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1
Q

The industry looks at PMI in terms of impact and frequency as?

A

Low frequency. High impact

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2
Q

Morality has increased over the last 50 years. What factors have least impacted the improvement?

A

A change in working habits

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3
Q

Why are policies being taken out for older lives?

A

People are working longer and therefore having mortgages longer

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4
Q

Mark died. In his will left 1million to his wife what IHT is payable?

A

Nil

2nd death will incur IHT

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5
Q

Statutory sick pay requirements

A 
Earns more than £112 a week
More than 4 days sick
Paid by employer
Pay class 1 NI
Taxable as wages & pay ni
28 weeks only > employment support
Not means tested
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6
Q

Self employed sick is most likely to claim?

A

Employment and support allowance

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7
Q

Redundancy benefit pays after?

A

39 weeks

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8
Q

Standard cover?
Guaranteed cover?
Maximum cover?

A

Standard - premium level as long as underlying investment preforms.
Guaranteed - set premiums will never change. No investment element
Maximum cover - premium set for period then reviews. Likely to increase premium or reduce benefit. small surrender value

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9
Q

Pure premium calculation is?

A

Sum assured x mortality rate

E.g.
£80,000 premium. Mortality rate of 0.0024

Pure premium is £192 (annual)

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10
Q

Health screenings usually include?

A

Non invasive tests. Saliva swabs. Hair samples. Urine tests

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11
Q

Terminal illness. Someone must have life expectancy of …. to pay out?

A

Less than 12 months

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12
Q

Val & Mark own a house together joint tenancy. Val dies what happens?

A

Mark would automatically own all of property

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13
Q

Tax treatment of life policies is?

  • qualifying?
  • non qualifying?
A

No tax on qualifying

Higher rate tax on non qualifying on gain

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14
Q

Endowment qualifying rules about premium& age and sum assured?

A

55 - to qualify must be min 75% premiums paid in

If policy taken out Over 55 reduces every year by 2%

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15
Q

How far can you backdate a policy and still be qualifying?

A

3 months

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16
Q

What’s IHT liability if Pete left Daniel his whole estate of £750,000

A

£170,000 (40% of taxable estate minus nil rate band)

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17
Q

Ref wishes to gift and endowment policy to his daughter. Using annual gift exemption in order to avoid IHT what’s the max premium he can pay per month?

A

£250 (£3000 per year)

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18
Q

What is a deferred period?

A

If a policy is taken out with a 3 month deferred period. This would mean if you couldn’t work from 1st Jan you don’t get paid on claim until 1st April. You would cover the first 3 months from savings etc

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19
Q

Strictest income protection category? Most likely to pay out in invent unable to work

A

Own occupation

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20
Q

If you have a deferred period when should you submit claim to provider?

A

Straight away to start deferred period

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21
Q

Group income protection has what features?

A 
Taken out by employer
Premiums paid by employer
Employee taxed as benefit in kind
Benefits paid to employer
Employee receives benefits as pay, subject to sax and NI to employer
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22
Q

Individual income protection is?

A

Monthly benefit

Tax free premium and benefit

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23
Q

Accelerated unit linked policy is?

A

Benefit added to life policy basically CIC

Alternative to death payment not additional. E.g. Life cover £150k. CIC pays out £150k nothing else is payable!

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24
Q

What is a split trust?

A

CIC to client

life cover to beneficiaries outside estate

25
How is CIC lump sum taxed?
Nil tax
26
Under local authority assessments how much is left as personal expenses?
£24.90
27
What's the advantage of an immediate care annuity?
Benefits paid tax free directly to care home | Pays for WOL
28
Personal accident and sickness features?
``` Benefits are not taxed Premiums no tax relief Covers loss of limbs. Death. Loss of eye. Other specific injuries Set amounts Weekly benefit Medical expenses to a percentage ```
29
Who is most likely to have a PAS policy?
Members of clubs Sports clubs Travelling and participating in a specific holiday Engaging in firms business
30
Basic PMI would usually not cover what?
Out patient Physicatric care Cancer treatment
31
Why is mortgage protection cheaper than income protection?
Is fully underwritten | Linked to mortgage benefits
32
What's a capital need of a typical client seeking life insurance?
Funeral costs
33
Key person cover what evidence should be provided?
Business plan & company accounts
34
Key person cover (multiple of salary) what rate is normal and how is it calculated?
Salary 5-10x
35
Key person cover proportion of profits formula
Key persons salary x profit last year x no of years to replace key person Divided by Total salary bill
36
Why is a partnership agreement needed if one of the partners were to die?
The partnership would end is either was to die
37
What happens to live cover in event of divorce?
The court can make any arrangements it sees fit in relation to existing policies
38
What is bereavement benefit?
£2000 lump sum to spouse or CP Died before Retirment Or allowance payable for 52 weeks at £112.55 full rate Widows £122.55 for if child. Finishes if spouse remarries or lives with another partner
39
Income support?
Not studying full time Work less than 16 hours Low income Not receiving job seekers or employement & support allowance
40
Job seekers is?
£57.90 pw if 16-24 £73.10 over 25 6 months max as contribution based then goes to income based which is means tested
41
Stator sick pay is?
£112 per week for 28 weeks
42
Employment and support allowance is?
After 28 weeks of stat sick pay for employed people Or available after 3 weeks for self employed Same rate as statutory 13 week assessment period then-passed to: Support group - terminal Work activity- week 14 £102.15 pw help to re-enter job market for a year. After year means tested £16,000
43
What is needed for proof of title for an individual?
Policy
44
Reinstatement rules for qualifying policies?
13 months to reinstate
45
Non qualifying policy what events are taxable?
Assignment Maturity Death
46
What does charity donations in a will do to IHT calcs?
Under 10% or taxable estate - take off charity donation and 40% tax Over 10% of taxable estate- take off charity donation and then 36% tax
47
What's the cost of wop?
2-5%
48
How much is child benefit per week?
£20.70 first child | £13.70 extra child
49
How is child benefit reduced for higher rate tax payers?
50,000 higher limit Every £100 over reduces amount by 1% E.g. £53000 Is 100 x 30 over 50000 30% of child benefit is 20.70 x52 / 100 x 30 - 1076.40 Is £753.48 per year child benefit
50
Endowment qualifying rules?
At least 10 years Sum assured on death at least 75% premiums Must be paid annual or shorter intervals for 10 years
51
WOL qualifying rules?
10 years plus Total premiums 1 year must not be double the premiums payable in any other year or 1/8 of total premiums over the whole term 75% of premiums at age 75
52
Temp insurance more than 10 years qualifying rules?
10 years plus Total premiums 1 year must not be double the premiums payable in any other year or 1/8 of total premiums over the whole term 75% of premiums at age 75
53
Temp insurance under 10 years qualifying rule?
Premiums must not exceed what's been paid in More than a year less than ten years No min payable
54
Qualifying rules annual premium limit?
£3600
55
Gain on £5,600 on a surrender of a higher rate tax payer on a qualifying policy. Over premiums paid in. What tax is due on the gain?
£1,220 (20%)
56
What is annual gifting exemptions?
£3,000 pa
57
Advantages of a drawdown mortgage?
Funds would be withdrawn when needed. Resulting in less interest building up. Against whole value being taken at inception
58
Budget PMI what will reduce premiums?
Excess being higher
59
CGT taxation?
10% as income 20% additional rate tax payers £1100 allowance Trusts is 1/2

R05 (1 decks)

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