R05 Mock Test 2

Front 1

Within a life fund, what rate of tax,if any, applies to the interest received from corporate bonds?

Back 1

20%

Front 2

Mack and Mabel have a seven year old daughter and are divorcing. What would be the most cost effective policy to cover child maintenance payments should either mack or Mabel die?

Back 2

A family income benefit policy.

Front 3

A company is intending to insure a key individual aged 40 who is responsible for bringing 40% of the £500,000 turnover. What is likely to be the most suitable policy?

Back 3

A 5 year renewable term assurance policy.

Front 4

Gary has recently been made redundant and is claiming income-based Jobseeker's Allowance. He is concerned about maintaining his £150,000 repayment mortgage. He should be aware that,after a waiting period, he should be entitled to claim the interest due on.

Back 4

All of his mortgage at a standard interest rate.

Front 5

If a life assurance policy with terminal illness benefit is written under trust, then any death benefits would initially be paid to the.

Back 5

Trustees.

Front 6

A wealthy client intends to reduce his potential inheritance tax liability by making regular gifts using a life assurance policy written in trust for benefit of his daughter. Ignoring the normal expenditure exemption,in order to maximise use of other exemptions, the annual premium should be.

Back 6

£3,000

Front 7

When a buyer of qualifying second hand policy receives the benefits on maturity,the potential capital gains tax liability is calculated by deducting from the proceeds the.

Back 7

Purchase price, expenses and premiums subsequently paid by the purchaser.

Front 8

The life assurance fund of a UK insurer is subject to tax on a realised capital gain at a rate of.

Back 8

20% after indexation allowance.

Front 9

Under a group income protection insurance (PHI) scheme,free cover relates to the cover provided.

Back 9

Without any evidence of health being required.

Front 10

Which of the following best describes the carer's allowance?

Back 10

Taxable weekly benefit payable to people who spend at least 35 hours a week caring for a person in receipt of disability living allowance or attendance allowance.

Front 11

In the case of dependent children, which is the most commonly used end age of dependency?

Back 11

Age 21 for the youngest dependent child.

Front 12

How would a partnership protection arrangement often differ in terms of dealing with critical illness rather than death?

Back 12

A single option is often used for critical illness because an ill partner might not want to be forced to sell his share of the business.

Front 13

Which of the following statements about shareholder purchase/partnership solutions is true?

Back 13

The cross option agreement is generally preferred to a buy and sell agreement for IHT reasons

Front 14

Which of the following statements about shareholder purchase/partnership solutions is true?

Back 14

The cross option agreement is generally preferred to a buy and sell agreement for IHT reasons

Front 15

Which of the following statements about shareholder purchase/partnership solutions is true?

Back 15

The cross option agreement is generally preferred to a buy and sell agreement for IHT reasons

Front 16

Which of the following best describes the tax treatment of an individual Personal Accident and Sickness policy?

Back 16

No relief on premiums, no tax on benefits.

Front 17

Kelly owns her own home and lives alone. Which one of Kelly's assets may be disregarded for long term care means testing?

Back 17

Her investment bond valued at £200,000

Front 18

Which of the following statements about the regulation of long term care insurance is FALSE?

Back 18

Intermediaries who advise on long term care insurance come into the voluntary jurisdiction of the Financial Ombudsman Service

Front 19

Which of the following is NOT considered an activity of daily living?

Back 19

Walking

Front 20

8.10 -Which of the following is NOT a party to a Lasting Power of Attorney?

Back 20

Donee.

Front 21

Which of the following is UNTRUE in respect of a CIC plan?

Back 21

Premiums are lower than those for straightforward life cover

Front 22

Which of the following is NOT a benefit to Group IPI over an individual arrangement?

Front 23

Which one of the following statements regarding waiver of premium on a Income Protection Insurance Policy is UNTRUE?

Back 23

Benefits usually commence immediately.

Front 24

Which one of the following protection benefits is currently rarely offered to staff by employer

Back 24

Critical illness cover.

