2.96 = 115

Units Purchased at beginning of 8th Year = $2,500/3.08

= 811.69 units

Total units at end 8th year = 5,000 + 811.69 – 115 = 5,696.69 (ans : C)

Q 98
Premiums minus charges = $100,000 – ($150 + 3% of $100,000)
= $100,000 - $3150
= $96,850
Units Purchased = 96,850/2.90 = 33,396.55 units (ans : A)

Q 99
Surrender Value = 33,396.55 x 2.80
= $93,510.34
Losses = $100,000 - $93,510.34
= $6,489.66 (ans : A)

Q100
Value of units in account = 2000 units x $1.52 = $3040

Monthly Mortality Charges = 1/1000 x (80,000 – 3040) / 12

= $6.41/month (ans :B)

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CFMAS Module 9

Mock Exam 3
C6/5
1. What kind of information is contained in the “Guide to Participating Policy” Document?

A. Company specific information

B. How bonuses are smoothed overtime
C. Describe the common types of bonuses
D. Fees and charges imposed on the plan.

C1/14
2. Which of the following on insurable interest is True?

A. A person is always considered to have more to gain by dying than by living.

B. Applicants rarely seek health insurance on someone in whom they have no insurable
interest.
C. Insurable interest only exists in family relationships.
D. A bank would have insurable interest on its customers.

C1/16.2.2
3. John cannot buy insurance from___________.

A. Life Insurers
B. Composite Insurers
C. Life Reinsurers
D. Captive Insurers

C4/2.3.2
4. What type of policy is most suitable for a couple who are both paying for a housing loan?

A. Joint Life First to die

B. Second to die
C. Endowment
D. Tenancy in common

C4/2.5
5. A man, married with 6 children is very concerned with protection, but do not have a big budget
for policies, what would you recommend?

A. Whole Life Policy

B. Term Policy
C. Renewable Level Term Policy
D. Convertible Term Policy

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CFMAS Module 9

C2/1.1b
6. In setting Health Insurance premium, which of the following factor is the most important ?

A. Morbidity Rate
B. Mortality Rate
C. Age
D. Gender

C3/3
7. Jack has a budget of $2000 per annum for a policy that offers highest life protection for the
longest duration. Which is the most suitable?

A. Term
B. Whole Life
C. Endowment
D. Annuity

C5/1.7
8. Jane bought a Whole Life Policy of $50,000. She had attached an Accidental Death Benefit
Rider of $100,000. She died in a car collision at the age of 56, how much should the insurer
pay?

A. $50,000
B. $100,000
C. $150,000
D. $250,000

C11/8.1
9. Which of the following underwriting factor best describes reduction of any anti- selection from
the group by the insurer?

A. Group reason for existence

B. Age and Gender
C. Expected Persistency.
D. Induces insurer to issue a policy through falsification.

C16/7.1
10. Tax concessions are allowed for funds withdrawn from Supplementary Retirement Scheme
under what situations?

A. On or before statutory retirement age

B. Upon bankruptcy of the participant
C. Anytime upon liquidation of investments
D. By a foreigner who has maintained his SRS account for at least 10 years

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CFMAS Module 9

C17/8.1
11. Which is True of making a Trust Nomination?

A. Policy owner has to complete a prescribed Trust Nomination Form, which must be
completed in the presence of 2 witness who each must be at least 21 years old.
B. Policy owner has to complete a prescribed Trust Nomination Form, which must be
completed in the presence of 2 witness who each must be at least 18 years old.
C. Any trustee must be at least 21 years old.
D. A nominee cannot be a trustee.

C10/4.3.2
12. Mr and Mrs Lim bought an Annuity for retirement. The annuity will pay as long as both of them
are alive. It will however ends when any one of them dies. What did they buy?

A. Joint & Survivor Annuity

B. Joint Life Annuity
C. Life Annuity
D. Fixed Period Payments Annuity

C15/4
13. Under common law, what are the agents’ rights in respect of his employment by his principal?

A. Right to remuneration and ratification

B. Right to remuneration and indemnity
C. Right to remuneration and termination
D. Right to remuneration and authority

C14/8.4(g)
14. Which of the following clause would benefit the insured more than the insurer?

