Table of contents

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 SPECIFIC OUTCOME 1 Explain dread disease as an insurance product SPECIFIC OUTCOME 2 Investigate dread disease products offered by different financial services institutions SPECIFIC OUTCOME 3 Explain the legal framework for dread disease SPECIFIC OUTCOME 4 Describe dread disease as part of holistic wealth management Declaration of Authenticity 2 6 8 20 23 25 Version 1 2009/10/29 1 Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management 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 assessment The purpose of assessment against this Unit unit Standard 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 unit standard This unit standard is registered on the NQF as follows: Field: Sub-field: Number: Level: Credits: Learning assumptions Business, Commerce, and Management Studies Finance, Economics, and Accounting 113913 4 2 Learning assumed to be in place:  Learners should be competent in Communication, Mathe- Version 1 2009/10/29 2 Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management 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. Step 1 Planning for the assessments 1. You will need to complete an assessment plan together with your assessor or line supervisor. 2. Your assessor will prepare you for your assessment and complete the assessment 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 Completing the assessments 1. These assessments will be by means of exercises detailed below. 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. Assessment process Version 1 2009/10/29 3 Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management Step 3 After the assessments 1. If “Not assessed”, you and the assessor will agree the criteria not assessed and arrange an additional assessment date. 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 authenticity Step 4 1. The declaration of authenticity on p. 25 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     DiscoveryWorld. n.d. [Online] Available: 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. Availability Internet Version 1 2009/10/29 4 Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management  Sanlam – Your Financial Services Group. n.d. [Online] Available: www.sanlam.co.za. Company product guides: member booklets and Marketing catalogues as available from the company with department which the learner has dealings. Version 1 2009/10/29 5 Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management Specific Outcome 1 Explain dread disease as an insurance product Assessment Criterion 1.1 Assessment Criterion 1.2 Assessment Criterion 1.3 Assessment Criterion 1.4 The concept of dread disease is explained with examples. Different terminology used to describe dread disease is identified for three different insurers. The various medical conditions covered by dread disease products are named and explained and an indication is given of when the insurer would pay out for each condition. Dread disease events which would not be covered are identified from a specific policy document and an indication is given of 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 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. Group discussion Version 1 2009/10/29 6 Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management ASSESSOR’S COMMENTS: Assessment Criterion 1.1 Assessment Criterion 1.2 Assessment Criterion 1.3 Assessment Criterion 1.4 ASSESSOR’S SIGNATURE: DATE: Version 1 2009/10/29 7 Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management 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 when benefits are payable. 1. Name two insurers, and list a major difference in their dread disease offerings in terms of the following:    Benefits Exclusions Waiting period Assessment Criterion 2.1 Assignment Write or type your assignment, and attach it to this pack. Version 1 2009/10/29 8 Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management Assessment Criterion 2.2 Group discussion The rates charged by the three insurers are compared and an indication is given of the policy best suited to a specific client. 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. Version 1 2009/10/29 9 Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management 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. Version 1 2009/10/29 10 Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management 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 Owner tax status Natural person Non-conforming PERSONAL DETAILS OF THE LIVES ASSURED Principal Name Date of birth Age next Gender Smoker status Educational qualification Gross annual income Gross monthly income Occupation Hazardous activities A Client 1965/01/01 40 Male Non-smoker 3-year diploma R480 000 R40 000 IT – Consultant None selected Version 1 2009/10/29 11 Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management BENEFIT AND PREMIUM DETAILS Monthly Principal life’s benefit Risk cat. Percen tage of fund 100.00 100.00 100.00 Benefit amount in rands 1 000 000 1 000 000 1 000 000 Benefit expiry age premium (incl. loadings) in rands 157.61 326.41 110.69 R594.71 Life Cover Severe Illness Benefit Comprehensive Plus Capital Disability Benefit Comprehensive Plus Total For Principal’s Benefits A1 A1 A1 Whole life Whole life Age 65 The recommended Minimum Protected Fund benefit has been removed from this quotation. TOTAL INITIAL MONTHLY PREMIUM TOTAL PREMIUM FOR A NON-INTEGRATED LIFE PLAN 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 01/10/2005 01/10/2006 01/10/2007 01/10/2008 01/10/2009 01/10/2010 01/10/2011 594.71 654.18 719.60 791.56 870.71 957.79 1 053.57 1 158.92 01/10/2012 01/10/2013 01/10/2014 01/10/2015 01/10/2016 01/10/2017 01/10/2018 01/10/2019 1 274.81 1 402.30 1 793.61 2 888.63 5 433.66 8 750.96 16 525.92 50 434.83 R594.71 R699.65 Version 1 2009/10/29 12 Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management 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. Version 1 2009/10/29 13 Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management QUOTE 2 OLD MUTUAL GREENLIGHT QUOTATION Prepared by Code Quotation date OmuQuote version Quote reference number Distribution channel Start date of the contract Contracting party Date of birth Gender Old Mutual 07/09/2004 6.02 QR00003 Broker 01/10/2004 