English IIQE Paper 3 Topic 1

The purpose of life insurance is for savings, short-term insurance arrangement, retirement preparation, etc. Tax evasion is not the purpose of life insurance. The answer is A.

“Life insurance provides a sum of money if the person who is insured dies
whilst the policy is in effect.” According to this definition, the basic intention of life insurance is to provide help to the insured’s family instead of giving money to the insured. As for retirement protection and savings, life insurance is a very useful tool for those needs but not the basic intention of it. So the answer is B.

People purchase life insurance for savings, investment, and temporary needs/threats. So D is the right answer.

To provide the insurance benefit for the family in the event of unfortunate death is still the main purpose and reason why people purchasing life insurance in modern society. So the answer is A.

The original intention of life insurance is to provide for one’s family and perhaps others in the event of death, especially premature death. Originally, policies were for short periods of time.
So the answer is C.

The original intention of life insurance is to provide for one’s family and perhaps others in the event of death. So the answer is B.

The original intention of life insurance is to provide for one’s family and perhaps others in the event of death, especially premature death. So option A is right.

The original, basic intention of life insurance is to provide for one’s family and perhaps others in the event of death. Originally, policies were for short periods of time. So D is the correct answer.

The function of life insurance is for savings, retirement and in case of premature death. Tax evasion is not the function of life insurance.

The original, basic intention of life insurance is to provide for one’s family and perhaps others in the event of death, especially premature death. Originally, policies were for short periods of time.
So the answer is D.

The function of life insurance is for saving, investment, retirement protection, and other needs. Speculation is not the function of life insurance. So the answer is A.

Life insurance provides a sum of money if the person who is insured dies
whilst the policy is in effect. According to this definition, the basic intention of life insurance is to provide sum insured in the event of the insured’s death instead of the policyowners.
Pay attention to the difference between the sum insured and premium.
The answer is A.

The original purpose of life insurance remains an important element in life insurance, that is for the temporary needs/threats. C is the best answer.
Options A,B and D are not the original and basic purpose of life insurance.

Life insurance can be used as a tool for finance and investment. But the primary purpose of life insurance still is to provide help for the insured’s family. So the answer is B.

Compare to A, B, and C, D still is the basic and most representative purpose of life insurance.

First of all, this definition is right so we can eliminate option B. As for all life insurance contracts mentioned in A, C, and D. Some of the life contracts can be used for other needs such as savings, investment or retirement. So this definition is not fully describing all types of life insurance contracts. The answer is C.

Except for providing the death benefit by the insurer if the person who is insured dies whilst the policy is in effect, life insurance can also be a useful tool for savings, retirement protection, and other needs. So this statement is partially right. The answer is C.

The original, basic intention of life insurance is to provide for one’s family and perhaps others in the event of death. Originally, policies were for short periods of time. A, B and C are wrong.

Business partner life insurance is for a business need. So A is the right answer.

All the options are for personal needs. So D is the right answer.

Key person life insurance is for a business need, so C is the right answer.

Retirement income is a personal need for life insurance. So C is the right one.

Life insurance for business partners and key persons are a “business need”. So D is correct.

Business partner life insurance is a business need. So the answer is D.

i, ii, iii, iv are all a “personal need”. So D is the answer.

Key person life insurance is an important form of business insurance. So D is the right answer.

The retirement income is a “personal need. Other three are a “business need”. So B is the answer.

Key persons life insurance is for a business need. The other three are for personal needs. So C is the answer.

The key person refers to the important person of a company instead of any other normal employee. So the answer is B.

In simple terms, insurable interest is such relationship with the subject
matter of insurance (a person’s life, in the case of life insurance) that is
recognised at law or in equity as giving rise to a right to insure that person’s
life. So D is the answer.

A spouse, who insures his/her spouse and then becomes divorced, can keep the policy in force and be perfectly entitled to collect the benefit in due time.
So D is the answer.

A parent of a minor (i.e. a person aged under 18) is given an insurable interest in that young person. This is the relationships
constitute an insurable interest arising from blood connection. So C is the answer.

