CMFAS HI – Health Insurance Module Exam

Correct: Providing a comparison between the existing and recommended policy is the right answer because MAS Notice 120 requires financial representatives to perform a side-by-side comparison when recommending the replacement of an Accident and Health (A&H) policy. This ensures the client is fully aware of the disadvantages, such as the potential loss of coverage for pre-existing conditions that were already covered under the old plan.

Incorrect: Guaranteeing that the new insurer will waive all waiting periods is wrong because a representative does not have the authority to override an insurer’s underwriting guidelines, and MAS 120 focuses on disclosure rather than making such guarantees. The requirement to cancel the old policy before the new one is processed is wrong because this would create a gap in coverage, which is contrary to the client’s best interests and not a regulatory requirement. The claim that the new premium must be at least 10% lower is wrong because MAS 120 does not set specific price-saving thresholds; the focus is on suitability and the disclosure of material information rather than a fixed percentage of cost reduction.

Takeaway: MAS Notice 120 mandates that representatives must highlight the potential disadvantages of replacing an existing health insurance policy to prevent clients from losing valuable coverage or facing new exclusions.

Correct: Providing the prospect with a Product Summary and, where applicable, a Benefit Illustration is a mandatory requirement under MAS Notice 120. These documents are designed to provide essential information about the policy’s benefits, key terms, and exclusions in a clear and concise manner to facilitate an informed decision.

Incorrect: The suggestion that a representative must ensure a prospect reads the entire policy wording before application is incorrect because MAS Notice 120 emphasizes the provision of summarized disclosure documents (Product Summary) rather than the full legal contract at the initial advisory stage. The requirement to compare at least five different insurers is not a specific mandate of MAS Notice 120; while a reasonable basis for recommendation is required, there is no fixed numerical quota for cross-insurer comparisons. Stating that premiums are fixed for life is incorrect and misleading, as most Accident and Health products, such as Integrated Shield Plans, typically have non-guaranteed premiums that are subject to adjustment.

Takeaway: MAS Notice 120 ensures transparency in the sale of Accident and Health products by requiring representatives to provide standardized disclosure documents like the Product Summary and Benefit Illustration.

Correct: The date on which the policyholder receives the final benefit payment under the policy terms is the right answer because ElderShield is a long-term care insurance scheme designed to provide monthly cash payouts for a fixed maximum duration. Once the insured has received the full extent of the benefits they are entitled to, the policy has fulfilled its contractual obligations and is officially terminated.

Incorrect: The scenario involving a disability arising from alcoholism is wrong because this is classified as a policy exclusion; while the insurer will not pay out for a disability caused by substance abuse, the policy itself does not terminate solely because of the diagnosis. Traveling or residing outside Singapore is wrong because ElderShield coverage is maintained regardless of where the insured lives, provided the policy remains in force. Being unable to perform only one Activity of Daily Living (ADL) is wrong because while this does not meet the three-ADL threshold required to trigger a claim, the policy remains active as long as premiums are paid or it has become a paid-up policy.

Takeaway: ElderShield coverage is not indefinite; it terminates upon specific events including the death of the insured, the exhaustion of all benefit payments, or a formal cancellation by the policyholder.

Correct: The transferability benefit is a core feature of the Transferable Medical Insurance Scheme (TMIS) which ensures that an employee moving between two participating employers can have their pre-existing conditions covered by the new employer’s insurer without a new waiting period, provided the transition occurs within a specified timeframe (typically 90 days).

Incorrect: The suggestion that the employee receives a cash payout for unused limits is incorrect because TMIS is designed for the continuity of risk coverage, not as a savings or reimbursement vehicle for unused premiums. The claim that the previous employer must pay premiums for 12 months after resignation is incorrect; while TMIS includes a continuation benefit, it generally allows the individual to stay in the scheme at their own cost or transfers the obligation to the new employer’s plan. The option regarding government-subsidized Integrated Shield Plans is incorrect as TMIS is a voluntary employer-led framework and does not involve automatic government subsidies for private shield plans.

Takeaway: The Transferable Medical Insurance Scheme (TMIS) facilitates labor mobility by allowing employees to carry their insurability for pre-existing conditions from one participating employer to another.

