Did you Know! That when you leave a medical aid as a member on Medical aid savings plan, as a member you have the following options • To request the refund which normally gets refunded back in 4 to 5 month • Members can request early payment on their Medical Aid Savings if they have financial problems, but they need to guarantee the scheme that should any claims arise after that they will be held accountable. • To request a transfer of Medical aid savings if they will be joining another medical aid that has the same component, Medical aid savings The other thing that members should know about their Medical aid savings - is that it works like a bank account, What you do not spend you carry over to the next year. But members needs to make sure they are on the New Generation scheme , options that offer Medical Aid savings not the Traditional scheme. Member can refer to their scheme website as the is different terms and conditions. If you have any queries regarding your medical aid, please contact Namhla in our Health Department, email [email protected] , tel (011)658-1333
0 Comments
As we emerge from the stringent lockdown restrictions of the past 100 plus days, many of us are now facing a world that looks quite different from what we were used to merely months ago. For many of us, things have changed drastically, especially financially. Countless individuals have been faced with and/or might still face retrenchment, having to take unpaid leave, drastic salary cuts or the possibility of losing their business. This reality hits home hard. Due to the unforeseen and devastating aftermath of the Covid-19 pandemic, many individuals have been forced to tap into their savings. The current circumstances have made people acutely aware of how important it is to have an emergency fund and/or contingency plan. With this in mind, let’s unpack the famous words of the well-known investor, Howard Marks: “you can’t predict but you can prepare”. Prediction is a fool’s game The first point to highlight is that trying to predict the market is fool’s game, however, it is human nature to try to find comfort in some sort of prediction of an outcome. This is because humans like to think they know what is going to happen next. Using a very simple mathematical example, the below equation illustrates how the odds are against you when trying to predict an outcome. Firstly, you have to predict the event correctly, and secondly, you have to predict how the market will react as a result of the event. If you don’t get both right you won’t be able to capitalize on the opportunity. Let’s say you are exceptionally good at predicting and you get it right 70% of the time, the odds are still the same as flipping a coin. Probability of predicting the event correctly x Probability of predicting the market’s reaction correctly = 70% * 70% = 49% (same odds as flipping a coin) The table below details two examples of recent events that an investor could have predicted accurately, but most people got the second prediction - how the markets will react – wrong. As we reflect on the events of the past couple of months, one thing is certain: it was impossible
to predict the events that have unfolded this year and the resulted reaction of markets, governments and economies. The only thing we can do is to do our best to prepare for times like these. Preparing for the unknown In a world filled with randomness and uncertainty a far better strategy than to prepare for the unknown is to focus on the known. What is known is that there are three primary drivers of results in life: 1) Your luck (randomness). 2) Your strategy (choices). 3) Your actions (habits). Only two of these three drivers are within your control – your strategy and your actions. By focusing your efforts on your choices and habits, you take ownership of your finances, instead of leaving it up to chance. The best way to prepare for these unknown and unprecedented times is to build up a nest egg. The most obvious way of doing this is by saving and taking advantage of the power of compounding. In the words of Warren Buffett – “Do not save what is left after spending but spend what is left after saving”. Unfortunately, many investors tend to spend first and save what is left. Often these investors also make the mistake of not saving the little that is left, as they believe it won’t make a difference. In January 2020, Victoria Reuvers, managing director of Morningstar Investment Management South Africa wrote an article in which she shows that anyone has the ability to become a millionaire. What it requires are two simple, but not easy, habits – firstly, start and stick to the habit of saving and secondly, be patient. Most investors’ path to becoming a millionaire is not by investing in the next big thing and making a quick buck overnight. For most of us, it is about building good habits and being disciplined when it comes to saving - even if it is just R200 a month. We encourage investors to use July as an opportunity to re-think their budget, savings and spending habits and encourage their children to practice good habits from a young age. Think about a good savings habit like brushing your teeth. Twice a day for two minutes is all it takes, and although it may not feel like a big action at the time, the long-term positive effects are enormous. The problem when you don’t do it is that you only see the damage your poor habits have caused after a long period of time. Some practical ideas to start saving In South Africa, you can save R36,000 per annum in a tax-free savings account, and a maximum of R500,000 over a lifetime. This is probably the easiest vehicle to ensure you get the benefit of investment returns without the concern of a tax bill at the end of the financial year. Another effortless way to save is to set up a monthly debit order to an investment account. Not only do you then save first and spend after saving, but you also have the option to increase this amount annually and/or make lump sum contributions as well. Other tips to start saving money every month:
month. Don’t ever think that it is too little to have an impact. There is a lot of power in compounding value. Conclusion In unusual times like these, investors might feel vulnerable and powerless. But it is often during times like these that we should try to form new healthy habits and leave behind bad habits. Let’s try to kick the practice of trying to predict everything and kickstart the habit of saving, even if only in small increments. To set up an appointment with a Financial Planners, please contact Kevin, email: [email protected] tel no: (011 658-1333) Written by: Debra Slabber Source: Morningstar Client's question: By adding a specific item to be insured, e.g. a R60K projector, does it mean a higher insurance premium? VS insured as a general contents lump sum? Answer: Electronic equipment ALWAYS have to be insured on a specified basis under the Electronic Equipment section. This section has extension suitable for data processing equipment. For items like Projector and Microphone, they can either be insured under Electronic Equipment or All Risk, but All Risk can be recommended as these items do not require the extensions offered under the Electronic Equipment. Secondly, Santam now offers various options under the All Risk section (e.g. Portable items that only stay on the premise), which attracts a lower rate. (These are the options we also discussed in our meeting) General contents under the Fire section is just for everything else such as furniture, fittings, stock etc. Additional fitting such as Aircon, Signage, Generators should be specified under the Fire section. If you would like to get a quote to cover your Equipment, please contact Edmond or Marizka in our Short-Term department, email [email protected], tel (011)658-1333 Source: Santam As we celebrate Women's Month, let's focus on personal finance for women. A study of the retirement savings habits of South Africans revealed that women are less financially prepared for retirement than men. Why?
