LEARNER’S STUDY GUIDE
Investigate dread disease products
and their place in wealth
management
(113913)
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
management
Contents
Instructions to the learner
2
UNIT 1
Dread disease products as an insurance product (SO1)
7
UNIT 2
Dread disease products offered by different financial services
institutions (SO2)
14
UNIT 3
The legal framework for dread disease (SO3)
19
UNIT 4
Dread disease as part of holistic wealth management (SO4)
28
Answers to Self-tests
35
Addendum 1
38
Addendum 2
46
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
management
Instructions to the learner
Introduction
Welcome
Welcome to the learning intervention that deals with the
investigation of dread disease products and their place in wealth
management.
This learning intervention forms part of a Level 4 skills
programme (Investigate dread disease products and their place
in wealth management), which enables you to meet the
minimum requirements to be “fit and proper” in terms of the FAIS
legislation.
Purpose of this This learning intervention will provide you with the knowledge
learning
and skills to provide insurance solutions by investigating dread
intervention
disease products and their place in wealth management.
Overall outcome
By the end of this learning intervention, you will be able to do the
following::

Explain dread disease as an insurance product.

Investigate dread disease products offered by different
financial services institutions.

Explain the legal framework for dread disease.

Describe dread disease as part of holistic wealth management.
Target audience
This learning intervention is intended for learners in a financial
services environment. It will add value to financial planners,
intermediaries, financial advisers, healthcare intermediaries,
product developers, co-ordinators of medical schemes, financial
call centre agents, and trustees of medical schemes and
retirement funds. It views dread disease insurance as an
integral part of holistic financial planning that is not necessarily
part of life cover.
Delivery
medium
This training will take place in the form of self-study. In other
words, you are required to work through this self-study guide and
complete the activities included.
The activities are
comprehensive, practical, and experiential in nature. They are
based on “real work” where learners work with real workplace
scenarios and case studies.
Prerequisites
Learning assumed to be in place:

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Learners should be competent in Communication, Mathematical Literacy, and Financial Literacy at NQF Level 3.
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
management
Learners’ roles
and
responsibilities
You are required to do the following:

Work through this self-study guide.

Complete activities.

Ask for guidance and support when required.

Complete the assessment.
Introduction to Investigation of dread disease products and their place in wealth
this self-study management is the central theme of this training and is
guide
discussed in detail in this self-study guide.
This guide makes use of icons to guide you in your learning
process. Below is a description of these icons:
Icon
Meaning
Icon
Meaning
Self-tests
and activities
Assignments and
assessments
Study
Outcomes
Read
Action verbs
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This guide uses action verbs in its learning outcomes. Action
verbs tell you what you must DO.
Action verb
Explanation
Compare
Examine in order to note the similarities and/or
differences
Explain
Make known in detail, clarify
Identify
Ascertain the origin, nature, or definitive
characteristics
Indicate
Show by using examples
Name
List, define, tell, show, label, collect, tabulate,
who, when, where
Research
Conduct an investigation to compare, contrast,
distinguish, analyse, categorise, examine,
identify, explain, separate
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
management
The diagram below illustrates the broad process to follow when
applying technical knowledge and skill in investigating dread
disease products and their place in wealth management and will
also illustrate how the self-study guide is structured.
Investigate dread disease products and their place in wealth management (113913)
UNIT
STUDY
READ
SELF-TEST/
ACTIVITY
ASSESSMENT
Start
here
UNIT 1
Dread disease
products as an
insurance
product
UNIT 2
Dread disease
products
offered by
different
financial
services
institutions
UNIT 3
The legal
framework for
dread disease
The outcomes for this unit
The content of sub-units 1.1-1.4
Complete Self-test 1
The outcomes for this unit
Read Addendum 1
The content of sub-units 2.1-2.2
Complete Self-test 2
The outcomes for this unit
The content of sub-units 3.1-3.3
Complete Self-test 3
The outcomes for this unit
UNIT 4
Dread disease
as part of
holistic wealth
management
The content of sub-units 4.1-4.3
Complete Self-test 4
Start preparing for
your final assessment
Page 1
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
management
Unit standards
The overall outcomes and specific outcomes of this learning
intervention are aligned with registered Unit Standard 113913.
This means that if you are able to demonstrate competence in the
learning outcomes, which are aligned to the specific outcomes of
the unit standard, you will qualify for credits, which will contribute
towards the 120 credits required for a national certificate at
Level 4.
If you are unable to demonstrate competence, you will not obtain
any credits for the unit standard.
This learning intervention is aligned to the following unit standard
as illustrated in the table below:
Unit standard title
Investigate dread disease
products and their place in
wealth management
Unit
standard
number
NQF
level
Number
of
credits
113913
4
2
This means a total of two credits towards a national certificate.
How is this
course made
up?
This course has four units. Each unit corresponds to a specific
outcome (SO) as indicated in the SAQA documentation
(Addendum 2). Each unit has a number of sub-units. These subunits correspond to the assessment criteria (AC) as indicated in
the SAQA documentation.
Note: SO1AC1 refers to Specific Outcome 1, Assessment
Criterion 1.
Assessment
In order to obtain the two credits for Unit Standard 113913 as
discussed previously, you must provide evidence of your
competence after working through this self-study guide.
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.
Resources
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The following resources will assist you in preparing for your
assessment:
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
management
Reference
Availability

Internet




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.
Sanlam – Your Financial Services Group.
N.d. [Online] Available: www.sanlam.co.za.
Company product guides: member booklets
Marketing
and catalogues as available from the company
department
with which the learner has dealings.
Our wish to
you
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Everything of the best in your studies. Enjoy every moment that
you spend studying. It is time well spent in making sure of your
future.
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
management
UNIT 1
Dread disease products as an insurance product
(SO1)
After completing this unit, you should be able to do the
following:
Outcomes for
this unit

Explain the concept of dread disease, and give examples
(AC1.1).

Identify the different terminology used to describe dread
disease for three different insurers (AC1.2).

Name and explain the various medical conditions that are
covered by dread disease products, and give an indication
when the insurer would pay out for each condition (AC1.3).

