Topic 4 - Dealing with long-term risks

Question 1

features of risk

Answer 1

• physical injury
• loss of/damage to possessions
• legal liability
• financial loss

Question 2

relationship between risk and reward

Answer 2

• wanting a higher rewards comes with accepting higher levels of risk of loss

Question 3

Risk transfer

Answer 3

Passing risk onto another person or medium

Question 4

critical illness insurance

Answer 4

• pays out a guaranteed cash lump sum if the insured person is diagnosed with an illness

Question 5

income protection insurance

Answer 5

• a policy that allows people to manage long term risk of loss of earnings and being unable to pay mortgages and other debts

Question 6

Accident, sickness and unemployment insurance

Answer 6

• provides cover to the insured party in the event of accidents or sickness