IIQE Paper 5 Illustration Documents 退保說明文件 Practice questions

Question 1

Mr Chan is preparing to apply for an investment-linked assurance scheme. Which arrangement meets the requirements for the illustration document for his proposed investment?

Accepted Answer

The authorised insurer prepares the document for that proposed investment, for him to review and sign before signing the application form

Answer

Sign the application form first, then review and sign the illustration during the cooling-off period

Answer

Omit the illustration document once he has received the principal brochure

Answer

Provide only a generic product example, without preparing a document for his proposed investment

Question 2

An investment-linked policy matures at the end of year 20. The minimum surrender illustration schedule covers the end of each of the first five years, then every fifth year until maturity. Which year-end is NOT required by this minimum schedule?

Accepted Answer

End of year 6

Answer

End of year 1

Answer

End of year 5

Answer

End of year 15

Question 3

Which statements about the investment-linked policy illustration templates applicable from 1 January 2015 are correct? (i) Version 1 has assumed annual return scenarios of 0%, 3%, 6% and 9%; (ii) Version 2 has scenarios of 0%, 3% and 6%; (iii) the 0% scenario guarantees repayment of all premiums; (iv) 3%, 6% and 9% are caps for the corresponding return scenarios.

Accepted Answer

(i), (ii) and (iv) only

Answer

(i) and (ii) only

Answer

(i), (iii) and (iv) only

Answer

(ii), (iii) and (iv) only

Question 4

Ms Lam’s investment-linked policy illustration shows a projected surrender value using a 6% assumed annual return. She believes signing it makes that amount guaranteed and replaces the policy terms. Which explanation is correct?

Accepted Answer

The assumed return is illustrative, actual returns may differ, and the document does not change the policy terms

Answer

The insurer promises a minimum annual return of 6%

Answer

The 6% rate is based on past performance and can therefore be treated as a forecast of actual returns

Answer

The projected surrender value becomes contractually guaranteed once the customer signs

Question 5

Mr Cheung’s surrender illustration uses these simplified assumptions: a HK$20,000 premium, an initial charge of HK$1,000, and the balance allocated to units at HK$10 each. At an illustrated year-end, the unit price remains HK$10. Surrender proceeds equal the total unit value less a HK$600 surrender charge, with no other charges or benefits. What is the projected surrender value?

Accepted Answer

HK$18,400

Answer

HK$19,000

Answer

HK$19,400

Answer

HK$20,000

Question 6

Surrender illustration calculations must exclude non-guaranteed discretionary bonuses and reimbursements of charges. Mr Wong has paid HK$100,000 in premiums, and his projected surrender value under the assumed return is HK$82,000 after all relevant charges. A non-guaranteed discretionary bonus of HK$3,000 and a reimbursement of charges of HK$2,000 have not been included. For the illustration, by how much do premiums paid exceed the projected surrender value?

Accepted Answer

HK$18,000

Answer

HK$13,000

Answer

HK$15,000

Answer

HK$16,000

Question 7

Which matters must be clearly stated before the customer’s signature in an ILAS illustration document? (i) Customers should invest only if they intend to pay premiums throughout their chosen payment term; (ii) early termination may cause significant loss; (iii) the customer confirms having read and understood the illustration and received the principal brochure; (iv) the customer confirms that the insurer guarantees the assumed returns.

Accepted Answer

(i), (ii) and (iii) only

Answer

(i), (ii) and (iv) only

Answer

(i), (iii) and (iv) only

Answer

All of (i), (ii), (iii) and (iv)

Question 8

A Hong Kong authorised insurer wants to customise an investment-linked policy illustration document by adding product information. Which statement most accurately describes the applicable conditions?

Accepted Answer

SFC approval is required; additions must be relevant and valuable, without misleading customers or detracting from minimum disclosures

Answer

Customer consent allows the insurer to add information without SFC approval

Answer

IA approval alone satisfies the approval requirement for this customisation

Answer

After SFC approval, additional information may replace minimum disclosures that hinder sales

Illustration Documents 退保說明文件

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