CMFAS M9 Underwriting, Servicing & Claims question: lapsed whole life policy

CMFAS M9Underwriting, Servicing & Claims

A lapsed whole life policy that had been in force for five years is reinstated. Six months after reinstatement the life insured dies by suicide. How is the claim treated?

A The death benefit is payable in full, because the original policy is over five years old
B Payable in full, because the suicide clause never applies again after reinstatement
C Not payable — reinstatement restarts the suicide clause, so only premiums since reinstatement are refunded
D Half the sum assured is payable, as the original policy had run for five years

Show the answer and explanation

Answer: C. Not payable — reinstatement restarts the suicide clause, so only premiums since reinstatement are refunded

Reinstatement causes the incontestability, suicide and waiting-period clauses to run afresh. Death by suicide within one year of the most recent reinstatement means no death benefit is payable; the insurer refunds premiums paid from the reinstatement date, without interest and less expenses.

Common mistake

The five-year-old original policy does not help — reinstatement resets the suicide (and incontestability) clock to the reinstatement date.

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Related CMFAS M9 questions

Which statement about reinstating a lapsed life policy is correct?Ben absolutely assigns his life policy to his brother Chris (the assignee) as a gift. Which of the following is a recognised disadvantage if Chris dies before Ben?A life insured dies two and a half years after the policy was issued. In assessing the claim the insurer discovers that, at application, the owner had deliberately and fraudulently concealed a serious pre-existing heart condition. Can the insurer contest the policy despite the incontestability clause?

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Original study material mapped to the public CMFAS M9 syllabus. Unofficial, not endorsed by MAS or SCI. Verify figures and rules against current guidance before relying on them.