Free PCIL Part A practice questions
10 sample questions · chapters A1 – A3 · answers & explanations
These are a free sample of the same questions shipped in the app — ten from Part A, Fundamentals of Insurance, across chapters A1 to A3. Tap an answer to check yourself and read the explanation. The full app has 500 practice questions plus a 300-question mock bank across Parts A, C and D, in English, Bahasa Malaysia and Chinese, every question explained against the Act, Bank Negara Malaysia policy document or LIAM code it tests.
The word "takaful" is derived from an Arabic word carrying which meaning?
Why: Takaful is derived from an Arabic word which means joint guarantee, whereby a group of participants agree to jointly guarantee among themselves against a defined loss. Profit sharing describes mudharabah and agency describes wakalah; both are contracts used to govern the relationship between participants and the operator, not the meaning of takaful itself.
What does a participant in a takaful scheme do under the concept of tabarru'?
Why: Tabarru' means donation, gift or contribution: the participant agrees to relinquish, as a donation, a certain proportion of the contribution into a takaful fund to assist other participants faced with difficulties. It embraces shared responsibility, joint indemnity and mutual protection, and it is what makes the uncertainty element allowable under the takaful contract. Option D describes a conventional exchange contract, not tabarru'.
The decree of the Malaysian National Fatwa Committee that helped trigger the development of takaful in Malaysia ruled that life insurance in its present form was a void contract because of the presence of which three elements?
Why: The Committee ruled that life insurance in its present form is a void contract due to the presence of the elements of Gharar (uncertainty), Riba' (usury) and Maisir (gambling). Tabarru', wakalah, mudharabah and qard are by contrast the Shariah concepts used to build a compliant takaful scheme, not the objectionable elements.
Under the wakalah model, how is the takaful operator remunerated and who bears the liability for losses?
Why: Under the wakalah model the takaful operator earns a fee for services rendered while liability for losses is borne by the participants, and the fee may be varied based on the performance of the operator. Option A describes mudharabah, under which the contracting parties share the profit. Option D is impossible: interest (riba') is prohibited and the central bank never underwrites fund performance.
Ahmad effects a life policy on the life of his neighbour, in whom he has no insurable interest. What is the status of that policy?
Why: A life policy insuring the life of anyone other than the person effecting the insurance, or a person deemed to be within the statutory list, shall be void unless the person effecting the insurance has an insurable interest in that life at the time the insurance is effected. Void is stronger than voidable: there is nothing for the insurer to elect, and later acquiring an interest does not revive the policy.
Which of the following persons is a proposer NOT deemed by the Financial Services Act 2013 to have an insurable interest in?
Why: A person is deemed to have an insurable interest in the life of his spouse or child, his ward under the age of majority at the time the insurance is effected, his employee, and a person on whom he is wholly or partly dependent for maintenance or education at that time. A business partner is not on that list, so any insurable interest would have to be established on ordinary principles.
An employer takes out a group life policy and it is later found that, at the time the insurance was effected, it had no insurable interest in the lives of some of the persons insured. What is the effect on the group policy?
Why: A group life policy shall not be void by reason only that the group policy owner did not have, at the time when the insurance was effected, an insurable interest in the lives of the persons insured. The Act instead protects those persons directly: where the group policy owner has no insurable interest and the person insured has paid the premium to the group policy owner, the insurer is liable even if it has not received that premium.
An agent tells a customer that a medical and health policy will only be issued if the customer also buys a savings policy from the same licensed insurer. Which prohibited business conduct in Schedule 7 of the Financial Services Act 2013 does that most directly describe?
Why: Making one product a condition of obtaining another is the tying conduct prohibited by paragraph 5 of Schedule 7. Paragraph 1 covers misleading conduct and paragraph 4 covers demands for payment for unsolicited products; paragraph 6 covers collusion between persons to fix product features. Complaints about tying and collusion are referred by the Bank to the Competition Commission.
What is the maximum penalty on conviction for a person who engages in prohibited business conduct set out in Schedule 7 of the Financial Services Act 2013?
Why: A person who contravenes the prohibition on prohibited business conduct commits an offence and is liable on conviction to imprisonment for a term not exceeding five years or to a fine not exceeding ten million ringgit or to both. The heavier eight-year and twenty-five-million-ringgit scale attaches to a licensed insurer carrying on both life and general business.
An eligible complainant has referred a dispute about her policy to an approved financial ombudsman scheme. What follows from that referral?
Why: Where a dispute has been referred to an approved financial ombudsman scheme by an eligible complainant, that complainant is not entitled to lodge a claim on the dispute with the Tribunal for Consumer Claims. A member financial service provider must also provide the documents or information required for the resolution of the dispute and must comply with any award granted, so the award binds the provider.
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