CMFAS M9 Life Insurance Products & Riders question: S$150,000 Whole Life policy

CMFAS M9Life Insurance Products & Riders

Priya has a S$150,000 Whole Life policy. She wants a lump sum if she is diagnosed with a covered critical illness, but she insists that the full S$150,000 death benefit must still be paid to her family afterwards. Which arrangement meets both requirements?

A An Acceleration Benefit Critical Illness Rider, which pre-pays part or all of the S$150,000 on diagnosis
B Rely on the base Whole Life policy alone, which pays a CI benefit automatically
C A Waiver of Premium Rider triggered by critical illness
D An Additional Benefit CI Rider: pays its own sum on diagnosis, leaving the S$150,000 death benefit intact

Show the answer and explanation

Answer: D. An Additional Benefit CI Rider: pays its own sum on diagnosis, leaving the S$150,000 death benefit intact

Only the Additional Benefit CI Rider pays its own sum assured on diagnosis while leaving the base policy untouched, so the full S$150,000 death benefit still goes to her family. An Acceleration Benefit reduces the death benefit by whatever it pre-pays, which fails her second requirement.

Common mistake

Acceleration pre-pays out of — and reduces — the death benefit; only the Additional Benefit type preserves the full base sum assured.

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Related CMFAS M9 questions

Under the extended term insurance non-forfeiture option on a Whole Life policy, when premiums are defaulted and the owner does not choose another option, the policy The survival period (usually 30 days from the occurrence of a covered critical illness) applies to which type of Critical Illness Rider?Mr Rao's children are now self-supporting, so his large protection need has ended. He wants to stop paying premiums on his Whole Life policy but would like to keep a smaller amount of cover in force for the whole of his life to leave a modest legacy. Which non-forfeiture option should he elect?

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