NAME: _______________________________________ COURSE & SECTION _______________________

BUILDING AND ENHANCING NEW LITERACIES ACROSS THE CURRICULUM (ProfEd - PCK6)
First Semester S.Y. 2020-2021
Module 12

Unit 4. 21st Century literacies

E. Insurance and taxes
F. Tips on being financially stable

I. Introduction / Rationale
Generally speaking, when the beneficiary of a life insurance policy receives the death benefit, this
money is not counted as taxable income, and the beneficiary does not have to pay taxes on it. However, a few
situations exist in which the beneficiary is taxed on some or all of a policy's proceeds. If the policyholder elects
not to have the benefit paid out immediately upon his death but instead held by the insurance company for a
given period of time, the beneficiary may have to pay taxes on the interest generated during that period. And
when a death benefit is paid to an estate, the person or persons inheriting the estate may have to pay estate taxes
on it. However, there are several ways, detailed below, that these estate taxes may be avoided.
Usually, there are no taxes owed, when a beneficiary of a life insurance policy receives the death benefit;
however, there are a few exceptions.
If the policyholder has arranged for the insurance company to hold the policy for a few months before
transferring it to the beneficiary, then the interest earned in that interim period would usually be taxable.
If the policyholder has made the beneficiary of the policy an estate, rather than an individual, then the person or
people inheriting the estate might have to pay estate taxes.
II- Learning Objective
 Design a workable financial plan
 Apply the principles of savings, investment, and valuing in spending one’s money.
III- Content
What is Insurance?
 Insurance is a contract (policy) in which an insurer indemnifies another against losses from
specific contingencies and/or perils.
 There many types of insurance policies. Life, health, homeowners, and auto are the most
common forms of insurance.
 The core components that make up most insurance policies are the deductible, policy limit, and
premium.
Insurance Policy Components
a. Premium
A policy's premium is its price, typically expressed as a monthly cost. The premium is determined by the
insurer based on your or your business's risk profile, which may include creditworthiness.
 b. Policy Limit
The policy limit is the maximum amount an insurer will pay under a policy for a covered loss.
Maximums may be set per period (e.g., annual or policy term), per loss or injury, or over the life of the
policy, also known as the lifetime maximum.
c. Deductible
The deductible is a specific amount the policy-holder must pay out-of-pocket before the insurer pays a
claim. Deductibles serve as deterrents to large volumes of small and insignificant claims.
Types of Insurance
a. Health Insurance
Health insurance is a contract between a health insurer and a policy holder that requires the health
insurer to pay for all or at least a portion of medical costs.
b. Car insurance
Auto insurance covers cars, motorcycles, trucks, and other vehicles, and is intended to protect against
physical damage or bodily injury that could result from driving, whether the incident is reckless or an
accident.
c. Life Insurance
In the event of death, a life insurance policy pays a beneficiary an agreed-upon amount of money to
cover the expenses left by the deceased. A beneficiary is the person or entity named in a policy who
receives benefits, such as a spouse.
d. Homeowners insurance
Homeowners insurance covers the house you reside in and any associated structures, such as a porch,
garage, and balcony.
e. Umbrella Insurance
Liability insurance is what’s called umbrella insurance, because it covers costs in excess of other
insurance policies.
f. Renters insurance
Renters insurance is used by tenants to cover personal property in case of damage or theft, which is not
the responsibility of the landlord
g. Travel Insurance
Travel insurance covers trip cancellations, lost or misplaced luggage, travel accidents, and even medical
expenses while on the trip.
What are Taxes?
Taxes are involuntary fees levied on individuals or corporations and enforced by a government entity—whether
local, regional or national—in order to finance government activities. In economics, taxes fall on whomever
pays the burden of the tax, whether this is the entity being taxed, such as a business, or the end consumers of the
business's goods.
a. Direct taxes
These are primarily taxes on natural persons (e.g., individuals), and they are typically based on the
taxpayer’s ability to pay as measured by income, consumption, or net wealth.
b. Indirect taxes
These are levied on the production or consumption of goods and services or on transactions, including
imports and exports. Examples include general and selective sales taxes, value-added taxes (VAT), taxes
on any aspect of manufacturing or production, taxes on legal transactions, and customs or import duties.
There are several very common types of taxes:
 Income Tax—a percentage of individual earnings filed to the federal government
 Corporate Tax—a percentage of corporate profits taken as tax by the government to fund federal
programs.
 Sales Tax—taxes levied on certain goods and services
 Property Tax—based on the value of land and property assets
 Tariff—taxes on imported goods imposed in the aim of strengthening internal businesses
 Estate tax—rate applied to the fair market value of property in a person's estate at the time of death
IV- Self- Test
1. The core components that make up most insurance policies are the _____________________.
a. deductible, policy limit, and premium b. deductive, policy limit, and premium
c. deductive, police limit, and premium d. deductible, police limit, and inferior
2. These are primarily taxes on natural persons (e.g., individuals), and they are typically based on the
taxpayer’s ability to pay as measured by income, consumption, or net wealth.
a. Direct Tax b. Indirect Tax
c.Tariff d. Estate Tax
3. These are levied on the production or consumption of goods and services or on transactions, including
imports and exports. Examples include general and selective sales taxes, value-added taxes (VAT), taxes on any
aspect of manufacturing or production, taxes on legal transactions, and customs or import duties.
a. Direct Tax b. Indirect Tax
c.Tariff d. Estate Tax
4. These are involuntary fees levied on individuals or corporations and enforced by a government entity—
whether local, regional or national—in order to finance government activities.
a. Direct Tax b. Indirect Tax
c.Tariff d. Tax
5. In economics, these fall on whomever pays the burden of the tax, whether this is the entity being taxed, such
as a business, or the end consumers of the business's goods.
a. Direct Tax b. Indirect Tax
c.Tariff d. Tax

