Topic 4: Dealing with long -term risks Flashcards Preview

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Flashcards in Topic 4: Dealing with long -term risks Deck (17):
1

What can be at risk?

Physical body
Possessions may get lost
Legal liability
Finances

2

How are risk and probability linked?

If the probability of something bad happening increases, it becomes more risky

3

From low to high, what are the ranks of risk for financial products

Premium bonds
Banks savings account
Unit trusts
Shares in an established company
Shares in newly quoted company

4

What increases if risk is higher

Interest rates and return

5

What does risk averse mean

Avoids it

6

What's risk transfer

Spending money to transfer the risk to someone else, insurance

7

What does the impact of risk depend upon

Amount of money involved
The effect on someone's lifestyle
The timing
The frequency

8

How can a bank measure the rate of risk

Probability x impact = degree of risk

9

Why buy life assurance?

Provides for family when you're gone
debt protection
cover for old people

10

What type of insurance is available to someone with an illness

Critical illness insurance

11

What insurance is available to someone who cant work

Income protection insurance

12

What insurance does ASU cover

Accident, sickness and unemployment

13

What is the FSCS

Financial services compensation scheme
Protects financial products from services if they default

14

What's in a will

Guardianship, possessions, assets, money, provision for a partner if not married legally and executors (the people who checks wants are met)

15

What does intestate mean

dying without a will

16

What can a will reduce the amount of

Inheritance tax
Inheritance Tax is a tax on the estate (the property, money and possessions) of someone who’s died.

Having the estate in your will given to spouse or charity can mean the tax paid is severely reduced

17

What's a trust

A financial relationship whereby financial property is held for someone else until they are of age to claim it