Kry versekering en maak voorsiening dat kinders ook erf

'n Leser, Pieter van Calitzdorp, wil weet hoe hy vir sy lewensmaat kan sorg sonder om sy kinders te onterf. Hy is geskei en is 'n pa van tweeling- dogters, 33 jaar oud.
Die afgelope 15 jaar is hy in 'n verhouding met 'n vrou wat nie veel ouer as sy dogters is nie. Hy wil graag sy lewensmaat versorg nalaat, maar is bang dat hy sy dogters "teoreties gaan onterf" as hy alles aan haar bemaak. Om dié probleem op te los, het hulle 'n gesamentlike testament opgestel met 'n voorwaarde dat die langslewende net mag erf as onderneem word om met afsterwe die bates "ten volle en uitsluitelik aan my twee kinders te bemaak en veral dat die vaste bates nie vervreem mag word nie".

Eerstens, 'n gesamentlike testament het weinig betekenis anders as sentiment. 'n Testament word eers geldig met afsterwe en tot die dag kan jy enige vorige testament of enige bepaling daarin herroep, of dit 'n enkel- of gesamentlike testament is. Tweedens is daar 'n regsreël wat bepaal dat jy nie met 'n ander persoon 'n ooreenkoms mag aangaan wat sy haar testeervryheid inperk nie. Die enigste uitsondering op die reël is 'n ooreenkoms aangegaan in 'n huweliksvoorwaardekontrak en dit is nie hier ter sprake nie. Wat kan jy dus doen? Dit gaan afhang van jou omstandighede.

Watter bates is ter sprake, wat is die behoeftes van jou lewensmaat en wat wil jy uiteindelik bereik? Jy kan oorweeg om alles aan jou dogters te bemaak en aan jou lewensmaat 'n vruggebruik oor die bates te gee. Dit kan wees of oor al die bates of oor net 'n gedeelte daarvan. Maar loop lig met 'n vruggebruik. Dit is 'n baie sterk reg. Dit sal aan haar volle gebruiksreg gee oor die vruggebruikbates vir solank as wat jy dit aan haar gegee het, waarskynlik lewenslank.

Sy sal selfs die vruggebruikbates kan uitverhuur en al die inkomste uit die huur in haar sak kan steek. Sy sal net die bate in stand moet hou in dieselfde toestand as waarin sy dit gekry het, maar jou dogters het geen reg op die opbrengs of gebruik van die bate totdat sy sterf  (as dit 'n lewenslange vruggebruik is) nie.
Of jy kan vir haar  'n gebruiksreg gee, of 'n woonreg. Dit is twee baie soortgelyke regte aan 'n vruggebruik, maar is meer beperkend.
Met 'n gebruikersreg het die gebruiker (ingesluit sy of haar onmiddelike familie) net 'n reg op die opbrengs uit die bate vir eie daaglikse gebruik.
'n Woonreg is weer beperk net tot die bewoning van die eiendom (ook ingesluit die onmiddelike familie), maar met geen verdere regte nie.
 Of jy kan aan haar 'n kombinasie van bogenoemde beperkte regte nalaat. Maar ek twyfel of dit jou probleem met die "teoretiese onterwing" gaan oplos.
 Ek sê  dit omdat haar lewensverwagting nie veel korter is as dié van jou dogters nie en die kans dat hulle voordeel uit hul erfenis gaan kry, is omtrent nul.

My voorstel sou wees dat jy  die probleem met lewensversekering oplos. Dis 'n eenvoudige oplossing en is ook die goedkoopste en sekerste manier om kapitaal te skep.
So sal jy almal tevrede hou, sonder dat die een die ander dalk later sal doodwens

Deur: Nico van Gijsen, Sake 24, 09 Oktober 2011

Testament is nodig om in saambly- verhouding te erf

In  saambly- verhoudings, heteroseksueel of homoseksueel, is dit van die uiterste belang om 'n korrek opgestelde en geldige testament te hê as jy wil hê die oorlewende party moet van jou kan erf. Ek het in die afgelope maand twee navrae gehad van ouers van kinders wat in 'n saambly- verhouding was en oorlede is sonder om 'n testament na te laat. In die een geval is daar ook 'n baba.
Wat is die oorlewendes (vroue, in dié geval) se regte ten opsigte van haar oorlede lewensmaat se bates? Die antwoord: Sy het geen regte en kan nie erf nie. Kom ons kyk.
As jy sonder 'n testament sterf, word jou sake gehanteer ingevolge die Wet op Intestate Erfopvolging (wet 81 van 1987) en word jou goed verdeel soos in dié wet bepaal. Byvoorbeeld, as jy 'n gade nalaat en geen erfgenaam nie, gaan alles na die gade. As jy nie 'n gade het nie, maar wel 'n erfgenaam nalaat, gaan alles na die erfgenaam. As jy 'n gade en 'n kind nalaat, word alles gelyk verdeel tussen die gade en die kind of kinders (met 'n minimum van R125 000 aan die gade).
Verwarring tree soms in by die definisie van 'n gade en dan word  gegryp na die definisie soos in die Boedelbelastingswet (wet 45 van 1955) wat onder meer bepaal dat 'n gade ook insluit iemand in 'n verhouding wat na die mening van die kommissaris van binnelandse inkomste bedoel was om permanent te wees. Enige bemaking aan 'n gade is aftrekbaar vir die doel van die boedelbelastingrekening. Dit sluit in 'n testamentêre bemaking sowel as 'n intestate (sonder testament) vererwing na 'n gade. Maar om intestaat te kan erf, geld die aanvaarde definisie van gade soos genoem nie. Dan moes daar 'n huwelik wees, of 'n erkende vorm gelykstaande aan 'n huwelik. Om dit anders te stel: As jy ongetroud is, kan jy nie van jou lewensmaat erf as daar nie 'n testament is nie.


