DIPFS Unit 3 Topic 1 KW

What is the purpose of Income Protection Insurance?

• To provide a lump sum payment after retirement.

• To manage the risk of loss of earnings due to accidental injury or long-term illness.

• To cover the cost of medical expenses during travel.

• To insure the contents of a home against theft or damage.

What does an Individual Savings Account (ISA) allow?

• To take out a loan for personal use.

• To save money tax-free up to a certain amount.

• To invest in government bonds only.

• To receive a fixed monthly income after retirement.

What is inflation?

• The decrease in the value of a currency compared to foreign currencies.

• The increase in the value of stocks over time.

• A general rise in prices, which means that the purchasing power of money falls.

• The reduction of interest rates by the central bank.

What is the main aim of investments?

• To provide immediate financial assistance in case of emergencies.

• To save money for short-term goals.

• To accumulate enough funds to purchase a property.

• To grow financial products over time so that the value of the money paid into them rises.

What is a Mortgage Payment Protection Insurance designed for?

• To cover the cost of home repairs.

• To cover mortgage payments in the event of illness or unemployment.

• To provide a death benefit to the borrower's family.

• To insure the property against natural disasters.

What is a recession?

• A period of rapid economic growth.

• A period of at least six months in which the amount of goods and services the country is producing is increasing.

• A period of at least six months in which the amount of goods and services the country is producing is shrinking.

• A temporary increase in unemployment rates.

What is repossession?

• A legal process where an asset is sold to the highest bidder.

• A legal process whereby a financial institution takes ownership of an asset due to unpaid loan repayments.

• A voluntary process where an asset is handed over to a financial institution.

• A legal process where an asset is temporarily held by a financial institution.

What is a savings bond?

• A type of equity that represents ownership in a company.

• A long-term investment that cannot be withdrawn for a set period without penalty.

• A financial product that offers high interest rates with high risk.

• A savings account with a variable interest rate.

What are shares also known as?

• Bonds

• Equities

• Savings accounts

• Mutual funds

What does surplus refer to in financial terms?

• Debt that exceeds income.

• Income that is less than mandatory expenditure.

• Income that exceeds mandatory and essential expenditure.

• The total amount of money saved over a lifetime.