Unit 2 Topic 4: Dealing with Long-Term Risks

This video covers unit 2 topic 4, focusing on long-term risks. It explains the concept of risk and reward, methods to minimize risk exposure, and the role of insurance and financial planning. The video also discusses inheritance tax, risk management, and the importance of diversifying financial products. It concludes with a knowledge check through multiple choice questions.

What is the relationship between risk and reward?

• High risk, high reward

• High reward, low risk

• Low reward, high risk

• No reward, high risk

Which of the following investments is considered the least risky?

• Investment trusts

• Premium bonds

• Unit trusts

• Shares in a company

What is the role of the Financial Services Compensation Scheme (FSCS)?

• To manage investment funds

• To insure against critical illness

• To provide loans to banks

• To guarantee savings up to a certain amount

Which type of insurance protects dependents in the event of the policyholder's death?

• Life insurance

• Income protection insurance

• Accident insurance

• Critical illness insurance

Which of the following is NOT a type of insurance mentioned in the video?

• Travel insurance

• Critical illness insurance

• Life insurance

• Income protection insurance

What is the maximum amount the FSCS guarantees in a specific savings account?

• £150,000

• £100,000

• £85,000

• £50,000

What is one way to provide for others in the event of your death?

• Buying premium bonds

• Opening a savings account

• Making a will

• Investing in stocks

What is the standard inheritance tax rate on the part of the estate above the threshold?

• 20%

• 30%

• 40%

• 50%

How can you minimize the risk of losing all your savings if a bank goes bankrupt?

• Investing in a single savings account

• Spreading savings across multiple accounts

• Keeping cash at home

• Investing in a newly quoted company

What is a benefit of using different financial product providers?

• Higher interest rates

• Access to a wider range of products

• Lower taxes

• Guaranteed returns