Mastervincent
HRM3706 SUMMARISED NOTES
ISR3702 EXAM
PACK
FOR ASSISTANCE CONTACT
, lOMoAR cPSD| 51600623
Page 1 of 10 ISR3702
Confidential Oct/Nov 2025
October/November 2025
ISR3702
LIFE INSURANCE
Total: 70 marks
Duration of examination session: Three hours
Instructions
1. The use of The Invigilator is compulsory for all ISR3702 examinations.
2. The QR code is included below and in a separate enclosed document on this
platform (Additional resources).
3. The examination rules set out in your examination timetable apply.
4. This is an open-book examination.
5. All types of calculators are allowed.
Downloaded by Vincent kyalo ()
, lOMoAR cPSD| 51600623
Page 2 of 10 ISR3702
Confidential Oct/Nov 2025
Read the following extract from the FAnews article, “Advice central to claims
payouts and growing assets” (20 August 2025) to answer some of the questions
below:
ADVICE CENTRAL TO CLAIMS PAYOUTS AND GROWING ASSETS
Close to a million life claims
The first positive news was published under the byline ‘Life insurers settled 95,6% of all
death claims in 2024’.
According to the Association for Savings and Investment South Africa, or ASISA, its
life insurance members paid over R39,5 billion to beneficiaries of life and funeral
policies over the 2024 calendar year, processing 914 258 death claims against
individual life, credit life, funeral and universal life policies.
Mr A, a member of the ASISA Life and Risk Board Committee, said that the average
claims payout rate for life and funeral policies has remained steady at between 94% and
96% since 2021. Unfortunately, 4,4% of declined claims translated to a hefty 40 433
claims in 2024. Insurers routinely decline claims where dishonesty or fraud is involved,
or where contractual exclusions render a claim inadmissible.
One common exclusion-based rejection reason is that suicide claims are not entertained
within the first two years after a policy is taken out. As for dishonesty, many insureds
fail to disclose material information about their lifestyles or medical conditions when
taking out a policy. Mr A reiterated that a life insurer will only decline a claim if there
is evidence of a crime, if the benefit definition is not met or if an exclusion applies.
Downloaded by Vincent kyalo ()
, lOMoAR cPSD| 51600623
Page 3 of 10 ISR3702
Confidential Oct/Nov 2025
He added that insurers exist primarily to provide consumers with the option of
protecting themselves and their loved ones against the financial impact of an event like
death, disability, or critical illness. Being honest when taking out life insurance is non-
negotiable, and one of the best ways to ensure that your beneficiaries are looked after
should a life-changing event occur.
Credit life claims rejections look dire
ASISA has been collating claims payout statistics for all types of life policies going
back to 2021. In the latest year, they report payouts for life insurance (R28,9 billion);
funeral policies (R7,3 billion); combined or universal life policies (R2 billion); and
credit life policies (R1,3 billion). Their detailed breakdown of the claims paid versus
claims declined in each category makes for interesting reading too. For 2024, 97,3% of
life policy claims were paid compared to 88,1% for credit life [policies], 94,7% for
funeral policies and 99,9% [for] combined policies.
Mr A said that the highest average claims payout percentage is typically achieved for
life insurance policies (and the old universal life policies), because they require some
form of risk screening, like health assessments and lifestyle questions, before the
applicant’s life is insured. “Life insurance policies can offer life cover worth millions
of rand, and the underwriting process reduces the risk of fraud and non-disclosure at
the application stage,” ASISA wrote.
Funeral insurance policies are designed to pay out quickly and without hassle. This,
coupled with the fact that there are regulatory limits on the maximum sums insured,
means that there are usually no medical underwriting conditions when taking out such
a policy. Insurers achieved an impressive payout-to-claims-declined ratio for funeral
policies, though declines do occur for the reasons already mentioned. To prevent
individuals from buying cover after developing a severe illness, insurers impose a six-
month waiting period for deaths due to natural causes.
That brings us to credit life policies, which are designed to cover loans should the
policyholder die before the debt has been settled. According to Mr A, claims against
credit life policies are most commonly declined because the cover lapsed due to non-
payment of premiums, or the outstanding loan balance had been settled.