A. Principle of Utmost Good Faith

B. Incontestability Clause
C. Basis Clause
D. Suicide Clause

C7/19
15. Cancellation Period and Free Look for Unit Trusts and Investment Linked Products are:

A. 14 days and 7 days respectively

B. 7 days and 14 days respectively
C. 14 days from the receipt of document and 7 calendar days from the signing of the
agreement respectively.
D. 7 calendar days from the signing of the agreement and 14 days from the receipt of the
document respectively.

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C7/17
16. Investment Linked Policy provides the following benefits except :

A. Diversification
B. Dollar Cost Averaging
C. Ease of Administration
D. Professional after Sales Service

C14/8.5
17. What are endorsements ?

A. Amendments
B. Confirmations .
C. Entire Contract
D. Grace Period

C17/7.1
18. Insurance nomination under the Nomination Framework is NOT allowed for:

A. An individual who is under the age of 21 years old.

B. A group policy.
C. A policy bought earlier where no nomination was made.
D. A policy incepted before and after the nomination framework came into force where they
were no existing encumbrances.

C8/4.1
19. Which of the following ILP funds aims for Capital Appreciation?

A. Managed Fund
B. Fixed Income Fund
C. Capital Guaranteed Fund
D. Equity Fund

C8/5.1
20. Which ILP fund adopts a strategy of maximizing returns with a portfolio of 70% equities and
30% bonds?

A. Equity Fund
B. Managed Fund
C. Bond Fund
D. Property Fund

C7/16.1,16.6
21. ‘ Initial Sales Charge ’ and ‘ Surrender Charge’ in an Investment Linked Policy refers to :

A. Administrative Charges and Premium Holiday Charges respectively

B. Benefit Charges and Lapsation Charges respectively
C. Bid – Offer Spread and Back- End Load respectively
D. Sales Charges and Fund Switching Charges respectively

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CFMAS Module 9

C17/T17.1
22. Which of the following policy is allowed under a Trust Nomination?

A. Minimum Sum Scheme Annuity

B. CPF Investment Scheme (CPFIS) Policy
C. Dependant Protection Scheme (DPS) Policy
D. Minimum Sum Plus Scheme (MSPS) Annuity

C1/14
23. Which of the following best describes the principle of Insurable Interest?

A. Prevent one person from profiting from the death of another

B. Prevent people who are not related to buy policies
C. Allow one person to benefit if another dies
D. Allow people to insure any limit of insurance on their own life.

C1/12
24. The Law of Large Numbers simply means the greater the number of insured persons,

A. the more the actual loss experience will tend towards the expected loss
experience.
B. the more the actual loss experience will tend towards the unexpected loss
experience.
C. the less the actual loss experience will tend towards the expected loss
experience.
D. the less the actual loss experience will tend towards the unexpected loss
experience.

C15/2b
25. Implied Agency is created by:

A. The principal authorising the agent by oral agreement

B. Conduct of the parties
C. Partnership .
D. Operation of Law

C13/1.1
26. If a person bought a policy and dies, leaving behind a fiancée, before he could get married,
what will she get?

A. All the sum assured

B. The sum assured less any indebtedness
C. Partial sum assured
D. Nothing

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C6/4.1
27. Which of the following is NOT included in the Product Summary?

A. Factors that will affect the non guaranteed bonus received.

B. Smoothing of bonuses
C. Free Look Period
D. Update on performance

C6/3.2(a)
28. How does the insurer allocate annual bonuses in a particular year?

A. Pay policy owner whatever profit it made from the par fund.
B. Bonus is directly dependant on the performance of the par fund.
C. Pay the same annual bonus for both good year and bad year.
D. It adopts the 90:10 Rule to apply bonus.

C6/App6B
29. Which of the following is true of the Projected Investment Rate of Return in the “Benefit
Illustration”?

A. Death Benefits and maturity benefits are projected at one interest rate of 5.25% to highlight
volatility.
B. Death Benefits and maturity benefits are projected at two interest rate of 3.5% and 5.25%.
C. Higher rate of 5.25% can be used if clear explanation is provided.
D. The actual returns can be higher than the projected two rates given in the
Benefit Illustration.

C6/App 6B
30. What is the main purpose of the Table of Deductions in the Benefit Illustration?

A. Highlight the total cost of distribution insurer expects to incur in relation to the policy.
B. Highlight how much premium insured has paid to date.
C. Highlight the cost of surrendering the policy early.
D. Highlight which year the insured will lose the most if he terminates his policy.

