Friday Five – 26 June – 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

IMPORTANT! These questions relate to examinable tax year 2019/20, examinable by the CII until 31 August 2020. They do not relate to tax year 2020/21 which is only examinable by the CII from 1 September 2020.

1. Your client, Jayden, is surprised that he is not able to protect his full income in the event of illness. 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. What factors are used in the money-weighted rate of return formula? Tick all that apply.
   1. D = income during the period
   2. V0 = value of the portfolio at the start of the period
   3. R0 = compound rate of interest
   4. V1 = value of the portfolio at the end of the period

3. Jonathan has recently become self-employed and wants to know how Class 2 National Insurance Contributions are normally paid. You can tell him that:
   1. they are collected via self- assessment in one lump sum on 31st January after the end of the tax year to which they relate.
   2. they are paid on account on 31st January in the year of assessment and 31st July following the year of assessment.
   3. they are paid quarterly to the National Insurance Contributions Office.
   4. they are paid monthly by direct debit.

4. At age 80, Sidney dies, leaving behind a wife and child. Sidney had uncrystallised pension benefits. Which of the following is true regarding payment of any lump sum death benefit?
   1. No LTA test needed and can pay out a lump sum subject to 45% tax charge
   2. Benefit crystallisation event so LTA test needed with any excess taxed at 55%
   3. No LTA test needed, and lump sum is payable tax-free if paid within 2 years
   4. No LTA test needed, and lump sum taxable at the recipient’s rate of tax

5. Gemma is buying a property and has been told by her solicitor that she will not be able to run a business from it. This is known as a:
   1. restrictive covenant.
   2. negative covenant.
   3. positive easement.
   4. restrictive easement.

Answers

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

2. ABD – See R02 Study Text, Chp 9
   Grab our taster mock exam paper for CII R02. Click here to download.

3. A – See R03 Study Text, Chp 2
   Grab our taster mock exam paper for CII R03. Click here to download.

4. D – See R04 Study Text, Chp 2.2
   Grab our taster mock exam paper for CII R04 Click here to download.

5. A – See R07 Study Text, Chp 5
   Grab our taster mock exam paper for CII R07. 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?

If you found this quiz useful for your CII exam revision, please do share it with your colleagues.