CEILLI Sample Questions (Eng) – Set 2

SET 2: CEILLI SAMPLE QUESTIONS

1. What is an investment-linked policy?

a) A participating whole life policy

b) A capital and returns guaranteed policy
c) An endowment policy only
d) A plan that offers clients’ coverage and investment returns

2. All the following statements are TRUE EXCEPT:

a) The investment-linked policy is directly linked to investment performance

b) Once the policy is in-force, the clients’ investments will grow steadily
c) Fund managers will make sure that the investment-linked policy is shielded from market
fluctuations
d) The investment-linked policy only provides coverage and nothing else

3. Investment-linked Insurance policy is named as the following around the world

EXCEPT:

a) Mutual fund-linked policy

b) Unit-linked policy
c) Variable life policy
d) Takaful investment-linked life

4. “... is designed to shift the uncertainties of investment gains or losses to the

policy holders...” The excerpt describes what of the following accurately?

a) Policyholders who choose to take investment-linked policies must realize that they are
also responsible to monitor the performance of their policy to ensure a reasonable return
b) The chances that the policy values going to zero is impossible because the Fund
Managers, companies and agents will ensure that the policy is profitable at all times
c) Insurance companies, fund managers will wash their hands off the policy once the policy
is taken and leave it solely to the agents and policy holders to monitor it
d) Agents are responsible to the clients’ only and must ensure that they monitor the policy
at all times

5. An investment-linked plan has the following features:

I. Provide cover for death and total permanent disability.

II. Participate in investments managed by the insurer.
III. Can provide a good return if monitored well.
IV. Largely depends on the clients’ ability to be good at investing in equities market.

a) I,II and IV
b) I,III and IV
c) II,III and IV
d) I,II and III

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6. An agent owes the client a moral obligation to

a) Educate a client to be an expert investor

b) To recommend specific funds to invest in
c) Educate clients’ with some basic and sound investment principles
d) Make decisions on behalf of the client

7. What considerations must be taken before making an investment decision?

I. Investment objectives, Availability of Funds, Diversification.

II. Risk or Security, Promised Money, Tax issues.
III. Investment Horizon, Performance of Investment, Accessibility of Funds.
IV. Economic Reports, Insurance Companies Asset base, Government Regulations.

a) I and III
b) I and II
c) I and IV
d) III and IV

8. Clients want to invest:

I. To lead a comfortable lifestyle

II. To be comfortable during retirement
III. To amass great wealth
IV. To provide adequate funding for their children’s needs

a) I,III and IV
b) I,II and III
c) I,II and IV
d) II,III and IV

9. What must an agent do to ensure the client is given proper advice on investment?

a) Ensure that there is a right combination of objectives and make sure proper risk analysis
is done
b) Show the wide selection of investment for the client to choose from
c) Motivate the client to borrow money to invest in guaranteed investment vehicles
d) Ensure that the advice is advantageous to the agent and the insurance company

10. Why is diversification in investment recommended?

I. So as not to be exposed in one particular class of investments

II. To even out market fluctuations and not suffer too much losses
III. To ensure the investments will always do well
IV. To ensure that they can realize their financial objectives faster

a) I and III
b) I and II
c) II and IV
d) III and IV

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11. The following instruments fall under corporate bonds EXCEPT:

a) Debenture stocks
b) Loan stocks
c) Convertible stocks
d) Warrants

12. What is the disadvantage of investing in unit trusts?

a) Unit trusts have lower risk compared to shares

b) They are managed by professional investment teams
c) Extra costs and charges are included in this vehicle
d) Income dividend can be reinvested

13. Sukuk bonds have the following characteristics EXCEPT:

a) They are issued by pooled funds

b) They adhere to strict Syariah principles
c) They can be guaranteed or not by their originators
d) They can only be bought by Banks and Financial Institutions

14. Mr. Indran wants to invest his money in a conservative steady income generating
investment vehicles. Your suggestion to him would be to put his money in:

I. Treasury Bills, Sukuk Bonds, REITs

II. Preference Shares, Warrants, Derivatives
III. Fixed Income Securities, Government Bonds, Corporate Bonds
IV. Commodities, Futures, REITs

a) I,II,III and IV
b) I and III
c) II and III
d) III and IV

15. Adam lives in the UK. He was impressed by the investment-linked life insurance
policy that you have bought in Malaysia. He is now back to London and wants to
buy a similar plan. What plan should he buy from his agent?

