LEARNER’S ASSESSMENT PACK
Investigate dread disease products and their place in wealth management (113913)
NAME: ORGANISATION: COURSE NO.: OR RPL: Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management
Contents
Instructions to the learner 2
SPECIFIC OUTCOME 1 6 Explain dread disease as an insurance product
SPECIFIC OUTCOME 2 Investigate dread disease products offered by different financial 8 services institutions
SPECIFIC OUTCOME 3 20 Explain the legal framework for dread disease
SPECIFIC OUTCOME 4 23 Describe dread disease as part of holistic wealth management
Declaration of Authenticity 25
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Instructions to the learner
Introduction This assessment guide has been designed as a generic assessment guide for the banking sector. Banking organisations may customise the guide according to their organisational requirements.
Purpose of the The purpose of assessment against this Unit unit Standard assessment standard is to do the following: 1. Award credits on the National Qualifications Framework (NQF) to learners who are capable toof a. Explain explaining dread disease as an insurance product, b. Investigate investigating dread disease products offered by different financial services institutions,. c. Explain explaining the legal framework for dread disease, and d. Describe describing dread disease as part of holistic wealth management. 2. In order for you to comply with the terms and requirements of the Financial Advisory and Intermediary Services (FAIS) Act 37 of 2002, you must achieve a minimum value of credits. This unit standard can assist and enable you to progress towards your credit registration. On qualification, and written approval, to perform financial services in terms of the FAIS Act, you are required to conduct your duties in terms of the Code of Conduct, as detailed in section 16 of this Act. Failure could result in your employer being found guilty of an offence, in terms of this Act, and the key individual being liable to a fine of up to R1 m or up to 10 years imprisonment, or both. It is incumbent upon you that you comply with the terms of the FAIS Act in all your business activities. The assessor must be absolutely sure that you are competent to apply your studies of this unit standard to safeguard the employer from possible future penalties or imprisonment.
Context of the This unit standard is registered on the NQF as follows: unit standard Field: Business, Commerce, and Management Studies Sub-field: Finance, Economics, and Accounting Number: 113913 Level: 4 Credits: 2
Learning Learning assumed to be in place: assumptions
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Learners should be competent in Communication, Mathe- matical Literacy, and Financial Literacy at NQF Level 3.
In order to obtain the two credits for Unit Standard 113913, as discussed above, you must provide evidence of your competence after working through the self-study guide. Assessment Providing evidence of your competence will occur during the assessment process. The laid-down policies, procedures, and related issues regarding assessments will be explained to you before the assessment takes place. You will also be given an overview of, or instructions on how, the assessment will take place, what evidence you must produce, how you must prepare yourself, etc. A qualified assessor or your line manager will guide and support you throughout this process.
Accreditation Anyone assessing a learner against this unit standard must be a registered assessor with the relevant ETQA.
Assessment Step 1 1. You will need to complete an assessment process plan together with your assessor or line Planning for the supervisor. assessments 2. Your assessor will prepare you for your assessment and complete the assess- ment preparation plan with you. 3. Ensure that you are familiar with what is expected of you for this assessment and the unit standard.
Step 2 1. These assessments will be by means of exercises detailed below. Completing the assessments 2. Submit these exercises fully completed as per the instructions by the date agreed on the assessment plan. 3. Your assessor may ask you additional questions. 4. Your assessor will record the evidence that you have submitted in the assessment guide. 5. Based on this evidence, the assessor will make a judgement of “Competent” or “Not yet competent” or “Not assessed” for each assessment criterion and overall for the total unit standard.
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Step 3 1. If “Not assessed”, you and the assessor will agree the criteria not assessed and After the arrange an additional assessment date. assessments 2. If “Not yet competent”, you and the assessor will identify why this judgement has been made and the action(s) necessary. A reassessment date should also be agreed on. 3. All decisions will be recorded in the assessment guide, which all parties should sign. 4. You will only be declared “Competent” if you have provided sufficient and valid evidence against all the assessment criteria and specific outcomes of this unit standard. 5. After declaration of competence, your assessment is subject to the internal moderation process. 6. Once this is complete, your results will be entered onto SAQA's National Learner Record Database (NLRD).
Declaration of Step 4 1. The declaration of authenticity on p. 25 authenticity must be signed by your manager, your assessor, and you to certify that the evidence is authentic and that this has been applied in your workplace. 2. Your line manager or assessor will give feedback on your assessment to you.
Resources The following resources will assist you in preparing for your assessment:
Reference Availability
DiscoveryWorld. n.d. [Online] Available: Internet www.discoveryhealth.co.za. Liberty Life. n.d. [Online] Available: www.liberty.co.za. Momentum. n.d. [Online] Available: www.momentum.co.za. Old Mutual – Investment and Insurance Products for South African Individuals and Institutions. n.d. [Online] Available: www.oldmutual.co.za.
