chapter 8

chapter 8

Financial self-reliance

As a citizen of the Netherlands you are responsible yourself for arranging your finances. You must be able to take care of yourself and take important financial decisions independently. Think of decisions such as:
• How do I want to live together financially with my partner?
• Which insurances will I take out?
• Is the purchase of a house something for me?
• How do I arrange my inheritance?
In order to take these decisions in a sound manner, you need to be well-informed, for instance about which possessions become communal property when you get married or enter into a partnership.

Not all insured persons run the same risk of sustaining damage. The good risks expect less chance of damage than the bad risks. As a result, you can get adverse selection. Due to differentiation between premium levels, good risks need to pay less premium than bad risks, and it is prevented that only bad risks will take out the insurance. When people know that they are insured, they can begin to display moral hazard. As a result, they will claim more damage than had been anticipated initially. The introduction of a deductible will cause people to behave more carefully again.

In the decision to rent or buy a house, the consideration of the housing costs of buying or renting plays an important role. The mortgage interest relief makes buying more attractive. When you buy, you build up a capital. In this decision, the enjoyment of a property is an important non-financial factor.

An inheritance concerns all the assets and liabilities which a deceased person leaves behind. If there is no will, then the law of inheritance determines who will get the inheritance, which is also known as the estate. Inheritance tax must be paid on the share in the estate. How much that is, depends on the relation with the deceased and on the exemption from inheritance tax. If there is a will, then the deceased himself or herself has stated who are the heirs to the estate.


Glossary chapter 8

Glossary chapter 1

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extra exercises

Extra exercises (Word)