CII R05 Financial Protection

Question 1

What is the primary purpose of key person insurance for a business?

To compensate the business for financial loss caused by the death or critical illness of a vital employee To provide personal life cover for the business owner's family To fund employee pension schemes on a group basis To cover business premises against fire and flood damage

Correct Answer:

To compensate the business for financial loss caused by the death or critical illness of a vital employee

Question 2

In a key person insurance arrangement, who typically pays the premiums?

The key person themselves from their salary The business, as it is the beneficiary of the policy The government via a tax relief scheme A discretionary trust set up by the key person

Correct Answer:

The business, as it is the beneficiary of the policy

Question 3

Which type of business protection is specifically designed to enable remaining partners to purchase a deceased partner's share of the business?

Key person insurance Partnership protection Relevant life insurance Group income protection

Correct Answer:

Partnership protection

Question 4

What is a 'cross-option agreement' in the context of shareholder or partnership protection?

An agreement allowing the insurer to cross-check claims with Companies House records An agreement giving surviving shareholders the option to buy and the deceased's estate the option to sell An agreement between two competing insurers to share risk on large policies An agreement to cross-sell complementary financial products to business clients

Correct Answer:

An agreement giving surviving shareholders the option to buy and the deceased's estate the option to sell

Question 5

Under HMRC guidance, key person insurance premiums are generally allowable as a business expense only when:

The key person owns less than 5% of the company's shares The policy term does not exceed five years The sole purpose of the policy is revenue protection rather than a capital purpose The sum assured does not exceed ten times the key person's annual salary

Correct Answer:

The sole purpose of the policy is revenue protection rather than a capital purpose

Exam overview

About this Exam

Prepare with the CII R05 Financial Protection practice quiz. This question bank includes 50 questions covering policy, protection, critical, illness, and life. Use it to review important concepts, identify knowledge gaps, and build confidence for the related exam, course, or assessment.

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CII R05 Financial Protection

This practice set contains 50 questions from the matching question bank and focuses on policy, protection, critical, illness, and life. Work through each question carefully, review the provided solutions, and revisit topics that need more study before your next attempt.

This is an independent study resource intended for practice and review; it is not an official examination or an endorsement by any organization named in the title.

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CII R05 Financial Protection

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