SCI M9A – Life Insurance And Investment-Linked Policies II Set Two

Correct: In Singapore, an ‘acceleration’ rider is designed to pay out the sum assured (or a portion of it) upon the diagnosis of a covered critical illness before death occurs. Because it ‘accelerates’ the existing death benefit, any claim paid under this rider reduces the sum assured of the main policy. If the rider covers 100% of the sum assured and a claim is made, the base policy typically terminates.

Incorrect: The description of a payout that is independent of the base policy and does not reduce the death benefit refers to an ‘additional’ or ‘standalone’ rider, not an acceleration rider. A mechanism that only covers future premiums is known specifically as a ‘Waiver of Premium’ rider, which is distinct from a Critical Illness rider that provides a lump-sum payout. Furthermore, while MAS encourages fair dealing and proper disclosure, there is no regulatory mandate that requires riders to be attached to all life policies; they remain optional enhancements based on the client’s needs.

Takeaway: An acceleration rider reduces the base policy’s death benefit upon a claim, whereas an additional rider provides a benefit over and above the base policy’s sum assured.

Correct: The Life Insurance Association (LIA) Singapore is a trade association that plays a vital role in self-regulation by setting industry codes of practice. These codes, such as the Code of Life Insurance Practice and the Minimum Standards for Life Insurance Advisory Process, establish the professional and ethical benchmarks for the industry. They ensure that all stakeholders, including intermediaries, prioritize the customer’s interests and provide clear, unbiased advice, which is especially critical when dealing with complex products like Investment-Linked Policies (ILPs) and potential conflicts of interest from gifts or entertainment.

Incorrect: The LIA is not a statutory body and cannot override the Financial Advisers Act (FAA) or provide legal safe harbors. Licensing and the power to revoke licenses rest with the Monetary Authority of Singapore (MAS), not the LIA. While LIA codes are industry-led, they are not purely advisory or voluntary in a way that allows them to be ignored; MAS expects financial institutions to adhere to these industry standards as part of their professional conduct and risk management frameworks.

Takeaway: LIA Singapore’s industry codes provide the essential ethical and professional framework that ensures customer-centricity and transparency in the life insurance advisory process.

Correct: Under the MAS Guidelines on Fit and Proper Criteria, the ‘honesty, integrity, and reputation’ pillar is a critical component of the assessment. A failure to disclose relevant information during the fit and proper notification process is a serious matter. The principal firm (the bank) must conduct a risk assessment to determine if the omission was intentional and if the nature of the past conduct suggests the individual is not suitable to hold a representative position. There is no automatic ‘expiry’ for past misconduct; it must be weighed against the current application.

Incorrect: The Financial Advisers Act and MAS guidelines do not provide a ‘statute of limitations’ or a three-year expiry that automatically clears a representative’s disciplinary history. Financial soundness is a separate pillar of the fit and proper criteria and does not replace or mitigate the requirement for honesty and integrity. While the SGX is a regulator for the exchange, the primary regulatory framework for the appointment of financial adviser representatives for life insurance and ILPs is governed by MAS under the Financial Advisers Act and the Representative Notification Framework (RNF).

Takeaway: The assessment of a representative’s fitness and propriety in Singapore is a holistic process where honesty and integrity are paramount, and all past conduct must be transparently disclosed and evaluated by the principal firm.

Correct: Approach Y is correct because the fundamental distinction in funding between the two products is that RP ILPs facilitate dollar-cost averaging (DCA). By investing fixed amounts at regular intervals, the client buys more units when prices are low and fewer when prices are high, which is a key strategy for funding via periodic income. This aligns with the representative’s duty under the Financial Advisers Act to provide recommendations that suit the client’s financial circumstances and investment strategy.

Incorrect: Approach X is incorrect because while investing a lump sum is an option, the FAA does not ‘prioritize’ idle cash over future income; the recommendation must be based on the client’s specific goals and risk tolerance. Option C is incorrect because there is no MAS regulation that mandates RP ILPs for employed individuals; both SP and RP options are available depending on suitability. Option D is incorrect because SP ILPs are not exempt from suitability assessments; all investment-linked policies (ILPs) are considered Specified Investment Products (SIPs) and require a rigorous assessment of the client’s knowledge and experience.