So, are you saving enough money for retirement? Picking a new plan partway through the year is usually not allowed. As medical costs continue to rise, the last thing you want is to find out that you are on the wrong medical scheme plan. But, depending on the rules of your scheme, you may not be able to change medical scheme options partway through the year, says Damian McHugh, executive head of sales and marketing at Momentum Health. When considering a change of medical aid cover, it might mean moving between schemes — from Momentum to Discovery, for example — or staying with the same medical scheme and changing your plan or option — such as moving from Discovery’s Coastal Core plan to the Classic Saver plan. The main reason for limiting when members can change options is to prevent the practice whereby “everyone stays on the cheapest option and when they get sick, they jump onto the highest plan. That’s like only buying insurance after you crash your car,” says McHugh. “So most medical schemes are likely to say no if you want to move from one plan to another within a year. “In October or November, you can choose your scheme and plan for the following year, and then you can’t change until the following year,” he says. Jill Larkan, the head of health-care consulting at financial services company GTC, says you may realise you are on the wrong plan when: • You reach the middle of the year and find you have a huge balance in your savings and you are paying a large medical aid premium every month. In this case, you are probably on an expensive plan even though you don’t have many health-care needs; • Your finances are taking strain and you need to find cheaper cover. This is probably relevant for many medical aid members right now; • You are facing a future medical or hospital event and realise you are on a plan with few benefits (for example, a hospital plan) when you actually need one with much higher benefits (for example, a comprehensive plan); or • You have a chronic condition or a severe illness, such as cancer, and your current benefits don’t match up to your treatment requirements. TOWARDS YEAR-END YOU CAN CHANGE OR KEEP YOUR PLAN FOR THE FOLLOWING YEAR Larkan notes that some medical schemes are more flexible. For example, Fedhealth will allow you to change your plan within the scheme within 30 days of a life-changing event, such as marriage of the main member, pregnancy or the diagnosis of a dread disease, like cancer, diabetes or HIV/Aids. “Discovery Health will allow you to downgrade if it is due to a reason such as death or divorce, where the premium or benefit level is simply no longer required. Discovery may also allow you to downgrade to a lesser plan if, for example, you decide you can use a lower-cost plan and you want to redirect the money you save on contributions towards a Discovery retirement annuity,” she says. However, she notes that there are set parameters for such downgrades. For example, if you are currently on a network plan that means you are restricted to a specific network of doctors and/or hospitals, you cannot “change to a plan that allows freedom of choice in hospital selection. “You will be required to stick within the original choice of plan network limitations,” Larkan says. Considerations when deciding to switch Changing to a medical scheme other than that recommended by your employer may mean your employer is unlikely to continue to pay your medical scheme subsidy, which will increase your contributions greatly. If you switch partway through the year, your benefits may be calculated from the date of joining the new option or scheme. For example, says Bianca Viljoen, spokesperson for Health Squared Medical Scheme, the new plan may have a R500,000 limit for cancer, but if you switch at the end of June, you will only be able to access 50% or R250,000. “You would have proportionately lower benefit limits for the remainder of the year,” she says. If you have pre-existing conditions such as asthma or cardiac issues, the new medical scheme is allowed by law to provide three underwriting conditions: 1. A three-month general waiting period where no claims are covered except the prescribed minimum benefits (PMBs) and chronic medicines. Note that your chronic medicines might be covered but the new medical scheme might pay for a different product. 2. A 12-month, condition-specific waiting period if you have pre-existing conditions such as cholesterol, for example. The new scheme may not cover any costs related to that condition for a year. This waiting period can only be applied if you have not been a member of a scheme for 24 months or if you don’t join a new scheme within three months. 3. A late joiner penalty — this only applies if you did not previously belong to a medical scheme and are 35 or older. The late joiner penalty is percentage-based on a sliding scale, depending on how old you are and for how long you had no medical aid after 35. Damian McHugh, executive head of sales and marketing at Momentum Health, says you can switch from one medical scheme to another halfway through the year if you are self-employed or your company gives you a choice of schemes. He says applying to a new medical scheme costs you nothing. “My recommendation would be to fill out the form and see what the new medical scheme comes back with. If they impose restrictions, you are under no obligation to move just because you applied to a scheme. “Don’t cancel your existing medical scheme cover until you have made a final decision,” he says. Please contact Tammy in our Health Department, email [email protected],to find out about different Medical aid options Source: Business Live The Financial Sector Conduct Authority (FSCA) and the Prudential Authority (PA), in a statement say they have reached