Tips on being financially stable

What is Financial Stability?
Financial stability can be more broadly defined as “a condition in which the financial system can facilitate real
economic activities smoothly and is capable of unravelling financial imbalances arising from shocks.”
Financial stability can be defined as “a condition in which the financial system is not unstable". It can also mean
a condition in which the three components of the financial system -- financial institutions, financial markets and
financial infrastructure -- are stable.
 ‘Stability of financial institutions’ refers to a condition in which individual financial institutions are
sound enough to carry out their financial intermediation function adequately, without assistance from
external institutions including the government.
 ‘Stability of financial markets’ means a condition in which there is no major disruption of market
transactions, with no significant deviation of financial asset prices from economic fundamentals, thereby
enabling economic agents to raise and operate funds with confidence.
  ‘Stability of financial infrastructure’ refers to a condition in which the financial system is well
structured to ensure smooth operation of market discipline, and both the financial safety net and the
payment and settlement system are running effectively.
Tips on being financially stable
a. Create budget–
make a list of all your monthly expenses, your total monthly income, and put a spending plan in place to
correct your challenges. Try not to get hung up on budgeting too much, but in the early stages you
should create one.

b. Lower your high costing bills –

Living, food, transportation, and utility bills. This may mean downsizing your home, car, and being
more money conscious on your food habits for a while. But get these under control. You can use an app
like Trim that helps negotiate savings and removes subscriptions for you to save money.

c. Start prioritizing your savings –

Practicing paying yourself first and build that buffer for emergencies and other “life happenings.” You
can set up automatic transfers once you know how much you can save, so you never see that money.

d. Make savings automagical.

This should be your top priority, especially if you don’t have a solid emergency fund yet. Make it the
first bill you pay each payday, by having a set amount automatically transferred from your checking
account to your savings (try an online savings account). Don’t even think about this transaction — just
make sure it happens, each and every payday.

e. Control your impulse spending.

The biggest problem for many of us. Impulse spending, on eating out and shopping and online purchases,
is a big drain on our finances, the biggest budget breaker for many, and a sure way to be in dire financial
straits. See Monitor Your Impulse Spending for more tips.

f. Evaluate your expenses, and live frugally.