Ons howe het al kopgekrap oor die probleem omdat sekere huwelike voorheen nie in ons reg erken is nie. Die kontitusionele hof se uitsprake in die afgelope paar jaar laat egter geen twyfel nie dat daar diskriminasie was en gevolglik word huwelike binne sekere gelowe nou erken, sowel as verbintenisse tussen gay mense. Die sleutelbegrip hier is dat gaan oor 'n huweliksverbintenis, nie soseer die vorm wat dit aanneem nie. Die blote saambly met iemand is nie 'n huweliksverbintenis nie, ongeag die langtermynaard of die emosionele en ondersteunende eienskappe daarvan en ongeag die siening van die kommissaris vir belastingsdoeleindes. Die konstitusionele hof het in die saak Volks No vs Robinson beslis daar rus 'n plig op getroudes om mekaar te onderhou, iets wat nie in saambly- verhoudings geld nie. As ons die uitspraak deurtrek na die intestate erfreg, geld die beginsel dat as jy die kans gebied word om te trou- die diskriminasie hierbo genoem is deur wetgewing verwyder- en jy doen dit nie, kan jy later die voordele wat 'n huwelik beid, opeis nie. In die geval waar die oorledene 'n kind nagelaat het, sal die kind alles erf. Die langslewende in die saambly- verhouding het geen reg op bates of 'n reg op onderhoud vir hom- haarself nie. Dit is ongelukkig die gevolge van die keuse 'n mens uitoefen. 


Deur: Nico Van Gijsen CFP, Sake24, 25 September 2011

Nuwe webwerf sal navrae oor boedels, trusts vergemaklik- Adri van Zyl

Die proses om boedels af te handel gaan makliker gemaak word deur die gebruik van 'n webwerf.
Adv. Lester Basson, hoofmeester van die hooggeregshof, het gister aangekondig dat eksekuteurs van boedels en lede van die publiek nou 'n webwerf kan gebruik om vas te stel hoe ver administrasie van trusts en boedels gevorder het. Dié diens is van gister af beskikbaar en bied toegang tot die geïntegreerde bestuurstelsel van die meesterskantoor. Die stelsel sal elke dag bygewerk word.
Basson het op 'n vergadering van die fidusiêre instituut van Suid- Afrika gesê personeel van die meesterskantoor bestee heeltemal te veel tyd aan navrae oor boedels, wat die afhandeling daarvan vetraag. Die kantoor beoog om binnekort meer inligting op die webwerf te plaas, soos die besonderhede van die eksekuteur en rekeninge wat teen die boedel ingedien is.
Die stelsel is ontwikkel deur mnr. Tienie Cronje, 'n navorser by die Regshervormingskommissie.
Die webwerf is by http://icmsweb.justice.gov.za/mastersinformation

Wrap your head around head injuries

This issue of CMScript focuses on head injuries as a prescribed minimum benefit (PMB) condition, from the slight bump to the serious brain injury.
What is a head injury?
Head injuries include any trauma, minor or serious, to the scalp, skull or brain. They can be closed or open (penetrating). A closed head injury means that the skull did not break (fracture); an open head injury means that the skull and a foreign object (such as skull bone) entered the brain.
What are the causes of head injuries?
Common causes of head injuries include traffic accidents, falls, physical assault, accidents at home and work, outdoor activities and sports injuries.
Symptoms of head injuries
The symptoms of a head injury can set in immediately or develop slowly over several hours or even days. Even if the skull is not damaged, the brain can hit against the inside of the skull and be bruised; the head may look fine on the outside, but complications could result from bleeding or swelling inside the skull.
What is covered in the prescribed minimum benefits?
All head injuries are medical emergencies and all medical emergencies are PMBs. A head injury, however insignificant it may seem, is thus a PMB condition until the diagnosis determines whether it remains a PMB condition or whether it changes to a non-PMB condition.
The PMB Code of Conduct states that where a medical emergency is diagnosed provisionally and not confirmed by additional medical evidence, the medical scheme must treat the medical emergency as a PMB and cover in full the costs for the diagnosis, treatment and care of the condition up to the point where a PMB condition has been excluded.

For example: Phumzile, a show-jumping competitor, falls from her horse and hits her head against the ground, cutting it open. She is unconscious but regains consciousness on the way to the hospital. At the hospital her doctor orders an X-ray and determines that there is no skull fracture. Based on firm clinical grounds, a Computed Tomography (CT) scan is also performed to ensure that there are no serious internal injuries to the head. The CT scan results are normal and Phumzile displays no further symptoms or signs of a brain injury. Right up until the CT scan results show everything to be normal, the case must be treated as an emergency (a PMB condition) and must be covered in full. Once treatment of the non-PMB condition starts, it will not be covered under PMBs.
PMBs cover the following head injuries:
• skull fractures;
• difficulty in breathing, eating, swallowing and bowel/bladder control due to a non-progressive neurological (including spinal) condition or injury;
•severe or moderate head injury: hematoma (bleeding which results in localised collection of blood within the brain) or oedema (swelling but no bleeding) with loss of consciousness;
• subarachnoid bleeding (between skull and brain);
• intracranial bleeding (in the skull);
• hematoma (bleeding in brain);
• compression of brain; and
• injury to major blood vessels.

Diagnosing PMB conditions
Depending on the clinical situation, the following diagnostic tests may be necessary and must be covered (in full) to determine the seriousness of your head injury and whether it remains a PMB condition:
• skull X-rays: to detect fractures and bone fragments;

• CT or Magnetic Resonance Imaging (MRI) scans, or an angiography: to detect swelling between the brain cover and the brain or within the brain tissue, and a shift or distortion in the brain chambers;

• electroencephalography (EEG): to detect the shift of the brain past its centre line;

• cisternography: to detect tears in the brain cover; and
• cerebrospinal fluid (CSF) sampling (called lumbar puncture): to detect whether there is increased pressure and blood in the CSF.