A spouse, who insures his/her spouse and then becomes divorced, can keep the policy in force and be perfectly entitled to collect the benefit in due time.
It is legally to insure the debtor’s life, have the debt repaid, keep the policy in force, and be “paid again” in due time by the insurer.
After the assignment, the assignee can claim the compensation even he/she has no insurable interests in the life insured if the assignment is legitimate.
So the answer is D.

Section 64B of the Insurance Ordinance renders a contract of life insurance void where the person for whose use or benefit or on whose account it is made has no interest. So the answer is C.

Section 64B renders a contract of life insurance void where the person for whose use or benefit or on whose account it is made has no interest. So the answer is A.

A policyowner can assign a properly arranged life insurance contract to a third party even though the latter has no insurable interest in the life insured. It does not matter whether the insured is bankrupt or not. So the answer is B.

By virtue of Section 64A of the Insurance Ordinance, a parent or guardian of a minor (i.e. a person aged under 18) is given an insurable interest in that young person. It means that, apart from one’s spouse, only the relationships just mentioned constitute an insurable interest arising from blood or family connection. An insurance effected on the basis of any other blood or family relationship is technically void. So option D is the right answer.

A policyowner can assign a properly arranged life insurance contract to a third party even though the latter has no insurable interest in the life insured. So A is correct.

Any one person has no insurable interest in his/her adult child (i.e. a person aged over 18) and his/her divorced spouse. So the answer is B.

A policyowner can assign a properly arranged life insurance contract to a third party even though the latter has no insurable interest in the life insured. So C is the answer.

It is judicially presumed that any one person has an unlimited insurable interest in the life of his or her spouse. So A is the right answer.

It is judicially presumed that we all have an unlimited insurable interest in our own lives. So A is the right answer.

Insurable interest is such a relationship with a person’s life, in the case of life insurance that is recognised at law as giving rise to a right to insure that person’s life. So the correct answer is C.

In simple terms, insurable interest is such a relationship with a person’s life that is
recognised at law or in equity as giving rise to a right to insure that person’s life. B is the answer.

It is judicially presumed that we all have an unlimited insurable interest in our own lives. So A is the right answer.

It is judicially presumed that we all have an unlimited insurable interest in our own lives. So A is the right answer.

According to Section 64A of the Insurance Ordinance, a parent or guardian of a minor (i.e. a person aged under 18) is given an insurable interest in that young person. It means that, apart from one’s spouse, only the relationships just mentioned constitute an insurable interest arising from blood or family connection. So option C is the right answer.

An insurable interest is only needed when the contract begins and becomes irrelevant
thereafter. So option C is the right answer.

In Hong Kong, by virtue of Section 64A of the Insurance Ordinance, a parent or guardian of a minor (i.e. a person aged under 18) is given an insurable interest in that young person. It means that, apart from one’s spouse, only the relationships
just mentioned constitute an insurable interest arising from blood or family connection. An insurance effected on the basis of any other blood or family relationship is technically void. So option A is the right answer.

It is judicially presumed that any one person has an unlimited insurable interest in his/her own life and the life of his or her spouse (even after divorce).
As for the assignment of a life insurance policy, we should consider the intention of the assignment, that is whether it is for a specific person who has no insurable interest in the life insured.
So C is the answer

It is legally possible to insure the debtor’s life, have the debt repaid, keep the policy in force, and be “paid again” in due
time by the insurer. So C is the right answer.

Insurable interest is such a relationship with a person’s life, in the case of life insurance that is recognised at law as giving rise to a right to insure that person’s life. So A is the answer.

A person can not insure his/her creditor’s life. So B is the answer.

A mother of the spouse has no insurable interest in the insured. So the answer is A.

A divorced ex-husband has no insurable interest in the insured. So the answer is A.

It is judicially presumed that we all have an unlimited insurable interest in our own lives. So A is the right answer.

It is judicially presumed that we all have an insurable interest in our own lives for an unlimited amount. This, of course, includes every married woman. So A is the right answer.

