Friday Five Focus on Protection – 15 January – 5 Questions in 5 Minutes

Friday Five Focus on Protection – 5 Questions in 5 Minutes Every Friday

What’s this all about?

Each week, we ask questions relating to one of these topics: Investments, Taxation, Pensions, Protection, or Regulation. This week, our Friday Five is relevant to Protection; this is useful as you prepare for the CII’s R05 exam. 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 2020/21, examinable by the CII until 31 August 2021.

1. Marie has an onshore life assurance policy and Claire has an offshore life assurance policy. The difference in the tax treatment of their funds is:
   1. Marie’s fund will be taxed at roughly the basic rate of income tax, while Claire’s fund will have gross roll-up.
   2. Marie’s fund will be taxed, but the tax is reclaimable while Claire’s fund will have a gross roll-up.
   3. Claire’s fund will be taxed at roughly the basic rate of income tax, while Marie’s fund will benefit from gross roll-up.
   4. Marie’s fund will be taxed, and the tax is non-reclaimable, while Claire’s fund will be taxed but the tax is reclaimable.

2. The usual limitation on the amount of benefit that can be paid from an individual income protection policy is that the total of all policies does NOT exceed:
   1. 50% of monthly gross earnings in the two years prior to incapacity.
   2. 50% – 60% of average monthly gross earnings in the year prior to incapacity.
   3. 75% – 80% of average monthly gross earnings in the year prior to incapacity.
   4. 50% – 65% of monthly gross earnings in the six months prior to incapacity.

3. Critical illness underwriting is based on:
   1. marital status.
   2. mortality risk.
   3. smoking status.
   4. morbidity risk.

4. Elaine, aged 28 and single, made a claim for employment support allowance (ESA), and has been placed in the work-related activity group. This means that she will have:
   1. a higher level of benefit than those in the support group.
   2. benefits paid for a maximum of 14 weeks.
   3. been attending mandatory work-focused interviews from week 8 of her claim.
   4. a work capability assessment every 4 weeks.

5. What form of benefit will Harry receive if he makes a claim on his care cash plan?
   1. A cash lump sum and income for a set period
   2. A cash lump sum and/or income until he dies
   3. A cash lump sum and/or income for a set period
   4. A cash lump sum and income until he dies

Answers

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

2. B – See R05 Study Text, Chp 6
   Grab our taster mock exam paper for CII R05. Click here to download.

3. D – See R05 Study Text, Chp 7
   Grab our taster mock exam paper for CII R05. Click here to download.

4. C – See R05 Study Text, Chp 3
   Grab our taster mock exam paper for CII R05 Click here to download.

5. C – See R05 Study Text, Chp 8
   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?

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