Treatment, care and rehabilitation
PMBs include the medical and surgical management of all head injuries. People with serious head injuries are always admitted to hospital for observation.
The Regulations in the Medical Schemes Act do not restrict the setting in which head injuries may be treated. Relevant treatment and care may be provided on an outpatient basis (in a hospital or clinic but where no hospitalisation is required) or in a setting other than a hospital, whichever is most appropriate clinically. Serious injuries may require that the patient be admitted to an intensive care unit and placed on a ventilator to assist with breathing. Ventilation, if required, is included in the medical management of head injuries.
The medical management and care of people with head injuries often includes rehabilitation. Rehabilitative services include but are not limited to physiotherapy, occupational and speech therapy, and psychological and social support.
Once it becomes clear that the patient will not regain further bodily functionality, the medical scheme is not obliged to pay for further rehabilitation services. The scheme can ask to see the initial assessment findings and weekly progress reports to determine whether you are making progress in regaining your functionality to be self-sufficient.

When a head injury has occurred, NEVER:
• Wash a head wound that is deep or bleeding.
• Remove any object that is sticking out of a head wound.
• Move the person (unless it is absolutely necessary).
• Shake the person if s/he seems confused.
• Remove the helmet if you suspect a serious head injury.
• Pick up a fallen person with any sign of a head injury.
• Drink alcohol within 48 hours of a serious head injury.



References
Medindia (www.medindia.net/patients/patientinfo/headinjury_types.htm)
U.S. National Library of Medicine (www.nlm.nih.gov/medlineplus/ency/article/000028.htm)
eMedicineHealth (www.emedicinehealth.com/head_injury/article_em.htm)
KwaZulu-Natal Provincial Health Department (www.kznhealth.gov.za/headinjury.htm)
The Communications Unit would like to thank Ronelle Smit, Dr Selaelo Mametja and Dr Boshoff Steenekamp for making this edition of CMScript possible.
information@medicalschemes.com
Hotline: 0861 123 267
Fax: 012 430 7644

THE EASY GUIDE TO ASSET CLASSES

Defining what asset classes are may seem trivial, but it is important because these are key components of a diversified portfolio. Each asset class needs to have a specific risk- return function, the detail of which many employers and members may not fully grasp. We hope that this simplified guide will be useful.

What does an asset class mean?
An asset is a piece of property that can be sold for cash, or traded for another property of equal value. Common asset classes include:
-Equities (stocks)
-Fixed income (bonds)
-Cash equilivants (money market instruments) and
-Property (real estate)

Each asset class includes assests bought and sold in the same way. The assets in each class also have the same guidelines or laws governing how they are traded, bought, or sold. Generally, assets in the same asset class also experience similar results in the marketplace. For example, when a stock market is said to be down, many individuals stocks lose value.

Equities (stocks)
Company shares sold on the open market or over the counter make up the stock asset class. Historically, equities have experienced more volatility than other asset classes. Due to increased risk, returns can be higher than in other classes.

Fixed interest/ Bonds
Debt instruments issued by companies, and federal and municipal governments, are included in the bond or asset class. A company issues bonds to raise money. Investors purchase the bonds and earn a fixed interest rate. Generally, bonds have less risk than equities.

Cash/ Money Market instruments
Cash equivalents or cash accounts are usually provided to investors by banks, credit unions, and investment firms- such as Money Market accounts. Investors earn interest similar to that of a savings account and, similarly, the returns may be lower compared to the other asset classes since there is much less risk involved.

Property/ Real Estate
To invest in the property asset class, buyers need to purchase real property. They can also participate in this market by purchasing investments in other asset classes. Options include buying shares in a real estate exchange traded fund (ETF) and purchasing shares in a real estate company.

Source: The Corporate Adviser (Old Mutual)- issue April 2011- 01

KEEP CESSIONS AND BENEFICIARY INFORMATION UP TO DATE

Each year, thousands of life policies are ceded to financial istitutions, usually as security for a debt such as a bond, loan or overdraft.Cessions play a important role for many people in gaining access to finance, giving the lender a comfort in the knowledge that their loan will be repaid in the event of their death. Unfortunately, few people take the time to understand the implications of a cession and the impact on nominated beneficiaries, usually loved ones. Even fewer people actually cancel cessions once their debts have been paid off, leaving potentially serious implications for beneficiaries should the policyholder die or become disabled. The best person to help you with this is your financial adviser.
Craig Harding, managing director of Altrisk says that policyholders need to know the ins and outs of cessions and consider all the scenarios and implications for their beneficiaries before signing on the dotted line. "The reality is that if you cede a life policy, or even a portion thereof to another party, the law provides that the cessionary will be paid before any other party. It is also not necessary for the beneficiaries to give any consent to the ceding of a policy and they may not even be aware that a cession exists.
"The harsh reality is that ceding an insurance policy, for example to provide security for a loan such as a mortgage, could leave your loved ones without any source of income if you die. The cessionary will take what's due to them first and any surplus could end up in your estatewhich could take months to settle before they see any financial relief," explains Harding.
Given the above implications, it's vital that policyholders understand what a cession is, the different types of cessions, how to implement and cancel a cession and what the considerations are before ceding a policy. Once again, the best thing to do is to consult your financial adviser so they can factor existing cessions into your financial plan. The status of cessions should then be part of the regular financial review.

What is a cession?
A cession is the transfer of the rights to a policy from one party to another. The party acquiring the rights is called the cessionary. The party giving the up the rights is called the cedent. A policy can be ceded in two ways:
-Outright cession- all rights in terms of the policy are transferred to the cessionary and all proceeds of the policy are paid directly to the cessionary in the event of a claim and not the previous owner, his/ her beneficiaries or estate.
- Collateral security cession- in this instance the policy will be ceded as security for a loan, typically for a home loan. The cessionary's rights are limited to receiving the lower of the claim proceeds and the amount of the policy owner's liability to the cessionary. All other rights of ownership of the policy remain with the ploicy owner.

If the policy is ceded, the rights of the cessionary takes precedent and will be paid before any payments to nominated beneficiaries.

