The Main Advice Areas Flashcards
What main factors affect the calculation of the level of sickness cover needed by a working parent with a child?
The extent of any sickness benefit from an employer
The nature and amount of available state benefits
The number and ages of the children
And the availability of any help from friends and family with childcare and housekeeping
What is the purpose of key person insurance?
To mitigate the adverse impact on a business’s profits caused by the death or long-term illness of an important member of staff
Hegley surveying services wants to take out a key person insurance on their senior surveyor, Simone. Her annual salary is £47,000. The companies total annual salary bill is £400,000 and its latest published gross profit was £1.5 million. Calculate the appropriate sum assured, assuming the estimated time to recover from Simones absence is 5 years.
£47,000➗£400,000 x 1.5 million x 5 = £881,250
How does the cross option method differ from the buy and sell method of partnership protection?
It comprises an option to purchase the deceased partners share rather than a binding contract; as a consequence, the deceased’s family or heirs are deemed to receive business assets rather than cash. So business relief from inheritance tax can be claimed.
Which of the following borrowers might a fixed-rate motgage be most useful?
A) Ruth, who feels that interest rates will staybthe same for the next few years
B) sean, who feels that lenders should never charge areangement fees.
C) Aditya, who is convinced that interest rates will fall sharply in the short term.
D) Nigel, who believes interest rates will rise significantly in the near future
D) Nigel, who believes interest rates will rise significantly in the near future
Which one of the following repayment vehicles would be suitable for a client who wants an interest-only mortgage, but insists that the product must guarantee to pay off the motgage at the end of the term?
A) full with profits endowment
B) low cost endowment
C) ISA
D) unit linked endowment
A) full with profits endowment
If the cost of living is rising, what is likely to be the main priority of a customer making an investment?
A) to avoid incurring any further income tax liablility
B) to protect money against the effects of inflation
C) to be able to access it immediately
D) to invest money securely
B) to protect money against the effects of inflation
If the rate if inflation is 2.5% what yield must an investor obtain on their deposit account in order to achieve a real return of 3%?
A) 0.5%
B) 2.5%
C) 5.5%
C) 5.5%
Nina is basic rate tax payer. She pays £162 pm by direct debit into her personal pension plan. How much is actually invested in her plan each month with tax relief?
A) 194.40
B) 202.50
C) 283.50
D) 270.00
B) 202.50
£162 divide by 80 x 100 = £202.50
What rules does HMRC apply in relation to gifts with reservation?
If the donor receives any benefit from a gifted asset, the asset is treated for IHT purposes as remaining in the donors estate.
