M9A — Life Insurance and Investment-Linked Policies II
Case Studies
Chapter 6 applies chapters 1 to 5 to client situations. Each case gives you a person, a goal, a time horizon and a structured product, usually a structured ILP, a structured fund or a portfolio bond, then asks one thing: what the client receives under a market path, who carries a default, what a charge or gate does to the cash value, which disclosure or assessment MAS requires, or whether the product fits. Marks go to candidates who read the payoff terms closely, work the arithmetic step by step, and match the product's term, liquidity and guarantee to the client's needs.
6 min read·5 sections
✓Checked against the SCI M9A syllabus chapter 6 (checked 21 Oct 2026); MAS Notice 307 on Investment-Linked Policies, last revised 28 Jun 2021 (paras 35, 35A, 35B, 51, 75; Appendix A paras 43 and 53; Appendix H); MAS Notice FAA-N16, last updated 29 Dec 2025 (para 10A; CKA paras 15-27D and Annex 2); MAS Notice FAA-N03 para 24(k), last revised 5 Oct 2018; LIA Your Guide to Investment-Linked Insurance Policies (Mar 2026); Financial Advisers Act 2001 s.36 (current version as at 21 Oct 2026); Code on Collective Investment Schemes, last revised and effective 2 Jul 2026 (Appendix 1 paras 5.1-5.5, Appendix 4); MAS Guidelines on Structured Deposits FAA-G09, last revised 28 Jun 2021; SDIC deposit insurance coverage (as at 21 Oct 2026); MoneySense structured products guides (last updated 2 Jul 2026). Unofficial prep, not endorsed by MAS or SCI.
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Must-know for the exam
✓A structured ILP only 'seeks to provide' its targeted payouts; the insurer is not obliged to make up a shortfall, and a guarantee is only as strong as the party giving it (SCI M9A ch 4).
✓A capital-guaranteed sub-fund is valued at maturity at the higher of NAV and the guaranteed amount; a guarantee stated for the maturity date is lost on early surrender (MAS Notice 307, last revised 28 Jun 2021).
✓Code on CIS Appendix 4 (2 Jul 2026): a guarantee may cover capital less initial sales charges only if that is prominently disclosed.
✓Avoid 'capital protected' or 'principal protected' wording, which has been disallowed in Singapore since September 2009 (see the M9A structured-products note); repayment depends on the issuer. Say 'designed to repay principal at maturity'.
✓OTC counterparty limit for a fund or ILP sub-fund: 10% of NAV if the counterparty is rated at least A, otherwise 5% (Code on CIS App 1 paras 5.1-5.5, applied by MAS Notice 307 para 51).
✓ILP sub-funds are valued every business day; one that does not deal daily is valued every dealing day and at least monthly (MAS Notice 307 para 75).
✓Statement to Policyholders: annual for a 'specified ILP' (regular premium, or single premium with death and critical illness benefit of at least 150% of premium); monthly for other ILPs since 8 Oct 2020 (MAS Notice 307 paras 35, 35A, 35B).
✓Product summary: no predictions of performance (App A para 53) and no simulated past performance of a hypothetical fund (para 43). PHS: at most 4 pages of text (8 with diagrams and glossary), no disclaimers, nothing beyond the product summary (Appendix H).
✓Free-look on an ILP: refund of premium adjusted for any fall in unit value, less medical and other expenses incurred (FAA-N03 para 24(k), 5 Oct 2018; LIA guide, Mar 2026).
✓An ILP whose sub-fund is a SIP needs a Customer Knowledge Assessment; the CAR is for listed SIPs (MAS Notice FAA-N16, 29 Dec 2025).
✓CKA limbs: a relevant diploma or finance qualification; at least 6 transactions in CIS units or ILPs in the preceding 3 years; or at least 3 consecutive years of relevant work in the past 10 years. Wealth and listed-share trading do not count (FAA-N16 Annex 2).
✓Selected client: at least two of aged 62 or above, not proficient in English, below GCE 'O'/'N' Level; offer a trusted individual unless the client declines in writing (FAA-N16 para 10A).
✓Structured products and ILPs are outside deposit insurance; SGD deposits are insured up to S$100,000 per depositor per Scheme member (SDIC, since 1 Apr 2024).
▸On this page · 5 sections
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Traps that cost marks
→Forgetting that a cap applies after the participation rate, so a strong rally pays no more than the cap.
→Assuming the guarantee fails in a falling market, when a falling market is exactly when it pays.
→Reading a guarantee that applies on the maturity date as protection on every dealing day.
→Believing a later recovery cancels a barrier breach on a barrier observed every day.
→Applying an intra-term low to a barrier that is observed only at maturity.
→Paying only the coupon for the call year when the terms remember missed coupons.
→Treating an early call as the best possible outcome and ignoring the reinvestment problem it creates.
→Averaging a worst-of basket, or treating the barrier as a floor on repayment.
A four-step case method
•Case items pack in many facts, but one or two decide the answer. Use the same four steps every time, before you read the options.
•Step 1, the client: objective (income, growth, capital repayment, protection), horizon, cash needs, and experience. Note age, language and education for the selected-client test.
•Step 2, the product: wrapper (ILP, fund, note, deposit), term, dealing frequency, redemption caps, charges, and who gives any guarantee.
•Step 3, the payoff: write the formula from the stem, check which dates the barrier or call is observed on, and apply caps, participation rates and coupons in order.
•Step 4, the rule: name the instrument that governs the point (MAS Notice 307 for ILP disclosure and valuation, FAA-N16 for CKA and selected clients, the Code on CIS for limits and guarantees) and test each option against it.
•Trap: answering from the product's headline (a 'guarantee', a high coupon) instead of the client's horizon and the observation dates.
•Takeaway: client, product, payoff, rule. Work the numbers on the observed dates only.
Worked case 1: barrier observation and early exit
•Ho Kai Wen, 49, puts S$100,000 into a structured ILP whose note repays 100% at the end of year 4 unless the index is below 60% of its start; if so, it repays the final level. The index touches 55% in year 2 and ends at 85%.
•If the barrier is observed on every close: the 55% close breaches 60%, so repayment = final level. S$100,000 x 85% = S$85,000.
If the barrier is observed only on the final date: 85% is above 60%, so repayment = S$100,000.
•If he surrenders in year 2 instead, holding 100,000 units at a bid of S$0.74: 100,000 x S$0.74 = S$74,000, and any maturity-date guarantee is forfeited.
•What the barrier is not: a floor. Below a 60% barrier he bears the whole fall, not a 40% loss capped at S$40,000.
•Takeaway: Find the observation dates first; a continuous barrier, once breached, stays breached.
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