Takeaway: The primary funding distinction is that Single Premium ILPs involve a lump-sum capital outlay, while Regular Premium ILPs utilize periodic income to benefit from dollar-cost averaging.

Correct: Term insurance is specifically designed to provide pure protection for a specified period (the term). In the Singapore market, its primary characteristic is the lack of any savings or investment element, meaning it does not accumulate cash value. This structure allows the premiums to remain significantly lower than other life insurance products, making it the most suitable and cost-effective option for individuals needing high levels of coverage for a finite period, such as the duration of a mortgage.

Incorrect: The suggestion that term insurance accumulates a surrender value or acts as a savings vehicle is incorrect, as those are features of endowment or whole life policies. Describing term insurance as a permanent form of insurance for a lifetime legacy is also inaccurate, as term insurance expires at the end of the chosen duration. Furthermore, term insurance is typically non-participating and does not receive bonuses from a participating fund; participating features are characteristic of ‘Par’ policies in Singapore.

Takeaway: Term insurance is a pure protection tool in Singapore that offers the highest coverage per dollar of premium for a specific timeframe because it does not build any cash value.

Correct: Strategic Asset Allocation (SAA) is the process of defining the long-term target asset mix for a portfolio. In the context of Singapore ILP sub-funds, SAA is intended to align the fund’s holdings with its stated investment objectives and risk profile over a long-term horizon. It provides a stable framework that prevents the fund from being swayed by temporary market noise, ensuring the risk-return characteristics remain consistent with what was disclosed to the policyholder.

Incorrect: The approach of shifting the entire portfolio based on short-term indicators describes Tactical Asset Allocation (TAA) or market timing, not SAA. The idea that SAA guarantees the net asset value is incorrect, as balanced sub-funds typically do not offer capital guarantees unless specifically structured as a capital-guaranteed fund under MAS guidelines. Focusing on individual stock selection to outperform a benchmark in the short term refers to security selection or active management, which is distinct from the high-level asset class weighting defined by SAA.

Takeaway: Strategic Asset Allocation serves as the long-term anchor for a sub-fund, defining the asset mix required to achieve specific investment goals regardless of short-term market volatility.

Correct: In Singapore, the Monetary Authority of Singapore (MAS) sets the competency requirements for financial representatives. The Singapore College of Insurance (SCI) is the industry-recognized examining body appointed to conduct the Capital Markets and Financial Advisory Services (CMFAS) examinations, including Module 9 (M9). Passing M9 is a mandatory requirement under MAS Notice FAA-N13 for individuals who wish to provide advice on or sell life insurance and investment-linked policies, ensuring they meet a minimum standard of technical knowledge.

Incorrect: The option suggesting SCI issues licenses is incorrect because the MAS is the body that handles the notification and registration of representatives, not the SCI. The option claiming the exam is voluntary is incorrect because M9 is a mandatory regulatory requirement for the specific activity of advising on ILPs. The option stating SCI is responsible for market conduct supervision is incorrect because the MAS and the representative’s own firm are responsible for supervision and disciplinary actions, while the SCI’s role is focused on education and examination.

Takeaway: The SCI M9 examination is a mandatory regulatory competency requirement administered by the SCI for representatives intending to advise on life insurance and investment-linked policies in Singapore.

Correct: In the Singapore insurance market, forward pricing is the standard mechanism for ILP unit transactions. It involves valuing units at the next available Net Asset Value (NAV) calculated after the transaction request is received. This is a critical fair-dealing practice because it prevents ‘stale price’ arbitrage, where an investor could exploit known market movements that occurred after the last historical price was published but before the current day’s valuation.

Incorrect: Historical pricing is generally discouraged or not used for ILPs because it allows for market timing and arbitrage, which can disadvantage other policyholders in the fund. MAS and industry standards do not mandate historical pricing for top-ups; instead, they emphasize equitable treatment of all policyholders through forward pricing. Furthermore, pricing mechanisms are typically consistent across all transaction types (purchases, switches, and redemptions) to maintain the integrity of the sub-fund’s valuation.

Takeaway: Forward pricing is the industry standard for Singapore ILPs to ensure equitable treatment of all policyholders and to eliminate arbitrage opportunities arising from market movements.

