Friday Five Focus on Protection – 5 May – 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 2022/23, examinable by the CII until 31 August 2023. They do not relate to tax year 2023/24 which is only examinable by the CII from 1 September 2023.

1. Which of the following statements is a drawback of using the multiple of salary basis to calculate the amount of key person insurance required by a company?
   1. It does not take account of the key person’s age
   2. It can only be based on a multiple of 5
   3. It is only loosely related to the key person’s contribution to profits
   4. It only takes a short-term time factor into account

2. With regard to decreasing term assurances, which of the following statements is TRUE?
   1. Premiums will often be payable for a period slightly longer than the duration of the cover
   2. Escalating payments are available on a family income benefit policy
   3. Mortgage protection insurance is suitable for protecting interest-only mortgages
   4. Gift inter vivos term assurance is appropriate to protect against the IHT potentially payable on an estate on death

3. A mortgage is distinguished from an absolute assignment by a right known as the
   1. law of reassignment
   2. equity of redemption
   3. repayment of security
   4. power of retention

4. The shortfall in the amount of cover necessary to maintain the current living standards of dependants can also be referred to as the
   1. savings gap
   2. pensions cap
   3. investment gap
   4. protection gap

5. Octavia Trading Ltd is setting up a group income protection scheme for their employees. The underwriters are likely to offer ‘free cover’ if all eligible employees
   1. are aged under 45 at the start of the scheme
   2. join the scheme
   3. are in occupational classes 1 and 2
   4. have benefits provided below a stated maximum

Answers

1. C – See R05 Study Text, Chp 11
   Grab our taster mock exam paper for CII R05. Click here to download.

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

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

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

5. B – See R05 Study Text, Chp 6
   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?

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