QFA Life Assurance Practice Test 2025 - Free QFA Life Assurance Practice Questions and Study Guide

To determine the exit tax for a unit-linked bond, it is important to consider the tax implications of a deemed encashment. In many jurisdictions, the exit tax is calculated based on the gains made within the bond or the cumulative growth that has been achieved over the time period the bond has been held.

In this case, if the current encashment value of the bond is €67,000, we need to establish how much of this value is considered gain for tax purposes. The exit tax is applied to the gains, not the entire value of the bond.

Assuming that the gain on the bond is subject to a specific tax rate (which may differ by jurisdiction), the correct figure for exit tax can be derived by multiplying the gains by that tax rate.

In this scenario, it seems that the exit tax amount of €6,970 reflects the calculated gain and applicable tax rate, making it the correct answer. This suggests that the initial investment (the amount contributed to the bond) was below the current encashment value, thus resulting in a taxable gain.

Understanding the specific tax laws applicable to unit-linked bonds and how they apply to exit strategies is crucial for anyone working with these products, ensuring that they account for potential tax