Correct: According to the Singapore Insurance Act, a life insurance policy (including ILPs) is void unless the proposer has an insurable interest in the life insured at the time the insurance is effected. In the case of business partners or other non-familial relationships, the proposer must have a pecuniary (financial) interest in the duration of the life of the person insured.

Incorrect: The requirement that interest must exist at the time of claim is a feature of general insurance, not life insurance in Singapore, where it is only required at inception. Insurable interest is not automatically assumed for all business relationships; it must be proven as a financial interest. ILPs are legally classified as life insurance policies and are subject to the Insurance Act, not exempt from it.

Takeaway: Under the Singapore Insurance Act, insurable interest for life policies must exist at the time of inception and must be a pecuniary interest when the relationship is business-related.

Correct: In Singapore, Investment-Linked Policy (ILP) sub-funds must be managed in accordance with the investment objectives and limits disclosed in the Product Summary and Fund Summary. If a breach of these limits occurs, the manager must take prompt action to rectify the situation to protect the interests of policyholders and ensure the fund remains consistent with the risk profile they agreed to. Documentation and reporting to compliance are essential for regulatory transparency under MAS guidelines.

Incorrect: Retaining the bonds and simply updating the summary later is incorrect because it violates the current contractual and regulatory agreement with policyholders. Monitoring for six months is inappropriate as breaches of investment mandates require timely rectification. Reclassifying the fund internally without notifying policyholders is a breach of transparency and disclosure requirements under the Financial Advisers Act and MAS regulations.

Takeaway: ILP sub-funds must strictly adhere to their disclosed investment mandates, and any breaches must be promptly rectified and documented to maintain regulatory compliance and policyholder trust.

Correct: In the FIDReC dispute resolution framework, if a dispute is not settled through mediation and proceeds to adjudication, the Adjudicator’s decision is binding on the financial institution if the consumer accepts it. However, the consumer has the right to reject the Adjudicator’s decision and is then free to pursue the matter through other channels, such as the courts or arbitration.

Incorrect: Mediation is the first stage of the FIDReC process, whereas adjudication is the second stage where a formal decision is made. The decision is not binding on the consumer, only on the financial institution, so it does not bar the consumer from further legal action. The Adjudicator is an independent and neutral party, not a legal representative for the consumer, and must make decisions based on the facts and policy terms.

Takeaway: FIDReC adjudication decisions are binding on the financial institution but allow the consumer the flexibility to reject the award and seek alternative legal remedies.

Correct: Under MAS Notice 314, foreign Politically Exposed Persons (PEPs) are automatically considered higher risk. Therefore, financial institutions must obtain senior management approval to establish or continue a business relationship with them. Furthermore, they are required to take reasonable measures to establish the source of wealth and source of funds, and conduct enhanced ongoing monitoring of the business relationship.

Incorrect: Notifying MAS for every individual PEP onboarding is not a regulatory requirement under Notice 314; the focus is on internal controls and Suspicious Transaction Reporting (STR) if applicable. Simplified due diligence is prohibited for high-risk categories like foreign PEPs regardless of the premium amount. While an AMLCO oversees the AML framework, the Notice specifically requires senior management approval for PEPs. Fixed restrictions on top-ups for 24 months are not a specific requirement of the Notice, which instead emphasizes risk-based enhanced monitoring.

Takeaway: Foreign PEPs are classified as high-risk under MAS Notice 314, necessitating senior management approval and enhanced ongoing monitoring of the relationship.

Correct: In the context of Singapore’s Investment-Linked Policies (ILPs), a premium holiday is a facility that allows the policyholder to temporarily stop paying premiums. However, the policy remains in force only as long as there are sufficient units in the account to pay for the ongoing cost of insurance (mortality charges) and administrative fees. These charges are met by canceling units in the sub-funds. Consequently, the unit balance decreases, which not only risks policy lapse if the value reaches zero but also reduces the base upon which future investment growth can compound.

Incorrect: The suggestion that the number of units remains unaffected is incorrect because charges are consistently deducted by liquidating units. The claim that MAS requires insurers to waive mortality charges is false; these charges are contractual and continue to be deducted to maintain the insurance cover. Furthermore, a premium holiday does not suspend policy-related fees or enhance growth; rather, the lack of new premium injections and the continued depletion of units for fees typically result in a lower terminal value compared to a policy where premiums are paid consistently.

