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Money · Ages 10+ · Set A
Insurance: sharing a risk
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Remember: Insurance is many people paying a small share so a few are not alone with a big surprise cost. A calm year is the plan working.

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The Marsh Lane potMarsh Lane has twenty little houses, and the river Reed runs past them. Most years the river stays in its bed, but one wet spring it filled a cellar. Drying it out and mending the walls cost ten pretend coins, a big bill for one family. Before any plan, two houses out of twenty flooded in a wet year, so eighteen families paid nothing and two paid ten coins each. Only luck decided the bills, and nobody did anything wrong. A risk is a chance of a costly surprise. Then a careful neighbor named Wren said, "Everyone puts one coin in a pot each year." All twenty families dropped in a coin, so the pot held twenty coins. In the first year two cellars flooded and each bill was ten coins, so the pot paid both and was empty. Otis made a claim, and Wren checked that his flood was real. In year two everyone paid in again and only one cellar flooded. The pot paid ten coins, and the other ten stayed in the pot for next year. In year three, three cellars flooded, and the pot held ten left over and twenty new coins.
1
Before the plan, 2 of the 20 houses flooded and paid 10 coins each. families paid nothing.
2
Join each word to what it means.
  1. 1Risk
  2. 2Premium
  3. 3Claim
  4. 4Insurance
  • Aa chance of a costly surprise
  • Bthe small yearly payment into the pot
  • Casking the pot to pay a bill
  • Dmany share a small cost so a few do not face a big one alone
3
Twenty families each put 1 coin in the pot. How many coins are in the pot?
20 coins10 coins2 coins
4
Each flooded cellar is a 10-coin bill. Look at the graph. In year three the pot paid coins.
5
In year two the pot held 20 coins and paid one 10-coin bill. coins stay in the pot for next year.

Check, sort and fix

6
In year three, three cellars flood at 10 coins each. The pot holds 10 left over plus 20 new coins. What happens?
The pot is 10 coins shortThe pot is 20 coins shortThe pot holds exactly 30 coins
7
Which costs could a pool like this share? Circle every one.
A fence flattened by a falling treeBread for the weekA cellar flooded in a big stormA treat you want next month
8
In a dry year nobody floods and the pot pays nothing. Did the plan fail?
YesNo
9
Otis says: if I put my coin in the pot, the river will stay in its bed. Is Otis right?
YesNo
10
Number the steps when a cellar floods.
  • Wren checks the flood is real
  • A cellar floods
  • The pot pays the bill
  • The family makes a claim
11
One year's bills were 20 coins, shared by 20 families. What is each family's fair share, the premium?
20 coins1 coin2 coins
12
Write one question you would ask a grown-up about a big surprise cost that people share.
13
Draw the pot on Marsh Lane with the coins going in.
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Answer key · Set A
Insurance: sharing a risk
118 20 − 2 = 18 families paid nothing. Only luck decided who paid.
21-A, 2-B, 3-C, 4-D A risk is the chance of a costly surprise, the premium goes in, a claim asks for a bill to be paid, and insurance is the sharing.
320 coins 20 families × 1 coin = 20 coins.
430 Year three had 3 flooded cellars, and 3 × 10 = 30 coins.
510 20 − 10 = 10 coins wait in the pot.
6The pot holds exactly 30 coins 10 + 20 = 30 coins, and 3 × 10 = 30 coins of bills, so the pot pays them all.
7A fence flattened by a falling tree, A cellar flooded in a big storm A pool shares rare, big surprises. Bread and a treat are costs you know are coming, so you plan for them yourself.
8No No. A calm year is the plan working. The premium buys peace of mind.
9No Insurance does not stop a flood. It shares the cost of one.
103, 1, 4, 2 The family asks, the flood is checked as real insurers do, and then the pot pays, because it pays only for floods that really happen.
111 coin 20 coins ÷ 20 families = 1 coin each. The premium is each family's fair share.
12Your own words: a grown-up reads it.
Mark each answer, count the right ones and write the score on the sheet.