Financial Literacy Skills Unit 4: Understanding Taxes and Insurance

Financial Literacy Skills

Unit 4: Understanding Taxes and Insurance

Objective 1: State the purposes of taxes.

• Taxes raise revenue to pay for government operations, facilities, and services.

• Taxes distribute benefits and obligations among different income groups.

• Taxes influence people’s behavior. • Income from taxes promotes the economic

stability of federal, state, and local governments

Objective 2: Discuss the consequences of failing to pay taxes.

• Income tax• Property tax• Sales tax

Objective 3: Complete W-4 forms.

Objective 4: Locate information on a pay stub.

Objective 5: List records that should be kept for taxes.• Annual W-2 Forms• Financial statements showing interest and dividends• Canceled checks that serve as receipts for tax deductions or

credits• Itemized bills and receipts for deductions or credits• Bills and receipts for major purchases and permanent home

improvements• Documents showing interest paid on home mortgages• Real estate closing statements• Documents showing investment transactions• Past tax returns

Objective 6: Locate information on a W-2 form.

Objective 7: Complete a 1040EZ form.

Objective 8: Identify types of insurance.

• Auto• Disability • Health• Liability

• Life • Long-term care• Home

Objective 9: Describe types of auto insurance.

• Bodily injury liability• Property damage

liability• Medical payments• Collision

• Comprehensive• Uninsured motorist• Underinsured

motorist• No-fault protection

Objective 10: Analyze insurance situations.

Objective 11: Identify factors that affect the cause of insurance.

Insurance Provider• The capabilities of the insurance company (such as

the size and efficiency of the insurance company)• Amount the insurance company has had to pay in

claims in the past• Type of coverage provided by the insurance

company• Amount of coverage provided by the insurance

company

Objective 11: Identify factors that affect the cause of insurance.

Auto Insurance• Risks involved in insuring a particular person – Age of insured– Gender of insured– Insured’s driving record– Marital status of insured– Insured’s student record

• Risks involving the particular vehicle– Age of vehicle– Cost of repairs to vehicle– Safety devices in vehicle

Objective 11: Identify factors that affect the cause of insurance.

Auto insurance (continued)• Vehicle use– Where the vehicle is parked (a garage or other safe place

may allow a discount of 5 to 15 percent)– Other drivers using insured’s vehicle– Frequency of vehicle use– Purpose for vehicle use

• Type of policy selected• Amount of coverage and deductible• Frequency of accidents in local area

Objective 11: Identify factors that affect the cause of insurance.

Life Insurance• Insured person’s risk of dying (due to age,

health, lifestyle, etc.)• Administrative and sales fees charged by the

insurance company• Type of policy selected (policies that provide for

savings generally cost more)• Amount of coverage• Size of benefit to be paid if insured dies

Objective 11: Identify factors that affect the cause of insurance.

Property Insurance• Risk factor where insured lives• Value of property• Amount of coverage and deductible• Type of coverage selected

Objective 11: Identify factors that affect the cause of insurance.

Health Insurance• Risks involved in insuring a particular person

– Age of insured– Occupation of insured– Physical condition of insured– Sex of insured– Medical history of insured

• Amount of coverage and deductible• Medical-care cost in local area• Type of health insurance selected• Type of policy selected — group or individual

Objective 12: Determine types of automobile insurance coverage.

Objective 13: Describe the common types of coverage in a standard homeowner’s insurance policy.

• Home• Personal property• Extra living expenses• Liability

End of Unit 4