Unit Standard 114983: Assignment Outcome 2

4.1 Whole Life vs Term insurance

4.2 Endowment vs Pure Endowment policies

Compare universal life and variable life products in terms of the security for the customer. Use the following table to answer this question.                                     (4)

Complete the following table for by comparing the risk element of Term and Whole Life policies. (4)                                                                                                          

Study Section 2.6 of the Learner Guide.        Explain how the Education policy for Unami Dube is allocated in terms of risk and/or investment.                                                   (4)

Jane Doe bought a life insurance policy with an accelerated death benefit. The life insurance policy will pay her son and daughter R5,000,000 upon her death (this is called the death benefit). Jane bought the policy when she was 45; now she is 75 and has been diagnosed with Alzheimer’s disease. The disease is aggressive, and Jane’s doctors say she is likely to die within 12 to 18 months. Jane’s treatments are very expensive. To obtain cash for her living and medical expenses, Jane taps into the accelerated death benefit of her policy. This gets her a portion of her policy’s death benefits now—R3,000,000 in rand value.

8.1 What is an accelerated benefit in a life policy? (2)

8.2 Explain how the accelerated death benefit will affect the final pay-out of the life policy?   (2)

Explain the effect of a premium increase when adding an ancillary benefit to a Long Term insurance policy after the inception date of a contract.  In your answer, refer to the relevant legislation.   (6)

Study Section 3.3 of the Learner Guide and use the Altrisk Case Study provided in the Learner Guide to answer these questions.

10.1 Why do you think Altrisk offers ancillary benefits to its life policy? (2)

10.2 State the age limitations on each of Altrisk’s ancillary products. (4)

John took out an R1, 000, 000 life insurance policy with an accelerated benefit that pays a maximum of 20%of the death benefit in the event of any dread disease. John has discovered that he has cancer and would like to know how the cancer claim will affect his life policy. Please explain this to him. Your answer should include how much the life policy will pay towards his cancer claim and how this will affect his death benefit.  (6)

11.1     Amount to be paid towards cancer claim:

11.2     How this will affect the final pay-out:

Explain ways in which an insurance company may help a policy owner who can no longer pay premiums.  (6)

Study section 3.7 of the Learner Guide, particularly the 2 case studies in this section. In all the circumstances, why were the ancillary benefit claims not paid out?

How can policy holders ensure that such ancillary claims are not rejected at claims stage?  (6)

Differentiate between an insurance agent and an insurance broker.                                    (2)

15.1 Discuss the role of intermediaries in the Long Term insurance industry and give 3 advantages and 3 disadvantages of using and not using them. (6)

15.2 Also explain how the use of Internet and direct marketing has failed to take intermediaries out of the insurance market. (6)

Explain how the following can be seen as possible sources of new life insurance business. (6)
16.1 The merging of two big corporates
16.2 The change of company’s management
16.3 Bad publicity about one of the life insurance companies in the market.

Look at the excerpt provided under Section 4.5 of the Learner Guide. Explain how Sanlam strives to achieve the objectives of the FAIS Act. (4)