Here are the remaining answers to the Bermuda Financial Literacy quiz that was featured in The Royal Gazette Moneywise article on April 11.

Answers to first five questions were published on May 2 (see links at end of this article).

Right, I promised those answers for May 9, didn’t I? So sorry. Special features like Mother’s Day and the continued escalation in cost of Bermuda living took total priority.

My dear husband says that I have to stop promising to continue a series the next weekend when it is too premature to plan around current events. Well, he is correct about that, but I’m an optimist, always thinking I can get more done than is possible. Sound familiar?

I promise that there will be more continuity between continuing series articles that I have written over the years — just as soon as the upgrade to the Moneywise: Pondstraddler website is finished.

6. Your cash in an account in a Bermuda bank is:

a. Guaranteed by the bank to give it back to you.

b. Guaranteed by the Bermuda Government to give it back to you.

c. Guaranteed by your wealthy mother-in-law.

d. None of the above.

Answer: D. None of the above. Your cash held in a Bermuda bank deposit is not guaranteed. Your deposits are listed on the bank’s balance sheet as a liability; the Bermuda government won’t be giving you your money back either in the event of bank difficulties. Plus your mother-in-law is certainly not going to bail you out. She never had much use for you anyway.

7. Your life insurance statement says you have a cash value because:

a. It is a term policy.

b. It is a variable annuity policy.

c. It is a universal life policy.

d. It is a whole of life policy.

Answer: D. Cash value builds up in a whole life insurance policy. This is because the permanent life policy projects the same average payment each year for your whole life. You don’t use the entire premium payment when you are young, so the difference (less expenses, etc) between the cash paid and the premium used accumulates as value to your whole life account.

Universal life accumulates little cash value while a component of variable life (that has a cash value) premiums are invested in security markets. Term life insurance has a set duration, typically one year — and no cash value accumulation.

8. You need to convert 10 Bermuda dollars into British pounds? Today the pound is at 1.47. What will you get in pounds?

a. £6.80.

b. £10.47.

c. You ask the bank teller to give you the most pounds you can get.

d. Less than £6.80.

Answer: D. Less than £6.80. Why? Now this was an easy question as all you had to do was pull up a currency exchange converter, such as XE.com.

The British pound strengthened against the Bermuda dollar since the quiz was started, so this week you’d get less than £6.40 for $10. Remember these are just the exchange rates, the cost to convert in commissions, admin fees, etc will reduce the amount further. Now, try to calculate British pounds (the inverse) by hand math. You can do it.

Well, low and behold there are two No. 9 questions! Your financial columnist is testing you but doesn’t know how to count either. I’ll blame it on deadline fatigue.

9a. You used to have a high-interest rate money market fund.

a. The interest rate was guaranteed.

b. The interest rate was calculated the same as a fixed term deposit.

c. The market value was fixed at one dollar.

d. The fund is made up of short-term debt.

Answers: C and D. Some money market account values are fixed at $1 (or 1 par value) while the fund is made up of short-term generally uncollateralised debt — less than nine months terms. Money market funds are not guaranteed, and the rate of return is not calculated like a term deposit. The return value fluctuates with capital markets.

9b. It is almost time for you to collect your Old Age Contributory Pension from the Bermuda Government. You are not sure you can get a pension, because:

a. You are over 65 and have no intention of retiring.

b. Your employer deducted your pension from your wages, but never paid into the pension pot.

c. Your statement says you did not contribute the specified number of payments.

d. You are living outside Bermuda.

Answers: B and C. You may not get an Old Contributory Pension because your employer never paid into the pension pot on your behalf — even though he/she deducted the amounts. Or, you just don’t have a sufficiently long enough earnings record.

Expatriate guest workers and anyone else not meeting the minimum employment time frame to qualify for this pension, need to be aware that you can get back the amounts paid in (without an inflation-adjustment). You can receive your pension if over 65 even though you are not retiring. The pension can be paid even if you are not living in Bermuda — but watch your residency time abroad as that criteria could change. You never know in this cost-cutting environment!

10. You have already passed to glory, now your relatives learn you did not make a will. Of course, you don’t care because you are not here.

a. The Bermuda Government will decide who gets your Bermuda assets.

b. Your ex-husband will inherit your Bermuda National Pension as he is listed as the beneficiary.

c. Your current spouse thinks he should inherit all your assets as your next-of-kin.

d. Your minor children will get your life insurance policies and your house. Why?

Answers: A, B, and D. Why? Upon your unfortunate premature demise, your estate will be reviewed for the following: Assets held in your name, assets held jointly, in trust, etc and assets designated by you to your beneficiaries.

A. Bermuda assets held solely in your name — without a will stipulating your legal testament wishes — will have their distribution fate determined by the Bermuda government.

B. Yes, your ex-husband will inherit your Bermuda pension — because you never bothered to remove him as your beneficiary on your pension plan document. This is contract law — not voidable, period. Many, many times I have seen this terribly mistake made, leaving families in dire straits.

D. Your children will receive your life insurance — you designated them as your beneficiaries on your life insurance contract. You placed your house in trust for them as well. And sorry, since you never got around to taking care of your new mate, he may inherit something, but certainly not what he thinks he is entitled to. More fodder to get your affairs in order, all of you who have not made wills or revised your beneficiary lists.

11. The great elevens. And there is one more important question — not stated in the original article.

The media writes a great deal about Bermuda’s GDP (Gross Domestic Product). It is an important number — since it is a primary indicator of the health of an economy. Credit worthiness, national debt, assessment of recessionary or boom times are evaluated by comparing this benchmark of growth. Do you know how the income approach GDP number is calculated?

Economic textbooks (and Investopedia) cite the gross domestic product of a country as “the monetary value of all the finished goods and services produced within a country’s borders in a specific time frame, usually on an annual basis.”

Bermuda produces few goods, but significant financial services — primarily international business. This means the GDP calculation includes all wages produced within Bermuda’s borders and service related fees to give the country one of the highest per capita incomes in the world (in 2012 it was $84,470.76). Question? What would our Gross Domestic Product (I prefer gross expatriate product) number be without international businesses contributions? Any guesses? I leave you with that final quiz question to arrive at an interesting answer.

Martha Harris Myron CPA CFP JSM Masters of Law: International Tax and Financial Services,

Appointed to the Professional Tax Advisory Council, American Citizens Abroad. https://americansabroad.org/

Principal: The Pondstraddler* Life™ Consultancy: international financial planning, publications, presentations for the challenging lifestyles of multinational individuals and their families residing, working, crossing borders, and straddling ponds in the North Atlantic Quadrangle. Specific focus for residents of Bermuda, the premier international finance centre. Contact: martha@pondstraddler.com

* Pondstraddler. A person with one foot on each shore whose heart resides in both countries*

LINKS:

Bermuda Financial Literacy quiz, original article (April 11): http://www.royalgazette.com/article/20150411/COLUMN07/150419958

Answers to first five questions (May 2): http://www.royalgazette.com/article/20150502/COLUMN07/150509960

Martha Harris Myron CPA CFP JSM Masters of Law: International Tax and Financial Services, appointed to the Professional Tax Advisory Council, American Citizens Abroad, Geneva, Switzerland. President, The Pondstraddler Life™ Consultancy: international financial planning, publications, presentations for the challenging lifestyles of multinational individuals and their families residing, working, crossing borders, and straddling ponds in the North Atlantic Quadrangle. Specific focus for residents of Bermuda, the premier international finance centre. Contact: martha@pondstraddler.com