CII R05 Test 2.pdf

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CII R05 2019/2020
Test 2
1. If an adviser has received commission from recommending a product to a new client, this would be
a[n]:
Select one:
a. pension.
b. unit linked whole of life policy which has an investment fund.
c. critical illness policy.
d. ISA investment.
2. When looking at recent trends that impact on insurance product design, the:
Select one:
a. availability of preferred life policies has reduced.
b. number of smokers has increased.
c. expenses incurred by insurers have increased.
d. use of price comparison websites has increased.
3. An insurer that offers preferred life policies is
most
likely to offer:
Select one:
a. more flexible policies.
b. quicker underwriting.
c. lower premium rates.
d. more lenient underwriting.
4. Graham is single with no dependants. He expects to purchase his first property within the next two
years. His
highest
protection priority is likely to be:
Select one:
a. term assurance.
b. income protection insurance.
c. critical illness cover.
d. private medical insurance.
5. When a couple divorce, in relation to their protection needs, a divorce court:
Select one:
a. can make any order they see fit in relation to existing protection policies.
b. cannot remove one party from a joint life policy.
c. cannot insist that a life office 'splits' the benefits under an existing policy.
d. cannot amend a policy which is subject to a trust.
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6. A disadvantage of relying on employer-provided employee benefits is that:
Select one:
a. these will typically cease on leaving the employer.
b. these are subject to full medical underwriting.
c. these will always be taxed as a benefit-in-kind.
d. an employee will usually have to bear some or all of the cost.
7. Danielle's partner has recently died leaving her with their two children. If they were
NOT
married or
in a civil partnership, what State benefits could Danielle potentially receive as a result of her partner's
death?
Select one:
a. Bereavement Support Payment.
b. Personal Independence Payment.
c. None.
d. Income support.
8. Sophie is aged 30, self-employed and she has an income protection policy. What State benefit is
most
likely to be taken into account when determining the maximum benefits payable?
Select one:
a. Personal Independence Payment.
b. Working Tax Credit.
c. Statutory Sick Pay.
d. Employment and Support Allowance.
9. Aida is age 68 and has just suffered a stroke. As a result, she will need ongoing care. What State
benefit could she qualify for as a result?
Select one:
a. Attendance Allowance.
b. Carer's Allowance.
c. Disability Living Allowance.
d. Personal Independence Payment.
10. Mark is about to take out a maximum cover, unit-linked whole life policy. He should be aware that:
Select one:
a. his premiums are guaranteed throughout the policy term.
b. the insurer can reduce the life cover level at a policy review date.
c. the first policy review will typically be in 15 years.
d. it offers little flexibility to amend the sum assured and /or premiums.
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11. When a whole life policy is taken out by a couple to meet an Inheritance Tax liability after they
both die, how should this policy be written?
Select one:
a. Joint life first death.
b. Two own life policies.
c. Two life of another policies.
d. Joint life last survivor.
12. When calculating a life assurance premium, what is the 'pure' premium?
Select one:
a. The full premium that the life office will charge the policyholder.
b. It is the loading that must be added on for expenses.
c. The premium required just to meet claims in respect of those who die during the year.
d. The premium required to pay for the risk benefit, including office expenses, but not allowing for
commission.
13. A life assurance policy is set up by Max under trust with Steve and Louise as trustees for the
benefit of Geoff and Glenda. Peter is Max's personal representative. Who is the settlor of the trust?
Select one:
a. Geoff and Glenda.
b. Steve and Louise.
c. Peter.
d. Max.
14. Ibrahim owns a term assurance policy which includes terminal illness cover. When he was
diagnosed with cancer and his life expectancy was given as nine months, the life company paid out the
terminal illness benefit. He subsequently survived the illness and lived past the expiry date of the
policy. What are the implications for Ibrahim in respect of the payment he received?
Select one:
a. The life office will not require him to pay back the money.
b. The life office will meet with him and negotiate how much of the money will be paid back.
c. He must pay the full amount back to the life office.
d. He must produce bank statements and pay back whatever amount of the money he had not
spent.
15. Peter has assigned his existing life policy to Paul. What does this allow Paul to do, if anything,
where he is able to demonstrate good title?
Select one:
a. Paul can write the policy under trust.
b. It does not give Paul any rights without Peter's permission.
c. Paul can increase the sum assured.
d. Claim the policy proceeds.
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16. Josh has an endowment policy that has matured. As part of his claim, the life office needs proof of
title. What should Josh provide as proof of title?
Select one:
a. Claim form.
b. Policy.
c. Passport.
d. Birth certificate.
17. When claiming on a life assurance policy, executors will be required to provide proof of title by
producing:
Select one:
a. the original policy document.
b. a certified copy of the will.
c. a grant of probate.
d. a grant of letters of administration.
18. Ravindra is an adviser. Which of his clients has a non-qualifying policy?
Select one:
a. Samantha, who has a 5 year reviewable term assurance.
b. Bini, who has a term assurance policy with a term of 9 months.
c. George, who has an existing 12 year endowment policy.
d. Javid, who has a 15 year whole of life policy.
19. John owns a qualifying whole life policy which lapsed three months ago due to non-payment of
premiums. How many months does John have to reinstate the policy if the qualifying status is to
remain unaffected?
Select one:
a. 3.
b. 6.
c. 9.
d. 10.
20
.
Which client will be subject to a chargeable gain under the restricted relief qualifying policy rules?
Select one:
a. Megan, who makes contributions of £3,000 into her qualifying policy that she took out in
January 2015.
b. Keira, who makes contributions of £4,000 into her qualifying policy that she took out in January
2014.
c. Ellie, who has just taken out a 20 year level term protection policy.
d. Ross, who makes contributions of £4,200 into his qualifying policy that he took out in March
2009 which has not been amended.
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21. A life company has made net capital gains of £5 million on its onshore equity fund. Ignoring any
indexation allowance, how much capital gains tax must they pay on this gain, if any?
Select one:
a. £950,000.
b. Nothing.
c. £500,000.
d. £1 million.
22. Nigel has died leaving an estate, valued at £1.6m which did not include a residential property. He
leaves £350,000 to a charity. How much inheritance tax will be paid on the estate?
Select one:
a. £333,000.
b. £370,000.
c. £510,000.
d. £459,000.
23. A life policy with a premium of £2,500 per annum was taken out eight years ago to cover any
future inheritance tax liability. Taking just these premiums into account, if death occurs today how
much inheritance tax, if any, has been saved?
Select one:
a. £12,000.
b. £8,000.
c. Nil.
d. £20,000.
24. Janice wants an income protection policy. She is looking to keep the costs as low as possible.
Which definition of disability is likely to be the lowest cost option?
Select one:
a. Alternative occupation.
b. Own occupation.
c. Any occupation.
d. Suited occupation.
25. With income protection insurance, what will adding a waiver of premium benefit typically cost as a
percentage of the premium?
Select one:
a. 8% - 10%.
b. 5% - 8%.
c. 2% - 5%.
d. 1% - 2%.
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