CMFAS M9A Structured ILPs question: Compared with an ordinary ILP

CMFAS M9AStructured ILPs

Compared with an ordinary ILP, what is generally true of a portfolio bond?

A It tends to need a longer horizon to cover higher charges, with only a small death benefit
B It offers a full capital guarantee and instant daily liquidity at no extra cost
C It provides a large death benefit that is well suited to clients with protection needs
D It is a short-term instrument ideal for parking surplus cash

Show the answer and explanation

Answer: A. It tends to need a longer horizon to cover higher charges, with only a small death benefit

A portfolio bond tends to need a longer horizon to cover its higher charges and carries only a small death benefit, being marketed as a flexible 'lifestyle' policy rather than a protection or short-term product.

Common mistake

Higher charges and a small death benefit make it a longer-horizon, non-protection product — not a short-term or guaranteed one.

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Related CMFAS M9A questions

For each structured ILP sub-fund, within what timeframes must the insurer provide the Semi-Annual Report and the Relevant Audit Report after the period to which they relate?Under the CIS Code investment guidelines applied to a retail structured ILP sub-fund, exposure to a single entity is generally capped at 10% of the fund's NAV. This cap is tightened to 5% when A structured ILP is marketed to 'seek to provide' annual payouts and repay capital at maturity. How does this differ from an ordinary bond?

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Original study material mapped to the public CMFAS M9A syllabus. Unofficial, not endorsed by MAS or SCI. Verify figures and rules against current guidance before relying on them.