Front 25

David, who has never been married or been in a civil partnership, wishes to leave his entire estate valued at £600,000 to his niece. He wishes to ensure that any IHT liability is covered by a suitable protection policy and should therefore insure his life for a minimum of:

Back 25

£110,000.

£600,000 - £325,000 = £275,000 * 40% = £110,000

Front 26

Teresa has put £400,000 into a discretionary trust for her daughter. What is the immediate tax charge, if any, which would be payable by the trustees?

Back 26

£15,000.

Front 27

Karen is about to retire from her employer having started work in 1990. What state pensions would she be entitled to?

Back 27

Basic state pension, SERPS and the state second pension.

Front 28

Su has applied for attendance allowance but her application has been turned down. This is because

Back 28

she has been suffering a disability for three months.

Front 29

Which of the following are advantages of placing a life policy in trust? (i) It avoids probate. (ii) It avoids the intestacy rules. (iii) There is always guaranteed protection against creditors in the event of the settlor's bankruptcy.

Back 29

It avoids probate.

There is always guaranteed protection against creditors in the event of the settlor's bankruptc

Front 30

In calculating the premium payable on a life policy, an actuary will include an amount for each of the following factors EXCEPT

Back 30

an amount for the tax payable on the policy.

Front 31

Karen is about to retire from her employer having started work in 1990. What state pensions would she be entitled to?

Back 31

Basic state pension, SERPS and the state second pension.

Front 32

Su has applied for attendance allowance but her application has been turned down. This is because

Back 32

she has been suffering a disability for three months.

Front 33

Which of the following are advantages of placing a life policy in trust? (i) It avoids probate. (ii) It avoids the intestacy rules. (iii) There is always guaranteed protection against creditors in the event of the settlor's bankruptcy.

Back 33

It avoids probate.

There is always guaranteed protection against creditors in the event of the settlor's bankruptc

Front 34

In calculating the premium payable on a life policy, an actuary will include an amount for each of the following factors EXCEPT

Back 34

an amount for the tax payable on the policy.

Front 35

The premiums payable on a joint life second death policy compared to those on a single life policy would be:

Back 35

lower.

Front 36

Where a chargeable gain arises under a life policy it is the responsibility of the:

Back 36

policyholder to declare the gain on their tax return for the tax year in which the chargeable event occurs.

Front 37

George died in May 2014 leaving £130,000 of his £800,000 estate to his son and the rest to his wife Mildred. If Mildred died in August 2014, how much inheritance tax will be payable, assuming that the taxable value of her estate is the amount bequeathed to her by George?

Back 37

£60,000.

Front 38

Rachel took out an income protection policy four years ago but has now become unemployed. The company will:

Back 38

treat this as a change in occupation.

Front 39

Where an employer provides income protection for employees, as a percentage of income, what is the usual MAXIMUM benefit that is payable to the employee if incapacitated?

Back 39

75% of gross income.

Front 40

Some life offices will cover AIDS or HIV under a critical illness policy provided the condition is contracted in which of the following ways? (i) Blood transfusion in a hospital within the European Economic Area (EEA). (ii) Police officer in the course of their duties. (iii) Medical professional in the course of their duties.

Back 40

Police officer in the course of their duties. (iii) Medical professional in the course of their duties.

Front 41

Which one of the following critical illness plans is likely to be the most cost-effective way of providing cover?

Back 41

The correct answer is: A guaranteed policy where benefit is paid as regular instalments of capital.

Front 42

Which one of the following conditions is NOT covered by the majority of critical illness insurers?

Back 42

Second degree burns.

Front 43

Martin has a combined critical illness and life assurance policy. He was diagnosed with cancer in 2014 and received 50% of his sum assured as an accelerated benefit. If he survives, in what year, at the EARLIEST, would he typically be able to buy back his lost life cover?

Back 43

2016.

Front 44

ABC Ltd wish to set up a group critical illness policy for their employees. They should be aware that the provider will most probably only offer cover to employees aged between:

Back 44

21 and 65.

Front 45

Severity-based cover in a critical illness policy allows for:

Back 45

additional payments to be made if a disease progresses beyond a particular stage.