In Hong Kong, by virtue of Section 64A of the Insurance Ordinance, a parent or guardian of a minor (i.e. a person aged under 18) is given an insurable interest in that young person. It means that, apart from one’s spouse, only the relationships
just mentioned constitute an insurable interest arising from blood or family connection. So option C is the right answer.

Insurable interest is such a relationship with a person’s life, in the case of life insurance that is recognised at law as giving rise to a right to insure that person’s life. So the correct answer is A.

It is judicially presumed that any one person has an unlimited insurable interest for the life of his or her spouse. So A is the right answer.

It is judicially presumed that we all have an unlimited insurable interest in our own lives. So A is the right answer.

Insurable interest is such a relationship with a person’s life, in the case of life insurance that is recognised at law as giving rise to a right to insure that person’s life. So the correct answer is C.

In Hong Kong, by virtue of Section 64A of the Insurance Ordinance, a parent or guardian of a minor (i.e. a person aged under 18) is given an insurable interest in that young person. It means that only the relationships just mentioned constitute an insurable interest arising from blood. So C is the right answer.

A parent is given an insurable interest in children aged under 18. So option B is wrong.
A spouse may insure his/her spouse before
divorced, so options C is also wrong.
It is legally to insure a debtor’s life. So A is correct.

A spouse, who insures his/her spouse and then becomes divorced, can keep the policy in force and be perfectly entitled to
collect the benefit in due time. So A is the correct answer.
In Hong Kong, by virtue of Section 64A of the Insurance Ordinance, a parent or guardian of a minor (i.e. a person aged under 18) is given an insurable interest in that young person. So option B is not right about the age of 20.
A creditor can only insure his/her debtor’s life after the loan.

It is judicially presumed that any one person has an unlimited insurable interest for the life of his or her spouse. So A is the right answer.

It is judicially presumed that any one person has an unlimited insurable interest for the life of his or her spouse. Since Mr. Qu had already assigned the life insurance contract to his daughter. The daughter has an unlimited insurable interest in Mrs. Qu. So C is the right answer.

In Hong Kong, a person only has an insurable interest in the life of his/her debtor instead of the creditor. So C is the answer.

Section 64B of the Insurance Ordinance renders a contract of life insurance void where the person for whose use or benefit or on whose account it is made has no interest. So the answer is A.

Section 64B renders a contract of life insurance void where the person for whose use or benefit or on whose account it is made has no insurable interest. So A is the right one.

A person has no insurable interest in the life of his/her divorced spouse and adult children (aged over 18). So the answer is B.

According to Section 64A of the Insurance Ordinance, a parent or guardian of a minor (i.e. a person aged under 18) is given an insurable interest in that young person. So option B is the right answer.

According to Section 64A of the Insurance Ordinance, a parent or guardian of a minor (i.e. a person aged under 18) is given an insurable interest in that young person. It means that, apart from one’s spouse, only the relationships just mentioned constitute an insurable interest arising from blood or family connection. An insurance effected on the basis of any other blood or family relationship is technically void. So option A is the right answer.

According to Sections 64C and 64D of the Insurance Ordinance, the person interested in the life insured, or for whose use or benefit or on whose account the contract is entered into, must be named in the contract. So B is the answer.

It is said in the question that Mr. Qu bought a life insurance policy on Mrs. Qu’s life with a single premium. So the premium is not the key question. The answer is C.

It is judicially presumed that any one person has an unlimited insurable interest in his/her own life and the life of his or her spouse.
As for the assignment of a life insurance policy, we should consider the intention of assigning, that is whether it is for a specific person who has no insurable interest in the life insured.
So D is the answer.

A spouse, who insures his/her spouse and then becomes divorced, can keep the policy in force and be perfectly entitled to collect the benefit in due time. So C is correct.

A policyowner is capable of assigning a life insurance contract to a third party even though the latter has no insurable interest in the life insured. The answer is B.

A policyowner can assign a properly arranged life insurance contract to a third party even though the latter has no insurable interest in the life insured. So C is the answer.