If you’ve never tracked your expenses, try the One Month Challenge. Then evaluate how you’re
spending your money, and see what you can cut out or reduce. Decide if each expense is absolutely
necessary, then eliminate the unnecessary. See How I Save Money for more.

g. Invest in your future.

If you’re young, you probably don’t think about retirement much. But it’s important. Even if you think
you can always plan for retirement later, do it now. The growth of your investments over time will be
amazing if you start in your 20s.

h. Eliminate and avoid debt.

If you’ve got credit cards, personal loans, or other such debt, you need to start a debt elimination plan.
List out your debts and arrange them in order from smallest balance at the top to largest at the bottom.

i. Pay bills immediately, or automagically.

One good habit is to pay bills as soon as they come in. Also, as much as possible, try to get your bills to
be paid through automatic deduction. For those that can’t, use your bank’s online check system to make
regular automatic payments.
Self- Test
1. It is a condition in which the financial system can facilitate real economic activities smoothly and is capable
of unraveling financial imbalances arising from shocks.”
a. Financial Stability b. Insurance
c. Tax d. Issuance
2. It makes a list of all your monthly expenses, your total monthly income, and put a spending plan in place to
correct your challenges. Try not to get hung up on budgeting too much, but in the early stages you should create
one.
a. Create budget b. Lower your high costing bills
c. Start prioritizing your savings d. Make savings automagical.
3. Practicing paying yourself first and build that buffer for emergencies and other “life happenings.” You can
set up automatic transfers once you know how much you can save, so you never see that money.
a. Create budget b. Lower your high costing bills
c. Start prioritizing your savings d. Make savings automagical.
4. This should be your top priority, especially if you don’t have a solid emergency fund yet. Make it the first bill
you pay each payday, by having a set amount automatically transferred from your checking account to your
savings (try an online savings account). Don’t even think about this transaction — just make sure it happens,
each and every payday.
a. Create budget b. Lower your high costing bills
c. Start prioritizing your savings d. Make savings automagical.
5. In Living, food, transportation, and utility bills. This may mean downsizing your home, car, and being more
money conscious on your food habits for a while. But get these under control. You can use an app like Trim that
helps negotiate savings and removes subscriptions for you to save money.
a. Create budget b. Lower your high costing bills
c. Start prioritizing your savings d. Make savings automagical.