a) Investment-Linked Life Insurance Plan

b) Universal-Variable Life Insurance Plan
c) Variable Life Insurance Plan
d) Unit-Linked Life Insurance Plan

16. The takaful investment-linked life insurance plan was developed due to…

a) Meeting the market demands and financial demands

b) The response to the religious principles and practices of the Muslims
c) The fact that there were no products suitable for Muslims in Malaysia before this
d) Tap into a vast and very lucrative insurance market

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17. All the following statements are false EXCEPT:

a) Takaful Insurance plans can only be sold by Islamic insurance companies

b) All insurance companies can develop and sell Takaful products as they wish
c) Takaful insurance products must adhere to the Syariah law requirements
d) Takaful insurance can only be sold to and purchased by Muslims in Malaysia

18. During a market crash, which fund suffers the biggest fall?

a) Funds that mainly invest in cash instruments like fixed deposits, treasury bills,
government bonds
b) Funds that invest in overseas properties, REITs and growth stocks
c) Funds that invest in fixed income funds, balanced funds and Sukuk Bonds
d) Funds that invest in equities market both locally and overseas

19. Funds that basically invest in government, corporate and fixed income
instruments seeking income producing characteristics are known as:

a) Balanced fund
b) Cash fund
c) Bond fund
d) Specialized fund

20. Switching of funds happen in unit trust and investment-linked products. Switching
is advantageous because…

a) It allows the smoothening process of uncertain market conditions

b) It allows the clients to make huge profits whence switches are done
c) It is a method to safeguard your principal invested
d) It is good because the client does not incur any charges related to constant switches

21. Rahim is a very cautious investor. He wants steady income and to safe-guard his
principal amount invested. Where would you suggest he puts his money?
I. Government, Corporate and Sukuk Bonds
II. Fixed income instruments
III. Cash funds
IV. Specialized funds
a) I, II and IV
b) II,III and IV
c) I,II and III
d) I,III and IV

22. Chee Seng wants to have a specific amount of money in 10 years. He is not averse
to risk. He wants your suggestion. Where can he put his money?
I. In a unit trust and investment-linked product that is heavy into equities
II. In a fund that specifically targets on high growth
III. In a fund that is mainly invested in government securities
IV. In a bank deposit and cash fund

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a) I,II and III

b) I and II
c) I,III and IV
d) III and IV

23. Which of the following statement is FALSE?

a) Bond funds can be found in the private sector

b) Bond funds can be found in the public sector
c) Bond funds are also called “fixed income funds”
d) None of the above

24. Generally people will choose between investing in assets that generate:

I. Regular income
II. Irregular income
III. Unpredictable gains or income
IV. Capital gains

a) I and II
b) II and III
c) I and IV
d) III and IV

25. Top-ups are allowed in investment-linked policies. What happens to the total
premium paid under the top-up?

a) The company converts the total top-up premium and accumulates it into the existing
account
b) The company opens a new account and deposits the converted top-up units into this
account
c) The company deposits the top-up premium into the existing account and levies all
charges as per the original policy
d) The company will use the top-up premium minus the top-up charges and deposit the
units into the policy owner’s account

26. A company can use the following methods in an investment-linked policies death
claim payout:

I. Upon a Death claim being submitted, the company will pay only the claim based on the
total unit accumulation multiplied by the unit price
II. Upon a Death claim being submitted, the company will pay the face amount of the initial
death coverage irrespective of unit accumulations
III. Upon a Death claim being submitted, the company will pay the unit value plus the sum
assured
IV. Upon a death claim being submitted, the company will pay only the unit value plus the
sum assured and any top-up amounts separately

a) I, II and III
b) I,II and IV

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c) I,III and IV
d) I,II,III and IV

27. In a regular premium investment-linked policy, the policy holder can do the
following EXCEPT:

a) Have a premium holiday if there are sufficient funds in the policy

b) Increase or decrease his sum assured according to his present needs
c) Increase his premium payments with regular premium top-ups and single top-ups
d) Have his cover cancelled and only ensure his premiums are used for investments

