CMFAS M9 Life Insurance Products & Riders question: life to leave a modest legacy

CMFAS M9Life Insurance Products & Riders

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?

A Reduced paid-up Whole Life — a smaller paid-up amount in force until death, with no further premiums
B Extended term insurance — the full original amount for a limited number of years only
C Surrender the policy for cash, ending all cover
D Convert the policy into a term rider on a new policy

Show the answer and explanation

Answer: A. Reduced paid-up Whole Life — a smaller paid-up amount in force until death, with no further premiums

Because he wants permanent (whole-of-life) cover but at a reduced level and with no more premiums, reduced paid-up insurance is correct: the net cash value is applied as a single premium to buy a smaller amount of paid-up Whole Life payable on the same conditions until death. Extended term would keep the full amount but only for a limited term, and surrender ends cover entirely.

Common mistake

Extended term gives the full amount for a limited period; only reduced paid-up gives lifelong (reduced) cover.

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Related CMFAS M9 questions

Under which legal provision must a life insurer keep separate statutory insurance funds, with a separate fund maintained specifically for investment-linked policies?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?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

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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.