Identify dread disease events that would not be covered from a
specific policy document, and give an indication why such
events are excluded for the policy (AC1.4).
Study the material for each sub-unit before moving on to the
activities.
1.1
The concept of dread disease is explained with
examples (AC1.1)
Introduction
The concept of dread disease is not easy to explain, as the
product is offered in a variety of combinations, depending on the
insurer.
Historically, dread disease benefits were paid as a lump sum
based on a multiple of salary or flat amount and limited to a few
diseases; for example, a lump sum of R400 000 is paid on
diagnosis of cancer as a once-off payment. Currently, dread
disease cover is offered for a range of diseases and with more
options of payment.
Example
Total dread disease cover amounts to R400 000, but first-stage
cancer has been diagnosed.
The benefit is, therefore, tiered accordingly. This means that the
claim for first-stage cancer amounts to, for example, 20% of
R400 000.
Should the member’s condition worsen, further portions of the
benefit will be paid until the total cover has been depleted.
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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What is dread
disease
cover?
Background
Dread disease cover is a risk benefit offered by insurers to cover
individuals in the event of serious illnesses. Most insurers offer a
range of policies, although some insurers may cover more than
others. The benefit is payable on diagnosis of any of, but not
limited to, the following conditions (as offered by the insurer):

Heart attack

Open heart surgery

Stroke

Cancer

Kidney failure

Rheumatoid arthritis

Muscular dystrophy

Motor neuron disease

Paralysis

Major organ transplant

Blindness

Major burns

Coma

Multiple sclerosis

Dementia

Accidental brain damage
Thirty years ago, the most severe ailments society suffered from
were diseases such as tuberculosis and diseases associated with
poverty. The Western lifestyle has evolved to such an extent that
more illnesses related to our current lifestyle are prevalent. Some
of these diseases are related to stress, refined nutrition, etc.
Up until twenty years ago, risk benefits such as death cover and
disability benefits were offered. The life insurers saw the need to
fill the gap in the market. No longer do they provide the
conservative products that cater for one condition or event. A
variety of combinations of risk products can be used to
supplement one another, providing for potential lifestyle changes
and loss of income, depending on a client’s specific needs. Dread
disease benefits became part of this spectrum.
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
management
Accelerated
benefits
This benefit is available when linking dread disease to life cover.
Once a dread disease claim has been paid, the group life cover is
reduced by the amount of the dread disease claim.
Example
Johan’s cover at Sanlam is as follows:
Life cover: R600 000
Disability cover: R600 000
Dread disease: R400 000

Johan suffers a stroke, and Sanlam pays a dread disease
benefit of R400 000.

His life cover is reduced to R200 000 because the policy
Johan has regards dread disease as an accelerated benefit.

If Johan owned a non-accelerated policy, he would have
retained his full life cover of R600 000, even though he
received a dread disease benefit of R400 000.
Reinstatement
The benefit can be reinstated after the policyholder has returned
to work and continued payment after a specified period of time as
specified by the insurer.
Example

John suffers a heart attack on 1 May 2004.

Old Mutual pays a benefit of R400 000.

His policy covers the reinstatement of the benefit after 30
days.
Should John suffer another heart attack two years later, the
benefit will again be paid to him.
1.2
Different terminology used to describe dread
disease is identified for three different insurers
(AC1.2)
Terminology
in the industry
Dread disease is identified as specific products offered by
insurers. These products are defined by insurers as part of a
unique range of benefits and, therefore, named differently. Dread
disease is offered with life cover or as a standalone benefit. Most
insurers have general names for all their risk benefits.
These generic names include the following:
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
Life cover

Disability

Dread disease

Premium protection
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
management
The terminology for dread disease within one insurer can also be
named differently when the features and target market of the
product differ. The table below indicates the terminology used for
the range of benefits available as dread disease benefits. Not all
insurance organisations have been included.
Risk Products
OLD MUTUAL
MOMENTUM
DISCOVERY
Name
Dread disease benefits

Severe Illness

Core Severe Illness

Comprehensive Severe Illness

Core Critical Illness

Comprehensive Critical Illness

Classical Critical Illness
Various:

Severe Illness
AcceleRater

Female Severe Illness
ModeRater

Child Severe Illness Benefit
Greenlight
Myriad
Integrator
SANLAM
Matrix

Dread Disease
LIBERTY
Lifestyle Protector

Living Lifestyle

Living Lifestyle Optimum

Living Lifestyle Optimum Plus

FemAbility

CareAbility
1.3
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 (AC1.3)
Introduction
Each medical condition subscribes to the terms and conditions
within the policy document. Exclusions, limits, and terms of
agreement will determine whether the benefit is paid.
Two main factors are considered when a claim is lodged:
The status of the policyholder in terms of the policy
document and whether the policyholder is entitled to the
benefit
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
management
Diagnosis of the condition must be made by a registered
medical practitioner and supported by medical evidence
with the necessary laboratory, clinical, radiological, and
histological evidence.
Prior to implementing the policy for dread disease cover, the
insurer will request that the client discloses information regarding
his/her health and habits. This is done in the form of a
questionnaire. Should any detail on the questionnaire(s) reveal
that the client has suffered or shows signs of suffering any of the
identified diseases, the insurer reserves the right to call for further
medical evidence, load the rates, and, finally, refuse cover if the
risk is too high.
The most common dread diseases are mentioned below. The list
is not exhaustive, and the criteria for each condition may differ
from company to company.
Heart attack
Payment will be made on the basis of supporting evidence in view
of a part of the heart muscle dying due to the blood supply not
being adequate. The medical documentation must include an
electrocardiogram (ECG) showing evidence of acute myocardial
infarction.
Open heart
surgery
Payment will only be effected on proof of coronary angiography
that the surgery was necessary. All other surgery is excluded.
Kidney failure
Payment is effected on failure of both kidneys where renal dialysis
is required.
Paraplegia
Payment is made on the loss of the use of both legs or both arms.
Blindness
Payment is made on diagnosis of the loss of vision in both eyes.
Major organ
transplant
Transplant of vital organs, that is, heart, lungs, liver, pancreas, or
kidneys, must have been made. A bone marrow transplant is also
considered for payment of this benefit.
Stroke
Payment is dependent on producing medical evidence that proves
a neurological deficit has occurred, lasting longer than 24 hours.
Conclusion
It must be noted that dread diseases and requirements for these
diseases are subject to the policy contract issued by the insurer.
Therefore, the same claim may be repudiated by one insurer and
paid by another. It is important that anyone buying or selling
dread disease products is fully acquainted with them.
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
management
1.4
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
(AC1.4)
Introduction
All of the events as documented under Assessment Criterion 1.3
will be covered, provided that the policyholder meets the policy
specifications in terms of the qualifying and medical criteria as
specified above. There are diseases that are not covered, for
example, HIV/Aids contracted by means other than a blood
transfusion. Criteria laid down by the insurers are different, and it
is important to study the terms and conditions of the policy.
However, there are reasons why payment may be repudiated.
Non-payment can be as a result of the following:

A pre-existing condition not disclosed at the time of taking out
the policy

Maximum cover already paid

Exclusions

Maximum age

Concurrent disability cover
Pre-existing
condition
No benefit will be payable if the policyholder claims immediately
24 months after taking out the policy if the condition or similar
condition was diagnosed 24 months prior to becoming a dread
disease policyholder.
Maximum
cover
If payment is made for the same illness by another insurer or if the
maximum benefit has already been paid, no further payment will
be considered.
Exclusions
The following will not be considered:
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
Claims arising directly or indirectly through war, whether
declared or not

Participation in aviation other than as a passenger travelling
between two airfields in an aircraft flown by a duly licensed
pilot

Participation in any hazardous sport or pursuit

Exposure to risks beyond the borders of South Africa that are
not generally found or are more severe than corresponding
risks in South Africa

Any act of the member or spouse that is a wilful and material
violation of any law
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
management

The use of nuclear, biological, or chemical weapons or attacks
on, or sabotage of, facilities and storage depots, whether
direct or remotely initiated, which lead to the release of
radioactivity or nuclear, biological, or chemical warfare agents
Maximum age
Dread disease cover cannot extend beyond the age of 65.
Concurrent
disability
cover
Should the policyholder receive a disability benefit due to a
medical condition that also forms part of the dread disease
category, payment may not be made.
Answer the following self-test questions. Compare your answers
to the ones provided at the end of this study guide.
Self-test 1
1. Briefly explain the reasons for insurers including dread disease
benefits in insurance packages.
2. How do accelerated benefits affect group life cover?
3. What are the conditions of reinstatement?
4. List the generic names for risk benefits.
5. Name the factors that are considered when a claim is made.
6.
Briefly explain the reasons for repudiating a claim.
Competency
Competency
check and
progress
indication
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Check
SO1
I can explain the concept of dread disease and
give examples.

