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Exam Review

Key Facts: CISI Paraplanning FPA Exam

80 Q

Questions

CISI Exam Specification

120 min

Time Limit

CISI Exam Specification

70%

Pass Mark

CISI Exam Specification

£315

Exam Fee

CISI Fee Schedule

The CISI Paraplanning FPA exam is a 2-hour, 80-question multiple-choice exam with a 70% pass mark, costing £315.

Sample CISI Paraplanning FPA Practice Questions

Try these sample questions to review concepts for the CISI Paraplanning FPA exam. Each question includes a detailed explanation. Start the interactive quiz above for the full 100+ question experience with AI tutoring.

1What is the primary purpose of a decreasing term assurance policy in financial protection planning?
A.To provide a tax-free lump sum that increases each year in line with inflation
B.To cover a repayment mortgage where the capital balance outstanding reduces over time
C.To pay a guaranteed income stream to surviving dependents for the rest of their lives
D.To build up a tax-efficient investment element alongside life cover
Explanation: Decreasing term assurance is designed so that the sum assured reduces over the policy term, broadly matching the decreasing principal of a capital-and-interest (repayment) mortgage. This makes it a cost-effective option for protecting repayment debt.
2In Income Protection Insurance (IPI), what does the term 'deferred period' represent?
A.The period of time between policy application and policy inception
B.The duration for which benefit payments will continue to be paid while disabled
C.The waiting period between the start of incapacity and when benefit payments commence
D.The period during which the insurer cannot cancel the policy for non-payment
Explanation: The deferred period is the time that must elapse after an insured person becomes incapacitated before policy benefits become payable. Common deferred periods are 4, 13, 26, or 52 weeks, usually chosen to align with employer sick pay provisions.
3What is the key difference between guaranteed premiums and reviewable premiums on a Critical Illness policy?
A.Guaranteed premiums stay fixed for the life of the policy, while reviewable premiums can be adjusted by the insurer based on claim experience
B.Guaranteed premiums are adjusted annually for inflation, while reviewable premiums remain flat
C.Reviewable premiums guarantee a payout regardless of pre-existing conditions, while guaranteed premiums do not
D.Guaranteed premiums are eligible for tax relief, while reviewable premiums are paid out of net income
Explanation: Guaranteed premiums remain fixed throughout the term of the policy, providing cost certainty. Reviewable premiums are subject to periodic review (e.g. every 5 or 10 years) by the insurer, who can increase premiums based on broad underwriting data and claim experience.
4Under a standard individual life assurance policy, when is a Terminal Illness benefit payable?
A.Upon diagnosis of any specified critical illness such as cancer or heart attack
B.When the life assured is diagnosed with an incurable illness and expected to die within 12 months
C.When the life assured attains age 75 without making any previous claims
D.Only after the life assured has been incapacitated and unable to work for 6 consecutive months
Explanation: Terminal Illness benefit allows the full sum assured to be paid out early if the life assured is diagnosed with an advanced, incurable medical condition and, in the opinion of an attending consultant, has a life expectancy of less than 12 months.
5What is the maximum duration for which Statutory Sick Pay (SSP) is payable by an employer in the UK?
A.12 weeks
B.26 weeks
C.28 weeks
D.52 weeks
Explanation: Statutory Sick Pay (SSP) is paid by employers to eligible employees who are unable to work due to sickness for up to a maximum of 28 weeks.
6What distinguishes an absolute (bare) trust from a discretionary trust when placing a life policy in trust?
A.In a bare trust, beneficiaries are fixed and cannot be changed, whereas trustees of a discretionary trust have flexibility over who benefits and when
B.In a discretionary trust, the settlor remains the sole beneficiary until death
C.A bare trust protects policy proceeds from Inheritance Tax (IHT), whereas a discretionary trust does not
D.A discretionary trust can only be created by corporate entities, whereas bare trusts are for individuals
Explanation: In an absolute (bare) trust, the beneficiaries and their shares are fixed at the outset and cannot be altered by trustees. In a discretionary trust, trustees have wide discretion to determine which potential beneficiaries receive capital or income and in what proportions.
7How are benefit payouts structured under a Family Income Benefit (FIB) life policy?
A.As a single cash lump sum paid on the policy expiry date
B.As regular tax-free income payments from the date of death until the policy expiry date
C.As an annuity purchased from an open market provider at the time of claim
D.As a taxable monthly payment linked to the yield on UK Government Gilts
Explanation: Family Income Benefit (FIB) is a form of term assurance that pays a regular, tax-free income stream starting at the date of claim and continuing for the remainder of the agreed policy term.
8What is the tax treatment of death benefits paid under an employer-sponsored Group Life Assurance scheme written under a registered pension trust?
A.They are subject to Income Tax at the beneficiary's marginal rate
B.They are subject to Inheritance Tax if the estate exceeds the Nil Rate Band
C.They are generally paid free of Income Tax and Inheritance Tax to the beneficiaries
D.They attract a flat 20% capital gains tax deduction at source
Explanation: Lump sum death benefits paid from a registered group life assurance scheme written under trust are generally free of UK Income Tax (for deaths before age 75) and sit outside the employee's estate for Inheritance Tax.
9What is a major tax advantage of a Relevant Life Policy (RLP) for a director of a small UK limited company?
A.Premiums paid by the company are usually an allowable business expense and do not count as a benefit-in-kind for the director
B.The policy allows tax-free cash withdrawals during the director's lifetime
C.Premiums qualify for 40% personal income tax relief directly from HMRC
D.The policy sum assured is guaranteed to be exempt from Corporation Tax for 25 years
Explanation: A Relevant Life Policy is an individual term assurance policy taken out by a company on the life of an employee or director. Premiums qualify as an allowable business expense for Corporation Tax, are not treated as a benefit-in-kind (P11D), and benefits are paid tax-free to beneficiaries via trust.
10When configuring Whole of Life assurance on a reviewable basis, what is the primary risk to the policyholder?
A.The policy will automatically convert to a fixed-term policy at age 65
B.Future premium reviews may result in substantially higher premiums or a reduced sum assured to maintain cover
C.The death benefit becomes fully taxable after the policy has been held for 10 years
D.The policy proceeds must be paid to the insurer if no claim is made before age 85
Explanation: Reviewable Whole of Life policies carry the risk that, at periodic policy reviews, the underlying investment performance or actuarial risk assumptions require higher premiums to maintain the initial sum assured, or the sum assured must be scaled down.