C2/1.7b,c
31. What is the difference between Single Premium Policy and Recurring Single Premium Policy?

A. Only Single Premium Policy are allowed under CPFIS and SRS Schemes.
B. Need to worry about policy lapsing.
C. Recurring Single Premium Policy allows Policyowner to make single premium payments
on a regular basis.
D. Cannot apply for a policy loan for Recurring Single Premium Policy.

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C1/1
32. Insurance products are designed to provide financial loss. Which of the following is not
considered as financial loss?

A. Key person insurance

B. Providing education fund
C. Providing the best for one’s child
D. Motor car insurance

C3/4.4, C4/2.4.1
33. Nathan, your neighbor would like to buy a Renewable Level Term Insurance. This kind of
policy is an example of :

A. Yearly Renewable Term (YRT) Insurance.

B. Decreasing Term Insurance (MDT) Insurance.
C. Limited Payment Policy.
D. Regular Premium Policy

C13/2.1(a)
34. A Joint Mortgage Decreasing Term Insurance Policy taken at the request of the bank as a
collateral, is an example of :

A. Tenancy in common
B. Joint Tenancy
C. Last Survivor Life Insurance
D. Doctrine of Estoppel

C14/5b
35. A claims officer advises a policyholder that under certain situations, his claims will be paid.
Insurer has to honour payment in this situation. This is an example of :

A. Doctrine of Ratification
B. Doctrine of Incontestability
C. Doctrine of Waiver
D. Doctrine of Estoppel

C1/13.1(c)
36. Which of the following is the correct description for the accidents caused in casualty
insurance?

A. Insurable Interest need to be present at inception for life insurance.

B. Insurable Interest need to be present at inception for general insurance.
C. Insurable Interest need not be present at inception for life insurance.
D. Insurable Interest need not be present at inception for general insurance.

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C1/7.2
37. Which situation best describe Moral Hazard?

A. A person with a history of illness will increase the likelihood of him dying sooner.
B. Over insurance of sum assured in excess of what others in the same financial situation
would buy.
C. A overweight person
D. A person with a low income.

C6/4.3
38. Annual Bonus Updates given out to existing par policyholders do not contain which section?

A. Update on changes in future bonus

B. Purpose of report
C. Bonus allocation
D. Audited Statements of fund

C1/13.1(c)
39. For life insurance, the duty of disclosure arises from?

A. At inception, renewal, alteration

B. At inception and alteration
C. At inception and at death
D. At inception

C 17/13.5
40. Lim dies without a Will, his assets will go to:

A. Spouse
B. Spouse and children
C. Executor
D. Administrator

C17/14.2
41. Jane was too sad to make the death claim of her husband. Her brother in law claimed
$150,000 from the insurer for his own use and none of the proceeds was return to Jane.
Insurer is acting under:

A. Constructive Trust.
B. Resulting Trust
C. Implied Trust.
D. Express Trust

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C1/11
42. Which of the following is NOT a benefit of life insurance?

A. Encourages thrift
B. Provides peace of mind
C. Provides high profit
D. Assist in making savings possible

C5/1
43. Peter bought a Life Policy with some riders. The policy has lapsed. Peter can:

A. reinstate the basic policy and all riders attached

B. only reinstate the basic policy
C. only reinstate the riders
D. reinstate the basic policy and some riders attached

C17/13.2
44. At what age can a person make a will?

A. Age of 10 with parental consent

B. Age of above 16
C. Age of 18
D. Age of 21

C3/2
45. Which of the following insurance funds is a requirement for insurer to maintain in respect of
their insurance business?

A. Non Participating
B. Single Premium
C. Premium Income
D. Money Market

C16/3.3
46. Mr. Yan earns a yearly income of $42,000, and contributes 20% CPF. He has a personal
insurance premium relief of $1000 and an earned income relief of $1000. How much is his
chargeable income?

A. $32,600
B. $33,600
C. $31,600
D. $32,000

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C14/7.2
47. If a person can show that the document which he signed was not the one he intended to sign
and the mistake was NOT due to his carelessness, he may be able to avoid the contract
based on:

A. Duress
B. Non Est Factum
C. Void Ab Initio
D. Mistake

C15/5.1
48. A representative with an authority given by an agency is called _______authority.