Takeaway: A premium holiday offers liquidity relief but can jeopardize policy longevity and wealth accumulation because insurance and administrative costs continue to deplete the unit balance.

Correct: In the context of Singapore’s insurance market, endowment policies are structured to encourage long-term savings. The ‘capital guarantee’ feature is a hallmark of many participating endowment plans, but it is crucial to understand that this guarantee almost always applies specifically at the point of maturity. If a policyholder surrenders the policy early (e.g., in year 4), they may receive less than the total premiums paid due to front-end costs and surrender charges. The ‘disciplined savings’ aspect refers to the contractual obligation to pay premiums over a set period to reach a specific financial goal at maturity.

Incorrect: The suggestion that surrender values are always equal to premiums paid after three years is incorrect, as early surrender usually results in a loss of capital. The idea that premiums can be stopped indefinitely without affecting the guarantee is false; non-payment of premiums usually leads to the policy lapsing or entering an Automatic Premium Loan (APL) state, which reduces the final payout. Finally, the MAS does not provide a sovereign guarantee for policy benefits; while the Policy Owners’ Protection Scheme (PPF) managed by the Singapore Deposit Insurance Corporation (SDIC) provides a safety net for guaranteed benefits in the event of insurer insolvency, it is not a performance guarantee for non-guaranteed bonuses.

Takeaway: Endowment policies in Singapore provide a capital guarantee only at maturity, making them suitable for disciplined savings but potentially illiquid in the early years.

Correct: Under Section 23G of the Financial Advisers Act (FAA), a financial adviser is prohibited from using the term independent (or any similar term) unless it operates without any influence from product providers. Specifically, it must not receive any commission or benefit that could create a conflict of interest, or if it does receive such benefits, it must rebate them in full to the client. This ensures that the adviser’s recommendations are not motivated by varying commission rates between different products.

Incorrect: While offering a wide range of products from multiple providers is a characteristic of a comprehensive financial adviser, it does not legally permit the use of the term independent if the firm still retains commissions from those providers. Corporate structure, such as being a bank subsidiary, does not grant the right to use the term independent. Capital requirements and professional indemnity insurance are general licensing conditions for all financial advisers in Singapore and are not the specific criteria used to determine the right to use the independent label.

Takeaway: To use the term independent under the FAA, a financial adviser must be free from commission-based conflicts of interest or rebate all commissions received back to the client.

Correct: In the context of Singapore’s ILP market, money market sub-funds are designed for capital preservation and high liquidity. They invest in short-term, high-quality debt instruments and bank deposits. For a client needing funds in the short term (eight months) during a period of volatility, this approach is most appropriate as it protects the nominal value of the investment, even though the real return might be low compared to inflation.

Incorrect: Treating a money market fund as a long-term growth engine is incorrect because these funds lack the capital appreciation potential of equities. Speculating on daily interest rate movements is inappropriate for this asset class and may lead to excessive switching costs. Claiming that ILP sub-funds have the same guarantees as Singapore Savings Bonds or are covered by the SDIC in the same manner as bank deposits is a regulatory misrepresentation; ILP sub-funds are subject to investment risks and are not bank deposits.

Takeaway: Money market sub-funds serve as a defensive asset class in an ILP, prioritizing liquidity and capital preservation for short-term needs or during periods of high market uncertainty.

Correct: Under the Singapore Insurance Act, insurers are required to maintain separate insurance funds for their life insurance business. This statutory requirement ensures that the assets belonging to a specific fund (such as the Participating Fund) are ring-fenced to meet the obligations and liabilities of that fund’s policyholders, thereby preventing the commingling of assets with the shareholders’ fund or other business lines.

Incorrect: Consolidating all premiums into a single account fails to meet the fund separation requirements of the Insurance Act. Discretionary transfers between funds without regulatory oversight or adherence to the Act’s provisions would jeopardize policyholder security. Limiting the Appointed Actuary’s role is incorrect as the Act mandates that the Appointed Actuary must oversee the financial condition of the life insurance funds and provide professional advice on the distribution of surplus to ensure fairness and sustainability.