Mr A Client 01/01/1965 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. Version 1 2009/10/29 14 Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management BENEFIT COVER AND PREMIUM DETAILS Comp. Initial cover amount Initial premium annual premium increase Risk benefit(s) No. Name 5.00% in Death Benefit 1 1 Mr A Client R1 000 000 R620 p.m. 5.00% in October each year Accelerator(s) as % of parent cover amount Comprehensive Disability Benefit (100%) Severe Illness (Comprehensive) Benefit (100%) R1 000 000 01/10/2 029 (65) For life N/A October each year – start 2005 For life 01/10/2 009 (5) Scheduled annual cover increase Cover end date (anb) End of guar. term (years) Life covered R1 000 000 N/A Total contractual regular premium via debit order RISK BENEFIT COVER AND PREMIUM PROJECTIONS R620 p.m. Death Benefit 1 (Mr A Client) – CAPI at 5.00% and SACI at 5.00% p.a. At the start of year Cover Illustrative premium 1 R1 000 000 R620 2 R1 050 000 R684 3 R1 102 500 R756 4 R1 157 625 R836 5 R1 215 507 R925 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.  Version 1 2009/10/29 15 Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management 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 Date of birth Age next birthday Gender Smoker status Educational qualification Annual income Rating category Occupation Percentage duties A Client 01/01/1965 40 Male Non-smoker 3- or 4-year Technikon or Teachers’ College Diploma R480 000.00 1 Computer consultant Admin 100% Manual 0% Supervisory 0% Travel 0% Occupation category 1 Version 1 2009/10/29 16 Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management Benefit and contribution details Principal life’s benefits Life Protection Life Cover Loss-of-Income Protection Capital Disability Plus (OD) Lifestyle Protection Living Lifestyle Plus (whole life) Total contribution for principal life’s benefits R1 000 000 Whole of life R381.00 R674.00 R1 000 000 Contract anniversary preceding age 65 R109.00 R1 000 000 Whole of life 184.00 Benefit amount Benefit term/cease age Initial monthly contribution Monthly policy fee Total monthly contribution Annual contribution increases will result in the following future contributions: Contribution effective date 01/10/2004 01/10/2005 Total monthly contributions 689.00 781.12 15.00 689.00 Version 1 2009/10/29 17 Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management QUOTE 4 MOMENTUM Myriad quotation Underwritten by Momentum Group Limited trading as Momentum This quotation is subject to underwriting. Booked policy number: Prepared for: Tax status: Myriad policy starting on: Premium frequency: A Client Natural person 2004/10/01 Monthly Prepared by: Francis AAA INSURANCE BROKERS CC BENEFIT AND PREMIUM SUMMARY Benefit details Initial benefit amount Mr A Client Death Benefit   Comprehensive Disability Benefit Comprehensive Critical Illness Benefit Policy fee Total contractual premium Total premium Benefit term Premium pattern Premium details Premium guarantee term Benefit Loading premium con-tract premium R185.29 R135.29 R294.84 Benefit R1 000 000 R1 000 000 R1 000 000 Whole life to age 65 Whole life Compulsory 11 R15.00 R630.42 R630.42 Version 1 2009/10/29 18 Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management ASSESSOR’S COMMENTS: Assessment Criterion 2.1 Assessment Criterion 2.2 ASSESSOR’S SIGNATURE: DATE: Version 1 2009/10/29 19 Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management Specific Outcome 3 Explain the legal framework for dread disease Assessment Criterion 3.1 Assessment Criterion 3.2 Legislation relating to dread disease is identified and an indication is given of how the Acts impact of the sale of dread disease policies. The tax implications for dread disease policies are explained 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. Role play The client calls for a meeting with the sales representative to 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 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 2. 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. Version 1 2009/10/29 20 Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management Assessment Criterion 3.3 The demarcation debate between medical schemes and insurance is researched with reference to dread disease and healthcare products. Read the article on “Medical Schemes Council, Liberty reach 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. Group discussion Make notes of your discussion here; your notes can also be typed and attached to this pack. Version 1 2009/10/29 21 Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management ASSESSOR’S COMMENTS: Assessment Criterion 3.1 Assessment Criterion 3.2 Assessment Criterion 3.3 ASSESSOR’S SIGNATURE: DATE: Version 1 2009/10/29 22 Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management Specific Outcome 4 Describe dread disease as part of holistic wealth management Assessment Criterion 4.1 Assignment Reasons why a client may require dread disease insurance are explained with examples. 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. 2. Advise him on how dread disease will benefit him. Explain to him the difference between dread disease and disability. Type or write this assignment, and attach it to this pack. Assessment Criterion 4.2 The difference between dread disease cover and disability insurance is explained in terms of benefits, contributions, tax deductions and when benefits are payable. 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. How dread disease fits into the bigger scope of risk benefits List the reasons you would give to convince her to take out dread disease cover. Assignment 2. 3. Type or write this assignment, and attach it to this pack. Version 1 2009/10/29 23 Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management Assessment Criterion 4.3 Assignment The role of dread disease in a holistic financial plan is explained with reference to the specific needs of three different clients. 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. 2. Assist her with financial planning. Include dread disease as part of the risk cover. 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: Version 1 2009/10/29 24 Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management 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: Version 1 2009/10/29 25