AC1.1
I can identify the different terminology used to
describe dread disease for three different
insurers.

AC1.2
I can name and explain the various medical
conditions that are covered by dread disease
products and give an indication when the
insurer would pay out for each condition.

AC1.3
I can identify dread disease events that would
not be covered from a specific policy document
and give an indication why such events are
excluded for the policy.

AC1.4
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
management
UNIT 2
Dread disease products offered by different
financial services institutions (SO2)
After completing this unit, you should be able to do the
following:
Outcomes for
this unit

Compare and identify dread disease products offered by
three insurers in the following terms (AC2.1):
o Contracts
o Benefits
o Exclusions
o When benefits are payable

Compare the rate charged by three insurers, and indicate the
policy best suited to a specific client (AC2.2).
Study the material for each sub-unit before moving on to the
activities.
2.1
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Dread disease products offered by three
insurers are identified and compared in terms
of the contracts, benefits, exclusions and when
benefits are payable (AC2.1)
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management
Benefit name
Survival period
Maximum cover
Events
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Old Mutual
Severe Illness Benefit
30 days
R2.5 m
Core version:
 Cancer
 Heart attack
 Stroke
Comprehensive version:
 All core-version benefits
 Open heart surgery
 Aortic surgery
 Heart transplant
 Cardiomyopathy
 Multiple sclerosis
 Motor neuron disease
 Accidental brain damage
 Dementia (including Alzheimer’s)
 Parkinson’s disease
 Bacterial meningitis
 Benign brain tumour
 Coma
 Liver transplant
 Pancreas transplant
 Chronic liver failure
 Kidney transplant
 Kidney failure
 Rheumatoid arthritis
 Paralysis
 Muscular dystrophy
 Accidental HIV via blood
transfusion
 Accidental HIV for medical, dental,
or nurse practitioners
Liberty
Living Lifestyle
Trauma and paraplegia/quadriplegia 14
days and all other 30 days
R2 m
Includes 14 categories as per the American
Medical Association (AMA):
 Life-threatening cancer
 Respiratory failure
 Blindness
 Loss of hearing
 Advanced Aids
 Multiple sclerosis
 Parkinson’s disease
 Benign brain tumour
 Coma
 Renal failure
 Paraplegia/quadriplegia
Cardiovascular:
 Heart attack
 Cardiomyopathy
 Coronary artery disease
 Heart valve
 Cerebrovascular incident
 Heart transplant
Trauma:
 Head injury
 Major burns
Discovery
Severe Illness Benefit
By condition
R2 m
 Cancer
 Heart and artery
 Gastrointestinal
 Connective tissue disease
 Urogenital tract and kidney
 Respiratory disease
 Advanced Aids/Accidental
 Musculoskeletal
 Eye
 Ear, nose, and throat
 Endocrine and metabolic diseases
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth management

Type of benefit






Accidental HIV via organ
transplant
Bone marrow transplant
Severe aplastic anaemia
Paid as a lump sum benefit
Available as a standalone or
accelerator of death benefits
Cannot claim twice for the same
event or related events, for
example, heart attack and open
heart surgery
Accelerator and non-accelerator
benefits offered




Termination of
benefit
Benefit ceases in the event of the
following:
 The life covered dies
 The benefit term ends
 The full cover amount is paid
 The benefit lapses
 For standalone, if illness has been
removed


Paid as tiered benefit, for example, firststage cancer amounts to, for example,
20% of R400 000. Should the
member’s condition worsen to stage 2,
50% of the benefit will be paid, etc.
Cannot claim twice for the same event
or related events, for example, heart
attack and open heart surgery
Claims dealt with in different stages of
severity
Accelerator and non-accelerator
benefits offered
Expires at age 65
Whole of life where payment of
premiums is until death





Pays according to seven severity
levels
Client qualifies for multiple claims
across body systems
Subsequent claims not related to
the same body system will be
treated independent of previous
claims
Expires at age 65
Whole of life where payment of
premiums is until death
Note: the table reflects the comparison between similar benefits. Additional benefits are offered by the above insurers.
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
management
2.2
Introduction
Example
The rates charged by the three insurers are
compared and an indication is given of the
policy best suited to a specific client (AC2.2)
Rates charged by insurers are related to different benefits, target
markets, and also the image of the company in terms of its
customer service and track record.
Discovery offers their Body IQ product as a benefit to ensure that
the client has membership of a gymnasium and, when using
these facilities, will benefit in terms of the products and premiums
charged.
Liberty offers its benefits and capitalises on its world-class service
to promote its products.
Differences in
the products
Examples
It must be noted that there are obvious and subtle differences in
the products that affect their price range.
Old Mutual’s Greenlight benefits pay for a coma on condition that
the beneficiary is off life support. Liberty pays for the benefit
whether the beneficiary is on or off life support.
A trauma benefit is included in the basic dread disease cover at
Liberty. Trauma is costed separately as an additional benefit at
Discovery Health.
Comparison
The quotes below are based on the dread disease product and
the life cover offered by three insurers.
Study the following (Addendum 1):
Study
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
Quotation 1 – Discovery Life

Quotation 2 – Old Mutual

Quotation 3 – Liberty Life

Quotation 4 – Momentum
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
management
Answer the following self-test questions. Compare your answers
to the ones provided at the end of this study guide.
Self-test 2
Mr Frail has a Living Assurance benefit with Liberty Life. He has
life cover of R1 million and dread disease cover of R500 000
taken out on the accelerator basis. He suffers from stage 1
cancer.
1. Calculate the benefit Mr Frail will receive as his first claim.
2. Mr Frail’s condition worsens to a point where he receives
100% of his dread disease benefit. What will Mr Frail’s life
cover look like when he dies?
3.
How, in your opinion, would Old Mutual have paid the
benefit on diagnosis of Mr Frail’s condition?
Competency
Competency
check and
progress
indication
SO2

AC2.1

AC 2.2
I can compare and identify dread disease
products offered by three insurers in the
following terms:

Contracts

Benefits

Exclusions

When benefits are payable
I can compare the rate charged by three
insurers, and indicate the policy best suited to
a specific client.
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Check
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
management
UNIT 3
The legal framework for dread disease (SO3)
After completing this unit, you should be able to do the
following:
Outcomes for
this unit

Identify the legislation relating to dread disease, and indicate
how the Acts impact on the sale of dread disease policies
(AC3.1).

