TWEAK-Insurance *G11 Flashcards
1
Q
Is donation a concept relating to insurance
A
No
2
Q
Insurance and assurance difference
A
*Insurance - on assets, risk not guaranteed
*Assurance - on lives, risks guaranteed
3
Q
Insurance definition *3
A
Contract of good faith between insurer and insured*
where insurer promises to compensate for insured risks*
and insured pays monthly premium
4
Q
Premiums are based on
A
Value of insurable interest and risk involved
5
Q
Aim of insurance
A
To provide protection for assets against damage or theft
6
Q
Assurance definition
A
Cover for risk that is certain
7
Q
What is the aim of assurance *2
A
Provide security for family* and cover long term risks
8
Q
Examples of assurance risks
A
Death
Retirement
9
Q
Policy holder definition
A
Person who takes out policy (is registered in their name)
10
Q
Beneficiary meaning
A
Person who the policy pays out to
11
Q
Compulsory insurance *3
A
*Road Accident Fund
*Unemployment Insurance Fund
*Compensation for Occupationsl Injuries and Diseas Act
12
Q
Non compulsory insurance *5
A
*Vehicle
*Money in transit
*Fidelity
*Crop
*Business/Commercial
13
Q
What does UIF cover *2
A
Loss of income as short term relief* when unemployed/unable to work*
Retrenched or pregnant (17 weeks)
14
Q
One may not claim uif if they were *3
A
Fired
Termination
Contract terminated
15
Q
Explain UIF contributions
A
1% deducted from salary, 1% from employer
16
Q
Are domestic workers covered by UIF
A
Yes
17
Q
UIF excludes *3
A
Public servants
Foreigners on contract
People employed less than 24 hours a month
18
Q
What does UIF stand for
A
Unemployment Insurance Fund
19
Q
What does COIDA stand for
A
Compensation for Occupational Injuries and Diseases Act
20
Q
Explain COIDA *2
A
Employers (on behalf of employees) take out compensation* as protection against injuries or death at work*
21
Q
How does COIDA protect the employer
A
It protects them against claims made by the employee
22
Q
What compensation is made to employees that are unable to work due to injury *2
A
Medical expenses
Loss of income
23
Q
COIDA does not apply to *4
A
*military
*domestic workers
*police
*casual workers
24
Q
Employer register for COIDA and…
A
An annual amount is paid
25
What is compensation based on *2
Employee earnings
Risk associated with the profession
26
How to claim COIDA *2
*employee informs about injury ASAP while on duty
*employer sends claim, medical report and necessary documentation to COMPENSATION COMMISSIONER
27
What does RAF stand for
Road Accident Fund
28
What does RAF apply to
Motor vehicles
29
Explain how RAF works *2
Innocent drivers and passengers (+families) are covered against financial loss* due to injury from accidents*
30
How is RAF contribution made
Levy on petrol and diesel
31
What does RAF compensation include *3
*medical and future medical expenses
*loss of income and future loss of income
*pain and suffering
32
Vehicle insurance: indemnity is offered to (a so victim cannot (b
(a guilty party
(b claim
33
Business/ commercial insurance *1+6
Protection from unforeseen events such as:
*theft + burglary
*contents
*public liability (slip)
*damages bc natural disasters
*damages bc fire
*force majeure
34
What does damages bc fire (business insurance) cover
Damage to stock, buildings or equipment as a result of fire
35
What does damage bc fire include *2
*damage by smoke
*water used to extinguish
36
What does damage bc fire not include *3
Fire as a result of:
*riots/war
*volcanoes
*earthquake
37
What does damage bc fire premium depend on
Risk and item value
38
Example of risk (damage bc fire) *3
*nature of product
*availability to extinguishers
*building construction
39
Why should insurer be notified as soon as a fire starts
To prove loss was a result of the fire
40
What is the iron safe clause
Something that forces insured to keep stock records in a fire proof safe to prove value of stock
41
Options for vehicle insurance *2
*third part, fire, theft
*fully comprehensive
42
Explain the theft, fire and third party option of VEHICLE THEFT *3
*if insured is responsible for accident, they’re not covered for damage, the other party’s vehicle is
*older vehicles lose value over time > insurer write vehicle off and not pay out satisfactory amount
*insured is covered against theft/fire
43
Explain fully comprehensive as an option of vehicle insurance *3
*it covers all damage to car and the other car
*other items must be listed separately to be insured
*full indemnity in case of fire and debt
44
What are premiums for vehicle insurance based on *2
Gender
Value
Age
45
Risk of driver can include *2
*age
*driving history
46
Explain damage bc natural disasters (business insurance)
structural damage as a result of natural disasters, explosions and impact on vehicles
47
What is premium based on for damage bc natural disaster
Value of goods, risk involved (location)
48
Discuss contents (business insurance) *kinda 2
*equipment - loses value over time > adapt values or over insurance/ update number or under insurance
*stock - iron safe clause (you knowwww it)
49
Theft definition
Forced entry when business is closed to the public
50
What does money in transit insurance cover *2
*potential loss that can happen between the bank and the business
*3rd park companies will have necessary insurance to transfer money on contact
51
What is the max amount of money in transit that can be covered
It’s specified in the policy
52
What does fidelity insurance cover
Losses due to dishonesty of employees (theft, fraud)
53
What are the covers for fidelity insurance *2
*individuals specified by position (<2)
*a floating policy where all staff (in a certain position) are covered for an amount
54
Crop Insurance
