Income Protection- Critical Questions Answered

  Income Protection is a necessity for every employed citizen, but are you sure you know what you’re paying for? We have compiled a short list of the most important questions to ask your financial advisor regarding your income protection cover. We hope this will make you feel confident and wiser when meeting with your financial advisor in the near future. How much of your income do you want covered? Under most circumstances people require their entire income to maintain their current lifestyles.  When choosing the amount of income protection it is of utmost importance to make sure that you choose enough income to pay for your daily needs expenses.  Most insurers provide a maximum of 75% of your salary in the event where you are unable to work.  If there is a 100% income option available, it would be best to make sure that you have enough cover. Are you sure cheaper insurance is the way to go? In the event that you choose the more affordable option, make sure that you fully understand the benefits you are entitled to.  If you are still uncomfortable with the product, and require more information, you must discuss this with your financial advisor who is responsible for explaining the products to you. Whenever we hear the term ” physical impairment” or “disability” we seem to only think permanent illness. So many people seem to overlook the fact that not all ailments are permanent.  There are many other incidents where people are unable to work for months, due to a vehicle accident, but are able to return to work eventually.  But, how...
The importance of business continuity planning

The importance of business continuity planning

  In today’s challenging economic environment business leaders and owners need to recognise the importance of business continuity planning that accounts for every eventuality. Since so many businesses- particularly in the SMME sector- rely on the skills, knowledge and relationships of a few key employees, insurance cover for the key personnel is a vital ingredient in the continuity planning mix. What is key-man cover? It refers to an insurance policy taken out by an employer on the life of an employee who is a key individual within the organisation.  This cover can be taken out on the life of a dynamic employee who is integral to the company’s success, or the entrepreneur whose skills are irreplaceable in their own business. What does it cover? This type of cover provides compensation for financial losses arising from the death or extended incapacity of the insured staff member.  It compensates with a fixed monetary sum that can be used to stabilise the business, including the costs incurred in recruiting a suitable replacement and training if required. Why should a key-person be covered? It can be detrimental to a business to lose effective, qualified people.  Key-man cover provides an invaluable safety net for the company and is particularly important for owner-managed businesses whose sustainability rests in the hands of one or two individuals. Losing a key individual can: Directly impact the profitability of the company, Lead to difficulty in raising finance, Result in costly recruitment and training of a replacement, Unsettle creditors who may want immediate settlement as a result of the death of the key person, Threaten client relationships How much cover...
Four Pillars of Dread Disease Cover

Four Pillars of Dread Disease Cover

    There is a way to address this complex product in a simple way.   The dread disease product in four key can be summarized : 1 . The event claims 2 . The definition 3 . The design 4.  Sickness Incidence     Pillar 1 : The event claims   It refers broadly to the medical conditions covered by the product , such as heart attacks and cancer . Some products cover a long list of conditions that looked impressive while others have a shorter list, which makes the product appear less comprehensive.  But it can be tricky and therefore we have to look at the other three pillars to see a more complete picture.   Pillar 2 : The definition   It becomes more complex to understand, because dread disease products does not cover every stage or grade of each disease condition.  To keep the product more affordable  a description is given of each claim event to describe the requirements to enable payments of the claim. Some definitions may be so severe that a claim will only be paid at a very late stage of the disease. Make sure to read and understand the fine print of your cover.   Pillar 3 : Design   In order to analyse the product properly one should pay close attention to the product’s design. How is the payment of claims structured ?   A simple example is as follows :  one product may only cover 50 % of a heart attack claim , where a another policy has 100 % coverage for the claim .  in the event of...

Die vier pilare van Gevreesde-siektedekking

Daar is ‘n manier om dié komplekse produk op ‘n eenvoudige manier te ontleed en te vergelyk. Die gevreesde-siekte produk kan in vier sleutelpilare opgesom word: Die eise-gebeurtenis  Die definisie Die ontwerp Siektevoorkoms   Pilaar 1: Die eise-gebeurtenis Dit verwys breedweg na die mediese toestande wat deur die produk gedek word, soos hartaanvalle en kanker.  Sommige produkte dek ‘n lang lys van toestande wat indrukwekkend lyk terwyl ander ‘n korter lys het, wat dit na ‘n minder omvattende produk laat lyk.  Maar dit kan bedrieglik wees en daarom moet ons na die ander drie pilare kyk om ‘n vollediger prentjie te kry. Pilaar 2: Die definisie Hier raak dit bietjie meer ingewikkeld, want gevreesde-siekteprodukte bied nie dekking vir elke stadium of graad van elke siekte-toestand nie.  Om die produk bekostigbaar te hou, het elke eisgebeurtenis ‘n omvattende beskrywing van hoe die mediese toestand daar moet uitsien voordat ‘n uitbetaling gemaak word.  Sommige definisies kan so streng wees dat ‘n eis eers in ‘n baie laat stadium van die siekte uitbetaal word.  Lees die fynskrif van elke eisgebeurtenis om die toespaslikheid van die voordeel te verstaan. Pilaar 3: Die ontwerp Vir verdere ontleding moet daar opgelet word na die produk-ontwerp.  Hoe is die uitbetaling van eise gestruktureer?  ‘n Eenvoudige voorbeeld hiervan is soos volg: een produk sal slegs 50% van die polis van ‘n hartaanval uitbetaal, waar ‘n ander weer 100% dekking vir die eis verskaf. met kanker, sal sommige produkte slegs 25% van die eerste stadium van kanker uitbetaal, terwyl ‘n ander 100% sal uitbetaal vir dieselfde eis. Om te bepaal of hierdie persentasies voldoende is of nie, is...

Divorce and Retirement Funds

  Have you ever wondered what would happen to your retirement funds in the event of a divorce? Understanding legislation The Divorce Act was amended in 1989 to make provision for the division of “pension interest” between parties of a divorce (excluding those married out of community of property without the accrual).  At that time, the non-member spouse had to wait until the pension benefit accrued to the member, before he/she could get their share (no growth accrued on that amount). A “Clean break” The clean break was introduced in the Pension Fund Act through the amendment of Section 37D(1)(d) (effective 13 September 2007) to allow a retirement fund to deduct from the member’s benefit or minimum individual reserve: any amount assigned to a non-member spouse in terms of a divorce order granted under the Divorce Act; and employee’s tax required to be deducted or withheld as per the Income Tax Act. A further amendment was made in 2008 to make the “clean break” applicable to all divorce orders granted after 1989.  The amount allocated to the non-member spouse has to be paid to that person or to an approved retirement fund of his/her choice. How does this affect government employees? The principle has also extended to the GEPF(Government Employees Pension Fund) with effect 1 March 2012.  The pre-1998 tax-free lump sum as determined in terms of paragraph 2A of the Second Schedule (the old formula C) will be apportioned between the member and non-member. What are the tax implications? If the divorce order was granted before 13 September 2007 and the benefit is deducted from the individual reserve...