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Sanlam – Your Financial Services Group. n.d. [Online] Available: www.sanlam.co.za.
Company product guides: member booklets and catalogues as available from the Marketing company with which the learner has department dealings.
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Specific Outcome 1 Explain dread disease as an insurance product
Assessment The concept of dread disease is explained with examples. Criterion 1.1
Different terminology used to describe dread disease is Assessment identified for three different insurers. Criterion 1.2 The various medical conditions covered by dread disease Assessment products are named and explained and an indication is given of Criterion 1.3 when the insurer would pay out for each condition. Dread disease events which would not be covered are identified Assessment from a specific policy document and an indication is given of Criterion 1.4 why such events are excluded from the policy. Learners are to split into teams of four learners each. Each team must discuss the following issues and present their Group discussion answers in the form of a presentation or debate: 1. An explanation of the concept of dread disease with at least five dread disease conditions 2. How dread disease is described/marketed and named by different insurers 3. Criteria on why insurers will pay and will not pay a claim Explore medical conditions as well as the policy requirements as laid down by at least one insurer.
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ASSESSOR’S COMMENTS: Assessment Criterion 1.1
Assessment Criterion 1.2
Assessment Criterion 1.3
Assessment Criterion 1.4
ASSESSOR’S SIGNATURE: DATE:
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Specific Outcome 2 Investigate dread disease products offered by different financial services institutions
Dread disease products offered by three insurers are identified and compared in terms of the contracts, benefits, exclusions and Assessment when benefits are payable. Criterion 2.1
Assignment 1. Name two insurers, and list a major difference in their dread disease offerings in terms of the following: Benefits Exclusions Waiting period Write or type your assignment, and attach it to this pack.
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The rates charged by the three insurers are compared and an indication is given of the policy best suited to a specific client. Assessment Criterion 2.2
Group discussion In groups of four, discuss the following, and make notes of your discussion: Study the comparisons of the three insurers as well as the quotes below. 1. Analyse the benefits and charges, and render your views on which benefits and costs you think are most beneficial. You can write or type your notes, and attach them to this pack.
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2. If you were a client, would you have been satisfied with the information provided, and which questions would you ask your intermediary? Write or type your questions, and attach them to this pack.
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QUOTE 1 DISCOVERY LIFE
LIFE PRODUCT QUOTATION
Prepared for: A Client Fund type: LIFE FUND Prepared by: Francis Plan type: Integrated SupeRater Description: A Client – Quote Socio-economic class: Class 1 Quote number: 277 Date of commencement: 2004/10/01 Discovery Health Plan: Comprehensive
OWNER DETAILS Owner type Natural person Owner tax status Non-conforming
PERSONAL DETAILS OF THE LIVES ASSURED Principal Name A Client Date of birth 1965/01/01 Age next 40 Gender Male Smoker status Non-smoker Educational qualification 3-year diploma Gross annual income R480 000 Gross monthly income R40 000 Occupation IT – Consultant Hazardous activities None selected
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BENEFIT AND PREMIUM DETAILS Monthly Percen Benefit premium Risk Benefit Principal life’s benefit tage of amount in (incl. cat. expiry age fund rands loadings) in rands Life Cover A1 100.00 1 000 000 Whole life 157.61 Severe Illness Benefit A1 100.00 1 000 000 Whole life 326.41 Comprehensive Plus Capital Disability Benefit A1 100.00 1 000 000 Age 65 110.69 Comprehensive Plus Total For Principal’s Benefits R594.71
The recommended Minimum Protected Fund benefit has been removed from this quotation.
TOTAL INITIAL MONTHLY PREMIUM R594.71
TOTAL PREMIUM FOR A NON-INTEGRATED LIFE PLAN R699.65
PREMIUM INCREASE DETAILS
AUTOMATIC ANNUAL PREMIUM INCREASES AT 10% P.A. AS WELL AS BY AN ADDITIONAL 20% IN YEAR 10 AND EVERY 10 YEARS THEREAFTER FOR WHOLE OF LIFE BENEFITS.
ADDITIONAL ANNUAL PREMIUM INCREASES MAY OCCUR AS A RESULT OF THE PERSONAL HEALTH MATRIX ON CERTAIN BENEFIT PREMIUMS. 01/10/2004 594.71 01/10/2012 1 274.81 01/10/2005 654.18 01/10/2013 1 402.30 01/10/2006 719.60 01/10/2014 1 793.61 01/10/2007 791.56 01/10/2015 2 888.63 01/10/2008 870.71 01/10/2016 5 433.66 01/10/2009 957.79 01/10/2017 8 750.96 01/10/2010 1 053.57 01/10/2018 16 525.92 01/10/2011 1 158.92 01/10/2019 50 434.83
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PREMIUM INCREASE NOTES
Premiums for the Global Health Protector, Global Education Protector, and Health Plan Protector will increase annually at a rate different to that of the other benefits on the Plan.
