The Fifth Amendment applies to statements which could conceivably show up in a future criminal proceeding. Here is a more precise statement of the principle:

A witness has traditionally been able to claim the privilege in any proceeding whatsoever in which testimony is legally required when his answer might be used against him in that proceeding or in a future criminal proceeding or when it might be exploited to uncover other evidence against him.

And for references see http://constitution.findlaw.com/amendment5/annotation07.html...

What mechanism prevents people from applying it all the time in all cases, referring to potential "future criminal proceedings"?

If the judge gets suspicious, you'll have to explain the potential issue to him off the record. After that you can only continue to say it if the judge thinks that you have a potential reason for worry. But they err on the side of respecting it.

That said, a defendant who pleads the fifth at all questions will not necessarily help their case...

> Fifth Amendment only applies to criminal proceedings

No.

https://law.stackexchange.com/questions/178/does-the-us-fift...

Just because this is not a criminal proceeding does not mean one could not follow, where his answers would be testimony against himself.

I imagine he is saying that he would have to confess a crime if he answers that question. But IANAL and everything.