Explain the tax implications for the dread disease policies in
terms of the following (AC3.2):

o
Reference to tax on receipt of the benefit
o
The deductibility of premiums
Research the demarcation between medical aid schemes
and insurance with reference to the following (AC3.3):
o
Dread disease
o
Healthcare products
Study the material for each sub-unit before moving on to the
activities.
3.1
Legislation relating to dread disease is
identified and an indication is given of how the
Acts impact on the sale of dread disease
policies (AC3.1)
Introduction
Most laws have an indirect effect on dread disease. We will
attempt to document whether legislation affects dread disease
and, if so, how it impacts on the benefit, premium, and sale
thereof.
Long-term
Insurance Act
52 of 1998
Dread disease forms part of six classes of long-term business:
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
Assistance policy (these are policies with a small amount of
life cover, for example, funeral benefits)

Disability policy

Fund policy

Health policy

Life policy

Sinking fund policy
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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Dread disease is affected by Part I of the Long-Term Insurance
Act that deals primarily with the administration of the Act, the
role of the Registrar for Long-Term Insurance and the Advisory
Committee.
Part 4 of the Regulation to the Long-Term Insurance Act
determines, along with the general principles of taxation, the
structure of policies such as dread disease.
Policyholder
Protector Rules
(PPR)
The purpose of the PPR is to

enable policyholders to make decisions regarding their longterm policies and

ensure that intermediaries and long-term insurers conduct
business fairly, with due care and diligence.
The policyholder is covered by the Statutory Notice in that it
provides the policyholder with the following rights:
Financial
Advisory and
Intermediary
Services (FAIS)
Act 37 of 2002
Income Tax Act
58 of 1962

Right to certain information from the intermediary at the
earliest reasonable opportunity

Right to know the impact of the decision he/she elects to
make

Right, when being advised, to replace an existing policy

Right to be informed by the insurer

Right to cancel the transaction within a specified period (that
is, 30 days)
Dread disease policyholders have the assurance that the FAIS
Act is there to

protect them as consumers,

ensure that they are provided with adequate information in
order to enable them to make informed decisions, and

regulate the selling and advice-giving activities of financial
planners.
Individuals pay tax on their taxable income in the year of
assessment at specified rates of tax laid down in the Schedule
of Taxation. Tax is paid on a taxpayer’s taxable income earned
over a period of a year, which is called the year of assessment.
Employees’ tax is a withholding tax that is deducted from an
employee’s remuneration on a regular (usually monthly) basis.
The deduction is made by the employer and is determined by
using tables issued by Inland Revenue.
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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When a client takes out cover for a policy, the premium paid on
that policy is normally paid with after-tax monies. Therefore,
premiums paid for this kind of policy and the benefits received
will be free of tax.
Life Offices’
Association
Regulations
The Life Offices’ Association (LOA) is a body set up by the
industry stakeholders to regulate industry practices.
The code of the LOA regulates dealings on dread disease
benefits. It determines that benefits are payable solely on the
occurrence of certain objectively determinable medical
conditions, including, but not limited to, heart attacks, strokes,
and cancer.
All dread disease claims, like other claims, are regarded as
“notifiable” and recorded in the LOA Claims Register.
“Notifiable” claims include

claims being investigated,

fraudulent or repudiated claims,

dread disease or overseas claims,

Aids-related claims,

permanent health claims, and

where the beneficiary is not a family member or the
beneficiary is an intermediary.
The LOA also subscribes to the Promotion of Equality and
Prevention of Unfair Discrimination Act 4 of 2000 and will
condone non-payment only, based on sound actuarial,
statistical, or medical data or opinion that substantiates such
action.
Impact of
legislation
The impact of legislation on dread disease is twofold:
1. From an intermediary or insurer’s point of view, sales can be
limited or restricted due to the repercussions of not
complying with legislation. Indirectly, the insurer will need to
employ legal experts to interpret and advise its staff, and this
will raise the running costs of the product.
2. From a consumer’s point of view, legislation can provide
peace of mind: the consumer feels secure in entering into a
dread disease contract, as legislation will ensure that he/she
is treated equitably and fairly and that the benefit is paid on
criteria generally applied by all insurers.
Intermediaries must bear in mind that dread disease benefits are
sold to target markets in a variety of ways, which could be
confusing for the client. The intermediary must ensure that all
aspects of the benefits are thoroughly explained to ensure that
the client makes an informed decision.
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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3.2
The tax implications for dread disease policies
are explained with reference to tax on receipt
of the benefit and deductibility of premiums
(AC3.2)
The general principles of taxation specify that the proceeds of a
life policy constitute capital. As such, proceeds of a life policy
are tax-free. Payment of premiums made by the policyholder is
normally made after tax has been deducted. Therefore, the
proceeds from a dread disease policy, or any benefits received
at any stage, constitute capital and will be tax-free.
3.3
Introduction
The demarcation debate between medical
schemes and insurance is researched with
reference to dread disease and healthcare
products (AC3.3)
There are two main bodies under which organisations that
provide insurance, medical and other, operate:

The Financial Services Board

The Council for Medical Schemes
Medical insurance has historically been dealt with under the
auspices of the Medical Schemes Council. When South Africa
became part of the global village and started aligning its
business practices according to world standards, insurance
organisations started incorporating the medical insurance
concept into their mainstream business.
The Financial
Services Board
(FSB)
The purpose of the FSB is to supervise the activities of all
financial institutions (excluding the banking sector), for example:

Pension funds, including provident and retirement annuity
(RA) funds

Unit trust schemes

Trust companies

Stock exchanges

Insurers

Friendly societies

Short-term brokers
Compliance with certain Acts is monitored by the FSB. One of
the Acts is the Long-Term Insurance Act, which determines how
dread disease products are managed.
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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The Council for
Medical
Schemes
Basis of conflict
The Council for Medical Schemes is an autonomous body,
established by Parliament, to provide supervision over medical
schemes. The council determines overall policy and its main
objectives include the following:

To protect the interests of medical schemes and their
members

To monitor the financial soundness of medical schemes

To investigate complaints and settle disputes in relation to
the affairs of medical schemes