Premium projections illustrated above do not include the Vitality premium and increases attributable to the Personal Health Matrix.
PREMIUM INCREASES FOR SUPERATER AND MODERATOR PLANS
In addition to the automatic annual premium increase selected on the plan, the risk premiums for benefits that received the SupeRater/ModeRator discounts at inception (that is, whole-of-life benefits only) will increase by a further 20% at the end of the first 10 years and every 10 years thereafter. This applies whether the plan is integrated or not.
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QUOTE 2 OLD MUTUAL
GREENLIGHT QUOTATION
Prepared by Old Mutual Code Quotation date 07/09/2004 OmuQuote version 6.02 Quote reference number QR00003 Distribution channel Broker Start date of the contract 01/10/2004
Contracting party Mr A Client Date of birth 01/01/1965 Gender Male
Greenlight offers a choice of flexible, modular benefits that can be added or subtracted from your contract as your needs change, making it the comprehensive risk management plan for life.
This quotation is valid (provided it has been produced by the current Old Mutual approved version of Omuquote) for 21 days from 07/09/2004 until 28/09/2004 and is subject to underwriting.
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BENEFIT COVER AND PREMIUM DETAILS Comp. annual Scheduled Cover End of Initial Initial pre- annual end guar. Life covered cover pre- mium cover date term amount mium in- increase (anb) (years) crease Risk benefit(s) No. Name 5.00% in 5.00% in October 01/10/2 Death Benefit 1 1 Mr A R1 000 000 R620 October each year For life 009 (5) Client p.m. each – start year 2005
Accelerator(s) as % of parent cover amount Comprehensive Disability Benefit (100%) R1 000 000 01/10/2 N/A Severe Illness 029 (Comprehensive) (65) Benefit (100%) R1 000 000 For life N/A
Total contractual regular premium via debit order R620 p.m.
RISK BENEFIT COVER AND PREMIUM PROJECTIONS
Death Benefit 1 (Mr A Client) – CAPI at 5.00% and SACI at 5.00% p.a. At the start 1 2 3 4 5 of year Cover R1 000 000 R1 050 000 R1 102 500 R1 157 625 R1 215 507 Illustrative R620 R684 R756 R836 R925 premium The illustrative premiums above include accelerators, but exclude riders. Notes: Compulsory annual premium increases are contractual. If you are unable to maintain your contractual obligation, you must make alternative arrangements with the Greenlight Service Centre. The premium projections are based on Old Mutual’s current premium basis, but this basis may change in future.
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QUOTE 3 LIBERTY LIFE
LIFESTYLE PROTECTOR
Please read this document carefully, as it contains important information that you need to consider before applying for the product concerned. The information provided is a summary of the main features of the product and does not constitute an offer by Liberty Life. You may be asked to sign this document – your signature is simply proof of receipt and is not an acceptance of the contents of this document.
Prepared for: A Client Prepared by: Francis – AAA Insurance Brokers Date of commencement: 01/10/2004 Contribution type: Age-rated Contribution frequency: Monthly Annual benefit increase: 7% p.a. Annual contribution increase: this will increase each year with age.
Details of the lives assured Principal life Name A Client Date of birth 01/01/1965 Age next birthday 40 Gender Male Smoker status Non-smoker Educational qualification 3- or 4-year Technikon or Teachers’ College Diploma Annual income R480 000.00 Rating category 1 Occupation Computer consultant Percentage duties Admin 100% Manual 0% Supervisory 0% Travel 0% Occupation category 1
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Benefit and contribution details Initial monthly Principal life’s benefits Benefit amount Benefit term/cease age contribution Life Protection Life Cover R1 000 000 Whole of life 184.00 Loss-of-Income Protection Contract anniversary Capital Disability Plus (OD) R1 000 000 R109.00 preceding age 65 Lifestyle Protection Living Lifestyle Plus (whole R1 000 000 Whole of life R381.00 life) Total contribution for principal R674.00 life’s benefits
Monthly policy fee 15.00 Total monthly contribution 689.00
Annual contribution increases will result in the following future contributions:
Contribution effective date Total monthly contributions 01/10/2004 689.00 01/10/2005 781.12
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QUOTE 4 MOMENTUM
Myriad quotation Underwritten by Momentum Group Limited trading as Momentum
This quotation is subject to underwriting.