V- Learning Activity
INSTRUCTION: Make a Financial Plan.
Process: Fill-out the matrix provided to input data on your finances including your savings.
VI. Assessment / Reflection
INSTRUCTION: Make reflection on the Financial literacy.
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
__________________________________________________________________________________________
VII. Feedback / Comment
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
VIII.Post -Test
1. It is a contract (policy) in which an insurer indemnifies another against losses from specific contingencies
and/or perils.
a. Financial Stability b. Insurance
c. Tax d. Issuance
2. There many types of insurance policies. Life, health, homeowners, and auto are the most common forms of
insurance.
a. Financial Stability b. Insurance
c. Tax d. Issuance
3. Typically expressed as a monthly cost. It is determined by the insurer based on your or your business's risk
profile, which may include creditworthiness.
a. Premium b. Policy Limit
c. Deductible d. Insurance
4. It is the maximum amount an insurer will pay under a policy for a covered loss. Maximums may be set per
period (e.g., annual or policy term), per loss or injury, or over the life of the policy, also known as the lifetime
maximum.
a. Premium b. Policy Limit
c. Deductible d. Insurance
5. It is a specific amount the policy-holder must pay out-of-pocket before the insurer pays a claim. Deductibles
serve as deterrents to large volumes of small and insignificant claims.
a. Premium b. Policy Limit
c. Deductible d. Insurance
6. A percentage of individual earnings filed to the federal government
a. Income Tax b. Corporate Tax
c. Sales Tax d. Property Tax
7. Taxes levied on certain goods and services
a. Income Tax b. Corporate Tax
c. Sales Tax d. Property Tax
8. A percentage of corporate profits taken as tax by the government to fund federal programs.
a. Income Tax b. Corporate Tax
c. Sales Tax d. Property Tax
9. It is based on the value of land and property assets
a. Income Tax b. Corporate Tax
c. Sales Tax d. Property Tax
10. The rate applied to the fair market value of property in a person's estate at the time of death
a. Income Tax b. Corporate Tax
c. Tariff d. Estate Tax
11. These are taxes on imported goods imposed in the aim of strengthening internal businesses
a. Income Tax b. Corporate Tax
c. Tariff d. Estate Tax
12. It can be defined as “a condition in which the financial system is not unstable". It can also mean a condition
in which the three components of the financial system -- financial institutions, financial markets and financial
infrastructure -- are stable.
a. Financial Stability b. Insurance
c. Tax d. Issuance
13. It refers to a condition in which individual are sound enough to carry out their financial intermediation
function adequately, without assistance from external institutions including the government.
a. Financial Stability b. financial institutions
c. financial markets d. financial infrastructure
14. It means a condition in which there is no major disruption of market transactions, with no significant
deviation of financial asset prices from economic fundamentals, thereby enabling economic agents to raise and
operate funds with confidence.
a. Financial Stability b. financial institutions
c. financial markets d. financial infrastructure
15. It refers to a condition in which the financial system is well structured to ensure smooth operation of market
discipline, and both the financial safety net and the payment and settlement system are running effectively.
a. Financial Stability b. financial institutions
c. financial markets d. financial infrastructure
16. One good habit is to pay bills as soon as they come in. Also, as much as possible, try to get your bills to be
paid through automatic deduction. For those that can’t, use your bank’s online check system to make regular
automatic payments.
a. Evaluate your expenses, and live frugally b. Eliminate and avoid debt.
c. Invest in your future. d. Pay bills immediately, or auto-magically.
17. If you’ve got credit cards, personal loans, or other such debt, you need to start a debt elimination plan. List
out your debts and arrange them in order from smallest balance at the top to largest at the bottom.
a. Evaluate your expenses, and live frugally b. Eliminate and avoid debt.
c. Invest in your future. d. Pay bills immediately, or auto-magically.
18. If you’re young, you probably don’t think about retirement much. But it’s important. Even if you think you
can always plan for retirement later, do it now. The growth of your investments over time will be amazing if
you start in your 20s.
a. Evaluate your expenses, and live frugally b. Eliminate and avoid debt.
c. Invest in your future. d. Pay bills immediately, or auto-magically.
19. If you’ve never tracked your expenses, try the One Month Challenge. Then evaluate how you’re spending
your money, and see what you can cut out or reduce. Decide if each expense is absolutely necessary, then
eliminate the unnecessary. See How I Save Money for more.
a. Evaluate your expenses, and live frugally b. Eliminate and avoid debt.
c. Invest in your future. d. Pay bills immediately, or auto-magically.
20. The biggest problem for many of us. Impulse spending, on eating out and shopping and online purchases, is
a big drain on our finances, the biggest budget breaker for many, and a sure way to be in dire financial straits.
See Monitor Your Impulse Spending for more tips.
a. Control your impulse spending. b. Eliminate and avoid debt.
c. Invest in your future. d. Pay bills immediately, or auto-magically.
IX- Referrences:
 https://www.investopedia.com/ask/answers/102015/do-beneficiaries-pay-taxes-life-insurance.asp
 https://www.investopedia.com/terms/i/insurance.asp
 https://www.opploans.com/oppu/articles/what-are-the-types-of-insurance/
 https://www.investopedia.com/terms/t/taxes.asp
 https://www.britannica.com/topic/taxation/Classes-of-taxes
 https://www.bok.or.kr/eng/main/contents.do?menuNo=400037
 https://www.investopedia.com/articles/younginvestors/08/generation-y.asp
 https://zenhabits.net/10-habits-to-develop-for-financial/