Correct: The payment of S$150,000 represents 50% of the sum assured being ‘accelerated’ upon the diagnosis of a critical illness. In a 50% acceleration benefit policy, the critical illness claim reduces the total sum assured by that percentage, leaving the remaining 50% (S$150,000) in force to cover death or Total and Permanent Disability (TPD). Because the policy continues with a reduced sum assured, a CI Waiver of Premium rider is highly recommended to ensure that future premiums for the remaining balance are waived after the CI diagnosis.

Incorrect: The statement that the policy terminates immediately is incorrect because termination only occurs if there is 100% acceleration or if the policy is a stand-alone CI plan. The suggestion that the policyholder receives S$300,000 for the CI claim while maintaining the full death benefit describes an ‘Additional Benefit’ rider, which is distinct from an ‘Acceleration Benefit’. The claim that the remaining sum assured is reserved for a second, different critical illness is generally incorrect for standard CI policies, as they typically allow only one CI claim, with the remaining balance reserved for death or TPD benefits.

Takeaway: An acceleration benefit CI rider pays out a portion of the main policy’s sum assured early, thereby reducing the remaining death benefit, whereas an additional benefit rider pays out a sum on top of the existing death benefit without reducing it.

Correct: Capitation is the right answer because it is a payment method where the Managed Healthcare Organisation (MHCO) pays a fixed, predetermined amount to a healthcare provider for each enrolled member assigned to them over a specific period. This payment remains constant regardless of the actual number of services or treatments the member receives, effectively shifting the financial risk of over-utilization from the insurer to the provider.

Incorrect: Discounted fee-for-service is wrong because it involves paying the provider for each specific service rendered, but at a rate lower than their standard charges; the total cost still increases with the volume of services. Fee schedule is wrong because it is simply a list of maximum allowable charges for various medical procedures, which still follows a pay-per-service logic. Salary is wrong because it refers to a fixed annual compensation paid to healthcare providers who are direct employees of the MHCO, rather than a per-member payment arrangement.

Takeaway: Capitation is a fundamental managed care mechanism that incentivizes providers to manage resources efficiently by paying them a fixed fee per enrollee rather than for each individual service.

Correct: The benefits under MediShield Life are not assignable or transferable, and the policy does not create any legal or equitable trust is the right answer because Section 10 of the MediShield Life Scheme Act 2015 explicitly prohibits the assignment of rights and clarifies that the scheme does not create a trust, nor do standard trust-related provisions in the Insurance Act or the Conveyancing and Law of Property Act apply.

Incorrect: The suggestion that benefits can be nominated under Section 49L of the Insurance Act is wrong because the MediShield Life Scheme Act specifically states that Section 49L does not apply to any policy issued under the scheme. The claim that the Insurance Act governs the scheme’s administration is wrong because Section 10(4) of the Act states that the Insurance Act does not apply to the Scheme. The statement that rights can be assigned to a private insurer to offset Integrated Shield Plan costs is wrong because the Act strictly prohibits the assignment or transfer of any rights or benefits arising from the insurance cover.

Takeaway: MediShield Life is a statutory social security scheme where benefits are non-transferable and exempt from standard insurance nomination and trust laws to ensure funds are used strictly for their intended purpose.

Correct: The monthly commission from the employer will be deducted from the disability benefit, but the lump-sum payout from the Life Insurance TPD rider will not be deducted. This is because the Limitation of Disability Benefit Clause in Disability Income Insurance is designed to prevent over-insurance by offsetting benefits against other sources of income like continuing salary, commissions, or other disability-specific insurance. However, Total and Permanent Disability (TPD) benefits received under Life Insurance policies are specifically exempted from this deduction.

Incorrect: The assertion that both payments would be deducted is incorrect because TPD benefits from life insurance are a standard regulatory and contractual exception to the offset rule. The suggestion that neither payment would be deducted is incorrect because the policy includes a limitation clause specifically to ensure the insured does not receive more than their pre-disability earnings. The claim that only the TPD payout is deducted is incorrect as it reverses the actual rule; continuing professional income must be offset, while life insurance TPD benefits are not.

Takeaway: To prevent moral hazard and over-insurance, Disability Income benefits are reduced by other income sources and disability insurance payouts, but they typically exclude TPD benefits from Life Insurance policies from this calculation.

Correct: The statement that individuals with serious pre-existing conditions may pay an additional premium of 30% for 10 years is correct. Under MediShield Life, universal coverage is provided to all Singapore Citizens and Permanent Residents, including those with pre-existing conditions. To help fund this inclusive coverage, those with serious pre-existing conditions pay a 30% surcharge on their premiums for a fixed period of 10 years, while the Government covers the majority of the actual cost associated with their higher risk.

