Investment Opportunities and Insurance

Flashcards for Grade 12 Investment Opportunities and Insurance.

Risk

The possibility of a loss or injury.

Return on Investment (ROI)

A tool to measure the efficiency of the investment.

Time Frame (Investment)

The period of investment.

Diversification

Spreading investments over different assets to reduce risk.

Blue Chip Shares

Shares in high-end companies on the stock exchange, considered lower risk.

Speculators (Shares)

Buying shares in companies expected to have a quick and significant increase in share price.

Brokerage

A stockbroker's fee for buying or selling shares.

Marketable Securities Tax (MST)

Tax on traded amount in the stock market.

STRATE Levy

Share Transactions Totally Electronic; a levy per trade.

Dividends

Profits of the company divided among shareholders.

Debentures

A letter of credit that a business sells to raise borrowed capital, usually unsecured.

Redeemable Debentures

Debentures repayable on a predetermined date.

Irredeemable Debentures

Debentures that are never paid back, with the holder receiving interest indefinitely.

Convertible Debentures

Debentures that can be converted into shares at a predetermined date.

Pension Funds

Deductions from salaries before taxable income is calculated to employees organise their retirement money.

Endowment Policy

A long-term savings plan where a certain amount is paid over a period, and the assurer pays out when the policy matures.

Contribution Waiver

A feature where the insurer pays monthly contributions if the investor becomes seriously ill or disabled.

Off Shore Investments

Investing in countries other than one's own to spread risks and find better opportunities.

Collectibles

Items like coins, diamonds, stamps, art, and antiques, held for long-term value appreciation.

Cash Option

A safe investment option with a stable, low-risk profile, but must consider inflation.

Fixed Deposits

An account with a bank where a fixed amount is invested for a fixed time at a fixed or variable interest rate.

Money Market Account

A form of short-term investment that is very liquid, allowing easy access to the money.

Money Market Account

A short term investment that allows easy access to the money in a short term.

Unit Trusts

A group of investors who pool their money together to invest in shares or bonds.

Unit Trust Management Company (MANCO)

Company that manages unit trusts.

Unit Holder

Person who invest in the Unit Trust managed by a Fund Manager.

Fixed Property

Refers to land and buildings, either commercial or residential.

Capital Gains Tax (CGT)

Taxed on the profit you make from a sale of property

INSURANCE

In case something happens, and covers actual loss of physical or measurable things

ASSURANCE

As sure as we are alive, each person will retire or die, and provides security to you when you retire or to loved ones if you die

Insurable Risks

Covers the risk of specified events that may occur, with premiums depending on personal needs, risk profile, and asset value.

Fire Insurance

Covers damage caused by smoke/water and excludes volcanoes, earthquakes and riots/war

General Business Insurance Commercial Insurance

Protects the business from suffering losses caused by unforeseen circumstances

Iron safe clause

Requires the insured to keep a record of stock on hand in a safe that is fireproof insurance for inventory

SASRIA – South African Special Risk Insurance Association

Covers loss sustained as a result of strikes / looting

Consignment Insurance

Provides coverage for the inventory you have on consignment, ensuring that you are not left financially vulnerable in the event of loss or damage.

Household Insurance Liability insurance

Usually includes all types of assets that form part of every household that is at risk due to events and Assets include: Furniture, Electronic items, Toys, Sports equipment, Tools and Gardening equipment

Vehicle Insurance

The insured's car and the other vehicle are repaired in the case of an accident, Damage caused by fire, Car is stolen and Insured is indemnified

Money-in-transit Insurance

Taken out if the business handles a lot of cash to cover any potential losses that may occur between the business and the bank

Crop Insurance

Taken out to cover risks that may arise from their income-generating assets

Fidelity Insurance

Taken out to protect the business against financial losses caused by dishonest employees

Liability Insurance

Covers a person who becomes liable for losses caused by negligence

Group life cover

Business insures the employees for a certain amount based on the type of work they do

Unemployment Insurance (UIF)

Insures employees for loss of income when they don’t have a job or are not working

Compensation for Occupational Injuries and Diseases Act (COIDA)

Protects employees for injuries / death / sick at work and Protects employer from claims

Road Accident Fund (RAF)

Injuries / financial losses due to accidents on the road and Compensation: Hospital and medical expenses including rehabilitation, Future hospital and medical expenses anticipated, Loss of income (up to R160 000 pa), Future loss of income anticipated and Pain & suffering

Insurable Interest

A person has insurable interest if it can be proven that they will sustain a financial loss if a certain event takes place

Absolute Good Faith / Honesty

Requires the insured to disclose all relevant information that may affect the risk. If all questions are not answered honestly and accurately, the risk will not be covered

Contractual Capacity

The person entering into the insurance contract is of legal age and sound mind

Risk

The likelihood of an uncertain event occurring

Peril

Is the potential cause of the loss and what is covered by the insurance policy

Hazard

Is a circumstance that increases the risk of the peril occurring

Excess

An amount on each claim which is not covered by the insurance company

Proximate Clause

The insurer is only liable for losses that are the direct result of the event that was insured

Subrogation

Based on the principle of indemnity, which means a potential loss is covered

Cession

Any rights that the insured has in a policy may be transferred to another person when a written clause is added to the policy

MARKET VALUE

The value at which the item can be sold today.

REPLACEMENT VALUE

The cost of replacing the item of today’s prices

BOOK VALUE

purchase price – depreciation