Insurance

Question 1

Short-Term Insurance

Answer 1

-Incase of an occurrence (Fire)

Question 2

Long-Term Insurance

Answer 2

-When something happens (Retirement)

Question 3

Non-Insurable Risks

Answer 3

-War
-Bad Debt
-Price Changes due to time
-Technological Development
-Unlawful Acts (By Insured Party)
-Natural Disasters (Some Areas)

Question 4

Indemnity

Answer 4

Insured party will be sufficiently compensated for loss to be put in the same financial position as before the event.

Question 5

Security

Answer 5

Gives financial security to insured party at retirement or to the insured’s dependents after death.

Question 6

Average Claus

Answer 6

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

Question 7

Excess

Answer 7

Amount or Percentage paid on every claim, not covered by the policy.
-Higher premium= Lower excess

Question 8

Proximate Cause

Answer 8

Only the insured event will be covered.

Question 9

Subrogation

Answer 9

Insured party can only claim for a loss once.

Question 10

Cession

Answer 10

Policy can be signed over to a creditor as collateral in order to get a loan.

Question 11

Risk, Peril, Hazard

Answer 11

-Risk: Likelihood of an event occurring
-Potential cause
-Circumstances which increase risk

Question 12

Absolute Good Faith

Answer 12

Insured must disclose all information that may affect the risk.

Question 13

Insurable Interest

Answer 13

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

Question 14

Contractual Capacity

Answer 14

Legal Age (18), Sound Mind

Question 15

Unemployment Insurance Fund (UIF) 2017

Answer 15

-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

Question 16

Compensation for Work-related Injuries and Disease Act (COIDA)

Answer 16

-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.

Question 17

Advantages/Disadvantages

Answer 17

Adv: Employee receives financial assistance for medical treatment. Better medical care means employees can return to work sooner.
Disadv: Safety requirements can be expensive

Question 18

Road Accident Fund (RAF)

Answer 18

-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

Question 19

Business Insurance

Answer 19

Covers: Theft, Burglary, Public liability, Natural disasters, Loss of income due to not being able to function (force majeure), Content insurance
-(Iron Safe Clause)

Question 20

Household Insurance

Answer 20

-Contents Insurance
-Structural Insurance

Question 21

Vehicle Insurance

Answer 21

-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

Question 22

Money-In-Transit-Insurance

Answer 22

Covers any loss of cash between the business and the bank.

Question 23

Fidelity Insurance

Answer 23

Cover financial loss of a business due to dishonest employees.

Question 24

Crop Insurance

Answer 24

Covers financial loss due to loss of crops.

Question 25

Short-term Insurance-adv. vs. disadv.

Answer 25

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

Question 26

Long-term Insurance- adv. vs. disadv.

Answer 26

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