Incorrect: The statement regarding the exclusion of pre-existing conditions is wrong because a key feature of MediShield Life is that it covers all Singapore Citizens and Permanent Residents regardless of their health history. The statement about a permanent risk-loading premium of double the standard rate is wrong because the additional premium is capped at 30% and is only payable for 10 years, not for life. The statement about a $300,000 lifetime claim limit is wrong because MediShield Life removed the lifetime claim limit entirely to provide lifelong protection; the $300,000 limit was a feature of the old MediShield scheme.

Takeaway: MediShield Life provides universal, lifelong health insurance coverage for all Singaporeans, utilizing a 30% premium loading for 10 years to integrate those with serious pre-existing conditions into the risk pool.

Correct: The provision for a waiver of pre-existing conditions is a core feature of the Transferable Medical Insurance Scheme (TMIS). When an employee moves from one firm to another, and both firms have adopted TMIS-compliant group medical insurance, the new insurer allows for the waiver of pre-existing condition exclusions, provided the employee meets the eligibility criteria and provides the necessary certification.

Incorrect: The statement regarding outpatient kidney dialysis and cancer treatment is incorrect because, under TMIS guidelines, these specific outpatient expenses are not eligible for TMIS benefits, regardless of whether they are covered by the underlying group policy. The suggestion that a 12-month contract qualifies an employee for TMIS is wrong; the regulations require a temporary employment contract to have a term of at least 24 months to be eligible. The claim that TMIS provides lifetime coverage is incorrect because TMIS coverage is tied to employment and generally expires at the prescribed statutory retirement age, unlike the Portable Medical Benefits Scheme (PMBS) which utilizes Integrated Shield Plans for lifetime protection.

Takeaway: TMIS is designed to provide continuity of inpatient coverage and waivers for pre-existing conditions for employees moving between participating employers, but it specifically excludes outpatient-related treatments from its benefit scope.

Correct: Application Type 2 is the right answer because it specifically caters to clients who wish to receive product advice and recommendations but are unwilling or unable to disclose all the information requested in the Fact-Find Document. In this scenario, the representative provides advice based on the limited information available, and the client must sign the relevant sections to acknowledge this.

Incorrect: The option regarding Application Type 1 is wrong because this type is intended for clients who are willing to disclose all requested information to ensure a comprehensive suitability assessment. The option regarding Application Type 3 is wrong because it applies to clients who do not wish to receive any advice at all and have already decided on a specific product to purchase. The option regarding a full financial needs analysis without a Fact-Find is wrong because, under MAS Notice 120, a representative must use a Fact-Find process to have a proper basis for any recommendation provided.

Takeaway: The Fact-Find Document categorizes client interactions into three types based on the level of disclosure and the client’s desire for advice, ensuring compliance with MAS Notice 120.

Correct: The Coordination of Benefits clause ensures the total payout from all indemnity-based policies does not exceed the actual expenses incurred by the insured. This is a fundamental application of the principle of indemnity in medical expense insurance, which aims to restore the insured to their financial position prior to the loss without allowing them to profit from the claim.

Incorrect: The suggestion that the client is entitled to the full sum of both policy limits (S$30,000) is incorrect because medical expense insurance is an indemnity-based contract, unlike life or critical illness insurance which are ‘valued’ policies. The claim that the private Integrated Shield Plan must always pay first is inaccurate; typically, a claimant is encouraged to utilize their employer’s group insurance first to preserve their private plan’s limits or to cover deductibles. The assertion that coordination of benefits only applies to restructured hospitals is false, as this regulatory and contractual principle applies to all medical expense claims regardless of whether the facility is public or private.

Takeaway: Under the Coordination of Benefits principle, an insured individual cannot collect more in total benefits than the actual medical expenses incurred, regardless of how many indemnity policies they hold.

Correct: The provision that Marcus’s coverage will only take effect upon his physical return to work is correct because of the ‘actively-at-work’ clause. In Group Medical Expense Insurance, this clause requires an employee to be performing their normal duties on the day the policy commences. If an employee is away on sick leave or annual leave on the inception date, their coverage is deferred until they are back at work.

