Insurance Flashcards
Short-Term Insurance
-Incase of an occurrence (Fire)
Long-Term Insurance
-When something happens (Retirement)
Non-Insurable Risks
-War
-Bad Debt
-Price Changes due to time
-Technological Development
-Unlawful Acts (By Insured Party)
-Natural Disasters (Some Areas)
Indemnity
Insured party will be sufficiently compensated for loss to be put in the same financial position as before the event.
Security
Gives financial security to insured party at retirement or to the insured’s dependents after death.
Average Claus
When asset is not insured for the correct value.
-Under-Insured: Monthly premium is too low, Asset will not be fully indemnified
-Over-Insurance: Monthly premium is too high, only the value of the asset will be paid out- no more
Excess
Amount or Percentage paid on every claim, not covered by the policy.
-Higher premium= Lower excess
Proximate Cause
Only the insured event will be covered.
Subrogation
Insured party can only claim for a loss once.
Cession
Policy can be signed over to a creditor as collateral in order to get a loan.
Risk, Peril, Hazard
-Risk: Likelihood of an event occurring
-Potential cause
-Circumstances which increase risk
Absolute Good Faith
Insured must disclose all information that may affect the risk.
Insurable Interest
If a person can prove they will sustain a financial loss in case of an event occurring
-Individual: Own assets and health
-Married person: Life of spouse
-Business partners: Life of co-partner
-Creditor: Life of debtor
Contractual Capacity
Legal Age (18), Sound Mind
Unemployment Insurance Fund (UIF) 2017
-Short-term relief to workers when unemployed/unable to work.
-1% of employee gross salary is deducted and employer matches contribution as well.
-Exempted from UIF contributions:
<24 hours /month
Only commission
Government
Compensation for Work-related Injuries and Disease Act (COIDA)
-If a worker becomes injured/ill as a result of work, they can claim form COIDA
-Employer must minimize possibility for injury/illness/death
-Employee must inform employer. Employer must claim from COIDA within 7 days.
Advantages/Disadvantages
Adv: Employee receives financial assistance for medical treatment. Better medical care means employees can return to work sooner.
Disadv: Safety requirements can be expensive
Road Accident Fund (RAF)
-Covers all road users
-Assists those injured in motorcar accidents
-RAF offers indemnity to guilty party so that the effected cannot claim form guilty
-Contributions to RAF are included in petrol/diesel prices
Business Insurance
Covers: Theft, Burglary, Public liability, Natural disasters, Loss of income due to not being able to function (force majeure), Content insurance
-(Iron Safe Clause)
Household Insurance
-Contents Insurance
-Structural Insurance
Vehicle Insurance
-Fully Comprehensive Insurance
>Insured party and other party vehicles are repaired
-Third Party Fire and Theft
>Insurance will pay out for other vehicle, if driver is at fault
Money-In-Transit-Insurance
Covers any loss of cash between the business and the bank.
Fidelity Insurance
Cover financial loss of a business due to dishonest employees.
Crop Insurance
Covers financial loss due to loss of crops.
Short-term Insurance-adv. vs. disadv.
Adv:
-Risk passed on to insurance company
-Peace of mind
-Cash back bonuses
-Cheaper to pay insurance than to repurchase lost asset
Disadv:
-Expensive
-Insured must check that insurance covers all risks
-Insurance companies are underhanded where possible
Long-term Insurance- adv. vs. disadv.
Adv:
-Life assurance allows dependants to continue living same standard of living
-Mortgage Loans have life assurance policies linked, giving family members peace of mind
-Life assurance acts as investment for future of Insured’s family
-Medical aid- health costs are covered
-Policies can be ceded (urgent money)
-Retirement annuities have tax benefits
Disadv:
-Wide variety of policies- difficult to choose
-Brokers do not mention over-insurance
-Large portion of monthly premiums taken by assurer for administrative fees