A. usual
B. appointed
C. express
D. ostensible

C4/2.3.2
49. Premium for decreasing term is :

A. decreases with sum assured

B. decreases at each renewal
C. usually level to the end of the term
D. usually level and ceases a few years before the expiry of the policy.

C14/6.1
50. An insured may commit a breach of utmost good faith in a few ways, of which way(s) would
the insurer allow the policy to stand?

A. Innocent non disclosure

B. Fraudulent non disclosure
C. Innocent and negligent misrepresentation
D. All of the above

C15/5.4
51. When an insurer continues to accept premiums from its agent’s spouse, who is not its agent,
the insurer is said to be granting what type of authority to its agent’s spouse?

A. Ostensible authority
B. Express authority
C. Usual authority
D. Implied authority

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C11/1.3
52. Mistakes do happen. If a mistake is discovered in the application form, what can happen?

A. Complete a new application form.

B. If the mistake is found when you are still with the client, get him to initial the change
C. If the mistake is found back at the office, you may alter the form on behalf of your client
D. Underwriters may phone the client to correct any wrong information they find.

C11/5a
53. Occasionally, a policy is accepted, but with a debt against it. What is this ‘debt’ called?

A. A kink
B. A charge
C. A lien
D. A mortgage

C12/8.1
54. Which of the following is not a requirement for issuing a duplicate policy?

A. A copy of the police report if the policy has been stolen

B. A statutory declaration that the policy has not been assigned to any person.
C. To indemnify the insurer against any loss arising from the issuance of the duplicate
policy.
D. Need not return the original policy if found, subsequent to the issue of the duplicate
policy.

C1/8
55. To minimize problems arising from anti selection, insurers can employ a number of methods.
Which of the following is NOT considered a method?

A. Underwriting
B. Policies with excesses
C. Pre-existing exclusions
D. Utmost good faith

C1/9, C2/2.2
56. Policy issued as Non Participating, but with Cash Values that earn interest at a declared rate
describes:

A. Term Insurance Policies

B. Riders
C. Investment Linked Policies
D. Universal Life Insurance Policies

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C12/10
57. Policy loans:

A. are given to all insurance policies which have been in force for at least five years
B. do not affect the amount payable in the event of a claim or if the policy is surrendered
C. attract interest at a rate determined by the insurer
D. are available from Term Insurance policies

C12/13
58. A lapsed policy can be reinstated by:

A. exercising one of the non-forfeiture options

B. re-dating the commencement date of the policy and paying a higher premium based on
the attained age.
C. paying in full all the arrears of premium with interest
D. activating the “backdated to” feature.

C1/13.1,13.2
59. The principle of “Uberrima Fide” in Life Insurance affects predominantly:

A. Insured
B. Insurer
C. Insured and Insurer
D. Third Party Policies

C2/1.7d, C4/2.4.1
60. Example of a Yearly Renewable Premium type of policy is:

A. Level Term Insurance

B. Renewable Term Insurance
C. Mortgage Decreasing Term
D. Increasing Term Policy

C3/5.3
61. Which of the following is definitely a Third Party Policy?

A. Husband and Wife bought a First To Die Life Insurance Policy

B. Husband and Wife bought a Last Survivor Life Insurance Policy
C. Father bought a policy on Child’s Life
D. Joint and Survivor Life Annuity

C6/3.1
62. Which of the following has the highest risk affecting performance of the Participating Fund?

A. Investment Risk
B. Mortality Risk
C. Expense Risk
D. Business Risk

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C7/14.4
63. For regular premium Investment Linked Polices, how does the level of protection affect cash
values?

A. The higher the level of coverage, the higher the cash value.
B. The higher the level of coverage, the lower the cash value.
C. The lower the level of coverage, the lower the cash value.
D. Level of coverage has no effect on cash value.

C5/1.1
64. Which of the following rider is Not often associated with juvenile policy?

A. Waiver of premium rider

B. Payor Benefit Rider
C. Family Income Benefit Rider
D. Guaranteed Insurability Option Rider

C14/8.4l
65. Mr. Koh has a participating whole life plan which has been in force for 10 years. He is now in
financial difficulties and is considering surrendering his policy. Which of the following
alternative is not useful to him?