28. The benefits of an investment-linked policy are as follows:

I. The ability of the company to pool and diversify

II. The flexibility it offers
III. The minimal charges levied on the policy
IV. The insulation of market risks by the company for the client

a) I,II
b) II,IV
c) I,III
d) III,IV

29. The flexibility offered by the investment-linked policy includes the following:

I. Policy owner can ascertain the level of premium that needs to be paid.
II. Policy owner can decide to add single or multiple top-ups.
III. Policy owner is subjected to a definite amount of premium payment that is non-
negotiable.
IV. Company will not charge any fees for premium holidays taken.

a) I and IV
b) I and III
c) I
d) I and II

30. The disadvantages found in an investment-linked policy are:

I. It is subjected to the smoothening process of the company

II. It is subjected to no charges if the company does not make any investment returns
III. It is subjected to fixed charges specified in the policy document
IV. It is subjected to the vagaries of the stock market

a) I and III
b) I and II
c) II and IV
d) III and IV

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31. Cash values that use investment vehicles are not immune to risk. This means that
the value of the cash value account can increase and decrease depending on the
performance of the market. Individuals who use earnings from the cash value
account may need to pay more out-of-pocket from premium payments when
investments are performing poorly. Individuals are also not permitted to withdraw
funds from the cash value while the policy is in force.”
What can be learned from the passage above?
a) Clients investing in an investment-linked product are at a disadvantage and should
choose to put their money in traditional whole life with profit plans
b) Clients must accept the fact that by buying an investment-linked policy they are also
responsible to accept the changes that can take place in the stock market
c) Clients must put the total burden and blame on the fund managers who are responsible
in making only positive returns
d) Clients can treat the investment-link policy as their personal bank account and do as
they wish

32. The apparent advantages of an investment-linked Insurance policy are:

I. The flexibility it offers in terms of choosing the premium payment amount, the sum
assured and top-ups
II. The ability to design the policy to meet one’s life goals as you go along the policy term
III. The guaranteed cash value accumulation that happens
IV. The definite understanding that all investment-linked policies are guaranteed by the
company and Bank Negara
a) I,II and III
b) I and II
c) II and IV
d) I and IV

33. Marcus argues that a person should buy a short-term life insurance policy and
invest the rest on other investment vehicles. Do you agree with him?

a) Yes. It is wise for a person to do so as they are quite proficient in the workings of the
investment markets.
b) No. It would be disastrous as the person will not be able to handle the portfolio as it is a
very difficult thing to do alone.
c) No. The short-term life insurance policy will not be able to cover his liabilities over a long
period of time as we do not know what will happen to us then.
d) Yes. This is an intelligent way of doing personal financial planning and it is being
practiced by all successful people.

34. You have just finished an interview with a client. He is a young married man with a
2 years’ old child. He wants to purchase insurance for his child. What would be a
good combination that you would suggest?

I. A Term Life policy for protection on Death and TPD

II. A Comprehensive Medical Card
III. A Dread Disease Policy
IV. An 18 years endowment plan

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V. An investment-linked policy.

a) I,II,III and IV
b) I,II,IV and V
c) II,III,IV and V
d) I,II,III,IV and V

35. What are the criteria used to compare traditional life insurance and investment-
linked policies?

I. Investment returns and Risks

II. Premium Computation
III. Death Benefit
IV. Surrender Value

a) I,II and III

b) II,III and IV
c) I,II and IV
d) I,II,III and IV

36. Salim and Siti are two self-employed people. They do not contribute to EPF and
have two young children. They would like to maximize their tax relief from
insurance. What is the maximum relief that they can claim?

a) RM 9,000 including Life, Medical/Education Premiums

b) RM 18,000 including Life, Medical/Education Premiums
c) RM 14,000 including Life, Medical/Education Premiums
d) RM 16,000 including Life, Medical/Education Premiums

37. The report to policy owners on the performance of the investment-linked fund
must include the following information:

I. A summary of the audited financial statement of the fund

II. Trend analysis of not less than five (5) years, where available, on the net investment
return of the fund
III. Composition and list of investments held by the fund as of reporting date
IV. Any charges levied against the fund during the year

a) I,II and III

b) I,III and IV
c) II,III and IV
d) I,II,III and IV

38. All sales materials and policy forms for investment-linked life insurance policies
must contain the following information:

a) Policy benefits will be based on the performance of the funds and the factors affecting
the policy benefits. Wherever possible, provide hypothetical illustrations to guide policy
owners on the policy benefits
b) The number and value of units held at the end of the previous statement period

