Topic 10

Question 1

Benefit

Answer 1

A government payment made to individuals who meet specific conditions to help them meet their living expenses. For example, people who are disabled and are unable to work.

Question 2

Budget

Answer 2

A plan of expected incomings and outgoings over a set time period such as a month.

Question 3

Citizens Advice

Answer 3

A charity providing free, independent and confidential advice on citizens and consumers rights and responsibilities.

Question 4

Credit Card

Answer 4

A card that allows the holder to make purchases face to face, online or over the phone. However, the provider pays for the transactions, and the card holder repays the provider in a single payment or instalments.

Question 5

Discretionary Expenditure

Answer 5

Voluntary spending on products and services that people want now, and savings towards items that they aspire towards in future.

Question 6

Essential Expenditure

Answer 6

Spending on items required to live, e.g. rent or mortgage repayments, food and drink, water supplier, gas and electricity

Question 7

Financial Ombudsman Service FOS

Answer 7

An independent body set up by Parliament that settles customer complains about providers at no charge to consumers.

Question 8

Fronting

Answer 8

A fraudulent method of lowering car insurance costs by naming a person as the main driver on a policy when they are not.

Question 9

General Insurance

Answer 9

A broad category of insurance that provides protection against financial losses associated with events such as car accidents (motor insurance) or theft (home contents insurance) etc

Question 10

Health Insurance

Answer 10

Products used to protect against the financial loss of being too unwell to work or diagnosed with a critical illness.

Question 11

Individual Savings Account ISA

Answer 11

An account that pays interest tax-free on savings up to a certain level. There are two types of ISA, cash ISAs and a stocks and shares ISA. Junior ISAs are available for under 18s. Rebranded as NISAs in 2014 when the rules were changed.

Question 12

Inheritance

Answer 12

The property, e.g. money etc, passed on from one person to another upon death.

Question 13

Insurance Certificate

Answer 13

A document issued by the insurance provider that verifies the existence of coverage for the policyholder and offers a summary of the cover given.

Question 14

Life cover

Answer 14

Products designed to protect other people from the financial consequences of another person’s death, also called life assurance.

Question 15

Mandatory expenditure

Answer 15

Compulsory outgoings, not necessarily applying to everyone, but those who have them must pay them.

Question 16

Money advice service

Answer 16

A consumer information service set up by the government to help people make informed financial decisions

Question 17

Mortgage

Answer 17

A long term loan taken out to pay for a property, usually for a period like 25 years

Question 18

No claims discount

Answer 18

A discount on the insurance premium that builds up each year that a person does not make a claim

Question 19

Pension policy

Answer 19

A product that enables people to save money for their retirement

Question 20

Premium

Answer 20

The price of an insurance policy, based on factors including how likely an event is to occur, the amount of money needed to rectify the situation, the length of the policy etc.

Question 21

Redundancy

Answer 21

Losing a job because a business no longer wants, needs or can afford that job to be done, related to the business not the person

Question 22

Sum insured

Answer 22

The maximum amount an insurance provider will pay out

Question 23

Third party insurance

Answer 23

Insurance that covers damage to other people or their property but does not cover the policyholder for what they suffer themselves

Question 24

Voluntary excess

Answer 24

The amount paid by the policyholder on a claim before the insurance company will pay anything. Compulsory excess is usually set but consumers can opt for a higher voluntary excess in exchange for a lower premium.