To make rules that are in line with the Medical Schemes Act
131 of 1998, with regard to its own functions and powers
Demarcation between medical schemes and insurance
providing medical cover has presented itself as an ongoing
debate and cause of confusion. There are two main reasons:
1. Guidelines on what constitutes a medical scheme and its
provisions are outlined in the Medical Schemes Act, which
was passed in 1998 and came into operation on 1 February
1999. Some of the clauses in the Act were found to be open
to interpretation.
2. Certain insurance products, such as hospital plans, where
the benefit is not coupled to a healthcare service and/or the
cost of such service, are not controlled by the Medical
Schemes Act, but fall under the jurisdiction of the FSB.
Dread disease
versus
healthcare
products
Dread disease products, as offered, do not replace healthcare
products offered by medical schemes. They do, instead,
enhance the benefits. Medical healthcare provides assistance
in a variety of ways for a variety of illnesses, most of which are
not considered serious or terminal. The following table is a
comparison of dread disease and the medical aid product:
Healthcare
Regulated by
Dread disease
Medical Schemes Council
FSB
Cover
Covers daily illnesses, from a
common cold treated by a
medical practitioner to hospitalisation
Covers specific dread diseases,
for example, cancer, stroke, and
blindness
Payment
Made on individual treatment
as long as client is a member
of the scheme
Once-off payment as a lump
sum or a percentage of the
prescribed lump sum until lump
sum is depleted
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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Purpose
1. To assist the client with
daily unexpected
expenses (small
amounts)
2. To cover hospitalisation
costs
To provide financially for nearfatal or fatal diseases in order to
1. maintain existing lifestyle,
2. cover medical expenses,
and
3. provide additional income
during recuperation
Medical
Schemes
Council versus
Liberty
The Medical Lifestyle product issued by Liberty raised some of
the issues regarding demarcation between insured medical
policies and medical schemes.
Read the following article:
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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Medical Schemes Council, Liberty reach agreement on healthcare product
GUIDELINES drawn up by the Life Offices’ Association (LOA) have ended a longrunning dispute between Liberty Healthcare and the Council for Medical Schemes over
Liberty’s health insurance product.
In a compromise agreement, Liberty Healthcare has agreed to stop selling the product,
Medical Lifestyle Plus, and the council has agreed to let the product continue, under an
exemption from the Medical Schemes Act, for the benefit of the 77 000 existing
policyholders.
The Council for Medical Schemes, which regulates medical schemes, was of the view
that Medical Lifestyle Plus did the business of a medical scheme, and because it was
not registered as medical scheme, was therefore illegal. Liberty Healthcare disagreed.
The matter was heading for court, but then the LOA, which represents life assurers and
of which Liberty is a member, decided to draw up its own guidelines on what
constitutes health insurance and what should be regarded as illegal in terms of the
Medical Schemes Act, for the benefit of life assurers who set up new health insurance
business.
Steven Maasch, the divisional director of healthcare for Liberty Personal Benefits, says
although Liberty is still of the view that the product is legal, the LOA had almost
finalised guidelines on what constituted health insurance and Liberty’s product did not
comply with these draft guidelines.
Liberty Healthcare had then engaged with the Council for Medical Schemes to secure
the rights of the existing policyholders, he says. Maasch says Medical Lifestyle Plus is
sustainable without new business, because the product has been priced in terms of
each policyholder’s risk.
Pat Sidley, the council’s spokesperson, says the agreement was a compromise
reached by both parties to protect existing policyholders, and to avoid a clash that
could have gone to court.
Sidley says the agreement is also a natural progression of the demarcation agreement
on what constitutes a health insurance and what is the business of a medical scheme.
The demarcation agreement was drawn up between the Council for Medical Schemes
and the Financial Services Board, which regulates insurance products, in an attempt to
clear up confusion about the line between the products.
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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The Medical Schemes Act regulates medical schemes. In terms of this Act, they have
to provide certain benefits and may not charge contribution rates that are based on a
member’s age or state of health. Insurance products are regulated by the insurance
acts, do not have to provide certain minimum benefits and can charge premiums based
on the risk a policyholder poses to the insurer.
However, there have been disagreements about the interpretation of the demarcation
agreement since it was drawn up.
About 18 months ago, the council first took exception to Liberty Healthcare’s original
health insurance product, Medical Lifestyle, which among other things, paid a daily
hospital benefit.
The product was closed to new business in December 2002, and Liberty Healthcare
launched Medical Lifestyle Plus in January last year.
The modified product pays benefits at a percentage of a sum assured, based on the
diagnosis of certain conditions. Policyholders can choose between two levels of cover
– one with a R75 000 sum assured and one with a R25 000 sum assured. Depending
on the condition you are diagnosed with, how long you spend in hospital, the level of
care and other factors, you would be paid a percentage of that R75 000 or R25 000.
The cover also includes a monthly benefit for chronic conditions.
The council was still unhappy with this product, saying it regarded products that offered
a payout linked to the number of days spent in hospital as doing the business of a
medical scheme.
This week’s compromise is expected to put the matter to rest.
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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Answer the following self-test questions. Compare your answers
to the ones provided at the end of this study guide.
Self-test 3
1. List the Acts that have an impact on dread disease.
2. Explain how legislation impacts on dread disease.
3. Name the two main bodies under which insurance and
medical operate.
4.
How compatible are dread disease and healthcare
products?
Competency
Competency
check and
progress
indication
I can identify the legislation relating to dread
disease and indicate how the Acts impact on
the sale of dread disease policies.
Check
SO3

AC3.1

AC3.2

AC3.3
I can explain the tax implications for the dread
disease policies in terms of the following:

Reference to tax on receipt of the benefit

The deductibility of premiums
I can research the demarcation between
medical aid schemes and insurance with
reference to the following:
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
Dread disease

Healthcare products
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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UNIT 4
Dread disease as part of holistic wealth
management (SO4)
After completing this unit, you should be able to do the
following:
Outcomes for
this unit

Explain reasons why a client may require dread disease
insurance, and provide examples (AC4.1).

Explain the difference between dread disease cover and
disability insurance in terms of the following (AC4.2):

o
Benefits
o
Contributions
o
Tax deductions
o
When benefits are payable
Explain the role of dread disease in a holistic financial plan
with reference to the specific needs of three different clients
(AC4.3).
Study the material for each sub-unit before moving on to the
activities.
4.1
Reasons why a client may require dread
disease insurance are explained with examples
(AC4.1)
Introduction
Dread disease benefits have been implemented to
accommodate the current trend of diseases. Individuals can
depend on the new structure of benefits in a variety of ways:
Financial
planning
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
The individual has the finances to recuperate.

The additional payout can cover medical costs.

The individual does not have to lower his/her standard of
living.

The cover is offered to compensate for the change in
lifestyle that may be required.
Financial planning is a process based on a constructive plan to
meet the client’s income needs during the client’s lifetime. The
following diagram depicts what needs are generally looked at
and how they complement one another:
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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Client needs
As indicated above, dread disease forms an important
component of sound financial planning. The client’s lifestyle and
income potential will be threatened if he/she does not take out
cover for dread disease.

The client can invest money towards retirement by means of
a pension, provident, preserver, or retirement annuity fund to
ensure that he/she is financially secure after retirement.

The client can pay a premium for life cover in the event of
death. His/her beneficiaries will be financially independent if
the client arranges for ample cover.