A material fact is legally defined as ‘every circumstance which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he will accept the risk’. So the answer is B.

The applicant cannot be expected to disclose what he reasonably cannot be
expected to know. Some conditions, for example, may be easily recognisable to qualified doctors, but the average layman cannot be expected to self-diagnose and reveal such things.
The occurred diseases may affect the insurer’s decision on taking the risk or fixing the premium. So the applicant is required to disclose this to the insurer. So C is the right answer.

According to the rules that (1) an insurance applicant is only required to disclose material facts, rather than any facts he is being asked about, and that (2) the scope of “material facts” is restricted by an objective test so that those facts which only a particular insurer deems to be material are not actually material enough to enable this insurer to rely on the principle of utmost good faith. So the answer is C.

According to the insurance principle of utmost good faith, it requires the applicant to disclose all material facts, whether the insurer requests them or not. A material fact is legally defined as ‘every circumstance which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he will accept the risk’.
So the answer is D.

Insurers wish to know all important facts, but applicants cannot be expected to disclose what they reasonably cannot be
expected to know. So A is the answer.

According to the insurance principle of utmost good faith, it requires the applicant to disclose all material facts, whether the insurer requests them or not. A material fact is legally defined as ‘every circumstance which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he will accept the risk’.
So the answer is C.

The applicant’s cough would not influence the judgment of the insurer in fixing the premium or determining whether he will accept the risk. So cough is not material. The answer is A.

According to the rules that (1) an insurance applicant is only required to disclose material facts, rather than any facts he is being asked about, and that (2) the scope of “material facts” is restricted by an objective test so that those facts which only a particular insurer deems to be material are not actually material enough to enable this insurer to rely on the principle of utmost good faith. So the answer is C.

According to the insurance principle of utmost good faith, it requires the applicant to disclose all material facts, whether the insurer requests them or not. A material fact is legally defined as ‘every circumstance which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he will accept the risk’.
So the answer is C.

A material fact is legally defined as ‘every circumstance which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he will accept the risk’. So the answer is C.

A material fact is legally defined as ‘every circumstance which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he will accept the risk’. So the answer is B.

Utmost good faith requires the applicant to disclose all material facts, whether the insurer requests them or not. So A is the answer.

According to the insurance principle of utmost good faith, it requires the applicant to disclose all material facts, whether the insurer requests them or not. A material fact is legally defined as ‘every circumstance which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he will accept the risk’. So the answer is B.

A material fact is legally defined as ‘every circumstance which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he will accept the risk’. So A is the answer.

According to the insurance principle of utmost good faith, it requires the applicant to disclose all material facts, whether the insurer requests them or not. A material fact is legally defined as ‘every circumstance which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he will accept the risk’.
So the answer is C.

According to the insurance principle of utmost good faith, it requires the applicant to disclose all material facts, whether the insurer requests them or not. A material fact is legally defined as ‘every circumstance which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he will accept the risk’.
So the answer is D.

With most life policies in Hong Kong, regard should be taken of a policy condition known as an Incontestability Provision, which states that the insurer will not contest the policy after it has been in force for a specified period (contestable period), unless there is proof of fraud on the part of the policyowner. So D is the answer.

A material fact is legally defined as ‘every circumstance which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he will accept the risk’.
So the answer is C.

According to the insurance principle of utmost good faith, it requires the applicant to disclose all material facts, whether the insurer requests them or not.
So the answer is C.

According to the insurance principle of utmost good faith, it requires the applicant to disclose all material facts, whether the insurer requests them or not. A material fact is legally defined as ‘every circumstance which would influence the judgment of a prudent insurer in fixing the premium, or determining whether he will accept the risk’.
So the answer is D.

In simple terms, insurable interest is such a relationship with a person’s life that is
recognised at law or in equity as giving rise to a right to insure that person’s life. B is the answer.

According to the Personal Data (Privacy)
Ordinance, it require insurers to explain the need for gathering information before any testing takes place. The subject of
the tests also has the right under that Ordinance to be told their results. So D is the answer.

