Friday Five – 19 October – 5 Questions in 5 Minutes

Welcome to this week’s Friday Five – 5 Questions in 5 Minutes Every Friday

What’s this all about?

It’s a bit of Friday Fun where we provide you with 5 questions relevant to a mix of CII exams. The challenge is for you to answer them in 5 minutes. Answers at the bottom of the page.

Questions

These questions relate to examinable tax year 2018/19, examinable until 31 August 2019.

1. Why do most insurers limit the amount of benefit they will provide under Income Protection policies?
   1. It is a restriction enforced by HMRC legislation
   2. They need to account for the income tax and National Insurance liability
   3. To prevent the individual getting more income than they would by working
   4. To account for future increases in the rate of inflation

2. Personal portfolios should include a level of cash liquidity in order to:
   1. take advantage of the fact that tax is not paid on any interest
   2. meet with the FCA legislation on holdings of cash
   3. take advantage of short-term investment opportunities
   4. provide higher returns over the longer-term

3. What is a difference between a local authority bond and a corporate bond?
   1. Only corporate bonds pay interest net of 20% tax
   2. Only interest received from a local authority bond is fully taxable as savings income
   3. In certain circumstances, losses may be allowable for corporate bonds
   4. A corporate bond pays interest for a fixed term and repays the capital at maturity

4. Sportsman Joe retires in 2018/19 at the age of 35. Joe’s lifetime allowance will be reduced by what percentage for each complete year before normal minimum pension age:
   1. 10%.
   2. 5%.
   3. 2.5%.
   4. 1.5%.

5. Which of the following factors would not be taken into account when making any changes at a review period of a reviewable policy?
   1. Changes in mortality rates
   2. Changes in the life offices expenses
   3. Changes in the life assured’s state of health
   4. Investment returns

Answers

1. C – See R01 Study Text, Chp 2
   Grab our taster mock exam paper for CII R01. Click here to download.

2. C – See R02 Study Text, Chp 7
   Grab our taster mock exam paper for CII R02. Click here to download.

3. C – See R03 Study Text, Chp 9
   Grab our taster mock exam paper for CII R03. Click here to download.

4. C – See R04 Study Text, Chp 2:2
   Grab our taster mock exam paper for CII R04. Click here to download.

5. C – See R05 Study Text, Chp 4
   Grab our taster mock exam paper for CII R05. Click here to download.

How did you find this week’s questions? Did you complete them in 5 minutes? Did you get them all correct? Do you disagree with any?

Do let us know by leaving a comment below – we promise to read them all. (Humour particularly appreciated on a Friday!)