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c) Charges e.g. initial charge, management fee, mortality and riders costs, etc. incurred
during the statement period
d) Any other information that BNM may from time to time deem necessary

39. What is the use of the Customer Fact Find (CFF) Form?

a) To submit a comprehensive picture to the company

b) To allow the agent to build up a clear understanding of the customer’s circumstances
c) To make sure that the clients’ information is used to design future and more effective
policies
d) To only comply to Bank Negara Malaysia’s new requirements

40. The CFF form will address the following areas:

I. Customer’s Personal and Dependents Details

II. Life and Financial Priorities and Goals
III. Risk Return Ratio
IV. Financial Needs Analysis

a) I,II and III

b) I,II and IV
c) I,III and IV
d) II,III and IV

41. Indran is a very satisfied with his agent as he has done a lot for him. He will
probably do the following EXCEPT:

a) Recommend that his agent be given a letter of commendation and an award from the
company
b) Speak highly about the level of commitment and service given to him by his agent
c) Keep his agent as a very well-guarded secret
d) Help him in prospecting and referring his friends to the agent

42. An agent can potentially get prospects effectively by utilizing the following
methods:

I. Approaching his natural market

II. Taking out advertisement in newspapers and magazines to promote himself
III. Asking for qualified referrals from his satisfied clients
IV. Obtain a list of existing clients from a rival company to replace their plans with his
company’s ones

a) I,II and III

b) II,III and IV
c) I and III
d) II and IV

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43. A truly professional person makes the following commitments:

I. Proudly announce about the quality of his clients and drop names to impress others
II. Shares intimate knowledge of his clients to fellow agents
III. Maintain a very high ethical standard when it comes to any information pertaining his
clients
IV. Conduct himself in a professional and honorable way whilst carrying out his work

a) I and II
b) II and III
c) I and III
d) III and IV

44. The Code of Ethics and Conduct for agents dwells on:

I. To avoid conflict of interest

II. Avoid misuse of position
III. To prevent misuse of information
IV. To ensure completeness and accuracy of relevant records
V. To ensure confidentiality of communication and transactions between the life insurance
company and its policy owners and clients
VI. To ensure fair and equitable treatment of all policy owners and others who rely on or
who are associated with the life insurance company
VII. To conduct business with utmost good faith and integrity

a) The seven principle underlying the guidelines

b) Bank Negara’s guidelines on good agent governance
c) The international standards set for agents
d) The leading criteria for the awarding of LIAM’s national award

45. Sebastian is very unhappy with the insurance policy that he has bought. To whom
can he complain?

I. Bank Negara’s Insurance Mediation Bureau

II. LIAM
III. The particular insurance company
IV. The Newspaper

a) I,III and IV
b) I,II and III
c) II,III and IV
d) I,II and IV

46. What is the main reason for the steady growth of the Insurance Industry in
Malaysia?

a) The liberalization of regulations by the Ministry of Finance and Bank Negara Malaysia
b) The introduction of Investment-Linked policies
c) The efforts by insurance companies to design and offer customer-centric and good plans

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d) The robust growth of the country’s economy

47. Why do you think people are not investing nowadays?

I. The adverse economic conditions, in the last 15 years, have made them be wary of
investments
II. The fall of many established financial institutions in the last few years
III. The stock market cannot be approached by ordinary people
IV. Many investors have seen their fortunes dwindling, due to the financial crisis

a) I,II and III

b) I,II and IV
c) II,III and IV
d) I,II,III and IV

48. All the following statements are TRUE EXCEPT:

a) Cash can be regarded as an investment

b) The capital value of cash will not increase and will not generate any additional income by
itself
c) Cash deposits are liquid instruments that carry little or no risk when the principal
amounts invested can be lost
d) Cash instruments can include Treasury Bills and Bank Accounts

