IIQE Paper 3 cheat sheet

Term life pays a death benefit only if death occurs within the policy term; it builds no cash value and is the lowest-premium pure protection product.

Whole life is permanent, level-premium coverage with guaranteed cash value and non-forfeiture values; participating versions pay dividends that are not guaranteed.

Universal life separates the account value from the death benefit; cost of insurance is deducted monthly and rises with insured age, so underfunding can lapse the policy.

Endowment and savings-type policies pay the sum assured at maturity or on earlier death; they combine protection with a guaranteed savings element.

Critical illness pays a lump sum on diagnosis of a covered condition, subject to a survival period; dread disease benefits may be accelerated from the death benefit.

Annuities convert capital into income; a deferred annuity accumulates, an immediate annuity pays at once, and payout options include life, fixed period and joint-life.

Accelerated death benefit riders advance part of the death benefit on terminal illness; the advance and any accrued interest reduce the eventual payout.

Group life covers a defined class of members under one master policy; individual evidence of insurability is usually waived and cover ends on leaving the group.

Medical and hospital products reimburse or indemnify eligible expenses; indemnity plans reimburse actual costs while fixed-benefit plans pay a set sum per event.

A valid contract needs offer, acceptance, consideration, intention to create legal relations and capacity; insurable interest is an additional statutory requirement.

Utmost good faith obliges the applicant to disclose material facts; non-disclosure or misrepresentation can render a contract voidable at the insurer's option.

The incontestability provision bars the insurer from avoiding a policy for misrepresentation after a stated period, typically two years from issue.

The suicide clause limits payout to a refund of premiums if death by suicide occurs within a stated period, commonly the first year or two.

The grace period allows premium payment after the due date without lapse, commonly 30 or 31 days; cover continues but unpaid premium may be deducted from a claim.

A reinstatement provision lets a lapsed policy be revived on evidence of insurability and payment of overdue premiums, often within a set window.

The free-look period lets the policyholder cancel within a stated period after delivery and receive a refund, subject to any market value adjustment.

A beneficiary designation governs who receives the death benefit; irrevocable designations require the beneficiary's consent to change.

Policy loans are secured against cash value; unpaid loan interest accrues and reduces the death benefit or surrender value if not repaid.

Underwriting classifies risk using age, sex, health, occupation, residence, hobbies and sum assured; the outcome is standard, substandard, postponed or declined.

Mortality and morbidity tables, plus interest and expense assumptions, drive gross premium: gross premium equals expected claims plus expenses plus profit margin minus investment return.

Loading is added to the net premium to cover substandard risk; it may be a flat extra, a percentage of premium or a temporary extra.

The duty of disclosure continues until the contract is formed; the insurer may rely on the application, medical examination and attending physician statements.

Non-medical limits allow cover up to a set sum without medical evidence, based on age and declared health.

Premium modes affect cost: annual is cheapest, then semi-annual, quarterly and monthly, because of lost interest and higher administration.

Policy servicing includes premium collection, mode and address changes, beneficiary changes, assignments, surrenders, loans and maturity or claim settlement.

Claims processing requires proof of death, policy documents and beneficiary identification; insurers must settle within a reasonable period after receiving complete evidence.

Automatic premium loan provisions pay overdue premiums from cash value to prevent lapse, and the amount plus interest is recovered from later benefits.

Investment-linked policies (ILPs) invest premiums in underlying funds; the policyholder bears investment risk and the value is not guaranteed.

ILP charges include premium allocation, bid-offer spread, fund management fees, policy administration, mortality and morbidity charges, and surrender charges.

A unit statement must disclose units allocated, unit prices, charges deducted and the fund value, so the policyholder can track performance.

Illustrations of ILP returns must show a realistic and a pessimistic scenario, with a warning that the higher figure is not a forecast.

Retirement products include deferred annuities, qualifying deferred annuity policies and MPF-style schemes; tax deductions may apply to qualifying premiums.

Annuity payout options include life annuity, fixed-term annuity and joint-and-last-survivor; inflation-linked escalation reduces the starting income.

Surrender and partial withdrawal from retirement or ILP products may trigger charges, tax consequences or loss of guaranteed benefits.

Fund switching rights let the policyholder move between sub-funds, often free up to a stated number of switches per year.

An insurance intermediary must be licensed for the class of business sold; regulated activities include advising on, arranging and negotiating long term insurance contracts.

The Insurance Authority is the regulator; licensees must be fit and proper, meeting qualifications, experience, training and financial soundness requirements.

Continuing professional development is mandatory: licensees must complete a set number of CPD hours per year, including ethics or regulation hours.

Client agreements and risk disclosure statements must be completed before or at the point of sale, and the client must receive a copy.

Know-your-client requires collecting financial situation, investment objectives, risk tolerance and insurance needs before recommending a product.

Anti-money-laundering rules require customer due diligence, source-of-funds checks, record keeping and suspicious transaction reporting.

Premium payment must go to the insurer or its authorized channel; intermediaries must not hold client premiums in personal accounts.

Sanctions for misconduct include fines, suspension or revocation of licence, and public censure; mis-selling can also attract civil liability.

Record keeping: intermediaries must maintain sales records and client files for the period prescribed by the regulator and produce them on request.

Suitability means the recommendation matches the client's disclosed needs, financial capacity and risk tolerance; the rationale must be documented.

The Financial Needs Analysis compares existing cover with identified needs; over-insurance and churning of existing policies are prohibited practices.

Replacement or switching of an existing policy requires disclosure of the disadvantages, including new surrender charges and loss of accrued benefits.

Misrepresentation, mis-selling, unauthorized promises of returns and pressure selling are conduct breaches; illustrations must not overstate benefits.

Conflicts of interest must be disclosed; commissions and incentives cannot override the client's best interest.

Cooling-off and free-look rights give the client time to reconsider; the intermediary must explain these rights at the point of sale.

Client confidentiality: personal data may only be used for disclosed purposes and must be protected under applicable data protection rules.

Complaints must be handled through the insurer's internal process and may escalate to the regulator or a dispute resolution scheme.

Vulnerable customers, including the elderly, require extra care: clear explanation, avoidance of high-pressure tactics and confirmation of understanding.