Vocabulary

Part II

breadwinner bight obligation beneficiary to deprive endowment policy lump sum contribution mature expiry to represent bonus monetary purpose

a person who works to support a family. the state of being justly entitled to something. a duty that is done as a return of a favour. one who receives money or property under a will or insurance policy. to take away from. a type of insurance whereby money is paid in a lump sum when the insurance policy matures. one full payment instead of many small payments. money given for a purpose. due for payment. termination of an agreement. to act or speak for somebody. payment that is more than usual. relating to money. intention.

Explanations

Part III

1. Life insurance is one of the main types of insurance. The others include marine, fire, burglary etc. There are two main types of life insurance. An endowment policy entitles the policy holder to the sum of money assured after the agreed number of years. If he dies before that time, his beneficiaries will be paid the sum assured. The second type is called a whole life policy. The policy holder must pay premiums until his death. The annual premium for this type of policy is less than for an endowment policy.

2. Bonus. Certain life insurance policies including endowment policies provide an annual bonus. This is dependent on the amount of the profit made by the company during the year.

3. When a life insurance policy is purchased, the policy holder will be requested to name his beneficiaries. They may be members of his family or other people. The beneficiaries will be paid the sum assured on the policy holder’s death.

4. To assure, to insure and to ensure are synonyms. All the three verbs mean to make secure or certain.

To assure is used with people and means to put the mind at rest.

Assure the President of our full support.

I assured him that we would be present.

Any of the three verbs may be used to describe an act of making something certain.

Victory is assured.

Victory is ensured.

Victory is insured.

To ensure and to insure also mean to protect from harm.

Let’s ensure our country against war.

Let’s insure our country against war.

Only to insure is now used with regard to the guaranteeing of life or property against risk.

Exercises

1. Answer the following questions.

   1. Why do people insure themselves?

   2. What is an insurance policy?

   3. What is the owner of an endowment policy entitled to?

   4. Who are beneficiaries?

   5. What does the bonus represent?

2. Give the meanings of the following words.

   1. Breadwinner. 2. Obligation. 3. To deprive. 4. Lump sum. 5. Contribution.

3. Give the word that fits the description.

   1. Due for payment.

   2. Termination of an agreement.

   3. To act or speak for somebody.

   4. Payment that is more than usual.

   5. One who receives money or property under a will or insurance policy.

Lesson 14

Taxation

Part I

A tax is a compulsory payment to the state on the net earnings of an individual or company. A state requires money for the maintenance of law and order and for defence. Governments provide social services such as education, housing, health and welfare at great cost.

The United States of America and Canada even subsidise farming and other industries. Some countries have a national debt to settle. This is money owed to those who have lent it to the state. These are some of the obligations of the state.

There are direct and indirect taxes. Direct taxes are taxes on income, examples of which are an income tax and death duties. Excessive direct taxes are likely to discourage people from working hard and saving. They may think that too much of their income is taken away by the government. Most states find it difficult to meet their expenditure from direct taxes alone.

Indirect taxes are therefore collected to increase the revenue. These are taxes on goods or services as distinct from taxes on income. Examples include taxes on tobacco, petroleum and liquor.

Merchants are required to pay indirect taxes on some manufactured and imported goods. They must pay the taxes before the removal of the goods from government controlled warehouses. Businessmen pass on the cost of these taxes to the public in the form of higher prices for their goods.

Excessive indirect taxation may lead to claims for higher wages. It may also reduce the demand for certain goods. The state is mindful of these effects ant tries not to overtax its people.