an understanding with non-life insurers that are most affected by business interruption cover claims that they will consider interim relief to their policyholders who have the appropriate contagious disease extension, while legal certainty on this matter is being sought from the courts. The interim relief will take the form of once-off payments to policyholders to enable them to continue running their businesses while awaiting the outcome of the legal process. This arrangement follows discussions between the authorities and the non-life insurers. The discussions were primarily aimed at addressing two main issues which are of concern to the FSCA. The first is the impact of the repudiation of contingency business interruption cover claims by some non-life insurers (and delays in processing policyholders’ claims) and the second is the impact of this matter on the reputation of the non-life insurance industry, the statement says. The authorities say they acknowledged in previous communications that business interruption cover is a complex issue. There are different business interruption policies. Those that have an extension for infectious/contagious diseases and the latter constitute approximately 3 to 5% of the policies. The FSCA says it is its view that claims in respect of cover with an extension for infectious/diseases in terms of these policies should be honoured where they meet the terms of the contract and that lockdown should not be used as a ground to repudiate these claims. This approach has also been adopted by some international conduct regulators but is being challenged by insurers and reinsurers globally and locally, which means that legal certainty will have to be obtained from the courts. The legal certainty will undoubtedly take time to achieve, with dire consequences for policyholders who have already been impacted severely by Covid-19 and the national lockdown, and it is in their interest that the authorities and the affected non-life insurers have reached understanding that interim relief payments should be made. The interim relief to be provided by non-life insurers will differ from case to case depending on reinsurer support, financial impact and the number and types of policyholders. The FSCA and PA say they have established the following guiding principles to be applied in determining the interim relief: The interim relief should at the very least focus on those businesses most impacted by lockdown (for example, the hospitality industry) and also on small businesses; The funds provided to a policyholder as interim relief shall not be claimed back by any non-life insurer from a policyholder should the courts decide in favour of insurers. However, should the courts find in favour of policyholders, these funds will be deducted from the total claim amount payable to a policyholder by a non-life insurer; and This relief should be on either an interim basis pending legal certainty or if non-life insurers wish to offer a full and final settlement, such settlement should reflect reasonable value to a policyholder and the implications thereof should be clearly explained in writing should a policyholder wish to accept the settlement on this basis. The authorities support the relief measures that will be provided by many of the non-life insurers that offer business interruption with the extension for infectious/diseases in line with these principles and view them as a necessary and appropriate interim response to the current situation, particularly when one considers that the said non-life insurers are providing financial relief to their policyholders without the support of their reinsurers at this stage. The exact details of relief measures by insurers to their policyholders will be communicated directly by each insurer to their brokers and policyholders. ADVERTISING The authorities say they have agreed with the most affected non-life insurers that, despite the time-barring clauses in the business interruption policies, non-life insurers would not raise the defence of prescription should policyholders decide to lodge court actions against non-life insurers at a later stage. For reinsurance purposes, non-life insurers may require policyholders to lodge their claims before certain dates and the authorities request policyholders, their brokers and legal representatives to co-operate with non-life insurers in this regard. “The authorities will continue to work with non-life insurers that are most affected by these business interruption cover claims to ensure that claims are resolved as quickly as possible and that trust and confidence in the non-life insurance industry can be restored. The efforts by these insurers to provide interim relief to their policyholders with no intention of claiming the funds back from their policyholders is appreciated by the authorities,” the statement says. If you would like to get a quote for your Business insurance contact Edmond and Marizka in our Short-term department email [email protected], tel (011)658-1333 Source: Personal Finance June proved to be another positive month for global markets, as investors’ appetite for risk continued to increase despite concerns around the spread of Covid-19 in emerging markets as well as a new spike in cases in the United States. Emerging market equities were the largest beneficiary of the risk on environment, benefiting from the unprecedented fiscal stimulus announced by governments and central banks across the globe. Global equity markets (and US technology shares in particular), delivered strong returns during the month, despite continued growth in Covid-19 cases across the globe and the announcement of new lockdown measures in some cases. Source: Morningstar |
AuthorKevin Yeh Archives
January 2025
Categories
All
|