Incorrect: The claim that Marcus is covered immediately from July 1st because it is a master contract is incorrect, as the master contract still requires individual members to meet eligibility criteria, including being actively at work. The suggestion that Marcus must undergo a new three-to-six-month probationary period is wrong because probationary periods are typically intended for new hires to the company, not for existing employees during a policy inception. The statement that Marcus is permanently excluded due to his health status is incorrect because the actively-at-work clause only delays the start of the coverage rather than denying it entirely.

Takeaway: The actively-at-work clause is a fundamental eligibility requirement in group insurance that defers the commencement of an individual’s coverage if they are not physically present and working on the policy’s effective date.

Correct: Signing the declaration signifies that the proposer and the proposed insured have disclosed all material facts truthfully and faithfully, while also granting the insurer the legal authority to exchange medical information with other sources for risk assessment. This is a fundamental requirement under the duty of utmost good faith and Section 25(5) of the Insurance Act.

Incorrect: The suggestion that the insurer cannot contest statements after thirty days is incorrect, as the contestable period is generally much longer, and the insurer maintains the right to rescind the contract for material non-disclosure. The claim that the legal burden of verification shifts to the insurance agent is wrong because the responsibility for full and faithful disclosure remains strictly with the proposer and the proposed insured. The idea that the declaration binds the insurer to provide coverage regardless of pre-existing conditions is incorrect, as the purpose of the disclosure is to allow the underwriter to assess the risk and decide whether to accept, exclude, or load the policy.

Takeaway: The declaration section of a proposal form is a legal commitment by the applicant to provide full disclosure and provides the insurer with the necessary permissions to verify the applicant’s medical history.

Correct: Capitation is the correct answer because it is a payment arrangement where the healthcare provider or medical group is paid a fixed amount for each enrolled member for a specific period (e.g., per month), regardless of whether the member utilizes the medical services or the actual cost of the treatment provided.

Incorrect: Discounted Fee-for-Service is incorrect because it involves paying the provider for each specific service or treatment rendered, but at a negotiated rate that is lower than their standard fees. Salary is incorrect because it refers to a fixed compensation paid to a physician who is an employee of the Managed Healthcare Organisation, which does not vary based on the number of members assigned. Fee Schedule is incorrect because it is a pre-determined list of maximum allowable charges for specific medical procedures, where payment is still based on the actual delivery of those services rather than a per-member flat fee.

Takeaway: Capitation is a primary cost-control mechanism in managed care that shifts the financial risk of service over-utilization from the insurer to the healthcare provider.

Correct: The requirement to disclose material facts fully and faithfully is a statutory duty under Section 25(5) of the Insurance Act. The Supplementary Lifestyle Questionnaire is designed to capture specific material information that allows the insurer to maintain equity in risk selection, ensuring that the funds and bonuses of existing policyholders are protected by accurately assessing the risk profile of new applicants.

Incorrect: The suggestion that the questionnaire acts as a legal waiver for all future claims is incorrect because disclosure is intended to help the insurer decide whether to accept the risk and on what terms, not to automatically void all future claims. The claim that the questionnaire is for the Ministry of Health to track statistics is wrong because the information is collected for private underwriting purposes and treated confidentially by the insurer. The idea that it is used to determine agent commissions is incorrect as the questionnaire’s function is risk assessment and legal compliance with disclosure laws, not the calculation of intermediary remuneration.

Takeaway: Pursuant to the Insurance Act, proposers must disclose all material facts in supplementary questionnaires to ensure the insurer can perform equitable risk selection and maintain the validity of the insurance contract.

Correct: The policyholder benefits from a streamlined application process without medical examinations, but faces uncertainty regarding the coverage of pre-existing conditions until the point of claim. This is the defining characteristic of Moratorium Underwriting, where the insurer does not assess medical history at the outset but applies a standard waiting period (usually two to five years) to determine if a pre-existing condition can eventually be covered.

Incorrect: The claim that chronic conditions like kidney failure or stroke will automatically be covered after the waiting period is incorrect because these conditions typically require ongoing medication or monitoring, meaning they will fail to meet the ‘symptom-free’ or ‘treatment-free’ criteria required to end the moratorium. The suggestion that a full health declaration and medical exam are required is wrong because those are features of Full Medical Underwriting, not Moratorium Underwriting. The idea that seeking medical advice during the moratorium period leads to immediate coverage is incorrect; in fact, seeking advice or treatment for a condition during the waiting period usually means the condition continues to be excluded from coverage.