A. Surrender his bonuses for cash

B. Take a policy loan
C. Convert his policy into an Extended Term Insurance policy.
D. Change to a limited premium payment policy

C13/3.1
66. In the event of a death claim, a Coroner’s Report is especially important in cases where:

A. The policy carries a suicide clause

B. The client died following a prolonged illness
C. The client’s gender cannot be determined
D. The age of the deceased cannot be determined accurately

C/13/3.1a
67. In instances where the life insured dies in remote areas where the death cannot be registered
and the body is not recovered, the insurer will rely on the declaration of which one of the
following to testify the death of the life insured?

A. A service certificate of death as proof of death

B. A close relative of the life insured.
C. The person who last saw the life insured alive.
D. One or more authoritative persons, such as a magistrate or a clergyman

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C17/T17.3
68. Which of the following is true of policies under Trust Nomination?

A. The policy proceeds are not protected against the creditors of the insured.
B. The named beneficiary who predeceases the life insured will result in the removal of the
vested interest.
C. The beneficiaries’ interest can be easily removed.
D. Policy owner loses all rights to the ownership of the policy.

C11/6
69. Cover under a life insurance contract commences when the:

A. proposal form together with the first premium are received by the insurer
B. applicant has undergone a medical examination
C. insurer accepts the proposal form and receives the first premium payment
D. insured has received the policy document

C4/2.3.2
70. “given V. without evidence of insurability” is Not Often associated with what kind of policy?

A. Guaranteed Insurability Option Rider

B. Renewable Term Insurance
C. Convertible Term Insurance
D. Mortgage Decreasing Term Policy

C14/1.2
71. In a life insurance contract, the premium paid is the consideration for the promise:

A. by the policy-owner to forgo all rights under a policy of insurance

B. to the life agent for representing the insurer
C. contained in the policy
D. to pay a sum assured

C10/2
72. Under annuity, the period where payments of premium are received is called :

A. accumulation period
B. payout period
C. deferred period
D. waiting period

C10/5
73. Which of the following limitations on annuity is false?

A. do not have the feature to counter the effect of inflation

B. do not allow death protection
C. cannot be used to provide for major illness protection
D. provides for premature retirement and death

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C11/1.1
74. The ________provides the insurer with the primary source of information about the risk to be
insured.

A. Proposal form
B. Endorsements
C. Attending Physician Report
D. Adviser’s Report

C11/4.2
75. Which of the following test is for measuring heart problem?

A. chest x ray
B. Blood Profile Analysis
C. Micro – Urinalysis
D. Electrocardiogram

C14/3
76. In Singapore, Life Insurance Policies contain a provision that in the absence of fraud, all
statements in the application form shall be deemed as:

A. warranties
B. representations
C. basis clause
D. contra proferentem

C14/7.5
77. A contract may not be valid and can be void ab initio as parties reached an agreement without
knowing the facts. This is an example of :

A. duress
B. mistake
C. undue influence
D. illegal contract

C17/13.5
78. Which of the following statements regarding a Will is false?

A. A Will gives you the right to say how your estate will be distributed.
B. Without a will, distribution of the deceased’s property is done in accordance to the
Intestate Succession Act, you must specify the percentage of share each nominee is to
receive and the total percentage must add up to 100 per cent.
C. A Will takes effect only on the day you die.
D. You can change your Will at any time up to your death, provided you are of sound mind.

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C15/7
79. Mr X is a life agent and promises his client that the company will still accept the first
premium after 4 weeks from the issue of letter of acceptance. If the insurer accepts the
above act of the agent, this is called:

A. Implied authority.
B. Customary authority.
C. Apparent authority.
D. Ratification.

C15/5.1
80. Which of the following acts are the express authority of a representative who is involved in
arranging life policies for his clients?

A. Issuing of cover notes.

B. Arrange for client to be examined by doctors.
C. Collecting premiums from the clients.
D. Explain questions in the proposal form.

C14/1.3a
81. Which of the following statements is not true?

A. A person of ‘legal age’ 18 has the capacity to enter into a contract

B. The interest of a policy owned by a bankrupt will be vested in the Official Assignee
C. A person of aged 17 can buy a policy in his own name, but cannot give valid discharge of
policy money paid to him.
D. A person aged between 10 and 16 can buy a life policy without the consent of his
parent or guardian

C16/4.9
82. Which one of the following items CANNOT claim for income tax relief?