Indemnity means an exact financial compensation for the loss sustained and is very important in most types of General Insurance. As far as life insurance is concerned, it is impossible to over indemnify. It is because the insurable
interests (closely linked with indemnity) in the majority of cases is unlimited. So C is the right answer.

The cause of death is critical when an accidental death benefit rider applies in life insurance. This is the application of proximate cause to life insurance. The answer is C.

The cause of death is critical when an accidental death benefit rider applies in life insurance. This is the application of proximate cause to life insurance. The answer is B.

According to the definition of the insurable interest, we know that insurable interest is close related to life insurance. So the Answer is A.

The principle of proximate cause is very important for accidental death insurance claims. The answer is C.

According to the principle of contribution, a person has more than one life policy and each must pay in full upon the insured event
happening. The answer is B.

The principle of proximate cause is concerned with the identification of the dominant, effective cause of the loss being claimed for under the insurance. The principle does apply to every class of business, but it is very likely to have rather less significance with life insurance partly because of the minimal use of exclusions. In life insurance, the cause of death is not critical, unless a suicide exclusion clause operates or an accidental death benefit rider applies. So the answer is C.

According to the definition of the insurable interest, we know that insurable interest is close related to life insurance. So the Answer is D.

According to the definition of the insurable interest, we know that insurable interest is close related to life insurance. So the Answer is A.

In life insurance, the usual provision is that suicide is excluded for an initial period of the policy. Also, the cause of death is not critical unless an accidental death benefit rider applies. The answer is A.

Suicide is a life policy exclusion, and the principle of proximate cause will be an important tool to determine whether death arose from suicide or not. However, suicide is only excluded for a limited time period
(suicide exclusion period). The answer is B.

Uninsured perils refers to those causes of loss which are neither included nor excluded. Such complexities are unlikely to arise with life insurance claims. The answer is C.

In life insurance, the cause of death is not critical, unless a suicide exclusion clause operates or an accidental death
benefit rider applies. The answer is C.

In life insurance, the principle of proximate cause is critical to a suicide exclusion clause or an accidental death
benefit rider. The answer is D.

Generally the principle of proximate cause is very likely to have rather less significance with life insurance. However, in the case of a suicide exclusion clause operates or an accidental death benefit rider applies, the cause of death is critical. The answer is D.

Indemnity means an exact financial compensation for the loss sustained and is very important in most types of General Insurance. As far as life insurance is concerned, however,(i) it is obvious that the policy proceeds (or ‘insurance proceeds’) in no way pretend to (or can) represent an exact financial compensation. That is why life policies are called benefit policies, not indemnity policies; (ii) it is impossible to over indemnify. It is because the insurable interests (closely linked with indemnity) in the majority of cases is unlimited.
One of the corollaries of Indemnity is Contribution which mentioned that life insurance policies are normally not subject to the principle of indemnity. So the answer is A.

It is obvious that the policy proceeds (or ‘insurance proceeds’) in no way pretend to (or can) represent an exact financial compensation. That is why life policies are called benefit policies, not indemnity policies. The answer is D.

Indemnity means an exact financial compensation for the loss sustained and is very important in most types of General Insurance. As far as life insurance is concerned, however, it is immediately obvious that the policy proceeds (or ‘insurance proceeds’) in no way pretend to (or can) represent an exact financial compensation. That is why life policies are called benefit policies, not indemnity policies. So A is the right answer.

It is obvious that the policy proceeds (or ‘insurance proceeds’) in no way pretend to (or can) represent an exact financial compensation. That is why life policies are called benefit policies, not indemnity policies. The answer is C.

Indemnity means an exact financial compensation for the loss sustained and is very important in most types of General Insurance. As far as life insurance is concerned, it is impossible to over indemnify. It is because the insurable
interests (closely linked with indemnity) in the majority of cases is unlimited. So A is the right answer.