The client can pay premiums towards disability cover in the
event of disablement, whether it is total and permanent or
temporary disablement. However, disability offered by most
insurers does not cover dread disease.

Premium protection is available should the client be unable
to continue payment of his/her premiums in the event of
illness, job loss, etc.
It is clear, however, that should the client contract an illness, for
example, cancer, no provision has been made. The employer
(that is, if the client is not self-employed) may pay the client’s
salary for a limited period, but what happens in the event of
prolonged illness?
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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What assistance is available for enormous medical bills? What
if the client needs nursing assistance? What about additional
costs incurred by not having an able-bodied person fulfilling
his/her role?
Example
Mary works for XYZ Ltd. She is 45 years old and unmarried
without any children. Her provident fund has made provision for
her retirement, life cover, and a lump sum disability. In addition,
Mary has a retirement annuity. She is satisfied that, in the event
of her retirement, death, or disablement, she is fully covered.
Mary becomes very ill, and her doctor diagnoses her with renal
failure.
Analysis of possible scenarios:
1. Mary has to depend on her employer to pay her a salary as
long as she is able to work. XYZ is unable to pay Mary for
an indefinite period, as they need someone to do Mary’s
work.
2. Mary needs financial assistance, as the medical aid she
belongs to only pays a portion of her benefits.
3. Mary is unable to maintain her lifestyle, as she has to
employ someone to drive her to hospital for dialysis and
assist her with daily chores and a nurse to help administer
the necessary drugs.
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 (AC4.2)
Introduction
It is important to note that the lines between dread disease and
disability have become blurred with the introduction of
impairment benefits. Impairment benefits are normally offered
as disability benefits. Some insurers offer impairment benefits
that cover similar diseases to those covered under dread
disease.
Examples of cover offered:
1. Liberty offers impairment using the AMA guide’s definition of
whole person impairment (WPI), based on the following
categories:
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
Aplastic anaemia

Benign brain tumour

Cancer

Cardiovascular

Chronic liver failure
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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
Renal failure

Respiratory failure

Multiple sclerosis

Parkinson’s disease

Trauma

Paraplegia

Blindness

Loss of hearing

Advanced Aids
Note: the dread disease benefits they offer are also based
on WPI (see Assessment Criterion 2.1).
2. Old Mutual offers functional impairment benefits based on
the following categories:

Mobility and balance

Upper-limb function

Senses

Effort tolerance

Well-being

Mental functioning

Serious psychiatric illness
Note: Old Mutual’s dread disease cover consists of a range
of different diseases (see Assessment Criterion 2.1).
The following table is a comparison of the main features of
dread disease and disability cover.
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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Dread disease
cover
Lump sum
disability cover
Income
disability
Purpose
Cover provided in
case of dread
disease to assist
with medical bills,
maintain lifestyle,
and offer financial
assistance during
recovery
Compensation for
loss of earning
capacity in the event
of total and
permanent
disablement
Compensation for
loss of earning
capacity in the
event of
temporary or
permanent
disablement
Benefits
Paid as a lump sum
and tiered according
to severity,
depending on the
insurer’s offerings
Paid as a lump sum
and/or tiered
benefits for
impairment
Paid as an
annuity
Contributions
Generally more
expensive than lump
sum disability
Less expensive than
dread disease
Generally more
expensive than
lump sum
disability and
dread disease
Tax deductions
No tax deductions
No tax deductions
Subject to
marginal rate of
tax
When payable
On diagnosis of
illness as specified
by the insurer (see
Specific Outcome 2)
On total and
permanent
disablement as
verified by medical
reports
On temporary or
permanent
disablement as
verified by
medical reports
4.3
The role of dread disease in a holistic financial
plan is explained with reference to the specific
needs of three different clients (AC4.3)
Client’s needs
A financial plan is a structured plan to meet the client’s
investment needs over a specific period of time during the
client’s lifetime. These needs relate to the following:
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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Retirement
planning
Retirement planning, including provision, should the client live
“too” long, relates to outliving your ability to support yourself
financially. The products that are recommended provide income
on retirement and also allow certain tax advantages during
contribution years and, then, on receiving the benefit. Examples
of these products are retirement annuities and retirement
preservers.
Becoming
disabled or
suffering a
dread disease
Becoming disabled or suffering a dread disease, which deprives
you of earning an income, means you will need additional
money to pay for medical costs incurred, maintain your existing
lifestyle, and perhaps get additional assistance while
recuperating. Examples of these benefits are capital disability
(lump sum), monthly disability income, accidental disability,
dread disease, and impairment benefits. These policies will pay
out in accordance with the terms and conditions of the contract
at claim stage.
Medical
expenses
Paying for medical expenses resulting from illness,
hospitalisation, or surgery, for example, medical schemes.
Income
protection
Income protection prevents investments from being eroded by
tax and inflation. Examples are automatic contribution increase
benefits, which allow clients to increase the contract contribution
to counteract inflation. Other products offer the possibility to the
client to increase his/her contribution with the consumer price
index, thus allowing the contract to retain monetary value.
Retirement annuity contracts offer tax advantages to their
members who contribute towards retirement.
Life cycles
Clients are in different stages of their life cycles, and therefore,
dread disease will be more important for some than for others.
Each client will also have a different set of circumstances that
will determine his/her specific needs.
Answer the following self-test questions. Compare your
answers to the ones provided at the end of this study guide.
Self-test 4
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1.
List the reasons why an individual requires dread disease
insurance cover.
2.
In which areas of a client’s life does dread disease play a
major role?
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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Competency
Competency
check and
progress
indication
I can explain reasons why a client may
require dread disease insurance and provide
examples.
Check
SO4

AC4.1

AC4.2

AC4.3
I can explain the difference between dread
disease cover and disability insurance in
terms of the following:

Benefits

Contributions

Tax deductions

When benefits are payable
I can explain the role of dread disease in a
holistic financial plan with reference to the
specific needs of three different clients.
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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Answers to Self-tests
UNIT 1
Dread disease products as an insurance product (SO1)
Compare your answers to the ones suggested below.
Answers:
Self-test 1
1. Depending on the client’s needs, a combination of risk products
had to be used to supplement one another and provide for
potential lifestyle changes and loss of income.
2. If dread disease is linked to life cover and once a claim has
been paid, the group life cover is reduced by the amount of the
dread disease claim.
3. The policy holder must go back to work and continue with
payments after a period stipulated by the insurer.
4. Generic list for risk benefits:

Life cover

Disability

Dread disease

Premium protection.
5. When a claim is made, the following factors are considered:

The status of the policyholder in terms of the policy
document and whether the policyholder is entitled to the
benefit

Diagnosis of the condition must be made by a registered
medical practitioner and supported by medical evidence with
the necessary laboratory, clinical, radiological, and
histological evidence.
6. Reasons for repudiating a claim:
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
A pre-existing condition not disclosed at the time of taking
out the policy

Maximum cover already paid

Exclusions

Maximum age
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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UNIT 2
Dread disease product offered by different financial services
institutions (SO2)
Compare your answers to the ones suggested below.
Answers:
Self-test 2
Mr Frail has a Living Assurance benefit with Liberty Life. He has life
cover of R1 million and dread disease cover of R500 000 taken out
on the accelerator basis. He suffers form stage 1 cancer.
1. R1 000 000
2. R500 000
3.
Old Mutual would have paid the full dread disease
benefit as lump sum.
UNIT 3
The legal framework for dread disease (SO3)
Compare your answers to the ones suggested below.
Answers:
Self-test 3
1. Legislation that has impact on dread disease:

Long-Term Insurance Act 52 of 1998

Policyholder Protector Rules (PPR)

Financial Advisory and Intermediary Services Act 37 of 200

Income Tax Act 58 of 1962

Life Offices’ Association
2. The impact of legislation on dread disease is twofold.