A. Single Life Insurance premium paid on the policy owner’s life and the policy owner’s
CPF contribution in a year amounts to $6,000
B. Regular Life Insurance premiums paid on the policy owner’s life and the policy owner’s
CPF contribution in a year amounts to $4,800
C. Single Life Insurance premium paid on the policy owner’s life and the policy owner’s
CPF contribution in a year amounts to $4,800
D. Regular Life Insurance premiums paid on the policy owner’s life and the policy owner’s
CPF contribution in a year amounts to $3,000

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C6/6.1
83. Under the Internal Governance Policy on Participating Fund Management, as set out in MAS
Notice 320, it is not necessary for the insurer to ensure:

A. The Internal Governance Policy is approved by its board of directors

B. The Internal Governance Policy is reviewed annually
C. The Internal Governance Policy is made available on its corporate website.
D. The participating fund is managed according to the rules and guiding principles as set
out in the Internal Governance Policy.

C16/7.1
84. Withdrawals from the Supplementary Retirement Scheme attract tax concessions in the
following circumstances, except?

A. After statutory retirement age

B. On special occasions, i.e. marriage or birth
C. Withdrawal on medical grounds or death
D. By a foreigner who has maintained his account for 10 years from his first contribution

C16/2
85. Which of the following sources of income are subject to income tax?

A. capital gains
B. winnings from Toto
C. receipts such as legacies
D. pension income

C17/8.1
86. The person appointed as a trustee under a Trust Nomination:

A. Must be at least 18 years of age

B. Trustee cannot be changed once appointed
C. A nominee cannot be a trustee.
D. The policy owner cannot also name himself as the Trustee.

C17/8.4
87. Which of the following regarding Trust and Revocable nomination is true?

A. When a policy owner makes a trust nomination, he is free to change, add or remove
nominees without their consent.
B. Under a Revocable Nomination, policy owner loses all rights to the ownership of the
policy.
C. The policy owner can revoke a Trust Nomination with the consent of all nominees.
D. To make a Trust Nomination, the policy owner must be the life assured and must not be
more than 18 years old.

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C17/T7.1
88. Which of the following types of policies under CPF Schemes are NOT allowed under
Revocation nomination?

A. MSPS Annuity
B. DPS Policy
C. CPFIS Policy
D. MSS Annuity

C17/13.4
89. Which of the following statements is false?

A. Anyone who is aged 21 or over can make a Will

B. An executor must be your next of kin
C. The executor of your Will is the person you nominate to execute your wishes regarding
the distribution of your estate
D. Before he can execute your wishes, your executor must get a grant of Grant of Probate
from the court.

C7/19
90. Which of the following regarding Free Look For Investment Link Polices (ILPs) and Unit
Trusts(UTs) are true?

A. ILPs - 14 days from date of receipt of policy

B. ILPs – 7 days from the date of receipt of policy.
C. UTs - 14 calendar days from the date of signing of purchase agreement.
D. UTs - 17 calendar days from the date of signing of purchase agreement.

C17/7.3
91. Which of the following is true?

A. With effect from 1 Sept 09, no nomination is allowed under Section 73 of the CLPA and
Section 45 of the Co- Operative Societies Act (CSA).
B. With effect from 1 Sept 09, only Trust Nomination is allowed under Section 73 of the
CLPA and Section 45 of the Co- Operative Societies Act (CSA).
C. With effect from 1 Sept 09, policies entered under Section 73 of the CLPA and Section 45
of the Co- Operative Societies Act (CSA), policy owner may be able to unilaterally
change his nominations.
D. Policy owners who make nominations prior to 1 Sept 09 under Section 73 of the CLPA
and Section 45 of the Co- Operative Societies Act (CSA), need to take action to change
them.

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C3/1
92. Life insurance products are generally not classified according to:

A. ownership
B. amount of sum assured
C. statutory insurance fund type
D. Premium type

C1/12
93. Insurers can accept so much risk because they know that:

A. if they accept the risk of a large number of people, only a few of those people will suffer
an insured loss.
B. for risk pooling to work, they must bring together a large number of people, exposed to
very different risks.
C. if they accept the risk of a large number of people, most of those people will suffer an
insured loss
D. for risk pooling to work, they must bring together small numbers of people, exposed to
very different risks

C1/14.2
94. Which of the following statements is true?