*aimed at farmers to cover risk that can arise from income generating assests
* drought, flood, add insurance on livestock
55
What does liability insurance cover
One’s losses due to neglect or defect in property
56
What is group life cover *2
Insurance that ensures workers for an amount* equal to salary multiplied by a factor*
57
Why is group life cover less expensive *3
A large number of people are insured* so there is less risk* and the company monthly income increases*
58
Explain loss of income insurance
If a person is unable to work, the policy pays out loss of income
59
What are some non insurable risks *5
*inflation
*changes in fashion (trading stock)
*technological advances
*loss from war
*illegal activities
60
What are the requirements for a valid insurance contract *3
*insurable interest
*good faith and honesty
*contractual capacity
61
Explain insurable interest *2
*able to prove financial loss if event occurs/ object is damaged
*person/object at risk forms contact baisis
62
Examples of cover for insurable interest *5
*own life
*lives of copartner
*life of spouse
*life of property
*life of debtor
63
Example good faith and honesty *2
*relevant info that can affect risk is discussed
*questions must be answered HONESTLY and ACCURATELY -
IF NOT, POLICY IS NULL AND VOID - NO COMPENSATION
64
What are the additional requirements of a valid insurance contract *5
*intention to bind - must be serious
*obligation
*legally binding - legal
*communication of intent
*executable
65
What does contractual capacity refer to *2
Legal age
Sound mind
66
What does obligation refer to
Both parties must be clear of EXPECTATIONS
67
What does communication of intent refer to
Contract must be clear of INTENT
68
What are the advantages of insurance *2
*protects business/individual from loss
*through indemnification, it ensures insured to be put in same financial position prior to event
69
Advantages of assurance *4
*policies can be ceded to bank as loan security
*protects creditor if debtor dies (outstanding amount)
*provides security to FAMILIES as breadwinners provide
*provides security to VICTIM as it compensates for medical expenses
70
What concepts are related to insurance and assurance *max 7 min 4
*indemnification
*security
*average clause
*excess
*proximate cause
*subrogation
*cession/assignment
71
What is indemnification *3
*When the financial position of insured will be the same as it was before the event (no loss nor profit)
*Insurer cannot claim more than what's been lost
*Only actual loss compensated
72
What is the purpose of security
Give financial security to insured/insured’s dependents after retirement/death
Just mention group life insurance
73
What does average clause refer to
Asset not insured for correct value
74
What is under insurance *3
*continuously nor paying sufficient premium
*monthly premium too low
*full loss value not indemnified
75
What is over insurance *3
*Good are ensured for more than their value
*Insured pays higher premium but won't benefit
*if damage is caused, only value of asset is paid out
76
What is excess *3
*% loss/claim that determines what insured should pay
*amount on each claim not covered by policy
*low excess, higher premium and vice versa
77
What is reinsurance
Contract between two insurers to spread risk
When insurer can’t cover full risk, they place a portion of it to a reinsurance company
78
What is proximate cause *2
*Insurer is only responsible for loss as a direct result of event NOT SECONDARY
*Contract specifies what's exactly covered
79
Importance of insurance *2
*many events that may occur that could seriously impact business
*compensated for potential loss
80
Business interruption insurance
Loss that results in turnover
81
Public liability insurance *2
*Owner/employee damages visitor/customer property
*If someone dies during the cost of the business
82
Short term insurance *2
Events may not occur*, in case they do insured wants to be INdemnified*
83
Long term insurance *2
*Refers to lives - death/retirement
*covers loved ones/maintains standard of living
84
By taking out short and long term insurance…. *2
A monthly premium is payed by insured* to pass risk to insurer*
85
COIDA advantages *2
*financial assistance for medical expenses
*better medical care > return sooner > more productivity
86
COIDA disadvantage
Many safety regulations according to law > difficult and expensive to fulfil
87
COIDA: employer must endure (a and (b to minimise injury and death
(a minimum safety requirements instituted
(b equipment in good order
88
Articles + insured items *2
*higher value, higher premium
*higher risk (crime rate, security), higher premium
89
Life insurance *2
*higher amount taken out, higher premium
*risky profession/living, higher premium
90
Pros and cons of short term insurance *3x2
Pros
*not worrying about uncertainties
*insurance financing risk for bank while it finances asset
*cheaper than expenses
Cons
*expensive if you never claim
*check if covers ALL CIRCUMSTANCES for peace of mind
*insurers give excuses not to claim bc fraud
91
Pros and cons of long term insurance *3x2
Pros
*dependents continue good standard of living
*retirement annuities offer tax benefits
*medical aid provides peace of mind as health expenses are covered
Cons
*proper research or waste
*bankers don’t mention max sum allowed to be paid
*capital growth may not me met bc large amounts of premium go to admin and handling fees
92
Subtrogation *2
*cannot claim from guilty party who caused loss
*right of Insurer to stand in insured place + exercise latter's rights
Mainly car
93
Ceasion/Assignment *2
*immediate need for money - policy to be signed over to creditor (as collateral) to get loan
*endowment policy builds up over time (paid monthly premium)