49. Rank the following funds in an ascending order in terms of risk?

I. Equity funds.
II. Derivatives and Futures fund.
III. Government Bond fund.
IV. Cash fund.
V. Balanced fund.

a) IV,III,I,V and II
b) V,I,II,III and IV
c) IV,V,I,II and III
d) IV,III,V, I and II

50. The following benefits of investing in an investment-linked policy is FALSE

EXCEPT:

a) Client is expected to monitor and switch the funds on his own all the time the policy is in
force
b) The burden of fund management is borne by the company’s professional management
team and does not burden the client
c) Client has the option to instruct the fund managers to follow his investment outlook and
strategies
d) Client has the option to make decisions on how the company must invest his money
totally
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51. The Government has allowed insurance premiums paid as tax relief because:

a) The Government feels that by giving this relief, all Malaysians will be able to purchase
insurance easily
b) The Government is giving this relief to encourage national thrift and promote individual
financial independence
c) The Government feels that the tax that they will collect if the relief is not given is
considerably low and insignificant
d) The Government is allowing this relief to make sure it is popular

52. Why is it important to identify and establish customer’s needs?

a) To project an air of professionalism to the client

b) To ensure that the client is comfortable and knows the important areas concerning the
policy that he is going to buy
c) To ensure that the agent will get good referrals
d) To ensure that the agent gets to sell the policy as fast as possible

53. Which of the following investments carries the highest risk and uncertainty?

a) Investment that offers the lowest opportunities for capital growth

b) Investment that offers the lowest opportunities for income growth
c) Investment that offers the greatest opportunities for capital growth
d) Investment that offers the acceptable opportunities for income growth

54. What is diversification?

a) The process of investing in the same asset classes and across different market
environments
b) The process of investing across different asset classes and across different market
environments
c) The process of investing in the same asset classes and not across different market
environments
d) The process of investing across different asset classes and not across different market
environment

55. What is debenture stock?

a) Secured loan to a company in which the security is either a fixed charge on company's
property or some of its assets
b) Unsecured loan to a company in which the security is either a fixed charge on
company's property or some of its assets

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c) Secured loan to a company in which the security is either a fixed charge on company's
well-being or capital
d) Unsecured loan to a company in which the security is either a fixed charge on
company's well-being or capital

56. Treasury bills are ___________.

I. Issued by the BNM (Central Bank)

II. Is the safest type of instrument
III. These are short-term financial instruments
IV. The repayment period is normally more than one year

a) I, II and III
b) I, II and IV
c) II, III and IV
d) All of the above

57. In a regular premium investment-linked whole life insurance plan, __________.

I. Premium top-ups and holidays, subject to the life office’s administrative rules, are usually
allowed
II. Life protection is the main objective of the plan with investment as a nominal purpose
III. A “one-off” premium contribution is made to the policy which uses the premium to
purchase units in an investment-linked fund and to provide certain level life cover
IV. Withdrawals and surrenders, usually after the payment of a few years premium, are
allowed

a) I, II and III
b) I, II and IV
c) I, III and IV
d) II, III and IV

58. The charges for the investment-linked life insurance are likely to be a combination
of two or more of the following:

I. Annual fund management fee

II. Mortality charges
III. Surrender charges
IV. Policy fee

a) I, II and III
b) II, III and IV
c) I, III and IV
d) All of the above
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59. These funds are normally segmented based on geographical regions or particular
industries. These are:

a) Managed funds
b) Balanced funds
c) Specialized funds
d) Speculated funds

60. The consumer buying decision process includes the following stages in order?

I. Sales interview
II. Information search
III. Post-purchase evaluation
IV. Problem recognition

a) I, II and III
b) I, II, IV
c) II, III and IV
d) I, II, III and IV

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Answer

1 D 21 C 41 C
2 D 22 B 42 C
3 A 23 D 43 D
4 A 24 C 44 A
5 B 25 D 45 B
6 C 26 A 46 C
7 A 27 D 47 B
8 C 28 A 48 A
9 A 29 D 49 D
10 B 30 D 50 B
11 D 31 B 51 B
12 C 32 B 52 B
13 D 33 C 53 C
14 B 34 C 54 B
15 C 35 D 55 A
16 B 36 B 56 A
17 C 37 D 57 B
18 D 38 A 58 D
19 C 39 B 59 C
20 A 40 B 60 C

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