A. Insurable interest must be present at inception for all classes of insurance.

B. Insurable interest must be present at inception for life insurance cases.
C. Insurable interest must be present at inception for marine and casualty insurance
D. Insurable interest must be present at the time of loss for life insurance cases

C5/1.3,1.7
95. Mrs. Tang has a $100,000 whole life plan with a 60% Acceleration Critical Illness rider (CI)
and an Accidental Death Benefit rider (ADB) for $100,000. Assuming Mrs. Tang contracts a
critical illness and her claim is admitted by the company, which of the following statements is
not true?

A. The policy will pay $40,000 on Mrs. Tang’s death.

B. The policy will pay $160,000 CI and ADB benefit on diagnosis of the critical illness
C. The policy will pay $60,000 CI benefit on diagnosis of the critical illness.
D. Subsequently, should Mrs. Tang die in an accident, the company would pay $140,000 in
death benefits.

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C9
Consider the following information relating to a Single Premium Investment linked plan, for
questions 96 - 98:

Single Premium = $25,000

Offer price = $1.40
Bid-offer spread = 5% throughout
Policy fee = $100
Administrative fee & Mortality charge = 3% of single premium
The plan grows at 7% pa throughout
Assumption: All fees and charges are deducted by the cancellation of units at the inception of the
policy.

96. How many units are allocated to the policy?

A. 16,325 units.
B. 17,218 units.
C. 19,322 units.
D. 23,123 units.

97. The client wants to withdraw $8,500 seven years later. How many units will be cancelled?

A. 3,972 units
B. 9,775 units
C. 3,778 units
D. 5,280 units

98. The client wants to surrender the plan at the end of the 15th year. What is the surrender value,
assuming he has 13,246 units?

A. $51,130
B. $48,613
C. $34,390
D. $46,100

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99. A Regular Premium Investment-linked policy had 300 units to its credit at the end of the 2nd
year. Using the following information, calculate the accumulated number of units after a
regular premium of $3,000 was paid at the beginning of the 3rd year:

Offer price = $1.20

Allocation rate = 70%
Bid-offer spread = 5%

A. 1,750 units.
B. 1,820 units.
C. 2,050 units.
D. 2,142 units.

100. A client invests $23,500 into a single premium Investment Linked Policy. Nine years later it is
worth $36,425. What compound growth rate has it achieved?

A. 5%
B. 6%
C. 7%
D. 8%

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Answers Mock Exam 3

Question Answer Question Answer Question Answer Question Answer

1 C 26 D 51 A 76 B
2 B 27 A 52 B 77 B
3 C 28 C 53 C 78 B
4 A 29 D 54 D 79 D
5 D 30 C 55 D 80 A
6 A 31 C 56 D 81 D
7 B 32 C 57 C 82 A
8 C 33 A 58 C 83 C
9 A 34 B 59 C 84 B
10 D 35 D 60 B 85 D
11 A 36 D 61 C 86 A
12 B 37 B 62 A 87 C
13 B 38 D 63 B 88 D
14 B 39 B 64 A 89 B
15 D 40 B 65 D 90 A
16 D 41 A 66 A 91 A
17 A 42 C 67 D 92 B
18 B 43 B 68 D 93 A
19 D 44 D 69 C 94 B
20 B 45 A 70 D 95 B
21 C 46 A 71 C 96 B
22 D 47 B 72 A 97 A
23 A 48 C 73 D 98 B
24 A 49 D 74 A 99 C
25 B 50 D 75 D 100 A

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Workings

96.
BP = 1.4 X 0.95 = 1.33
Charges = 100 +750 = 850
Units bought = 25000/1.4 = 17857.14
Charges cancelled = 850/1.33 = 639.10
Units allocated = 17,857.14 – 639.10 = 17,218.04 (b)

97.
New OP = 1.4 x 1.6058 = 2.25
New BP = 2.25 x 0.95 = 2.14
8500/2.14 = 3,971.96 (a)

98.
New OP = 1.4 x 2.7590 = 3.86
BP = 3.86 x 0.95 = 3.67
13,246 x 3.67 = 48,612.82 (b)

99.
Year 3 = 3000 x 70% / 1.2 = 1750
Total = 1750 + 300 = 2050 (c)

100.
(1 +i)9 = 36,425/23,500
= 1.55
From interest table, look for year 9, closest to 1.55, look up the table to see how many %. It should
be 5% (a)

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