Unit 2

Question 1

2C5A

Most income protection contracts restrict benefits to a maximum of 75% of the policyholder’s income, less any other benefits provided by either the employer or the State. This is because:

a. it keeps the premiums reasonably low.

b. insurance companies dare not accept a higher level of risk.

c. of HMRC restrictions on available benefits.

d. it gives the policyholder a financial incentive to return to work.

Answer 1

d. it gives the policyholder a financial incentive to return to work.

Question 2

2C4A

Ewan has a renewable term assurance policy. On expiry of the five year term, what is LEAST likely to be an option?

a.Another similar policy can be taken out.

b.It can be renewed and the premium will fall.

c.It can be renewed and the premium will rise.

d.It will cease if not renewed.

Answer 2

b. It can be renewed and the premium will fall.

Question 3

2E3C

Bobby has eligible jobholder earnings of £20,000. Under auto-enrolment:

a.the total minimum contribution is 5% of his earnings in the current tax year.

b.his earnings are below the minimum amount required for auto-enrolment.

c.the minimum contribution is based on earnings over the lower level of qualifying earnings.

d.his contribution will not include tax relief.

Answer 3

c. the minimum contribution is based on earnings over the lower level of qualifying earnings.

Question 4

Sheila, who is age 60, began working at the age of 16 and was employed in various roles for 28 years. During her working life she paid full National Insurance contributions. Sheila has not received any National Insurance credits when not employed. What State retirement benefits would Sheila be entitled to?

a.
A proportionate amount of the Basic State Pension.

b.
The full amount of the new State Pension.

c.
A proportionate amount of the new State Pension.
Correct
Correct, chapter reference 2E3A

d. The new State Pension plus an Additional State Pension.

Answer 4

c. A proportionate amount of the new State Pension.