CMFAS Life Insurance M5 6 — Questions and Answers
Question 1: What is the role of the Life Insurance Association (LIA) of Singapore?
- To sell insurance policies
- To represent and promote the interests of the life insurance industry (Correct answer)
- To regulate insurance companies
- To process insurance claims
Correct answer: To represent and promote the interests of the life insurance industry
LIA represents the life insurance industry in Singapore, setting professional standards, promoting best practices, and liaising with regulators.
Question 2: What is a policy loan?
- A loan to buy an insurance policy
- A loan taken against the cash value of a life insurance policy (Correct answer)
- A bank loan for insurance premiums
- A loan from the government
Correct answer: A loan taken against the cash value of a life insurance policy
A policy loan allows the policyholder to borrow money from the insurer using the cash value of their life insurance policy as collateral.
Question 3: What is the cooling-off period under the Financial Advisers Act?
- 7 calendar days
- 14 calendar days (Correct answer)
- 21 calendar days
- 30 calendar days
Correct answer: 14 calendar days
Under the Financial Advisers Act, there is a 14-calendar-day cooling-off period for certain investment products sold by financial advisers.
Question 4: What happens when a life insurance policyholder stops paying premiums?
- Nothing happens
- The policy may lapse or become paid-up depending on its type and cash value (Correct answer)
- The insurer pays the premiums
- The beneficiary must pay
Correct answer: The policy may lapse or become paid-up depending on its type and cash value
If premiums stop, the policy enters a grace period. After that, it may lapse or, if it has sufficient cash value, be converted to a paid-up policy with reduced benefits.
Question 5: What is an annuity?
- A one-time lump sum payment
- A financial product that provides regular payments for life or a specified period (Correct answer)
- A type of health insurance
- A government bond
Correct answer: A financial product that provides regular payments for life or a specified period
An annuity provides a stream of regular payments to the annuitant, either for life or for a fixed period, typically used for retirement income.
Question 6: What is the CPF Life scheme?
- A private insurance product
- A national annuity scheme that provides lifelong monthly payouts to Singaporeans (Correct answer)
- A savings account
- A health insurance plan
Correct answer: A national annuity scheme that provides lifelong monthly payouts to Singaporeans
CPF Life (Lifelong Income For the Elderly) is a national annuity scheme that provides Singaporeans with monthly payouts for life starting from their payout eligibility age.
CMFAS Life Insurance M5 6
What is the role of the Life Insurance Association (LIA) of Singapore?