Whether you are preparing for your exams, or simply want to keep your knowledge up-to-date, Professional Paraplanner’s Development Zone can help.
Every month, in conjunction with Brand Financial Training, we provide a series of questions from across the syllabus which aim to test your knowledge of the financial services market, as part of your overall self development training goals and exam techniques.
The following questions relate to examinable Tax year 22/23, examinable by the CII until 31 August 2023.
You will find the answers separately under the Development Zone tab on the Professional Paraplanner website.
Questions
1. Your elderly clients, Myriam and Geoff, have asked you to explain the key difference between a lifetime mortgage and a home reversion scheme. You tell them
A. monthly payments are typically lower under a home reversion scheme.
B. under a home reversion scheme, you sell all or part of your home, but under a lifetime mortgage, you take out a loan secured on your home.
C. you can borrow a higher percentage of the value of your home under a lifetime mortgage.
D. ownership of the home is retained by the client under a home reversion scheme, but not under a lifetime mortgage.
2. Steven invested £7,500 in an account paying 4.5% interest. After seven years how much would he have accumulated?
A. £10,225
B. £10,206
C. £9,767
D. £9,525
3. Maureen, a basic rate taxpayer, has just invested £50,000 into a guaranteed income bond that has been constructed by the provider using a medium-term note. She should be aware that? Tick all that apply.
A. Her personal savings allowance can be used to reduce the amount of tax payable.
B. Any chargeable gains are subject to CGT in the normal way.
C. Her tax liability will be met at source with a 20% tax credit.
D. Products constructed in this way cannot be held in an ISA wrapper
4. Jack’s annuity has been calculated on a points system using an automated basis in relation to his lifestyle. This would indicate the purchase of
A. an enhanced annuity.
B. a joint life annuity.
C. a protected rights annuity.
D. an impaired annuity.
5. Georgia, 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 her employer. How are the benefits from the policy treated in relation to the company’s taxation?
A. They are taxable only if they exceed £1,000 per month
B. They are free from any liability for tax
C. They are paid as a regular income and therefore taxable
D. Any excess over £1,000 per month is taxable
6. Paula invested £500 at the end of every year for five years at an interest rate of 6%. What is her accumulated value at the end of the period?
A. £2,833.33
B. £3,400.00
C. £2,818.55
D. £2,500.00
7. If the credit rating agency Standard & Poor’s modified their rating of a bond from AAA to BBB investors should be aware that the bond
A. is now non-investment grade.
B. is now a junk bond.
C. has kept an investment grade.
D. is now rated as the highest quality.
8. Which benefit is an informal carer most likely able to claim as a result of providing support for an individual requiring care?
A. Income Support/Universal Credit
B. Attendance Allowance/Employment Support Allowance
C. Personal Independence Payment only
D. Disability Living Allowance only
9. What is the essential difference between a Lifetime Mortgage and a Home Reversion Plan? A Lifetime Mortgage
A. lasts for the mortgagee’s lifetime, but a Home Reversion Plan is for a set time period.
B. can typically only be taken out by over 55s, whereas a Home Reversion Plan can be taken out at any age.
C. is a loan secured against a property; a Home Reversion Plan is not a loan but involves the sale of the property.
D. tends to have a much lower interest rate than Home Reversion Plans.
10. The formal term for a contract in Scotland is:
A. offer.
B. treaty.
C. tender.
D. missives.
Need help with your CII exams? For resources including mock exam papers and e-mocks, calculation workbooks, revision notes, audio masterclasses and video tutorials do visit Brand Financial Training and don’t forget to download your free taster versions!
