Not many people need their CPF for terminal illness like this
case. So how come you assume everyone needs their CPF in
cash?
You are also assuming based on a few cases.
CPF locked up is still better than CPF squandered away.
Already with cash, people are not saving in the banks. You
expect CPF taken out can last meh?
Terminal illness means going to die, keep so much money in CPF
for?
This is like a no brainer.
I stand corrected, maybe you can do a nether world banking
transfer. 
CPF locked up is as good as no CPF. Perhaps you are those few
people who can feel good looking at your CPF statement (but you
can't use) and knowing that your HDB cost a 1/4 of a million
(but you can't sell). I think you can derive pleasure from staring
into Jade restaurant (Fullerton) and imagine yourself actually
eating the Chinese delicacies.
CPF squandered is still money you own and squandered before your
last days on earth.
The amount of money made for the lower wager earners in our
population is insufficient to make ends meet and expect people to
save money?
Those who can afford to save are those high wage earners.
Sighs......