Booked policy number:
Prepared for: A Client Prepared Francis by: Tax status: Natural AAA INSURANCE person BROKERS CC Myriad policy 2004/10/01 starting on: Premium Monthly frequency:
BENEFIT AND PREMIUM SUMMARY Benefit details Premium details Benefit Initial Premium Bene- Premium Loading con-tract Benefit benefit guaran- fit term pattern premium pre- amount tee term mium Mr A Client Death Benefit R1 000 000 Whole Compul- 11 R185.29 . Comprehensive Disability R1 000 000 life sory R135.29 Benefit R1 000 000 to age R294.84 . Comprehensive Critical 65 Illness Benefit Whole life Policy fee R15.00 Total contractual premium R630.42 Total premium R630.42
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ASSESSOR’S COMMENTS:
Assessment Criterion 2.1
Assessment Criterion 2.2
ASSESSOR’S SIGNATURE: DATE:
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Specific Outcome 3 Explain the legal framework for dread disease
Assessment Legislation relating to dread disease is identified and an Criterion 3.1 indication is given of how the Acts impact of the sale of dread disease policies.
Assessment The tax implications for dread disease policies are explained Criterion 3.2 with reference to tax on receipt of the benefit and deductibility of premiums.
Work with a partner. One of you is to be a sales representative, the other the client. The client calls for a meeting with the sales representative to Role play take out a dread disease policy. The sales rep must explain the following to the client: 1. What legislation affects dread disease and how it will impact on his/her policy should he/she decide to take one out 2. What tax will be deducted, if any, and a justification of your answer by explaining the tax implications of dread disease policies with reference to tax on receipt of the benefit and deductibility of premiums The client must ask questions to elicit responses for possible scenarios. Make notes for your role-play here; your notes can also be typed and attached to this pack.
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Assessment The demarcation debate between medical schemes and Criterion 3.3 insurance is researched with reference to dread disease and healthcare products.
Group Read the article on “Medical Schemes Council, Liberty reach discussion agreement on healthcare products” in your study guide, and interpret the demarcation between medical schemes and the Liberty product in question. In view of the article, 1. consider dread disease benefits, and distinguish between medical scheme products and dread disease. Make notes of your discussion here; your notes can also be typed and attached to this pack.
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ASSESSOR’S COMMENTS:
Assessment Criterion 3.1
Assessment Criterion 3.2
Assessment Criterion 3.3
ASSESSOR’S SIGNATURE: DATE:
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Specific Outcome 4 Describe dread disease as part of holistic wealth management
Assessment Reasons why a client may require dread disease insurance are Criterion 4.1 explained with examples.
Assignment Case Study 1 Mr French is 52 years old. He has been working for Astra Global Ltd for 30 years. Over the years, he has accumulated a tidy sum towards his retirement, but his company only provides lump sum disability of three times his annual salary. Mr French has other fixed investments: a holiday home, a boat, and his current residence in Johannesburg. Do the following for Mr French: 1. Advise him on how dread disease will benefit him. 2. Explain to him the difference between dread disease and disability. Type or write this assignment, and attach it to this pack.
Assessment The difference between dread disease cover and disability Criterion 4.2 insurance is explained in terms of benefits, contributions, tax deductions and when benefits are payable.
Assignment Case Study 2 Jane is 25 years old. She has made provision for retirement, life cover, and disability. She feels that she is still too young to consider dread disease cover, as disability will cover conditions such as paraplegia and blindness. However, she is concerned about her family history of cancer, and she approaches you for advice. Explain the following to Jane: 1. The difference between dread disease and disability insurance in terms of benefits, contributions, tax deductions, and when benefits are payable. 2. How dread disease fits into the bigger scope of risk benefits 3. List the reasons you would give to convince her to take out dread disease cover. Type or write this assignment, and attach it to this pack.
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Assessment The role of dread disease in a holistic financial plan is explained Criterion 4.3 with reference to the specific needs of three different clients.
Assignment Case Study 3 Ms Roman is 48 years old. She has been a housewife for 20 years. She has a financially independent son. Her husband died without leaving her sufficient financial assistance, and she is forced to work. She earns good money based on commission and has built up a substantial savings account. However, Ms Roman is not a member of a retirement fund and has no insurance cover. Do the following for Ms Roman: 1. Assist her with financial planning. Include dread disease as part of the risk cover. 2. Explain to her why she needs an array of benefits, such as retirement benefits, life cover, dread disease, and disability. Type or write this assignment, and attach it to this pack.
ASSESSOR’S COMMENTS: Assessment Criterion 4.1
Assessment Criterion 4.2
Assessment Criterion 4.3
ASSESSOR’S SIGNATURE: DATE:
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DECLARATION OF AUTHENTICITY We, the undersigned, hereby declare that ______has completed all of the specified requirements for assessment against this unit standard.
SIGNED:
LEARNER:
DESIGNATION:
DATE:
SIGNED:
LINE SUPERVISOR:
DESIGNATION:
DATE:
SIGNED:
ASSESSOR:
DESIGNATION:
DATE:
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