Implementing a cession
Before ceding a life policy there are a number of steps that need to be followed:
- check your policy document- it should contain:
*rules relating to the nomination of beneficiaries or to ceding the policy eg can the policy be ceded.
*the requirements (including forms)to cede a policy or nominate a beneficiary
* how a cession will affect existing beneficiaries
* how to cancel a cession.
- Check the debt agreement you have with the bank or creditor may contain provisions regarding cessions and may stipulate how the creditor will deal with any surplus funds in excess of your liability.
- Go through the cession document is where you will cede your rights to the policy as security for a debt and may also stipulate the effect the cession will have on an existing beneficiary nomination.
- The beneficiary nomination document names the beneficiary to a policy and it may also contain provisions regarding the effect than any subsequent security cession will have an existing beneficiary nomination.
-Make sure you understand who has the right to cancel the cession. "The exact effects od ceding a policy as security for a debt will be governed by the wording of the various documents involved, so it's vital to thoroughly study these documents and asess their impact in various scenarios
- your broker or financial adviser will be an important source of information in this regard,"says Harding.
You should be aware of the following:
>Where the creditor pays any balance into an estate, it may attract additional unforseen costs.
>Even if you have paid off your debt but failed to cancel the cession, the insurer will pay the policy proceeds to the cessionary instead of to your nominated beneficiaries. Aside from the possible unforseen costs, there is also the time required to resolve the estate to consider and its impact on the beneficiary's liquidity.

Cancelling a cession
In order to reinstate the beneficiary and policyholder's rights the cession must be cancelled. "In the case of an outright cession, or a collateral cession where the right to revocation has also been ceded, the institution to which the cession was made must cancel it in writing. This releases you of your responsibility and confirms that you no longer have a debt in this regard. which in turn must be communicated to the insurer. In some situations a cession will revoke an existing beneficiary nomination even if the cession has been cancelled- in this instance it is essential that you make a new nomination and record this with your insurance company," explains Harding.

LIFE, CRITICAL ILLNESS AND DISABILITY COVER SHOULD BE A FINANCIAL PLANNING PRIORITY FOR YOUNGER CLIENTS

I'm young and healthy so do I really need all this life and critical illness insurance cover?
It's a question that many young individuals often grapple with, and for the most part, many leave getting their finances in order too late.
This is according to Craig Harding, managing director of Altrisk. This view is further highlighted in the 2010 Life and Disability Insurance Gap Study which shows that South Africans remain seriously underinsured. The 2010 study commissioned by the Association of Savings and Investments of South Africa (ASISA) and conducted by True South Actuaries & Consultants warns that South Africa's income earners aged 16 to 35 would not be able to sustain their way of living even remotely based on the current insurance cover.
"There's a tendency to think that life, disability and critical illness cover is something that you worry about when you're older- not when you're in your 20's and bolstered by superhero bravado. The reality is, the sooner you consider life cover the better as the cost of insurance products increase as you get older. If you're unlucky and suffer poor health the cost of your cover will be even more expensive. There's every reason for single people to have a life policy in place if they want to be certain that their parents or any dependants are looked after" says Harding.
"Equally important, if not more so, is cover for critical illness and disability. Few individuals enjoy contemplating the emotional and financial consequences for themselves and their family if they were to contract a serious illness or become permanently disabled. What is often overlooked is the repercussions of an impairment or disability. Will you and your family be in a position to financially provide for ongoing healthcare, therapy and other necessary lifestyle changes? The case for cover for anyone who is self- employed is even more crucial. How will a person's death or illness affect his business? is the business dependable upon him financially? A business owner's death, illness or disability can have far- reaching consequences for many other people" says Harding.
Wally Bodin, an independant financial adviser and planner adds to the debate. "Critical illness or dread disease cover has evolved since the 90's to a modern day 'must have' in financial planning. Planners no longer wait for their clients to reach a 'mature' age to put critical illness cover in place. The fact that a client in their early thirties is healthy is no reason to cover them for critical illness. This wasn't always common practise, but when one looks at statistics for cancer claims, people are being diagnosed at far younger ages than they were 20 years ago, due to medical advances and greater awareness. Recent industry claims statistics reveal that cancer is responsible for 50% of all dread disease claims. Sadly, cancer knows no age. Women are the most neglected market, and ironically, they have almost double the number of claims than men," explains Bodin.
In terms of cover and how much cover is needed, Wally offers the following advice: "An ideal structure would be a level premium pattern. This means that the premiums do not change for the duration of the policy. You might pay more per month when you are younger but you pay a lot less as you get older. By taking level cover your insurance premium will stay the same, so in your later years when you need the cover the most, you will still be able to afford it.
"Should your budget allow, take the longest guarentee term available. Long term planning is essential as this is the last bit of life assurance you are still going to have well into your 70's. Having no cover means you'll have to find the cash shortfall to supplement your loss of income. In terms of how much cover, I believe a good starting point for any cover is a thorough financial needs analysis," explains Bodin.

Still not convinced?
Based on actual experiences in 2010, True South Estimates there'll be 159 034 deaths in South Africa this year and 52 481 diability events. That's 435 deaths and 144 disabilities every day. "The bottom line is most people believe in insurance- some are just not happy to pay for it. Sadly, their families end up paying for it by suffering financially after the death of their loved one, or from the repercussions of the onerous care requirements and costs after an incident, illness or disability," concludes Harding of Altrisk.

