Meeting customer needs and priorities

Question 1

What are the 7x financial ‘life cycle’ stages?

Answer 1

1. children
2. students
3. Young adults in employment
4. Young families
5. Established families
6. Mature households
7. Retirement

Question 2

Hierarchy of financial needs? x6

Answer 2

1. Living today
2. Protection
3. Income
4. Pension
5. Savings
6. Investment

Question 3

As well as personal needs, self employed sole-traders might need? x5

Answer 3

1. business banking
2. loans & mortgages
3. business protection
4. other insurance to protect tools, premises, etc
5. pensions for employees

Question 4

Partnership protection life assurance is ideal for?

Answer 4

Business partners to receive a lump sum on the death of their business partner

Question 5

Similar to sole-traders, Limited companies needs are similar but typically also require what 3x things?

Answer 5

business insurance

staff benefits – pension schemes, life assurance etc,

business protection – loan protection, director and shareholder protection

Question 6

Life assurance can be arranged in which 4x ways?

Answer 6

1. Single life, own benefit
2. Life of another
3. Joint-life first death
4. Joint-life second death

Question 7

The cheapest form of life cover?

Answer 7

Term assurance (payable only for a set term on a single life or a joint‑life first‑death basis)

Question 8

Benefits of whole-of-life cover?

Answer 8

1. personal or business protection for dependants
2. provide funds for the payment of inheritance tax

Question 9

Critical Illness Cover provides?

Answer 9

a tax-free lump sum for a specified serious illness or disability

Question 10

Maximum pay-out for Income protection insurance?

Answer 10

50% - 60% of pre‑disability income until recovery, death or end of term

Question 11

To lower the premium of IPI you can?

Answer 11

Defer for a longer period (4, 13, 26, 52 or 104 weeks)

Question 12

Maximum pay-out for Accident, sickness and unemployment (ASU) insurance?

Answer 12

Usually limited to 60%–65% of income.
Benefits cease after 1-2 years

Question 13

Cash deposits and savings products are usually beneficial for?

Answer 13

those wanting to avoid risking capital, shorter-term,

Question 14

Fixed interest investments (gilts or corporate bonds) are slightly higher risk than deposits and therefore?

Answer 14

pay a slightly higher rate of interest. but they are fixed-term

Question 15

Name the 3x Collective investment schemes, that allow for risk spread over a range through pooling investments together?

Answer 15

1. Unit trusts
2. open-ended investment companys (OEICs)
3. Investment trusts

Question 16

3x Tax incentivised investment schemes?

Answer 16

ISAs, VCTs, EISs

Question 17

Benefits of VCTs? x3

Answer 17

1. 30% tax relief on annual investments up to £200,000 (which will be clawed back if shares are sold within the first 5 years)
2. no capital gains tax on growth
3. tax‑free dividends

Question 18

Benefits of EISs?

Answer 18

1. 30% tax relief on annual investment up to £1m (clawed back if shares are sold within 3 years)
2. no capital gains tax if shares are held for 3 years

Question 19

The FCA has identified which 4x examples of high‑risk investments?

Answer 19

Cryptoassets

Mini‑bonds (smaller/startup corporate bonds)

Land banking

Contracts for differences (CFD)

Question 20

Max. age for making personal pension contributions?

Answer 20

75

Question 21

Pension funds are free from income and capital gains tax while invested. What percentage can be taken tax-free?

Answer 21

25%

Question 22

The normal minimum pension age (NMPA) is the earliest age at which an individual can withdraw their what?

Answer 22

Workplace or personal pension