Takeaway: Moratorium Underwriting offers the advantage of speed and simplicity during application, but policyholders must understand that coverage for pre-existing conditions is conditional upon remaining treatment-free and symptom-free for a specified period.

Correct: Disability Income Insurance (DII) is designed as an income replacement tool for working adults, offering features like partial disability benefits and escalation benefits to protect against inflation. In contrast, Total and Permanent Disability (TPD) benefits are typically riders to life insurance policies that accelerate the death benefit and do not provide for partial disability or escalation.

Incorrect: The statement that TPD benefits are calculated as a percentage of the insured’s average monthly salary is incorrect because it is DII benefits that are pegged to salary (usually up to 75%), while TPD sum assured is generally independent of earned income. The claim that DII is for non-working individuals while TPD is for those with earned income is incorrect because DII is specifically for working adults with a salary to replace, whereas TPD can cover non-working individuals like children or housewives since it is bundled with life insurance. The assertion that both provide a choice of deferred periods is incorrect because only DII offers a choice of elimination periods (e.g., 1, 3, or 6 months); TPD usually requires a standard 6-month waiting period to prove the disability is permanent.

Takeaway: Disability Income Insurance serves to replace earned income with flexible features like partial benefits and escalation, whereas TPD is a lump-sum acceleration of life insurance for severe, permanent conditions.

Correct: Disability Income Insurance (DII) is specifically designed as an income-replacement tool, typically providing a monthly benefit of up to 75% of the insured’s earned income. Because a stay-at-home parent does not have a formal salary or earned income to replace, they generally do not meet the eligibility criteria for DII. In such cases, financial consultants recommend Total and Permanent Disability (TPD) riders or Personal Accident policies, which pay out a lump sum to cover maintenance costs or additional expenses regardless of the insured’s employment status.

Incorrect: The statement that stay-at-home parents are legally prohibited from holding health insurance is false, as they can and should be covered by Medical Expense and Critical Illness insurance. The claim that Disability Income Insurance only covers accidents occurring in a corporate workplace is incorrect; DII covers disabilities resulting from both illness and accidents regardless of location, provided the insured is gainfully employed. The assertion that premiums are strictly tied to corporate tax filings is a misconception; while income must be verified, the fundamental reason for ineligibility is the lack of earned income to indemnify, not the specific method of tax filing.

Takeaway: Disability Income Insurance is an indemnity-based product requiring the insured to have earned income; for non-earning individuals like homemakers, disability protection is instead addressed through lump-sum benefits like TPD or Personal Accident insurance.

Correct: Requiring a minimum participation level in a contributory group health plan is primarily intended to mitigate anti-selection. By ensuring a high percentage of eligible members (typically between 70% and 90%) join the scheme, the insurer achieves a balanced spread of risk across both healthy and less healthy individuals, rather than only covering those who anticipate high medical expenses.

Incorrect: The suggestion that this requirement is to classify the group as a creditor-debtor arrangement is incorrect, as creditor-debtor groups specifically involve financial institutions and their borrowers, not employer-employee relationships. The idea that participation levels are meant to prevent new members from joining to ensure stability is wrong; insurers actually prefer a steady influx of new members to prevent the group risk from increasing as the average age of existing members rises. The claim that the requirement aims to restrict enrollment to high-income employees is also incorrect, as high-income classes often lead to higher claim costs due to their preference for expensive private healthcare services.

Takeaway: Minimum participation levels in contributory group insurance are a critical underwriting tool used to ensure a diverse risk pool and prevent the plan from being utilized only by those with pre-existing or high-risk health conditions.

Correct: The 90th percentile bill size is a statistical benchmark indicating that 90% of patients paid that amount or less for a specific procedure. In the context of Financial Needs Analysis, it serves as a reliable estimate for the upper range of typical costs, helping clients understand that while most bills fall below this level, 10% of cases may still result in even higher charges due to complications or extended stays.

Incorrect: The suggestion that this figure is a fixed price set by the Ministry of Health is incorrect because Singapore hospitals have pricing autonomy, and these figures are historical data points rather than price caps. The claim that it represents the average cost is wrong because the average (mean) is a different statistical measure that can be heavily influenced by extreme outliers, whereas percentiles show the distribution of costs. The idea that it represents a minimum payment is a misunderstanding of the percentile; the 90th percentile represents the high end of the spectrum, not the floor.