Front 46

The 'named person' on a lasting power of attorney (LPA) is the:

Back 46

person to be notified when the LPA is registered.

Front 47

Usain is applying for local authority funded care. When an assessment is made of his ability to pay for care, which source of income will NOT be taken into account?

Back 47

His pension fund.

Front 48

George has an unregistered enduring power of attorney (EPA) that was made in November 2008. What is the legal status of this EPA?

Back 48

The EPA is invalid.

Front 49

Which one of the following is NOT true regarding Fred and Florence who are an older married couple planning for the future?

Back 49

The correct answer is: They can execute a joint lasting power of attorney appointing their son to manage their affairs.

Front 50

The improvements in mortality rates over the last 30 years has led to more aggressive underwriting processes which result in more lives being:

Back 50

A. rated

Front 51

Christopher, a doctor, has taken out an income protection policy to insure against the costs of employing a locum if he is ill, therefore the premiums qualified as a deductible business expense. How will the benefits he receives on a claim be paid and treated in relation to taxation?

Back 51

They will be paid gross but taxable as a business receipt

Front 52

Terminal illness benefit is not usually paid out in the last:

Back 52

18 months of a policy

Front 53

In which of the following circumstances is it most likely that the benefits provided from a personal accident and sickness policy would be linked to salary rather than fixed sums?

Back 53

When the policy is provided as a group scheme by an employer

Front 54

Where a private medical insurance policy is set up with moratorium underwriting, when will the underwriting take place?

Back 54

When a claim is made

Front 55

The factors used to calculate the amount of capital required under a protection policyto generate the net income needed are broadly based on:

Back 55

Temporary annuity rates

Front 56

Robert and Ian are the directors of Enigma Ltd. They have taken a loan of £100,000 and want to arrange insurance so that it could be repaid on either of their deaths. Which of the following policies would allow them to continue the policies for other purposes after the loan was repaid?

Back 56

Individual policies for the full amount of the loan

Front 57

George, a key person of Romulus Ltd is currently off work after an accident and receiving an income from an income protection plan taken out by his employer. How are the benefits from the policy treated in relation to the company’s taxation?

Back 57

They are paid as a regular income and therefore taxable

Front 58

Craig is one of three partners in a partnership and has £80,000 in the capital account. On his death this is treated as:

Back 58

An asset of his estate and repayable immediately

Front 59

For this tax year, state second pension (S2P) flat rate accrual is:

Back 59

£92

Front 60

Robert has life assurance provided by his employer through his pension scheme which includes a continuation option. This means that Robert can:

Back 60

Take out a new policy if he leaves the company based on his age at the time

Front 61

Which of the following statements correctly explains the guaranteed insurability option on a life assurance policy?

Back 61

It allows the policyholder to increase the sum assured on stated events within a specified time period without the need for further underwriting

Front 62

A mortgage is distinguished from an absolute assignment by a right known as the:

Back 62

equity of redemption

Front 63

Which of the following documents gives the executors of a deceased’s estate proof of title to a life assurance policy?

Back 63

Grant of probate

Front 64

Sharon has made a request to make her life assurance policy ‘paid up’. In relation to the sum assured, which of the following statements is TRUE?

Back 64

It is reduced

Front 65

Donald, a UK resident, placed a life assurance policy in trust in July 2008 for his grandchildren and appointed his two sons, also UK residents, as the trustees. A chargeable event occurred on the policy in July 2014 giving rise to a chargeable gain. On whose income would the gain be chargeable?

Back 65

Donald’s

Front 66

John assigns a qualifying endowment policy set up in 2008 with premiums of £500 per month to his 21 year old son on 6th April 2014. His son must complete and return a written statement to the provider to determine whether it is non-qualifying or a restricted relief qualifying policy by the:

Back 66

6th July 2014

Front 67

Matthew has surrendered an offshore life assurance policy. What rate, or rates, of income tax will he be liable for on any chargeable gain?

Back 67

Basic rate, higher rate or additional rate