Indemnity means an exact financial compensation for the loss sustained. The reason why life policies are called benefit policies, not indemnity policies is that the policy proceeds or can represent an exact financial compensation. As far as life insurance is concerned, it is impossible to over indemnify. It is because the insurable interests (closely linked with indemnity) in the majority of cases is unlimited. So B is the right answer.

Contribution and subrogation are two corollaries of indemnity. Life insurance policies are normally not subject to the principle of indemnity. So the principle of contribution and subrogation are not applicable to life insurance. The answer is B.

Subrogation relates to the legal right of the insurer who has provided an indemnity to take over any remedies the policyowner possesses against third parties, to seek to recover his payment to the policyowner. The answer is A.

Indemnity has two corollaries: contribution and subrogation. But life insurance policies are normally not subject to the principle of indemnity. The answer is C.

Subrogation relates to the legal right of the insurer who has provided an indemnity to take over any remedies the policyowner possesses against third parties, to seek to recover his payment to the policyhowner. Though this does not apply to life insurance, it is applicable to other insurance. So the answer is B.

The insurable interests (closely linked with indemnity) in the majority of cases
is unlimited. So it is impossible to over indemnify. The answer is C.

Subrogation relates to the legal right of the insurer who has provided an indemnity to take over any remedies the policyowner possesses against third parties, to seek to recover his payment to the policyowner. But this does not apply to life insurance. The answer is C.

Subrogation does not apply to life
insurance. The answer is A.

Subrogation relates to the legal right of the insurer who has provided an indemnity to take over any remedies the policyowner possesses against third parties, to seek to recover his payment to the policyowner. The answer is B.

Life insurance policies are normally not subject to the principle of indemnity. When a person has more than one life policy, he may get paid from each policy. The answer is C.

According to contribution, in most general insurance classes, if by some chance a person has more than one policy covering a loss, he does not get paid twice. Each policy contributes to (shares) the loss
rateably. Life insurance policies are normally not subject to this. So the answer is C.

Adequate and equitable (fair) are the classic criteria usually applied to life insurance premiums. C is the right answer.

Equitable means fair, so the answer is B.

The criterion of adequate is to make sure the insurer will have money to pay the benefit and meet other obligations under the contract. B is the answer. B is the answer.

The criterion of adequate means that the insurer will have money to pay the benefit and meet other obligations under the contract. C is the answer.

Fair means equitable for policyowners, so the answer is B.

Adequate and equitable (fair) are the classic criteria usually applied to life insurance premiums. B is the right answer.

The criterion of adequate is to make sure the insurer will have money to pay the benefit and meet other obligations under the contract. B is the answer.

Adequate and equitable (fair) are the classic criteria usually applied to life insurance premiums. C is the right answer.

Adequate and equitable (fair) are the classic criteria usually applied to life insurance premiums. B is the right answer.

Mortality, expenses and interest must be taken into account in setting life insurance premium rate. The answer is A.

The loading added to the net premium produces the gross premium. It takes into account all three basic factors of mortality, interest, expenses. The answer is D.

Mortality, expenses and interest must be taken into account in calculating life insurance premiums. The answer is C.

Mortality, expenses and interest must be taken into account in calculating life insurance premiums. The answer is B.

The loading added to the net premium produces the gross premium, so the answer is D.

Mortality, expenses and interest must be taken into account in calculating life insurance premiums. The answer is A.

The net premium (sometimes called the pure premium) refers to the money required to be collected from the policyowners just to meet death claims arising in the future under normal statistical expectations. B is the right answer.

Competition, public health, and economic changes are all the factors which may have an effect on life insurance premiums. The answer is D.

Competition, economic changes, public health and some other influences may have an effect on the adjustment of life insurance premiums. The answer is D.

Par or non-par, competition, marketing strategies and other factors may have an effect on life premium rating. B is the answer.

The loading added to the net premium produces the gross premium, so the answer is B.

The loading added to the net premium produces the gross premium, so the answer is A.

The two factors of mortality and interest combined will produce what is called the
net premium. B is the answer.

Mortality, expenses and interest must be taken into account in setting life insurance premium rate. The answer is D.