Insurance
Difference between short-term and long-term insurance
Short-term insurance: Long-term insurance:
IN case something happens. There is It will de nitely happen. Retirement
no guarantee that the asset will be and death are certain.
damaged but in case it does, we take
out this insurance.
Non-insurable risks
• Things we cannot insure against.
War. Technological changes.
Bad debt. Unlawful acts.
Business risks. Climate change.
Trading stock becoming out of date.
General insurance concepts
Indemnity
• Short-term insurance.
• Peace of mind knowing you will be put back in the same nancial position you were before an incident occurs.
• The insured will not make a pro t or a loss from insurance.
Security
• Refers to long-term insurance.
• Gives nancial security to insured at retirement or to the insured’s dependents in the case of death or
disability.
Average clause
Under-insured: Over-insured:
• If the insured hasn’t paid the premium that is • If the asset is insured for more than its value.
su cient to cover the full risk. • The insured is paying a higher premium than
• If the monthly premium is too low, the full value of necessary.
the loss will not be indemni ed. • The insurance company will only pay out the value
of the asset and will keep the extra money.
Excess
• The rand amount of % of the loss that the insured needs to pay themselves.
• The higher the excess, the lower the premium.
Proximate clause
• The insurance company will check if a loss is due to the incident reported or another incident.
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, Subrogation
• If the insured person claims from one insurance company, they cannot claim from the other parties insurance
too.
• The insured cannot make a pro t or a loss from insurance.
Cession or to cede the policy
• Long-term insurance builds up into an endowment fund.
• If an immediate need arises for the money, the policy can be signed over as collateral to get a loan.
Requirements of a valid insurance contract
Absolute good faith
• Utmost honesty.
• Requires the insured to disclose all information that can a ect risk.
• If the insured is not honest, the policy is declared null and void and no premiums will be paid back.
Insurable interest
• Must be able to prove that you will lose out nancially if an incident occurs.
Contractual capacity
• The person entering into the contract is over 18 and of sound mind.
Types of insurance
Unemployment Insurance Fund (UIF)
• Gives short-term relief to workers when they are unemployed or unable to work.
• In 2020:
1. The UIF paid workers who couldn’t receive salarues due to COVID-19.
2. “Parental leave” was instituted and stated the following:
- Father or someone in a same sex marriage is entitled to 10 consecutive days from the UIF.
- Adoption leave (child under 2) one parent can claim from UIF.
- Surrogate pregnancy, one parent may also claim.
• Contributions are made by the employee and employer. 1% of the gross salary is deducted from the employee
and the employer matches the amount.
• The ceiling amount for contributions is R14 872 per month.
• The ceiling amount for claims is R17 712 per month.
• The following people cannot claim from the UIF:
1. Employees who work less than 24 hours a month.
2. Employees who only earn on commission.
3. Employees of the National or Provincial governments.
• Civil servants and foreigners are now covered by UIF.
• Domestic workers are covered by UIF but the employer must ensure they are contributing.
• The rules for claiming are:
1. To claim for the maximum period, the employee must have contributed for 4 years.
2. Gives relief to dependants of an employee that has died.
Compensation for workrelated Injuries and Diseases Act (COIDA)
• Used to be called the Workmans Comensation Act.
• If a worker becomes ill, disabled or injured while at work, they can claim from this act.
• If the employee dies due to something work related, the family can claim from COIDA.
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Difference between short-term and long-term insurance
Short-term insurance: Long-term insurance:
IN case something happens. There is It will de nitely happen. Retirement
no guarantee that the asset will be and death are certain.
damaged but in case it does, we take
out this insurance.
Non-insurable risks
• Things we cannot insure against.
War. Technological changes.
Bad debt. Unlawful acts.
Business risks. Climate change.
Trading stock becoming out of date.
General insurance concepts
Indemnity
• Short-term insurance.
• Peace of mind knowing you will be put back in the same nancial position you were before an incident occurs.
• The insured will not make a pro t or a loss from insurance.
Security
• Refers to long-term insurance.
• Gives nancial security to insured at retirement or to the insured’s dependents in the case of death or
disability.
Average clause
Under-insured: Over-insured:
• If the insured hasn’t paid the premium that is • If the asset is insured for more than its value.
su cient to cover the full risk. • The insured is paying a higher premium than
• If the monthly premium is too low, the full value of necessary.
the loss will not be indemni ed. • The insurance company will only pay out the value
of the asset and will keep the extra money.
Excess
• The rand amount of % of the loss that the insured needs to pay themselves.
• The higher the excess, the lower the premium.
Proximate clause
• The insurance company will check if a loss is due to the incident reported or another incident.
ffi fi fi fi fi fi
, Subrogation
• If the insured person claims from one insurance company, they cannot claim from the other parties insurance
too.
• The insured cannot make a pro t or a loss from insurance.
Cession or to cede the policy
• Long-term insurance builds up into an endowment fund.
• If an immediate need arises for the money, the policy can be signed over as collateral to get a loan.
Requirements of a valid insurance contract
Absolute good faith
• Utmost honesty.
• Requires the insured to disclose all information that can a ect risk.
• If the insured is not honest, the policy is declared null and void and no premiums will be paid back.
Insurable interest
• Must be able to prove that you will lose out nancially if an incident occurs.
Contractual capacity
• The person entering into the contract is over 18 and of sound mind.
Types of insurance
Unemployment Insurance Fund (UIF)
• Gives short-term relief to workers when they are unemployed or unable to work.
• In 2020:
1. The UIF paid workers who couldn’t receive salarues due to COVID-19.
2. “Parental leave” was instituted and stated the following:
- Father or someone in a same sex marriage is entitled to 10 consecutive days from the UIF.
- Adoption leave (child under 2) one parent can claim from UIF.
- Surrogate pregnancy, one parent may also claim.
• Contributions are made by the employee and employer. 1% of the gross salary is deducted from the employee
and the employer matches the amount.
• The ceiling amount for contributions is R14 872 per month.
• The ceiling amount for claims is R17 712 per month.
• The following people cannot claim from the UIF:
1. Employees who work less than 24 hours a month.
2. Employees who only earn on commission.
3. Employees of the National or Provincial governments.
• Civil servants and foreigners are now covered by UIF.
• Domestic workers are covered by UIF but the employer must ensure they are contributing.
• The rules for claiming are:
1. To claim for the maximum period, the employee must have contributed for 4 years.
2. Gives relief to dependants of an employee that has died.
Compensation for workrelated Injuries and Diseases Act (COIDA)
• Used to be called the Workmans Comensation Act.
• If a worker becomes ill, disabled or injured while at work, they can claim from this act.
• If the employee dies due to something work related, the family can claim from COIDA.
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