Friday Five Focus on Protection – 5 Questions in 5 Minutes – 26 Jul 2024

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 2023/24, examinable by the CII until 31 August 2024. They do not relate to tax year 2024/25 which is only examinable by the CII from 1 September 2024.

1. Stephen, a financial advisor is reviewing his client’s protection needs. One of Stephen’s main concerns when looking at his client’s current assets vs their need for protection should be
   1. are the client’s current assets liquid, as this will alter his protection recommendations.
   2. what the client is willing to spend on their insurance policy over the term of the policy.
   3. how the client’s current assets might impact on their eligibility for the personal independence payment.
   4. the client’s existing debt to income ratio and how that will impact on his recommendation.

2. Frank has received the terminal illness benefit payment from his term assurance policy. Which of the following statements CORRECTLY explains the tax treatment of the payment at the time it is made?
   1. A liability for inheritance tax will be payable.
   2. There is a liability for income tax.
   3. No liability for income tax or inheritance tax is due.
   4. There is a liability for capital gains tax.

3. Jennifer, who works in the hotel and catering industry as a housekeeper, is applying for an income protection policy. In which occupational class will she be placed for the calculation of her premium rate?
   1. Class 1
   2. Class 2
   3. Class 3
   4. Class 4

4. A local authority may assess an individual as being able to meet the full cost of their own care if the persons notional and actual capital is in excess of
   1. £23,250
   2. £29,422
   3. £42,157
   4. £52,500

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

2. C – 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 6
   Grab our taster mock exam paper for CII R05. Click here to download.

4. A – See R05 Study Text, Chp 8
   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?

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