About the CISI Paraplanning FPA Exam

The CISI Certificate in Paraplanning (Financial Planning & Advice unit) tests practical knowledge of UK financial planning, protection, pensions, investments, tax, and FCA client suitability compliance required of professional paraplanners.

Exam sponsor: CISI. The requirements and fees below concern the certification or admission exam, separate from our free practice resources.

Assessment

80 multiple-choice questions across 4 main syllabus areas.

Time Limit

2 hours

Passing Score

70%

Exam / Certification Fees

£315

Exam sponsor website

Reported exam pass rate: Approx 65-70%. Based on CISI candidate pass trends. This describes exam candidates, not OpenExamPrep users or results from using our resources. Exam sponsor website

Fees, eligibility, and exam policies can change. Confirm them with the exam sponsor before applying or paying.

Our practice resources: topics covered

We aim to reflect publicly available exam outlines and topic information in our study resources. Coverage, format, and difficulty may differ from the actual exam, and we cannot guarantee that every detail is accurate or current. Confirm exam requirements, fees, and policies with the official exam sponsor.

25%

Financial Protection

Protection needs analysis, individual and business protection policy structures, trusts, and state benefits.

30%

Retirement & Pensions Planning

Pension tax relief, Annual Allowance, carry forward, MPAA, flexi-access drawdown, UFPLS, and Lump Sum Allowances.

25%

Investment & Wealth Planning

Taxation of ISAs, investment bonds, CGT, dividend tax, asset allocation, portfolio risk, and top-slicing.

20%

Advice Standards & Client Suitability

FCA Consumer Duty, COBS 9 suitability requirements, fact-finding, client vulnerability, and cash flow assumptions.

Preparing for the CISI Paraplanning FPA Exam

What You Need to Know

  • Passing score: 70%
  • Assessment: 80 multiple-choice questions across 4 main syllabus areas.
  • Time limit: 2 hours
  • Exam / certification fees: £315 Official sources

Using Our Practice Resources

  • Work through all 100 available questions
  • Review every answer and explanation
  • Track weak areas and revisit them
  • Use our AI tutor for tough concepts

CISI Paraplanning FPA: Suggested Study Strategy

1Master UK tax calculation rules including pension annual allowance carry forward and top-slicing relief for investment bonds.
2Understand FCA Consumer Duty rules and how they impact suitability recommendations in paraplanning reports.
3Practice multi-step calculations under timed conditions to manage time effectively.

Frequently Asked Questions

What is the pass mark for the CISI Financial Planning & Advice exam?

The pass mark is 70% (56 out of 80 questions).

How long is the CISI Paraplanning FPA exam?

Candidates are given 2 hours (120 minutes) to answer 80 questions.

What is the cost of taking the exam?

The exam entry fee is £315.