The role of advice in risk cover
Taken together, the ASISA life statistics reinforce an important truth: well-structured
policies, chosen with guidance and maintained correctly, deliver reliable protection
when it matters most. Advisers prove their worth by helping clients select appropriate
Downloaded by Vincent kyalo ()
HRM3706 SUMMARISED NOTES
ISR3702 EXAM
PACK
FOR ASSISTANCE CONTACT
, lOMoAR cPSD| 51600623
Page 1 of 10 ISR3702
Confidential Oct/Nov 2025
October/November 2025
ISR3702
LIFE INSURANCE
Total: 70 marks
Duration of examination session: Three hours
Instructions
1. The use of The Invigilator is compulsory for all ISR3702 examinations.
2. The QR code is included below and in a separate enclosed document on this
platform (Additional resources).
3. The examination rules set out in your examination timetable apply.
4. This is an open-book examination.
5. All types of calculators are allowed.
Downloaded by Vincent kyalo ()
, lOMoAR cPSD| 51600623
Page 2 of 10 ISR3702
Confidential Oct/Nov 2025
Read the following extract from the FAnews article, “Advice central to claims
payouts and growing assets” (20 August 2025) to answer some of the questions
below:
ADVICE CENTRAL TO CLAIMS PAYOUTS AND GROWING ASSETS
Close to a million life claims
The first positive news was published under the byline ‘Life insurers settled 95,6% of all
death claims in 2024’.
According to the Association for Savings and Investment South Africa, or ASISA, its
life insurance members paid over R39,5 billion to beneficiaries of life and funeral
policies over the 2024 calendar year, processing 914 258 death claims against
individual life, credit life, funeral and universal life policies.
Mr A, a member of the ASISA Life and Risk Board Committee, said that the average
claims payout rate for life and funeral policies has remained steady at between 94% and
96% since 2021. Unfortunately, 4,4% of declined claims translated to a hefty 40 433
claims in 2024. Insurers routinely decline claims where dishonesty or fraud is involved,
or where contractual exclusions render a claim inadmissible.
One common exclusion-based rejection reason is that suicide claims are not entertained
within the first two years after a policy is taken out. As for dishonesty, many insureds
fail to disclose material information about their lifestyles or medical conditions when
taking out a policy. Mr A reiterated that a life insurer will only decline a claim if there
is evidence of a crime, if the benefit definition is not met or if an exclusion applies.
Downloaded by Vincent kyalo ()
, lOMoAR cPSD| 51600623
Page 3 of 10 ISR3702
Confidential Oct/Nov 2025
He added that insurers exist primarily to provide consumers with the option of
protecting themselves and their loved ones against the financial impact of an event like
death, disability, or critical illness. Being honest when taking out life insurance is non-
negotiable, and one of the best ways to ensure that your beneficiaries are looked after
should a life-changing event occur.
Credit life claims rejections look dire
ASISA has been collating claims payout statistics for all types of life policies going
back to 2021. In the latest year, they report payouts for life insurance (R28,9 billion);
funeral policies (R7,3 billion); combined or universal life policies (R2 billion); and
credit life policies (R1,3 billion). Their detailed breakdown of the claims paid versus
claims declined in each category makes for interesting reading too. For 2024, 97,3% of
life policy claims were paid compared to 88,1% for credit life [policies], 94,7% for
funeral policies and 99,9% [for] combined policies.
Mr A said that the highest average claims payout percentage is typically achieved for
life insurance policies (and the old universal life policies), because they require some
form of risk screening, like health assessments and lifestyle questions, before the
applicant’s life is insured. “Life insurance policies can offer life cover worth millions
of rand, and the underwriting process reduces the risk of fraud and non-disclosure at
the application stage,” ASISA wrote.
Funeral insurance policies are designed to pay out quickly and without hassle. This,
coupled with the fact that there are regulatory limits on the maximum sums insured,
means that there are usually no medical underwriting conditions when taking out such
a policy. Insurers achieved an impressive payout-to-claims-declined ratio for funeral
policies, though declines do occur for the reasons already mentioned. To prevent
individuals from buying cover after developing a severe illness, insurers impose a six-
month waiting period for deaths due to natural causes.
That brings us to credit life policies, which are designed to cover loans should the
policyholder die before the debt has been settled. According to Mr A, claims against
credit life policies are most commonly declined because the cover lapsed due to non-
payment of premiums, or the outstanding loan balance had been settled.
The role of advice in risk cover
Taken together, the ASISA life statistics reinforce an important truth: well-structured
policies, chosen with guidance and maintained correctly, deliver reliable protection
when it matters most. Advisers prove their worth by helping clients select appropriate
Downloaded by Vincent kyalo ()
