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AFA 2 Flashcards

1
Q

Partnership protection?

A

Automatic Accrual: Deceased’s partner compensated via life policy.
Buy & Sell: Partner’s executors legally obliged to sell, partners buy using life policy proceeds.
Cross Option: Both parties have option to buy/sell.

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2
Q

In general, benefits available to?

A

Those with savings <£16,000, reduced if >£6000.

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3
Q

Jobseekers allowance?

A

‘New Style’ dependent on having paid sufficient C1 NICs. Paid at fixed rate irrespective of savings/partners earnings.

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4
Q

SMP eligibility?
Payable for?

A

Worked for 26wks, including 15th (qualifying wk) pre-baby.
39 wks
6wks at 90%, lower standard rate thereafter

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5
Q

Maternity allowance for self employed?

A

Maternity Allowance.

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6
Q

Child benefit?

A

Income tax charge at £1 for every £100 over £50k. Thereby, earning >£60k, child benefit paid is negated.

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7
Q

What is Working Tax Credit and Child Tax Credit?

A

WTC: ‘Top-up’ for low earners.
CTC: Those with children who get WTC.

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8
Q

Statutory Sick Pay when?

A

Off for 4 or more days. Paid up to max of 28 wks.

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9
Q

New style ESA for? Process?

A

Incapacity to work owing to illness/disability.
Ax then main phase.

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10
Q

Attendance allowance?

A

Tax-free benefit for those over state pension age.

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11
Q

Personal independence Payment (PIP) for?

A

Help with:
- ‘Daily Living’
- ‘Mobility’

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12
Q

Universal credit replaces?
Claims made on?

A

ESA, JSA, WTC, CTC, Income support.
Household basis.

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13
Q

Bereavement support payment?

A

£2500/3500 lump sum + 18mthly £100/350

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13
Q

SERPS? S2P?
They allow?

A

SERPS: State Earnings Related Pension Scheme.
S2P: State Second Pension.

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13
Q

SMI is?

A

Support for Mortgage Interest, loan to people in receipt of benefits, towards mortgage payments.

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14
Q

Benefits cap outside London? Inside London?

A

£258 single/£385 family
££296 single/£442 family

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15
Q

Main types of life assurance?
To be qualifying? Meaning?

A

Whole of Life
Term Assurance
Minimum term of 10 years. No additional tax (on top of life office).

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16
Q

Flexible whole of life policies are?
Universal whole of life policies?

A

Unit linked whole of life policies.
Include other benefits e.g. Income Protection/CIC.

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17
Q

Types of whole of life policies?

A

Non-Profit
With-Profit
Unit-Linked
Unitised With-Profit
Low-Cost

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18
Q

FIB?

A

Level decreasing term assurance providing income, instead of lump sum (Unlike Term Assurance).

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19
Q

Gift inter vivos policy?

A

Term assurance to cover IHT liability.

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20
Q

Increasing term assurance is?

A

Increasing sum assured through time, with increasing premiums, to negate inflation.

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21
Q

Split-Benefit/Carve Out Trust?

A

On discretionary basis.
Life assurance component within trust, CIC outside.

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22
Q

ASU?

A

Accident, Sickness, Unemployment Insurance. Annually renewable/reviewable/revisable.

23
Q

PPI?

A

Payment Protection insurance: protect repayments to service a loan or debt (or mortgage).

24
Q

Tax conditions on CIC/IPI/ASU/PPI?

A

Tax-Free

25
Q

PMI vs Hospital Cash Schemes?

A

PMI: Medical Expenses
HCS: Costs of hospitalisation.

26
Q

Life assurance policy mechanics? Benefit?

A

Settlor (Maker) often a trustee.
Out of IHT estate.

26
Q

KFD vs KFI for protection plan?

A

KFD: Generic features
KFI: Customer specific

27
Q

Trust types?

A

Statutory/MWPA: protect trust assets against bankruptcy
Absolute/Bare: Inflexible
Flexible
Discretionary: Flexible, by class
- A&M: E.g. provide for children, until 18
IIP: Parent provide for other, preserve capital for child
Will Trust

28
Q

What is assignment?

A

Transferring policy to another owner (Assignee) via deed of assignment to be able to pay off debts.

29
Q

How can life policy proceeds be paid out?

A

On death
Maturity
Surrender
Part-Surrender

30
Q

Life policy tax?
Qualifying? Contribution limit?
Non-Qualifying?

A

Life Office pays CT on income, CGT on profits –> BR Liability therefore paid.
Qualifying: No further tax. £3600/yr.
Non Qualifying: Gain taxed, on chargeable event (Death claims: Surrender value pre-death used).

31
Q

Top slicing relief used when?
How to calculate top slice?

A

Chargeable gain makes them HR/AR taxpayer.
Total gain/Yrs of Policy
Top Slice + Income –> 20% of part in HR band, then multiplied by policy years.

32
Q

Withdrawal from life policy?

A

Up to 5% without resultant IT liability.

33
Q

Tax treatment of:
- Contributions to pension term assurance?
- Lump Sum Death benefits from pension?

A
  • No tax relief.
  • Tax free if <75.
34
Q

Offshore life policy taxation?

A

Not subject to UK life fund taxation. Taxed as per country, or, once proceeds payable as per IT rate.

35
Q

Taxation of life policies for business protection?

A

Premiums are tax-deductible.

36
Q

Tax on traded endowment policies?

A

No tax for seller.
Can be chargeable event (If <10yrs).

37
Q

Viatical Settlement?

A

Intermediary buys a life policy from a terminally ill policyholder.

38
Q

CIC tax?
Group CIC?

A

No tax relief on premiums. Tax-free payout.
Allowable business expense.

39
Q

IPI tax?
Group IPI?

A

No tax relief, so not subject to tax.
Tax-deductible expense,

40
Q

ASU/MPPI tax?

A

No tax relief.
Income payments tax-free.

41
Q

PMI Tax?
Employer contributions?

A

Premiums subject to insurance premium tax, benefits paid tax free.
Allowable deduction against CT

42
Q

AFA 2 - Top 9 + 10

A
43
Q

Pensions Regulator?
Pension Protection fund?
Financial Assistance Scheme?

A

Promote good pensions.
Recover pension money from insolvent firms.
To help those DB schemes not covered by PPF.

44
Q

Pensions and divorce?

A

Offsetting: Added to total assets
Earmarking: % to partner when crystallised
Splitting: Split

45
Q

Pensions in bankruptcy?

A

Excluded.

46
Q

Aim of SERPS? S2P? If leaving?

A
  • Boost state pension by 25%
  • Boost low/Mod earners’ pension
  • ‘Contracted out’
47
Q

Types of Pension Credit?

A
  • Guarantee Credit
  • Savings Credit
48
Q

Pension changes 2024?

A

LTA scrapped.
£268k PCLS limit.
Annual pension allowance to £60k.

49
Q

How are pensions paid?

A

Personal: Net of BR tax, then reclaimed later.
Occupational: ‘Net pay agreement’

50
Q

What is A day?
If previously >25%

A

06/04/06 –> Pension Simplification.
Can Primary/Enhance protect LS.

51
Q

What is QROPS?

A

Qualifying recognised overseas pension scheme

52
Q

Drawdown Pension? Types?

A

Funds remain invested.
- Flexi-Access
- Short Term Annuities
- Uncrystallised Funds Pension LS

53
Q

What is MPAA?

A

Money Purchase Annual Allowance: Only contribute £10,000 to pension once triggered.

54
Q

SIPP?

A

Self Invested Personal Pension.

55
Q
A

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