R05 Premium limit and restricted relief qualifying policies: free practice questions

1. Question 1 of 5

   What is the annual premium limit for qualifying policies issued from 6 April 2013?

   Option A: £1,200Option B: £2,880Option C: £4,000Option D: £3,600

   Show answer

   The answer is D: £3,600

   From 6 April 2013, qualifying policy premiums payable by a policy beneficiary are limited to £3,600 in any twelve-month period, including friendly society tax-exempt policies.

   Why the other options are wrong

   A

   £1,200 isn't the limit; it's £3,600.

   B

   £2,880 is the net amount of a £3,600 personal pension contribution, not the qualifying limit.

   C

   £4,000 isn't the limit; it's £3,600.

2. Question 2 of 5

   Ben and Chloe jointly own a qualifying policy, not in trust, with premiums of £2,000 a year. How much counts towards Ben's annual premium limit?

   Option A: Nothing, as joint policies are exemptOption B: £1,000Option C: £2,000Option D: £3,600

   Show answer

   The answer is C: £2,000

   Where there is more than one policy beneficiary, the whole premium counts in full towards each one's limit. Ben uses £2,000 of his £3,600 limit, and so does Chloe.

   Why the other options are wrong

   A

   Joint policies aren't exempt from the limit; the full premium counts for each beneficiary.

   B

   The premium isn't halved between joint owners; the whole £2,000 counts towards each one's limit.

   D

   £3,600 is the annual limit itself, not the amount this policy uses.

3. Question 3 of 5

   Qualifying policies issued before 21 March 2012 are protected from the annual premium limit unless what happens?

   Option A: They are varied from 21 March 2012 or assigned from 6 April 2013Option B: The policyholder reaches age 75 before the policy has endedOption C: Premiums are switched from annual to monthly paymentOption D: The policyholder moves house or changes their address

   Show answer

   The answer is A: They are varied from 21 March 2012 or assigned from 6 April 2013

   Pre-21 March 2012 policies are exempt unless varied from 21 March 2012 or assigned from 6 April 2013, subject to some exempt assignments. Mortgage endowments kept solely to repay an interest-only mortgage are also exempt.

   Why the other options are wrong

   B

   Reaching 75 doesn't affect protected status.

   C

   Changing premium frequency isn't the trigger in the rules.

   D

   Moving house doesn't affect protected status.

4. Question 4 of 5

   A qualifying savings policy was issued in June 2012 with premiums of £5,000 a year from outset. How is it classified?

   Option A: A fully non-qualifying policy from outsetOption B: A restricted relief qualifying policyOption C: A protected policy exempt from the limitOption D: A friendly society tax-exempt policy

   Show answer

   The answer is B: A restricted relief qualifying policy

   Policies issued in the transitional period from 21 March 2012 to 5 April 2013 with premiums above £3,600 from outset became RRQPs. Premiums up to 5 April 2013 received qualifying treatment, and the limit applies from 6 April 2013.

   Why the other options are wrong

   A

   Policies in the transitional period became RRQPs rather than non-qualifying from outset.

   C

   Protected policies are those issued before 21 March 2012; this one was issued after.

   D

   Nothing suggests a friendly society policy, and the £5,000 premium is far above any tax-exempt limit.

5. Question 5 of 5

   After a qualifying policy is issued from 6 April 2013, within what period must the policy beneficiaries give a written statement to the provider?

   Option A: Twelve monthsOption B: Six monthsOption C: Three monthsOption D: 30 days

   Show answer

   The answer is C: Three months

   Beneficiaries must give a written statement within three months of events such as issue, certain variations, assignment or inheritance. If they do not, the policy becomes non-qualifying.

   Why the other options are wrong

   A

   Twelve months is far longer than the deadline.

   B

   Six months is longer than the three-month deadline.

   D

   30 days is shorter than the three-month deadline.

R0 Exam Prep is an independent revision tool. It is not produced, endorsed by or affiliated with the Chartered Insurance Institute (CII). Questions and explanations are original. Use it alongside the official study text. About R0 Exam Prep