SOURCE: MONEY MARKETING- 31 MARCH 2011

A MEDICAL AID MUST SUIT YOUR NEEDS

Peter Edwards- Alexander Forbes

Navigating your way through the confusing maze of medical aids starts with the selection of the scheme.
Peter Edwards, managing director of Alexander Forbes Health, says this decision should include issues of stability and solvency of the scheme, and the innovation and service levels applied by the administrator of the scheme. "Preferably you'd want the solvency level to be around where the regulations require it to be, around 25% of premiums. Anything below that means that means schemes ultimately are under pressure to move to that level, and they have to price in reserve growth" says Edward. "You don't want a scheme that's losing a lot of money, because it would mean having to correct this position with benefit reductions and/ or significant contribution increases."
Look for stability, not a scheme that makes a lot of money one year and loses the next, or has significant changes to its options. Look at past contribution increases. This will tell you whether the scheme is stable and whether increases are introduced in a consistent manner.
"Generally an indicator of stability is size. A larger medical scheme is likely to be more stable and the experience is fairly consistent, given the larger risk base. In a large scheme, one big claim or a series of big claims don't have an impact on the scheme, unlike small schemes where it could be detrimental," says Edward.
It's difficult for an individual who's not directly involved in the market to assess the administrator. That's where the financial adviser, your doctor, and family and friends come in. Another important point is governance. "You don't want a high noise factor around a scheme, with infighting splashed in the press. You want a low noise factor. It mostly indicates things should be going well and that there's stability and it's organised." The base of any medical scheme is prescribed minimum benefits, which schemes are required to cover by law. You must ensure that you choose the scheme with the hospital cover you require. if you rarely go to a doctor, you might be happy with a hospital plan only or savings- based option.
All options have to cover 26 chronic conditions as part of the prescribed minimum benefits. If you have a chronic condition which is not on the list, you will need to consider higher- level options covered by a scheme. Edward suggests evaluating the cost of this additional cover versus covering the cost of your own medication, as it may be less than the additional cost of buying up.
"If your day-to-day needs are higher, such as if you have a health condition or young children, then maybe consider a medical scheme that has more comprehensive benefits than just a savings account or minimum out-of-hospital cover. Perhaps consider one that has an above- threshold benefit or more comprehensive benefits.
"It helps to try and estimate how much you'd need for out-of-hospital costs and take this into account when selecting your option.
"A real problem for people is the detail within a scheme. People often just gloss over it, but it creates massive frustration."

Look at these elements to better understand the detail:


* The first is chronic medication. Can you get medication from anywhere ir do you have to go to a specific network? Most of teh bigger schemes have networks where you can see specific practitioners or get medicines from particular places. In return, you pay less and have the comfort that prescribed minimum benefits will be covered in full.
"Familiarise yourself with those networks. A lot of people don't, and then benefits aren't paid in the way they expected," says Edward
* Affordability is a critical issue and needs to be taken into account in making your selection.
Network plans or lower- cost options often aren't understood. They are not sub- standard. This is clear if you look at the number of doctors that agree to be part of the network. "If affordability is an issue, join a different structured plan."
When getting advice, there are three key things you need to make sure advisers are doing for you:
- First, they must do a thorough needs analysis and ask you about your health status. Are you planning to have a baby? When were you last in hospital?
- They must make their recommendations and indicate why they're suggesting one scheme and plan, and not another;
- If an adviser suggests that you move, he must communicate the differences between where you come from and where you're going, to such as how the contributions and procedures differ.

Daar is redes vir lewenspolis

Veral as 'n mens jonk is, word lewensversekering dikwels beskou as 'n luukse wat jy nie nodig het nie. Veral omdat die persoon wat die lewenspolis uitneem self nie die voordele daarvan kan ervaar nie. As mense boonop nie enige afhanklikes het nie, het dit vir hulle nog minder sin om lewensversekering uit te neem omdat hulle nie 'n "opbrengs" op hul premies verdien nie. Mense verkies dus dikwels om in die een of ander spaarproduk te belê om in hul toekomstige behoeftes te voorsien omdat hulle kwansuis dan kan sien hoe hul spaargeld groei. "Mense se omstandighede kan egter oornag verander, en dan gaan hulle wel sulke versekering nodig hê," sê mnr. Nico van Gijsen, 'n direkteur van Finlac en skrywer van die reeks boeke Kernfinansies wat deur Pearson uitgegee word. Een van die boeke handel juis oor versekering

Van Gijsen identifiseer 6 redes waarom mense lewensversekering nodig het:

Versorging van geliefdes
Enige iemand wil graag dat sy geliefdes goed versorg is as hy nie meer daar is nie, en dat planne vir die kinders nie skipbreuk ly nie. Selfs al verdien die gade wat agterbly 'n inkomste, is dit dikwels nie genoeg om te sorg dat die gesin dieselfde lewenspeil as vroeër handhaaf nie.
Dit kan selfs meer kos om 'n gesin aan die gang te hou as een van die twee gades nie meer daar is nie omdat iemand anders gehuur word om van die pligte te verrig wat die afgestorwe persoon verrig het.

Sakeredes
Baie meer mense moet deesdae na hulself omsien om 'n bestaan te maak en bedryf kleinsake- ondernemings, allen of saam met 'n vennoot. Veral as 'n onderneming as 'n vennootskap bedryf word, is dit baie belangrik dat die twee vennote lewensversekering op mekaar se lewens uitneem.
Die opbrengs uit so 'n polis kan gebruik word om die afgestorwe vennoot se aandeel uit te koop, en sodoende ook vir die afgestorwene se familie te sorg. So 'n polis kan ook vergoed vir 'n moontlike verlies aan inkomste as die afgestorwene besonderse vaardighede gehad het waarvan die onderneming afhanklik was. In die geval van 'n eenmansaak kan versekering nie net vir die afgestorwe persoon se familie sorg as hy sterf nie, maar ook vir die onderneming se personeel wat dalk sonder heenkome sit.
Nog 'n vorm van sakeversekering is sleutelpersoonversekering. Baie ondernemings het persone in diens wie se kennis noodsaaklik is vir die voortbestaan van die onderneming. As so 'n persoon sterf, kan dit die ondernemer help met kontant om die verlies aan inkomste te vergoed totdat 'n plaasvervanger gevind of opgelei is.

