finance topic 4 key terms

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Accident, sickness and unemployment(ASU) insurance
A policy that provides cover to the insured party in the event of
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Beneficiary
In relation to trusts, a beneficiary is a person whose property is held as part of a trust and looked after by a trustee. See also trust.
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ISA
An account that pays interest tax-free on cash savings up to a certain level.
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Child Trust Fund
A long-term savings account only available to children born between 1 September 2002 and 2 January 2011. CTFs were set up by the government to encourage people to build up savings for
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civil partnership
A legal union between same-sex couples
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credit rating
An assessment of an individual’s creditworthiness – their eligibility to borrow money – based on their record of money borrowed and repaid.
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Critical illness insurance
Insurance that pays out a guaranteed cash lump sum if the insured person dies or is diagnosed with a specific critical illness.
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Estate
The sum of a person’s assets minus all debts and obligations. Also known as net worth.
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Financial Services Compensation Scheme (FSCS)
A compensation scheme that pays compensation to account holders of up to a certain amount per provider if the provider is indefault (in other words cannot pay account holders the money they have in their accounts).
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Income Protection Insurance
A policy that allows people to manage the risk of loss of earnings over a long term. It pays out a monthly income to insured people who have suffered an accidental injury or long-term illness and who are therefore unable to work.
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ISA
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
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inheritance tax
A tax that may be payable on the estate (the assets after debts have been paid off) left by someone when they die.
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Intestate
The term used to describe someone who has died without having made a will. In this situation, intestacy laws set out what happens to the person’s possessions (that is, their estate).
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Legal Gurdian
A person who has the legal authority and the corresponding duty to care for another person, known as a ward. The ward is usually a child (under 18) but could also be an incapacitated or disabled person who is not able to make decisions for themselves
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life assurance
A type of insurance policy that pays out a sum of money if the insured person dies.
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Personal loan
A product that allows someone to borrow a fixed amount over a fixed period at a fixed amount of interest.
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premium
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.
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premium bond
A lottery bond, issued by NS&I, entered into a monthly prize draw with tax-free prizes or ‘premiums’. Bonds must be held for a full calendar month after the month in which they were purchased, and retain an equal chance of winning until cashed in.
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probability of risk
The likelihood of a damaging or harmful event happening.
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Prudential Regulation Authority (PRA)
One of the two main regulators of financial services in the UK (the other is the Financial Conduct Authority).
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Risk Averse
Reluctant to take any kind of risk.
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Risk / reward relationship
The notion that people will be prepared to take a greater risk if doing so may bring them a greater reward; conversely people who seek greater security (ie lower risk) will receive a lower level of reward.
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risk tolerant
willing to take risks
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Risk transfer
Risk transfer A way of managing risk by transferring it (at a cost) to someone else who will accept the financial responsibility. The best example is insurance, which passes the risk of loss or damage on to the insurance company.
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shares
Investments that represent part-ownership of a company.
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trade union
Trade union An organisation that represents workers within a particular industry or carrying out a particular type of job. Trade unions seek to protect the rights and enhance the working conditions of their members and also offer a range of benefits,
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trust
Trust A financial relationship whereby property is held by one party (the trustee) for the benefit of another (the beneficiary).
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trustee
Trustee A person who holds property for the benefit of another party as part of a trust. They have legal title to the property but also a duty of care to the beneficiary.
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unit trust
Unit trust A type of collective investment scheme, the most common type in the UK.
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A Will
Will A legal document setting out what a person wants to happen to their belongings (assets) after their death.
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Other cards in this set

Card 2

Front

Beneficiary

Back

In relation to trusts, a beneficiary is a person whose property is held as part of a trust and looked after by a trustee. See also trust.

Card 3

Front

ISA

Back

Preview of the front of card 3

Card 4

Front

Child Trust Fund

Back

Preview of the front of card 4

Card 5

Front

civil partnership

Back

Preview of the front of card 5
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