From an intermediary or insurer’s point of view, sales can be
limited or restricted due to the repercussions of not
complying with legislation. Indirectly, the insurer will need to
employ legal experts to interpret and advise its staff, and this
will raise the running costs of the product.

From a consumer’s point of view, legislation can provide
peace of mind: the consumer feels secure in entering into a
dread disease contract, as legislation will ensure that he/she
is treated equitably and fairly and that the benefit is paid on
criteria generally applied by all insurers.
3. Two main bodies under which insurance and medical operate:
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
The Financial Services Board

The Council for Medical Schemes
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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4.
Dread disease does not replace healthcare products offered
by medical schemes, but it enhances benefits. Medical healthcare
provides assistance in terms of illnesses that are mostly not
considered serious or terminal.
UNIT 4
Dread disease as part of holistic wealth management (SO4)
Compare your answers to the ones suggested below.
Answers:
Self-test 4
1. In case of a major illness, an individual can rely on the following:

The individual has finances to recuperate.

The additional payout can cover medical costs.

There is no need to lower the standard of living.

The cover compensates for the change of lifestyle that may
be necessary.
2. The role that dread disease plays in a client’s life:
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
Retirement planning

Disability or suffering from dread disease

Medical expenses

Income protection

Life cycles
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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Addendum 1
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
Natural person
Owner tax status
Non-conforming
PERSONAL DETAILS OF THE LIVES ASSURED
Principal
Name
A Client
Date of birth
1965/01/01
Age next
40
Gender
Male
Smoker status
Non-smoker
Educational qualification
3-year diploma
Gross annual income
R480 000
Gross monthly income
R40 000
Occupation
IT – Consultant
Hazardous activities
None selected
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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BENEFIT AND PREMIUM DETAILS
Monthly
Principal life’s benefit
Risk
cat.
Percen
tage of
Benefit
amount in
fund
rands
Benefit
expiry age
premium
(incl.
loadings) in
rands
Life Cover
A1
100.00
1 000 000
Whole life
157.61
Severe Illness Benefit
Comprehensive Plus
A1
100.00
1 000 000
Whole life
326.41
Capital Disability Benefit
A1
100.00
1 000 000
Age 65
110.69
Comprehensive Plus
Total For Principal’s Benefits
R594.71
The recommended Minimum Protected Fund benefit has been removed from this
quotation.
TOTAL INITIAL MONTHLY PREMIUM
R594.71
TOTAL PREMIUM FOR A NON-INTEGRATED LIFE PLAN
R699.65
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
594.71
654.18
719.60
791.56
01/10/2012
01/10/2013
01/10/2014
01/10/2015
1 274.81
1 402.30
1 793.61
2 888.63
01/10/2008
01/10/2009
01/10/2010
01/10/2011
870.71
957.79
1 053.57
1 158.92
01/10/2016
01/10/2017
01/10/2018
01/10/2019
5 433.66
8 750.96
16 525.92
50 434.83
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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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.
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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QUOTE 2
OLD MUTUAL
GREENLIGHT QUOTATION
Prepared by
Code
Quotation date
OmuQuote version
Quote reference number
Distribution channel
Start date of the contract
Old Mutual
Contracting party
Date of birth
Gender
Mr A Client
01/01/1965
Male
07/09/2004
6.02
QR00003
Broker
01/10/2004
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.
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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BENEFIT COVER AND PREMIUM DETAILS
Comp.
Life covered
Initial
cover
Initial
pre-
amount
mium
annual
pre-
Scheduled
annual
Cover
end
End of
guar.
mium
in-
cover
increase
date
(anb)
term
(years)
For life
01/10/2
009 (5)
crease
Risk benefit(s)
No.
Name
5.00% in
Death Benefit 1
1
Mr A
R1 000 000
Client
R620
5.00% in
October
October
each year
p.m.
each
– start
year
2005
Accelerator(s) as %
of parent cover
amount
Comprehensive
Disability Benefit
(100%)
Severe Illness
R1 000 000
(Comprehensive)
Benefit (100%)
01/10/2
029
(65)
For life
R1 000 000
Total contractual regular premium via debit order
R620 p.m.
RISK BENEFIT COVER AND PREMIUM PROJECTIONS
Death Benefit 1 (Mr A Client) – CAPI at 5.00% and SACI at 5.00% p.a.
At the start
of year
1
2
3
4
5
Cover
R1 000 000
R1 050 000
R1 102 500
R1 157 625
R1 215 507
Illustrative
premium
R620
R684
R756
R836
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.
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N/A
N/A
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
A Client
Date of birth
01/01/1965
Age next birthday
40
Gender
Male
Smoker status
Non-smoker
Educational qualification
3- or 4-year Technikon or Teachers’ College Diploma
Annual income
R480 000.00
Rating category
1
Occupation
Computer consultant
Percentage duties
Admin 100%
Manual 0%
Supervisory 0%
Travel 0%
Occupation category
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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Benefit and contribution details
Principal life’s benefits
Benefit amount
Benefit term/cease age
R1 000 000
Whole of life
Initial monthly
contribution
Life Protection
Life Cover
184.00
Loss-of-Income Protection
Capital Disability Plus (OD)
R1 000 000
Contract anniversary
preceding age 65
R109.00
Lifestyle Protection
Living Lifestyle Plus (whole
life)
R1 000 000
Whole of life
Total contribution for principal
life’s benefits
R381.00
R674.00
Monthly policy fee
15.00
Total monthly contribution
689.00
Annual contribution increases will result in the following future contributions:
Contribution effective date
Total monthly contributions
01/10/2004
01/10/2005
689.00
781.12
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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QUOTE 4
MOMENTUM
Myriad quotation
Underwritten by Momentum Group Limited trading as Momentum
This quotation is subject to underwriting.
Booked policy number:
Prepared for:
A Client
Tax status:
Natural
person
2004/10/01
Myriad policy
starting on:
Premium
frequency:
Prepared
by:
Francis
AAA INSURANCE
BROKERS CC
Monthly
BENEFIT AND PREMIUM SUMMARY
Benefit details
Benefit
Initial
benefit
amount
Premium details
Bene-
Premium
fit term
pattern
Mr A Client
Death Benefit
R1 000 000
Whole
Compul-

