Question 1 1.

1 25-30 years old, Married- they are in the process of acquiring a home which is usually a top priority for people in this life cycle. 1.2 Cyril and Tabitas needs Wealth creation/protection Product Recommended 1. Health 2. Retirement 3. Childs education 4. Retrenchment Wealth protection Wealth creation Wealth creation Wealth protection Medical aid and health insurance Retirement Annuity Endowment Retrenchment protector

Question 2 2.1 The Government deems it necessary because healthcare is a human right that should not be determined by ones affordability margin. Without NHI the burden of diseases in the country will not be reduces because the majority of the population and particularly the section suffering the greatest ill health will not access good quality healthcare. The NHI system is intended to ensure that South African citizens are able to use both the public and private sectors. Currently private healthcare is a privilege only enjoyed by the rich. It not the Governments intention to abolish private medical schemes. Cyril and Tabita have a choice to participate in NHI, however if they choose to participate they will need to meet a certain requirement that will be prescribed under the NHI policy. If Cyril and Tabita earn above a certain income they will be required by law to make a contribution to the NHI fund. They cannot escape this responsibility. If however as patients they wish to make use of services of a healthcare provider who is not accredited and or who chooses not to contract to NHI, they will have to pay the provider directly or else maintain medical scheme cover, in addition to making NHI contributions. The first five years of HNI will include pilot studies and strengthening the health systems in the following areas: Management of health facilities and health Quality improvement Infrastructure development

2.2

2.3

2.4

2.5

Question 3 The contract of insurance is just like any other legally binding document and due consideration must taken into account when its signed. The following determine the validity and enforceability of same; Consensus In this instance Cyril and Tabita must have a meeting of the minds with Greenbest Insurance. The latin term for meeting of the minds is Consensus ad idemwhich means that the parties have understood and agreed on the terms of the contract. In this instance Cyril and Tabita must accept the terms and conditions duly imposed by Greenbest to best effect the contract and also be aware of the intentions and responsibility required by the contract. Capacity Both Cyril and Tabita are over the age of 18 years so they have the contractual capacity to enter into this contract. It must be noted that where the parties are infact minors they would have to be assisted by guardians. Physical possibility Cyril and Tabita must contract with Greenbest for an item that exists, e.g the house as well as the household contents. This ensures that the contract is able to be executed as loss or damage would occur on an item that would be assessed. Legal possibility The contract between the parties must be a legal contract. This entitles the parties the ability to take legal steps in the unfortunate event that one of the parties defaults from the contract. Intention to contract Apart from meeting of minds that was explained earlier the parties must intend to make a legally binding contract. If there is evidence of coercion and or intention to incite violence or illegal acts then that contract will be null and void ab initio (invalid from the beginning). Formalities This contract can be made verbally or in writing. There is an obligation on Greenbest to ensure that Cyril and Tabita receive a policy schedule so that they can familiarise themselves with the terms and conditions, and if there are further amendments, duly amend accordingly. It is noteworthy to mention that when this contract is being entered into the provisions of the FAIS Act and the Code must be adhered to, namely, recording the service rendered.

Insurable Interest Though it does not form part of the essentials of a contract but it does form part of insurance contract. Cyril and Tabita must show that they will suffer financial loss in the event that their house and household contents are destructed. Question 4 Voluntary Annuity Non compulsory money, for example the source of the money to be invested could come from an inheritance. Compulsory Annuity Source must be from either a pension or provident fund (where the member elects to take then than 100 % as a lumpsum) Specified period or until Choose to have a the death of the guaranteed term investment 5-20 years as chosen by Income for life the investor Level or escalate Level or escalate

Source of funds

Term

Income Guarantees Income Levels Tax

Partly taxable and partly Income fully taxable tax free because probably the source has already been taxed

4.2 The proceeds to purchase the annuity are from a non pensionable source; ssince this is a voluntary purchased annuity the capital portion will be exempt: Y = A B xC

Where A represents the cash consideration paid by the purchaser of the annuity (R200 000.00) B represents the total expected return for in the annuity (R22 000 x 10=R220 000.00) C amount of the annuity (R22 000.00) Therefore Capital Element: Y = 200 000 x 22 000 220 000 =R20 000.00

Taxable portion of annuity

http://www.duhaime.org/LegalDictionary/C/ConsensusAdIdem.aspx accessed on the 20th of February 2013