Takeaway: Financial consultants use the 90th percentile bill size data to help clients prepare for the upper range of potential medical expenses, ensuring that insurance coverage is sufficient for more than just the typical or average case.

Correct: An individual is considered unable to perform the Activity of Daily Living (ADL) of ‘Transferring’ if they require the physical assistance of another person to move from a bed to a chair or wheelchair. However, they are still considered able to perform ‘Mobility’ if they can move from room to room independently using assistive devices like a walker, as the definition of inability requires the physical assistance of another person throughout the activity.

Incorrect: The statement that using a walker qualifies as an inability to perform ‘Mobility’ is incorrect because the use of assistive devices does not constitute a failure of an ADL unless the physical assistance of another person is also required. The claim that ‘Dressing’ is only failed if the person cannot mentally identify clothes is wrong because ‘Dressing’ is defined as the physical ability to put on, take off, and secure garments. The assertion that ‘Transferring’ and ‘Mobility’ are assessed as a single combined criterion is false, as they are distinct ADLs with separate definitions in Long-Term Care policies.

Takeaway: For Long-Term Care insurance in Singapore, the inability to perform an ADL is strictly defined as requiring the physical assistance of another person throughout the task, even if assistive devices are available.

Correct: The requirement to provide a written warning about the potential disadvantages of replacing an existing policy is correct because MAS Notice 120 mandates that financial advisers and their representatives must alert clients to the risks involved in switching accident and health insurance. This includes highlighting that the client may lose coverage for pre-existing conditions or be subject to new waiting periods and higher premiums under the new policy.

Incorrect: The suggestion that the representative must ensure the new policy has a lower premium is incorrect because MAS Notice 120 focuses on the disclosure of material information and the suitability of the advice, rather than imposing price-based restrictions on product recommendations. The requirement to obtain written approval from the original insurer is incorrect as there is no such regulatory hurdle; clients are free to change insurers provided they are informed of the consequences. The statement that only a Product Summary is required for experienced clients is incorrect because the specific disclosure requirements for policy replacement apply regardless of the client’s perceived familiarity with health insurance products.

Takeaway: Under MAS Notice 120, representatives must provide a specific warning to clients when recommending the replacement of an accident and health policy to ensure the client understands the potential loss of benefits or coverage.

Correct: The requirement for an employer to contribute at least 1% of a full-time employee’s gross monthly salary, subject to a minimum of S$16 per month, is a specific condition for the Portable Medical Benefits Scheme (PMBS) to qualify for the enhanced 2% tax deduction. This scheme leverages the Medisave and MediShield Life framework to ensure employees have medical coverage that remains with them regardless of their employment status.

Incorrect: The statement regarding 24 months of coverage is incorrect because the Transferable Medical Insurance Scheme (TMIS) provides continuous coverage for a period of up to 12 months after leaving service, not 24. The claim that 50% of all employees including foreign workers must be covered is wrong; the regulation requires the scheme to cover at least 20% of local employees (Singapore Citizens and Permanent Residents) at the start of the financial year. The assertion that tax deductibility is completely removed if these schemes are not implemented is false, as the standard tax deduction for medical expenses remains at 1% of total employee remuneration.

Takeaway: To encourage portable medical benefits in Singapore, employers can increase their tax deduction limit from 1% to 2% by implementing schemes like PMBS, which requires specific minimum Medisave contributions for local employees.

Correct: The statement that coverage remains active is correct because standard Singapore medical insurance policies state that while entering full-time military service terminates cover, an exception is explicitly made for National Service reservist duty or training in accordance with the Enlistment Act.

Incorrect: The suggestion that coverage is suspended is wrong because the policy remains in full effect during reservist training without any break in protection. The claim that the policy terminates upon entering camp is incorrect because the termination clause for military service does not apply to reservist duty. The suggestion that a specific ‘Active Duty’ rider is required is wrong because reservist training is generally covered under the base policy terms without needing additional riders or endorsements.

Takeaway: In Singapore, health insurance policies distinguish between full-time military service (which terminates cover) and reservist training (which does not), ensuring continuity of protection for those performing their national duties.

Correct: Notice of Assessment or audited company accounts for the last three years is the right answer because self-employed individuals do not have fixed monthly salaries, and insurers require a longer financial history (typically three years) to determine a fair and stable average income for benefit calculation and to mitigate the risk of over-insurance.