Boedelbeplanning
Dit kan 'n duur storie wees om te sterf. Benewens die koste van die begrafnis, eksekuteursfooie en administratiewe koste kan boedelbeplanning die nagelate persone in 'n geldmors laat beland. As daar belasting op 'n boedel van toepassing is is daar wesenlike gevaar dat daar nie genoeg kontant beskikbaar is om dié belasting en moontlike kapitaalwinsbelasting te betaal nie. Dit kan daartoe lei dat van die bates in die boedel verkoop sal moet word om dié verpligtinge na te kom.
Slim boedelbeplanning maak gewoonlik voorsiening vir lewensversekering om dié verpligtinge af te handel.

Skuld
Die meeste mense gaan die een of ander tyd skuld aan om bates soos 'n huis of motor te koop, maar die skuld gaan ongelukkig nie weg as jy te sterwe kom nie. Die krediteure het 'n eis teen die afgestorwene se boedel en die skuld sal eers uit die boedel betaal moet word voordat afhanklikes iets van die boedel kan ontvang.
Dit het dus sin om 'n lewenspolis uit te neem om die skuld te delg as jy sterf om te keer dat jou naasbestaandes skielik sonder geld sit omdat krediteure alles opgeraap het.

Egskeiding
Sowat die helfte van alle huwelike eindig in 'n egskeiding en dit is 'n risiko waarvoor beplan moet word. Veral wanneer die vrou van onderhoudsbetaling afhanklik is, kan dit lol as die man te sterwe kom. 'n Lewenspolis op die man se lewe moet dus deel van enige egskeidingsooreenkoms wees. En wanneer 'n egpaar volgens die aanwasbedeling getroud is, kan daar 'n probleem wees as die lid van die egpaar wie se aanwas in bates die grootste is, sterf. Die persoon se boedel sal dan 'n verpligting hê teenoor die ander helfte wat betaal moet word voordat enige bemakings gedoen kan word. 'n Lewenspolis is die ideale manier om te verseker dat kontant beskikbaar is.

Aftreekapitaal
Dit gebeur dikwels dat 'n egpaar al hul aftreegeld gebruik en wanneer die een te sterwe kom, is daar feitlik niks vir die agtergeblewene oor nie. Dit kan veral vroue wat gemiddeld sewe jaar langer as mans leef. Die opbrengs van 'n lewenspolis is die ideale manier om die agtergeblewene se geldsake 'n hupstoot te gee.

Artikel geskryf deur David van Rooyen, Sake24- 27 Maart 2011

Divorce Checklist

Things newly divorced persons must attend to

Events such as birth, divorce and death each involve unique administratitve procedures which, in some cases, have to be attended to as a matter of urgency.
When a person is in the process of getting a divorce, he or she must make sure that he/ she obtains the correct legal and financial advice before the divorce is finalised. Rushing through the traumatic process just to get it over and done with could hold financial implications for one or both of the parties.
It is suggested that a "to- do list be compiled" and the items ticked off as they are completed. Ensure that all instructions in the settlement agreement are attended to as soon as possible and are carried out correctly and fully. As time goes by it becomes more difficult, and sometimes unpleasant, to negotiate matters that have not been finalised. In most cases the lawyer will, and should, protect the interests of his client and ensure that all instructions are carried out. However, it is important for the person also to protect his/ her own interests.

The cession of a life policy can be used as an example of what is meant by "carry out correctly". If the agreement states that a policy on the life of one of the parties has to be ceded in favour of the other party, the latter should make sure that it is in fact ceded and registered with the relevant insurance company and that she/ he is not simply nominated as a beneficiary. In the case of a cession, full ownership is acquired. This is not the case with a nomination while the insured is still alive. He or she may cancel the nomination at any time without the knowledge of the other party, while this cannot be done in the case of a cession. If one of the parties that have to implement certain actions, such as the cession of a policy or the transfer of a vehicle, emigrates or is declared insolvent or becomes incapable of contracting, other problems and delays could arise if the actions have not yet been executed.

The will, if any, must be revised as a matter of urgency. If a divorced spouse is a beneficiary in the will and this has to be changed, the Wills Act allows a three month period of grace after the final divorce for a will to be revised or drawn up. If this is not done, the divorced spouse will be entitled to the relevant benefits at the death of the testator/ testatrix.

No period of grace applies to policies iro which beneficiary has been nominated. The nomination of a divorced spouse under a policy is not cancelled by a divorce and the revisionof an existing will, or a new will.

Other matter that also require urgent attention include inter alia notice to an employer, pension and medical funds, amending existing or effecting new short- term insurance, applications to service providers such as municipality and Telkom, and debit order for the payment of monthly obligations.

Persons who rebert to their previous name must also inform all institutions where their existing surname is known. It is interesting to note that certain administrative procedures pertaining to marriages and divorces are very similar.

Source: Punch newsletter,Issue 255, Sanlam

Impact of Budget on Retirement Funds

Herewith short summary of changes impacting on Retirement Funding:


Contributions to retirement funds:

Contributions by employers to pension, provident and retirement annuity funds are not currently taxed in the hands of employees. From March1, 2012, these contributions will be deemed to be a taxable fringe benefit in the hands of the employee

Individuals will be allowed to deduct up to 22.5% of their taxable income for contributions to pension, provident and retirement annuity funds, subject to a maximum deduction of R200000 and a minimum of R12000. This is a slight change from the existing legislation where a distinction is drawn between retirement funding income and non-retirement funding income.

The taxation of employer contributions in the hands of employees will have a significant impact on the investment savings of retirement fund members. The tax deduction regime of 7.5% of approved remuneration for pension contributions and up to 15% of non-retirement funding income will no longer be applicable from 1 March 2012, and it is anticipated that the application of a total of 22.5% of taxable income (as opposed to approved remuneration or non-retirement funding income) for all retirement contributions means that the percentage deduction will be applicable off a smaller base).

