IIQE Paper 3 Types of Life Insurance and Annuity question: comparing credit life insurance and mortgage redemption insurance

Answer: D. (i), (ii) and (iv) only

Answer: (i), (ii) and (iv) only. Statements (i), (ii) and (iv) are true; (iii) is not.(i) True. It pays the loan balance direct to the lender.(ii) True. It insures the borrower's interest, even if the lender may ask to be named beneficiary.(iii) False. Credit life is normally an indemnity insurance.(iv) True. It is a benefit insurance, so the claim is still payable after the debt is repaid.Why not the others:• (i) and (ii) only: leaves out (iv), which is true.• (i) and (iii) only: includes (iii), which is false, and leaves out (ii) and (iv), which are true.• (i), (ii) and (iii) only: includes (iii), which is false, and leaves out (iv), which is true.Watch out: Swapping the two covers: credit life is the lender's indemnity cover; mortgage redemption is the borrower's benefit cover.Rule: Credit life: lender's interest, normally indemnity. Mortgage redemption: mortgagor's interest, a benefit policy that pays even if the debt is gone.Source: IA Long Term Insurance (Paper III) Study Notes, 2022 Edition (8th ed., June 2022; for exams from 24 Oct 2022), 2.1.1a(b)(i),(iii), p. 2/2-2/3