Incorrect: Computerized payslips and certified employer letters are wrong because they are underwriting requirements specifically for salaried employees who have a formal employer-employee relationship. CPF statements for the last six months are also a standard requirement for salaried employees to verify current employment and recent income levels, rather than the long-term stability of a self-employed person’s business. Personal bank statements and client lists are wrong because they do not provide the official, government-verified net income figures that tax assessments or audited accounts provide for underwriting purposes.

Takeaway: Underwriting for self-employed persons in Disability Income Insurance requires more extensive historical financial data, such as three years of tax assessments, to accurately establish the insurable income level.

Correct: Medifund is the designated endowment fund that serves as the ultimate safety net for Singaporeans who cannot afford their hospital bills after subsidies and the use of other financing layers like Medisave and MediShield Life.

Incorrect: The option mentioning ElderShield is incorrect because it is a severe disability insurance scheme providing monthly cash payouts for long-term care and is not intended to cover acute hospital bills for the needy. The option regarding MediShield Life is incorrect because it is the basic universal health insurance for large bills, acting as a primary layer of protection rather than the final safety net for those with no remaining funds. The option about Medisave-approved Integrated Shield Plans is incorrect because these are private insurance options for enhanced coverage in higher ward classes and do not function as a government-funded safety net for indigent patients.

Takeaway: Singapore’s healthcare financing model utilizes Medifund as a final discretionary layer to ensure that basic medical care remains accessible to all citizens regardless of their financial situation.

Correct: The statement that the surgery is covered if it results from an injury occurring while the policy is in force and is performed within 12 months is correct. While aesthetic or cosmetic surgery is generally excluded from health insurance policies, an exception is made for treatment resulting from an injury that occurs while the insured person is covered, provided the treatment takes place within 12 months of the injury.

Incorrect: The claim that all cosmetic surgery is strictly prohibited is incorrect because it fails to account for the standard regulatory exception regarding accidental injuries. The assertion that the surgery is covered regardless of when it occurs is incorrect because standard policy provisions impose a specific time limit (usually 12 months) for such reconstructive treatments to be eligible for claims. The suggestion that a specific ‘Cosmetic Rider’ is required is incorrect because the exception for injury-related reconstructive surgery is typically built into the standard terms and conditions of the base medical expense policy.

Takeaway: Standard health insurance exclusions for cosmetic surgery do not apply when the procedure is medically necessary to treat an injury sustained while the policy is active, provided the treatment is completed within the stipulated 12-month window.

Correct: Females are generally observed to have lower mortality rates but higher morbidity rates than their male counterparts is the right answer because in health insurance underwriting, gender is a key demographic factor where statistics show that while women tend to live longer (lower mortality), they often experience a higher frequency of illness or medical claims (higher morbidity).

Incorrect: The statement about insurers preferring groups that switch providers annually is wrong because insurers actually seek to avoid groups with a history of frequent switching; they require persistency to recover substantial acquisition costs. The statement about acquisition costs being recovered within twelve months is wrong because insurers typically spread these costs over an extended period of three to five years to remain competitive in the first year. The statement regarding a group of 20 employees for Critical Illness Insurance is wrong because while small groups might skip health declarations for Medical Expense insurance, underwriters generally require health declarations from all members for Critical Illness policies due to the nature of the risk.

Takeaway: Group underwriting involves evaluating demographic risks like gender-based morbidity and financial risks like persistency to ensure the insurer can recover acquisition costs and price the risk accurately.

Correct: The feature of providing progressive lump sum payments at various stages of an illness is the defining characteristic of severity-based Critical Illness (CI) plans. These plans are designed to pay out a percentage of the sum assured depending on whether the condition is diagnosed at an early, intermediate, or advanced stage, providing financial support for early treatment.

Incorrect: The suggestion that premiums are lower is incorrect because severity-based plans offer broader coverage by including early-stage illnesses, which results in higher premiums compared to standard CI plans. The claim that it cannot be attached as a rider is false, as these plans are flexible and can be purchased either as standalone term plans or as riders to existing life insurance policies. The statement regarding higher non-medical underwriting limits is wrong because, in the Singapore insurance market, CI insurance typically has lower non-medical limits than standard life insurance, meaning medical tests are required at lower sum assured thresholds.

Takeaway: Severity-based CI plans offer tiered payouts based on the clinical stage of a disease, allowing for earlier claims than traditional CI policies, though this is reflected in higher premium costs.