The minimum deduction is potentially beneficial for low paid workers as this allows them to benefit from the floor level tax deduction. The R200000 cap on deductions makes sense from the government’s perspective as beyond a certain savings level it is clear that an individual will not be dependent on the state in old age.

Effective removal of provident funds

Withdrawal at retirement from provident funds will be limited to one third of the accumulated share of fund. On balance this is probably a good move as it will reduce the possibility of individuals squandering their retirement benefits. It appears that legacy provident funds will be accommodated, so members should not attempt to cash in their provident funds as their rights will be protected.

Taxation of lump sum benefits on retirement


Government will increase the tax-free lump sum on retirement from R300000 to R315000.

10 reasons to invest in a retirement annuity (RA)

Retirement annuities remain a popular investment
vehicle with many South Africans for good reason.

A retirement annuity is a long-term savings vehicle aimed
primarily at people providing for their retirement. To prevent
people from relying on the government to provide for them in
their old age, there are legal restrictions on withdrawing funds
from RAs. But there are also tax advantages to offset the lack
of access to funds. Tax benefits are just one of the ten reasons
that you should consider a retirement annuity:

1. Preparing for retirement
An RA helps you to build up capital during your working years so that you have enough income to enjoy the same standard of living when you retire.

2. Ensuring sufficient savings
The rule of thumb is that if you save 15% of your salary over 35 years, you will receive 75% of your salary as a pension, given reasonable returns.
The problem is that your pensionable salary (the amount that your 15% pension contributions are calculated on) is usually about only 70% of your total salary benefits which include, for example, a bonus, car allowance, medical aid and other benefits. This means that you could retire on 75% of
70% of your salary! It is important to save for these ‘extras’ as they do help us meet our current living expenses.
For example: if your monthly package is R20 000, you would need to retire on the equivalent of R15 000 (75%). But your pensionable salary is significantly less at R10 500 (75% X R20 000 X 70%). By investing 15% of your non-pensionable income into a retirement annuity, you can make up the savings gap. A starting point is to always invest 15% of your bonus tax-free into an RA.

3. Tax benefits
You can invest up to 15% of your total income (less any amount that may be used for other pension fund contributions) tax-free. Not only can you invest with before-tax money, but you do not have to pay capital gains tax or income tax on your retirement investment. Your investment growth will be higher over the long-term as the growth remains in the policy and
will usually offer you a better after-tax return than other types of saving. When you retire, you can take one-third of your investment as a lump sum. Of this the first R300 000 is tax-free with a favourable tax-rate for higher amounts. The remaining two-thirds of the retirement annuity is invested in an annuity to provide you with income during your retirement. You can reduce your income tax by contributing towards an RA before the end of the tax year in February.

4. The power of compound growth
Because you are saving over a long period, your money starts to work for you as you earn interest on the interest. If you save consistently over 30 years, less than 35 cents of each Rand of income you receive will come from the contribution you paid in. The balance will come from the growth
earned on your contributions and savings in retirement.

5. Disciplined savings
You do not have access to your retirement annuity savings until the age of 55. This may sound like a disadvantage but it removes the temptation to dip into or deplete your savings while you are working. A 25-year old needs about 15% of his/her salary through their working lifetime to secure an adequate pension. If they cashed in their savings at 35, they would need to save 25% to get to the same benefit. Starting from a zero base at 45 requires an incredible 47%! The only remedy here would be to retire later.

6. Long-term growth
As markets fluctuate during different economic cycles, your consistent contributions will average out this variability. You also draw your pension over a (hopefully) prolonged period. Therefore, what happens in a turbulent investment market is of less concern to you. The average investment manager has delivered returns which are 11% above inflation over the last 5 years, despite the recent global economic crisis.

7. Supporting your dependants
If your dependents are left to cope without you, your retirement annuity can provide a source of income for those you leave behind, especially if you buy death cover on your policy. The cash benefit from a retirement annuity falls outside your estate, so if you die and are insolvent, your
benefit is paid to your family rather than your creditors.

8. Room to grow your savings
While pension funds generally require a contribution that is a fixed percentage of your salary, RAs offer more flexibility. Many people recognise the need to save but struggle in the short term to meet
financial obligations. A retirement annuity allows you to slowly increase your contributions over time. For example, you could take 3% from each of your next five years’ salary increases to get to the full 15% contribution.
You can also invest a portion of your bonus each year as a lump sum contribution.

9. Diversified portfolio
You have access to different asset classes in a retirement annuity. You can invest 25% of your savings offshore without needing Reserve Bank clearance. You can also invest in other types of
portfolios through your RA, such as direct property, private equity and fund of funds.

10. Freedom of choice
With many retirement annuities, you can choose your underlying investment giving you some flexibility in how your contributions are invested and therefore how they grow.

*Article from Liberty*

Calculating tax relief

Many ordinary salary-earning taxpayers are aware that there are certain expenses on which one can claim tax relief, but often they have difficulty in working out what portion they can claim tax relief thereon.

16 January 2011 | Steven Jones

Many ordinary salary-earning taxpayers are aware that there are certain expenses on which one can claim tax relief, but often they have difficulty in working out what portion they can claim tax relief thereon.

But help is at hand, as we discuss some of the more common deductions one can claim.

Pension fund contributions, Next to capital gains tax, one of the most confusing tax concepts for most people is that of “retirement-funding employment” (RFE) income. This is the measure used to calculate the deduction allowed for pension fund contributions.

But in actual fact, it is quite simple. Go to your HR department and ask them what portion of your income is taken into account when determining your contributions to the pension fund. This will be determined by the rules of the fund, and varies – for some it may be a percentage of total package, while for others it may be based on basic salary only (ie, excluding allowances). Overtime payments are normally excluded.

Once you have this figure, multiply it by 7,5%. The result is the amount that SARS will allow as a deduction. Obviously, if your actual contribution is less than this amount, SARS will only allow the amount actually contributed. However, if your contribution is more than the 7,5%, the portion disallowed will eventually form part of the tax-free portion of your pension fund when you retire.

