Topic 10: Dealing with unexpected events

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 unemployed, unable to work because they care for a disabled person, or have a disability themselves
may be entitled to benefits if they meet the criteria.

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, confidential and impartial 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, and to withdraw cash from an ATM.
Unlike a debit card, where the money is taken from the holder’s own account, transactions are paid by the card provider. The
card holder repays the amount owed to the provider either in one payment or in instalments. The provider charges interest on
cash withdrawals from the time the withdrawal is made and on purchases after a certain period.

Question 5

Discretionary

Answer 5

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

Question 6

Essential expenditure

Answer 6

Spending on items required to live, eg 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 complaints 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), loss of or damage to a home or its contents (buildings and home contents insurance), problems with a
holiday (travel insurance) and vet bills (pet insurance)

Question 10

Health insurance

Answer 10

Products used to protect against the financial loss of being too unwell to work or being 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 stocks and shares ISAs. Junior ISAs are available for people under 18

Question 12

Inheritance

Answer 12

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

Question 13

Insurance certificate

Answer 13

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

Question 14

Junior ISA

Answer 14

Junior ISAs are long-term savings accounts set up by a parent or guardian specifically for the child’s future. The child can only
access the money once they turn 18 years old.

Question 15

Life cover

Answer 15

Products designed to protect other people from the financial consequences of someone’s death. Also called life assurance.

Question 16

Mandatory expenditure

Answer 16

Compulsory outgoings; they do not necessarily apply to everyone but if they do apply, they must be paid.

Question 17

MoneyHelper

Answer 17

An independent organisation set up by the government to support people to make the most of their money and pensions.

Question 18

Mortgage

Answer 18

A loan taken out to pay for a property, usually over a long term such as 25 years.

Question 19

No claims discount

Answer 19

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

Question 20

Pension policy

Answer 20

A product that enables people to save money for their retirement.

Question 21

Premium

Answer 21

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 should the event happen, the length of time the policy will be in force, and how the premium is paid.

Question 22

Redundancy

Answer 22

Losing a job because the business no longer needs, wants or can afford that job to be done; it is related to the needs of the business and not to how well or badly an individual does their job.

Question 23

Sum insured

Answer 23

The maximum amount an insurance provider will pay out.

Question 24

Third-pary insurance

Answer 24

Insurance that covers damage that the policyholder causes to someone else (the ‘third party’) or to their property but does not
cover the policyholder for any injury or loss that they suffer themselves.

Question 25

Voluntary excess

Answer 25

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