Takeaway: The Singapore Insurance Act mandates the strict separation of insurance funds to protect policyholder interests and ensure that assets are used solely for the intended fund’s liabilities.

Correct: In Singapore, an acceleration-type rider ‘accelerates’ the payment of the death benefit. When a claim is made for a critical illness, the amount paid is deducted from the main policy’s sum assured. If the CI rider benefit is equal to the sum assured, the policy terminates upon payment. For a client whose primary goal is to preserve the full death benefit for dependents, an acceleration rider may be unsuitable unless the total sum assured is increased to account for the potential ‘drawdown’ by the CI claim. This disclosure is a key part of the suitability assessment under the Financial Advisers Act (FAA).

Incorrect: Waiver of premium riders only waive future premiums upon disability or illness and do not provide the lump sum CI benefit the client sought. There is no MAS regulation requiring all riders to be ‘additional’; both acceleration and additional (buy-back) riders are legally permitted and common in Singapore. While the Product Summary is a required document, the FAR has a professional duty under the FAA and MAS guidelines to explain the specific features and trade-offs of the recommended product to ensure the client makes an informed decision.

Takeaway: Financial advisers must clearly distinguish between acceleration and additional riders to ensure that a client’s death benefit remains sufficient if a critical illness claim is made.

Correct: In Singapore, ILP sub-funds are pools of assets managed by a fund manager (either internal or external to the insurer) according to a specific investment mandate. The fund manager’s primary role is to select securities or underlying funds that fit the predefined objectives, risk parameters, and asset allocation limits disclosed in the Product Summary and Fund Summary to ensure consistency for the policyholders.

Incorrect: The suggestion that fund managers have absolute discretion to ignore the mandate is incorrect because they are legally and contractually bound by the fund’s stated objectives. The idea that policyholders can direct individual asset trades is false; policyholders only buy units in the sub-fund and do not have direct ownership or control over the underlying assets. The claim that all sub-funds must be feeder funds is incorrect, as insurers may also offer ‘managed’ sub-funds that invest directly in a diversified portfolio of stocks, bonds, or other securities.

Takeaway: Fund managers must operate strictly within the defined investment mandate of the ILP sub-fund to ensure the portfolio remains aligned with the risk-return profile promised to policyholders.

Correct: In the context of Singapore’s ILP market, equity sub-funds are characterized by their investment in shares or stocks. They sit at the higher end of the risk-return spectrum compared to bond or money market funds. While they offer the potential for superior capital growth over the long term, they are highly susceptible to market fluctuations and do not offer capital guarantees, meaning the investment risk is fully borne by the policyholder.

Incorrect: The suggestion that equity sub-funds provide a guaranteed floor is incorrect as they are non-guaranteed investment products where the policyholder bears the market risk. The claim that the insurer’s capital adequacy ratio offsets portfolio losses is a misunderstanding of ILPs; unlike participating policies, the performance of ILP sub-funds is directly linked to market prices, not the insurer’s balance sheet. Finally, equity sub-funds are not mandated to hold a majority of assets in government securities, as doing so would change their fundamental investment objective from growth to income or capital preservation.

Takeaway: Equity sub-funds offer high long-term growth potential but require investors to accept significant market volatility and the absence of capital guarantees.

Correct: Approach Y is correct because the DNC provisions under the PDPA mandate that organizations must check the DNC Registry before making telemarketing calls to Singapore telephone numbers. The only way to bypass this check is if the organization has obtained ‘clear and unambiguous consent’ from the individual for that specific purpose. While there are limited exemptions for ‘Existing Business Relationships’ regarding text and fax messages for related products, these do not generally apply to voice calls in the same way, making the checking of the registry or obtaining specific consent the required standard for compliance.

Incorrect: Approach X is incorrect because the ‘Existing Business Relationship’ exemption is limited and does not provide a blanket authorization for all voice calls for any product; specific conditions must be met, and checking the DNC Registry remains the safer legal default. Approach C is incorrect because the PDPC does not vet individual marketing scripts or recipient lists; the onus of compliance lies with the organization and its representatives. Approach D is incorrect because ‘Deemed Consent’ is strictly defined and does not automatically grant a representative the right to use personal data for marketing new products unless it was reasonably necessary for the original transaction or specific consent was obtained.

