Friday Five – 28 August 2015 – 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 2014/15, examinable until 31 August 2015.

1. Why does the FCA have rules regarding inducements under COBS 2?
   1. To ensure all offers or inducements are correctly recorded
   2. To ensure all intermediaries receive the same inducements
   3. To ensure intermediaries are not swayed by any incentives
   4. To ensure all life offices are aware what their competitors are offering

2. Cyril had pension benefits already in payment at ‘A’ day. As he has further benefits to crystallise, the earlier pension will be valued by a factor of:
   1. 10:1.
   2. 20:1.
   3. 25:1.
   4. Zero.

3. A property was bought for £117,000 and has tenants paying £525 per month, with general management costs of 25% and £1,100 worth of purchase costs. What is the rental yield?
   1. 4.08%
   2. 4.04%
   3. 4.00%
   4. 5.38%

4. William took out a Long Term Care bond some years ago but investment performance has been poor and the insurer has recommended a further contribution, which William cannot afford to do. What is the likely effect on the plan?
   1. The insurer will look to cancel the Long Term Care cover and encash the bond
   2. It will continue but may not provide for the full cost of care fees if William makes a claim
   3. Long Term Care cover will cease but the bond will continue as an investment only
   4. It will continue but will only pay out in the case of a residential care requirement and not for domiciliary care

5. Which of the following benefit is either wholly or largely exempt from income tax for an employee?
   1. Accommodation where the employee pays a low rent
   2. A company car that runs on diesel
   3. Premiums paid for Private Medical Insurance
   4. An award of £1,000 for 25 years’ service

Answers

1. C – See R01 Study Text, Chp 5.2 Section H1B
   Grab our taster mock exam paper for CII R01. Click here to download.

2. C – See R04 Study Text, Chp 2.1 Section C3
   Grab out taster mock exam paper for CII R04. Click here to download.

3. C – See R02 Study Text, Chp 1.2 Section D2
   Grab our taster mock exam paper for CII R02. Click here to download.

4. B – See CF8 Study Text, Chp 5 Section B4
   Grab our taster mock exam paper for CII CF8. Click here to download.

5. D – See R03 Study Text, Chp 1 Section G7
   Grab our taster mock exam paper for CII R03. 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!)