L3 BTEC Business Unit 3 - A4 Insurance, Borrowing and Saving

What type of insurance is this?

Package in which an insurer provides protection against a possible eventuality which are related to situations that involve your vehicle such as theft or an accident.​

• Car Insurance

• Travel Insurance

• Home Insurance

• Third Party

Answer explanation

Car insurance works by the customer paying for an insurance company policy to cover them against the risk of injury or damage that may be caused when they are out driving.​

The premium they pay is calculated based on the risk that the customer places on the company of a claim being made. This can be based on age, power, driving habits, location and experience.​

What type of insurance is this?

The customer pays for an insurance policy that cover them against the risk of damage to the place they live.​

• Car Insurance

• Travel Insurance

• Home Insurance

• Third Party

Answer explanation

Home insurance covers the physical building​.

Home insurance works by the customer paying for an insurance company policy to cover them against the risk of damage to their home.​

It typically covers the rebuilding of the home or making right of specific damage

What type of insurance is this?

Insurance that covers what is in someones home from theft or damage

• Car Insurance

• Travel Insurance

• Home Insurance

• Contents Insurance

Answer explanation

Contents insurance covers physical items in the house – if an individual item has high value it may need to specified on the policy​.

Items can be insured when the person has them away from the home​.

Offers protection against theft / damage

What type of insurance is this?

Can protect both groups and individuals whilst abroad.

• Car Insurance

• Travel Insurance

• Home Insurance

• Mobile Insurance

Answer explanation

Can be purchased for a specific trip, for multiple trips or for all trips in a year​.

Cover includes loss / theft of property, illness, cancellation and emergencies up to predetermined level​.

Specific types of holiday or activities will require additional cover due to high risk​

What type of insurance is this?

Helps to limit the costs of going to a vet.

• Car Insurance

• Pet Insurance

• Home Insurance

• Health Insurance

Answer explanation

Protects owners of pets against some or all expenses associated with treating ill or injured pets​.

Avoids having to put pet down if vets bills are too high​.

​Doesn’t usually cover pre-existing complaints​.

What type of insurance is this?

Covers individuals, families or employees against medical expenses including assessments, treatments ad loss of earnings​.

• Car Insurance

• Pet Insurance

• Home Insurance

• Health Insurance

Answer explanation

In UK the NHS provides free medical care but individuals may have insurance to receive payments when in hospital or private treatment. If funding private care this is often quicker and with better facilities. Premiums can be expensive depending on degree of cover needed​.

This is the legal minimum insurance you need to drive a car and will only cover injury to others and damages to their property caused by you. It doesn’t cover any of your costs as a result of the accident​

• Basic

• Third Party

• Comprehensive

• 1st Party

True or False

Young people are more likely to be in a car accident so pay higher insurance premiums.

• True

• False

Answer explanation

The premium they pay is calculated based on the risk that the customer places on the company of a claim being made. This can be based on age, power, driving habits, location and experience.

True or False

Older people are more likely to have existing health problems so pay lower insurance premiums.

• True

• False

Answer explanation

Older people are more likely to have health conditions or to develop health conditions. This may make them a higher risk for cover so insurers will charge more. Their existing conditions may not event be covered at all.

If you borrowed £12,000 at 5.6% interest over 1 year how much would you repay in total?

• £12,000

• £672.00

• £8064

• £12,672

Answer explanation

To find a percentage using a calculator you need to divide the percentage by 100 and then multiply this by the amount borrowed.

Doing this will give you the interest you need to pay back which you need to add to the original sum.

5.6 divided by 100 multiplied by 12000 gives us 672. Which we add to the 12000. Giving us a grand total of £12672.

If we didnt pay any of this back we would have to calculate the 5.6% on £12672. This means the debt can quickly increase.