Friday Five – 26 May – 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 2016/17, examinable by the CII until 31 August 2017.  They do not relate to tax year 2017/18 which is only examinable by the CII from 1 September 2017.

1. How does a Family income benefit policy differ from a standard term assurance policy?
   1. On death of the life assured a series of payments are made instead of a lump sum payment
   2. The policy has multiple lives assured to cover all family members
   3. The aim of the policy is to maintain the family’s lifestyle in the event of the life assured becoming ill
   4. It is a government backed policy with tax concessions

2. What is the purpose of a client agreement?
   1. To ensure the client understands investment reporting, review frequency and whether the client will be alerted to future planning changes that may be required
   2. To outline the adviser’s investment process
   3. To provide the administrative template for client actions
   4. To identify and obtain the client’s agreement to a portfolio designed to meet their key needs

3. Tom is a trustee of the Davies family Interest in Possession trust. What rate of income tax will he be liable for, as trustee, on savings income?
   1. 20%
   2. 37.5%
   3. 40%
   4. 45%

4. Alan opted for enhanced protection as, at A-day, his tax-free cash sum was £490,000 from a total fund of £1.4m. Assuming crystallisation in 2016/17 and an increase in the fund to £2m, calculate Alan’s tax-free cash.
   1. £1,400,000.
   2. £500,000.
   3. £700,000.
   4. £540,000.

5. Matthew has surrendered an offshore life assurance policy. What rate, or rates, of income tax will he be liable for on any chargeable gain?
   1. Higher or additional rates only
   2. Basic rate only
   3. Basic rate, higher rate or additional rate
   4. Any gain will be free of income tax

Answers

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

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

3. A – See R03 Study Text, Chp 1
   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 5
   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!)