Takeaway: Under the Singapore PDPA, insurance representatives must check the DNC Registry before telemarketing unless they have obtained clear and unambiguous consent from the individual.

Correct: According to the MAS Guidelines on Fit and Proper Criteria (FSG-G01), the assessment of a person’s honesty, integrity, and reputation involves looking at their past conduct. A civil settlement involving a breach of fiduciary duty is a significant factor that the principal firm must evaluate. The firm must consider the seriousness of the matter, the lapse of time, and whether the individual has shown a consistent pattern of ethical behavior since the event.

Incorrect: The suggestion that an individual is automatically cleared if no prohibition order was issued is incorrect because the responsibility for assessing fit and proper status lies with the principal firm during the appointment process regardless of prior regulatory action. Focusing exclusively on financial soundness or academic qualifications ignores the critical pillars of honesty and integrity required by MAS. Passing CMFAS examinations satisfies the competence and capability requirement but does not mitigate or override concerns regarding a candidate’s integrity or reputation.

Takeaway: The MAS Fit and Proper Criteria require a holistic and continuous assessment of honesty, integrity, reputation, competence, and financial soundness for all financial adviser representatives in Singapore.

Correct: In the Singapore insurance context, specifically for participating (Par) policies, reversionary bonuses are non-guaranteed and depend on the performance of the insurer’s participating fund. However, once the insurer declares these bonuses and they are vested in the policy, they become a guaranteed addition to the sum assured and increase the policy’s cash value. This aligns with the Life Insurance Association (LIA) guidelines on how participating fund benefits should be communicated to consumers.

Incorrect: Option b is incorrect because the rates used in Benefit Illustrations (such as 3.0% or 4.25% p.a.) are purely illustrative and do not represent guaranteed returns. Option c is incorrect because whole life policies typically do not accumulate a surrender value in the first year or two, and early surrender usually results in a loss. Option d is incorrect because reversionary bonuses are added to the sum assured to be paid at maturity or death, rather than being paid out as annual cash dividends (which would be a different type of bonus structure).

Takeaway: Reversionary bonuses in Singapore participating policies become guaranteed only after they are formally declared and vested by the insurer, thereafter increasing both the death benefit and the surrender value.

Correct: In Singapore, forward pricing is the standard mechanism for Investment-Linked Policies (ILPs). It means that the price of units is not known at the time of the transaction request; instead, the transaction is processed at the next available valuation price determined after the application is received. This approach is crucial for protecting the interests of all policyholders within the fund by preventing ‘market timing’—where an investor could exploit known market movements if historical (stale) prices were used.

Incorrect: Historical pricing, which uses the last known price, is generally avoided in the ILP market because it allows for arbitrage opportunities that can disadvantage other fund participants. Forward pricing is not used to collect extra fees, but rather to ensure fair valuation. The Monetary Authority of Singapore (MAS) and industry standards actually favor forward pricing over historical pricing for unit-linked products to maintain market integrity.

Takeaway: Forward pricing is the standard for Singapore ILPs to ensure fairness and prevent arbitrage by using the next available valuation price after a transaction request is made.

Correct: The primary characteristic of term insurance in Singapore is to provide ‘pure protection’ for a specific period. It is designed to pay out a death benefit only if the insured event occurs within the policy term. Unlike whole life or endowment policies, it typically does not have a savings or investment component and does not build up a surrender value. Therefore, it is fundamentally misaligned with a client objective focused on capital growth or retirement income.

Incorrect: The suggestion that term insurance premiums are higher than endowment premiums is incorrect; term insurance is generally the most affordable way to obtain high protection coverage. There is no regulatory requirement under the Financial Advisers Act (FAA) linking term insurance eligibility to Supplementary Retirement Scheme (SRS) contributions. Furthermore, the Monetary Authority of Singapore (MAS) does not mandate the conversion of term policies into investment-linked policies; while some policies offer a ‘convertibility’ option, it is a feature of the contract, not a regulatory requirement.

Takeaway: Term insurance serves the primary purpose of affordable protection and does not provide the cash value or investment returns required for wealth accumulation or retirement funding.