Provident fund contributions Unlike pension funds, employee contributions to a provident fund are not tax-deductible. However, the portion of your income that is taken into account for calculating the contributions is still regarded as RFE income, which has an impact when calculating the allowable amount deductible for retirement annuity fund contributions.

Since employer contributions are tax-deductible in the hands of the employer, and do not constitute a fringe benefit in the hands of the employer, most provident funds tend to be structured as “non-contributory” funds (ie, funds where the employee does not make any direct contributions thereto).

Retirement annuity (RA) fund contributions
The reason why the distinction between RFE income and non-RFE income is so important is because the amount allowable as a tax deduction in respect of RA fund contributions is 15% of non-RFE.

In other words, you can contribute to an RA fund up to 15% of any income that is not taken into account when determining contributions to a pension or provident fund. The deduction also applies to any taxable income not derived from employment, such as annuity payments or rental income. This also means if you are not a member of any such fund, you can contribute up to 15% of your total income (from whatever source) to an RA fund and claim tax relief thereon.

However, if 15% of your income from non-RFE employment is less than R1 500 per annum (or R3 500 less pension contributions), you can claim whichever is the greater amount. Once again, any RA fund contribution for which tax relief is not granted is carried over to future years, and if there is any remaining portion thereof by the time you retire, such portion forms part of the tax-free portion of your eventual payout.

Medical fund contributions
SARS allows a fixed monthly amount upon which tax relief will be granted (known as the “cap”). The amounts are R670 per month each for the primary member and first additional beneficiary, and R410 per month for each beneficiary thereafter. For a married member with a spouse and two children, this makes the monthly deductible amount R2 160.

The cap applies whether the contributions are made by the employer or the employee. If the employer contribution exceeds the monthly cap, any excess will be taxed as a fringe benefit, whereas if the employer contribution does not exceed the cap, relief up to the amount of the unused portion will be granted on employee contributions.

However, if you are over the age of 65 years the cap does not apply. This means that there is no fringe benefit on any employer contribution to a medical scheme, irrespective of the amount, while employee contributions are fully tax-deductible.

Entertainment allowances
These were scrapped some years ago, so the amount deductible by ordinary salary-earners in respect of entertainment expenses is a nice round number – zero!

Other expenses
If an employee is required to incur expenses for business purposes as part of their job requirements, such as subsistence, travel, maintenance of a home office, and the like, there must be (a) specific stipulations in the employment contract that this is required, and (b) a specific allowance provided for this purpose.

Different rules apply to each allowance, including the portion of the allowance that is taxed upfront – 80% of travel allowances are taxed upfront; some (such as for uniforms) are not taxed at all; while most other allowances are fully-taxed upfront. Likewise, there are specific ways in which claims against such allowances are made.

– steven@moneywebtax.co.za

How prescribed minimum benefits help you manage diabetes

What is diabetes mellitus?

When we eat, the food is broken down into materials that our bodies need to function properly. One of the substances into which food is broken down is the simple sugar glucose. Sugar is absorbed into the bloodstream and stimulates the pancreas to produce insulin. Insulin allows sugar to move from the blood into the cells where it is converted into energy.

Diabetes is a chronic disease where your blood sugar levels (blood glucose) are too high because the normal control mechanisms of your body fail.

There are two types of diabetes, namely type I and type II. The two types are actually two completely different diseases.

Diabetes type I occurs when your body does not produce adequate quantities of insulin. It typically starts in early childhood.

Diabetes type II occurs when your body does not make enough insulin or, even if adequate amounts of insulin are produced, the body fails to transport the glucose from the bloodstream into the body cells. Type II usually starts later in life.

The result of both is that the glucose stays in your blood and cannot be used as an energy source for normal cell functions.

Diabetes leads to serious complications and could even jeopardise your life. It may cause heart disease and strokes and damage the eyes, kidneys and nervous system. Blood sugar levels that are too high or too low can also cause you to fall into a coma.

Diabetes cannot be cured but it can be successfully managed.

Treating diabetes

The treatment of diabetes focuses on the control of blood sugar levels. Treatment involves all aspects of your lifestyle, especially diet and exercise, but most sufferers also use medicine management at some point.

People with diabetes mellitus type I almost always need insulin therapy but lifestyle management is still important. People with diabetes mellitus type II may be able to manage their disease with lifestyle changes but if blood sugar levels cannot be controlled this way, oral anti-hyperglycaemic drugs and even insulin therapy may be required. Treatment of other risk factors such as blood pressure and high cholesterol is extremely important.

PMB entitlement

Diabetes mellitus type I and type II are included on the prescribed minimum benefit (PMB) Chronic Diseases List. This means that your medical scheme must fund the diagnosis, treatment and care of your condition and it must do so from its risk pool and in full.

Your condition must be treated according to the algorithm in the PMB regulations. These algorithms are also available on the Council for Medical Schemes (CMS) website at the following links:
http://www.medicalschemes.com/files/Prescribed%20Minimum%20Benefits/DiabetesMellitus1_2.pdf
http://www.medicalschemes.com/files/Prescribed%20Minimum%20Benefits/DiabetesMellitus2_3.pdf

The disease management interventions that must be funded by the scheme include:

• Consultations with your treating provider (GP or specialist – if authorised by your scheme)
• Lifestyle modification interventions such as dietary and disease education
• Annual eye examination for retinopathy
• Annual comprehensive foot examination
• Pathology tests at 3-6 monthly intervals
• Disease identification card or disc
• Home glucose monitoring

It is important to remember that the scheme may still use managed care protocols which for instance allow only a specific number of consultations with your treating provider per year. These protocols must be supplied to you on request.

If there is a clinical reason or need for more benefits than those specified in the protocol the medical scheme may not refuse to fund these.

The Communications Unit would like to thank Ronelle Smit, Dr Nkuli Mlaba, Dr Selaelo Mametja and Dr Boshoff Steenekamp for making this edition of CMScript possible.