CMFAS Life Insurance M5 4 — Questions and Answers
Question 1: What is the free-look period for life insurance policies in Singapore?
- 7 days
- 14 days (Correct answer)
- 21 days
- 30 days
Correct answer: 14 days
Singapore mandates a 14-day free-look period during which the policyholder can cancel a new life insurance policy and receive a full refund of premiums paid.
Question 2: What is a non-participating policy?
- A policy that pays dividends
- A policy with guaranteed benefits that does not share in the insurer's profits (Correct answer)
- A policy for non-residents
- A policy that does not provide coverage
Correct answer: A policy with guaranteed benefits that does not share in the insurer's profits
A non-participating policy provides guaranteed benefits only and does not share in the insurer's surplus or profits. Benefits are fixed and predictable.
Question 3: What is the MAS Notice on Product Advertising for insurance?
- Guidelines on billboard sizes
- Rules governing how insurance products can be advertised to the public (Correct answer)
- A requirement to advertise daily
- A ban on all insurance advertising
Correct answer: Rules governing how insurance products can be advertised to the public
MAS Notices on product advertising set out rules and standards that insurance companies must follow when advertising their products to ensure fair and accurate representation.
Question 4: What is the surrender value of a policy?
- The death benefit amount
- The amount a policyholder receives when terminating the policy before maturity (Correct answer)
- The total premiums paid
- The face value of the policy
Correct answer: The amount a policyholder receives when terminating the policy before maturity
The surrender value is the cash amount a policyholder receives from the insurer when they voluntarily terminate (surrender) their policy before its maturity date.
Question 5: What is underwriting in life insurance?
- Signing documents
- The process of assessing risk and deciding whether to accept an applicant (Correct answer)
- Writing insurance policies by hand
- Reviewing claims
Correct answer: The process of assessing risk and deciding whether to accept an applicant
Underwriting is the process where the insurer evaluates the risk of insuring an applicant based on their health, age, occupation, and lifestyle to determine premiums and acceptance.
Question 6: What is a convertible term policy?
- A term policy that can be converted to foreign currency
- A term policy that can be converted to a permanent policy without a medical exam (Correct answer)
- A policy that converts premiums to investments
- A policy that converts automatically upon death
Correct answer: A term policy that can be converted to a permanent policy without a medical exam
A convertible term policy gives the policyholder the option to convert it to a permanent (whole life or endowment) policy without needing to prove insurability.
CMFAS Life Insurance M5 4
What is the free-look period for life insurance policies in Singapore?