Comprehensive Disability
R1 000 000
life
sory
R1 000 000

Benefit
Comprehensive Critical
to age
65
Illness Benefit
Premium
guarantee term
Benefit
Loading
con-tract
premium
premium
11
R185.29
R135.29
R294.84
Whole
life
Policy fee
R15.00
Total contractual premium
R630.42
Total premium
R630.42
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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Addendum 2
All qualifications and unit standards registered on the National
Qualifications Framework are public property. Thus the only
payment that can be made for them is for service and reproduction.
It is illegal to sell this material for profit. If the material is reproduced
or quoted, the South African Qualifications Authority (SAQA)
should be acknowledged as the source.
SOUTH AFRICAN QUALIFICATIONS AUTHORITY
REGISTERED UNIT STANDARD:
Investigate dread disease products and their place in wealth management
SAQA US ID
UNIT STANDARD TITLE
113913
Investigate dread disease products and their place in wealth
management
SGB NAME
ABET BAND
SGB
Financial
Services
PROVIDER NAME
Undefined
FIELD DESCRIPTION
SUBFIELD DESCRIPTION
Business, Commerce and Management
Studies
UNIT STANDARD
UNIT STANDARD
CODE
TYPE
Finance, Economics and Accounting
NQF LEVEL
CREDITS
Regular
Level 4
2
REGISTRATION
START DATE
REGISTRATION
END DATE
REGISTRATION
NUMBER
SAQA DECISION
NUMBER
2004-02-11
2007-02-11
113913
SAQA 1852/04
BUS-FEA-0-SGB
FinS
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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PURPOSE OF THE UNIT STANDARD
This Unit Standard is intended for learners in a financial services environment. It will
add value to financial planners, intermediaries financial advisers, healthcare
intermediaries, product developers, co-coordinators of medical schemes, financial call
centre agents and trustees of medical schemes and retirement funds. It views dread
disease insurance as an integral part of holistic financial planning that is not
necessarily part of life cover.
The qualifying learner is capable of:

Explaining dread disease as an insurance product.

Investigating dread disease products offered by different financial services
institutions.

Explaining the legal framework for dread disease.

Describing dread disease as part of holistic wealth management.
LEARNING ASSUMED TO BE IN PLACE
There is open access to this Unit Standard. Learners should be competent in
Communication, Mathematical Literacy and Financial Literacy at Level 3.
UNIT STANDARD RANGE
The typical scope of this Unit Standard is:

Dread disease includes, but is not limited to, cancer, heart attack, coronary artery
surgery, stroke, kidney failure, paraplegia and blindness.

Events that would not be covered include, but are not limited to, events resulting
from war, terrorist attack, civil commotion, riots, rebellion, breaking of the law,
failure to disclose information, self inflicted injury, under the influence of alcohol
or drugs and avocation related risks.

Legislation includes, but is not limited to, the Long Term Act, FAIS, FICA,
Medical Schemes Act, Pension Funds Act, Income Tax Act and CGT.
UNIT STANDARD OUTCOME HEADER
N/A
Specific Outcomes and Assessment Criteria:
SPECIFIC OUTCOME 1
Explain dread disease as an insurance product.
ASSESSMENT CRITERIA
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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ASSESSMENT CRITERION 1
1. The concept of dread disease is explained with examples.
ASSESSMENT CRITERION 2
2. Different terminology used to describe dread disease is identified for three different
insurers.
ASSESSMENT CRITERION 3
3. 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.
ASSESSMENT CRITERION 4
4. 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.
SPECIFIC OUTCOME 2
Investigate dread disease products offered by different financial services institutions.
ASSESSMENT CRITERIA
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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ASSESSMENT CRITERION 1
1. Dread disease products offered by three insurers are identified and compared in
terms of the contracts, benefits, exclusions and when benefits are payable.
ASSESSMENT CRITERION 2
2. The rates charged by the three insurers are compared and an indication is given of
the policy best suited to a specific client.
SPECIFIC OUTCOME 3
Explain the legal framework for dread disease.
ASSESSMENT CRITERIA
ASSESSMENT CRITERION 1
1. Legislation relating to dread disease is identified and an indication is given of how
the Acts impact of the sale of dread disease policies.
ASSESSMENT CRITERION 2
2. The tax implications for dread disease policies are explained with reference to tax
on receipt of the benefit and deductibility of premiums.
ASSESSMENT CRITERION 3
3. The demarcation debate between medical schemes and insurance is researched
with reference to dread disease and healthcare products.
SPECIFIC OUTCOME 4
Describe dread disease as part of holistic wealth management.
ASSESSMENT CRITERIA
ASSESSMENT CRITERION 1
1. Reasons why a client may require dread disease insurance are explained with
examples.
ASSESSMENT CRITERION 2
2. The difference between dread disease cover and disability insurance is explained in
terms of benefits, contributions, tax deductions and when benefits are payable.
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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ASSESSMENT CRITERION 3
3. The role of dread disease in a holistic financial plan is explained with reference to
the specific needs of three different clients.
UNIT STANDARD ACCREDITATION AND MODERATION OPTIONS
Accreditation for this Unit Standard shall be obtained from the relevant Education and
Training Quality Assurance Body, through summative and formative assessment by a
registered assessor.

Assessors must be registered as an Assessor with the relevant ETQA

Moderators must be registered as assessors with the relevant ETQA, or with an
ETQA that has a Memorandum of Agreement with the relevant ETQA.

Training providers must be accredited by the relevant ETQA.
Moderation should include both internal and external moderation where applicable.
UNIT STANDARD DEVELOPMENTAL OUTCOME
N/A
UNIT STANDARD LINKAGES
N/A
Critical Cross-field Outcomes (CCFO):
UNIT STANDARD CCFO IDENTIFYING
Learners are capable of identifying and solving problems and making decisions is
explaining the role of dread disease cover in a holistic financial plan.
UNIT STANDARD CCFO COLLECTING
Learners are capable of collecting, organising and critically evaluate information in
comparing dread disease policies from different insurers and selecting the policy best
suited to a particular client.
UNIT STANDARD CCFO COMMUNICATING
Learners are capable of communicating effectively in explaining concepts relating to
dread disease cover and the legal framework for dread disease.
UNIT STANDARD CCFO DEMONSTRATING
Learners are capable of demonstrating an understanding of the world as a set of
related systems by identifying events that would or would not lead to payout of
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Unit Standard SAQA 113913 – Investigate dread disease products and their place in wealth
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benefits.
UNIT STANDARD ASSESSOR CRITERIA
N/A
UNIT STANDARD NOTES
Comment on this unit standard should reach SAQA no later than 15 December 2003.
All qualifications and unit standards registered on the National Qualifications Framework
are public property. Thus the only payment that can be made for them is for service and
reproduction. It is illegal to sell this material for profit. If the material is reproduced or
quoted, the South African Qualifications Authority (SAQA) should be acknowledged as the
source.
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