Chapter 5 - Benefit Overview & Providers of Benefits

Question 1

Describe the main providers of benefits on contingent events

Answer 1

Key providers of benefits are :

• State
• Employers
• Financial Institutions
• Individuals
• Other organisations

Question 2

The State

Answer 2

State will :
- provide benefits to some or all of the population
- sponsor provision of such benefits
- educate or require education of the importance of providing for the future
- regulate to encourage or compel benefit provision by or on behalf of some of the population
- regulate bodies providing benefits

Question 3

Employers

Answer 3

Employers can :
- finance benefits for emloyees
- provide facility for benefit provision, eg. offer retirement funds , healthcare benefits , etc

Employers will do this to :
- desire to attract and retain good quality staf - compelled or encouraged to do so by government
- a desire to look after employees and their dependents financially beyond the level provided by the state
- pooling of expenses and expertise

Question 4

Individuals

Answer 4

Individuals usually finance benefits they require

The benefits they choose depend on customer specific factors but the state and the tax regime play a role in what the client chooses , eg. through tax incentives on specific products

Question 5

Financial Institutions and Other organisations

Answer 5

Where employers allow for benefit provision , they usually do this through financial institutions such as life insurers , general insurers , banks , investment companies , etc.

Individuals usually can finance their own benefits through these institutions directly as well.

Other organisations can also provide benefits or act as financial intermediaries for benefit provision , these include :

• Stokvels
• Trade Unions
• Credit Unions
• Charities