CTFA

CTFA practice questions, page 5 of 35, with answer review and explanations.

Question 21

Stephen is about to commence taking benefits from his personal pension scheme, which includes protected rights. He should be aware that:

  1. He can take up to 25% of the total fund as a pension commencement lump sum
  2. He has the right to exercise the open market option
  3. His whole pension fund must provide limited price indexation in payment
  4. The value of the protected rights element will not count towards the lifetime allowance

Question 22

Frank, age 55, is considering adopting a lifestyle investment technique as he aims to build up his personal pension prior to retirement. He should be aware that:

  1. The asset mix of the fund will be adjusted automatically on pre-determined dates
  2. His ongoing exposure to equities will reduce with lifestyling
  3. After 10 years, a maximum of 25% of the investments will be in bonds
  4. Lifestyling is likely to be appropriate if he intends to purchase a conventional annuity with his entire fund.

Question 23

Under an employer's group life assurance policy, what is the normal tax treatment of the death benefit?

  1. It is liable to Inheritance Tax
  2. It is liable to Capital Gains Tax
  3. It is liable to Income Tax
  4. It is not liable to any form of taxation

Question 24

If an income protection insurance (PHI) policy has reviewable premiums, this usually means that the insurance company can:

  1. Alter the cost of the cover
  2. Withdraw cover on any anniversary date
  3. Only increase premiums in line with inflation
  4. Pay benefits for less than the full period of incapacity

Question 25

Apart from comparing cover and costs, what other key factor should usually be considered if a financial adviser intends to recommend that a client cancels an existing term assurance policy and replaces it with a new one?

  1. The insurable interest
  2. The underwriting requirements
  3. The secondhand policy market value
  4. The chargeable gains