Correct: The Life Insurance Association (LIA) Singapore is a trade association that promotes high standards of professional conduct through self-regulation. Member companies are expected to adhere to LIA Codes of Practice, such as those regarding disclosure and advisory standards, to ensure consistency and consumer protection across the industry. Updating internal procedures to align with these codes is the proactive and correct professional response.

Incorrect: Seeking a MAS override is inappropriate because LIA codes are designed to complement, not contradict, MAS regulations. Ignoring guidelines for profit targets undermines the industry’s self-regulatory framework and the company’s obligations as an LIA member. The Singapore Exchange (SGX) is primarily concerned with the listing and trading of securities and is not the body responsible for auditing life insurance sales practices or LIA code compliance.

Takeaway: LIA Singapore sets industry-wide codes of practice that member companies must integrate into their operations to uphold professional standards and consumer confidence.

Correct: According to the Singapore Insurance Act, a person is deemed to have an insurable interest in the life of another only in specific relationships, such as a spouse or a child/ward under the age of 18. For other relationships, such as an uncle and an adult nephew, an insurable interest must be based on a pecuniary (financial) interest or dependency existing at the time the policy is issued. If no such interest exists at the time of inception, the life insurance contract is void from the beginning.

Incorrect: Consent from the life insured does not satisfy the statutory requirement for insurable interest under Singapore law. Furthermore, for life insurance policies in Singapore, the insurable interest must exist at the time the policy is issued (inception); it is not a requirement that it persists until the claim, nor is it only checked at the time of claim. The validity of the contract is determined by the Insurance Act itself, not by a discretionary decision from the Monetary Authority of Singapore (MAS) regarding the intent of the policy.

Takeaway: Under the Singapore Insurance Act, a life insurance policy is void at inception if the policy owner lacks a recognized insurable interest in the life insured at the time of issuance.

Correct: Single Premium (SP) ILPs involve a single upfront capital outlay at the start of the policy. In contrast, Regular Premium (RP) ILPs involve recurring payments (e.g., monthly or annually). This recurring nature of RP ILPs enables dollar-cost averaging, as units are purchased at different price points over time. Furthermore, RP ILPs often provide the flexibility of a ‘premium holiday,’ where the policyholder can temporarily cease premium payments if the policy’s account value is sufficient to cover the ongoing insurance and administrative charges.

Incorrect: The suggestion that Single Premium ILPs must only use SRS monies is incorrect, as they can also be funded by cash or CPFIS (subject to eligibility). The claim that Regular Premium ILPs require mandatory annual top-ups of 10% is a fabrication and does not represent standard product structures in Singapore. The idea that Single Premium ILPs have escalating premiums is contradictory to the definition of a ‘single’ premium, and the claim that Regular Premium ILPs cannot be reduced or paused (premium holiday) ignores standard flexibility features found in most Singaporean RP ILP products.

Takeaway: The primary distinction lies in the frequency of funding: Single Premium ILPs require a one-off lump sum, while Regular Premium ILPs involve periodic contributions that offer benefits like dollar-cost averaging and premium payment flexibility.

Correct: The Singapore College of Insurance (SCI) is the industry-led professional training and examination body appointed to conduct the Capital Markets and Financial Advisory Services (CMFAS) examinations. Module 9 (M9) is a mandatory requirement under the Financial Advisers Act (FAA) for individuals who wish to provide advice on life insurance and investment-linked policies. This ensures that all representatives possess a standardized level of technical knowledge and ethical understanding to protect consumer interests in Singapore.

Incorrect: The suggestion that SCI is a statutory board under the Ministry of Finance is incorrect; while it works closely with regulators, it is an industry-based education institution, and MAS (not SCI) is the licensing authority. The idea that the M9 certification is voluntary or can be waived based on general sales experience is false, as CMFAS requirements are mandatory for regulated activities. Finally, the claim that MAS conducts the examinations directly is incorrect, as MAS delegates the administration of these professional competency exams to bodies like the SCI and the Institute of Banking and Finance (IBF).

Takeaway: The SCI is the authorized body for administering CMFAS examinations like M9, which are mandatory competency requirements for financial advisers in Singapore to ensure professional standards in the life insurance and ILP sectors.