With the lengthy and detailed extensive business textbook, it's often difficult to pinpoint and study what's important and of actual relevance, there notes have been made summarising everything that is important in the business chapter, and will assist you to achieve a distinction.
Insurance
Events that may or may not take place, but in order to manage the risk IN CASE they do
occur, the insured wants to be indemnified (compensated) -wants to be put in same
financial position as before the event occurred.
Assurance
Managing the risk of loved ones being without an income when death occurs, or help maintain
a standard of living after death (inevitable). Money paid out so when you die, it isn’t a
financial burden/loss for your family.
Insurable and non-insurable risks
[too expensive, insurance companies can’t afford it]
War= regarded as a risk that should be managed by government
Bad debt= generally considered uninsurable, is a risk and almost unaffordable
Business risks= price fluctuations, due to time intervals (between time goods are ordered & time
Chapter 9: Insurance
they’re received)
Trading inventory=(all business’s movable assets), become outdated, it’s the business’s job/risk that is
uninsurable
Technological advancements=business can’t take insurance against equipment/outdated machines.
Solution being business must lease machines.
Illegal acts= such as insurance against a penalty imposed for a traffic offence
Natural disasters: insurers find it too much of high risk to cover these areas
Types of insurance: Compulsory and Non-Compulsory
-Compulsory-
(1. UIF, 2. COIDA, 3. RAF)
Unemployment Insurance Fund (UIF)
Purpose: short-term relief to workers who are unemployed or unable to work because of maternity or
illness (provides relief to dependants of a deceased employee who contributed to the fund)
1% employee’s gross Employees who work
Some foreigners are Domestic workers
salary contributes & 1% less than 24hrs per
of employer’s = equal month AND employees covered by UIF + included in UIF
(must register w
amount (with ceiling who earn commission employees on
amount being R17712) only are EXCULDED Department of
learnerships
Labour)
FROM UIF
Rules regarding claims
-66% of monthly salary for maternity if she’s paid UIF for at least
4yrs
-maximum claim period is 365 days=lost job/retrenched
-7 days of employee not at work and employer isn’t covering them?
UIF will cover
-UIF pay out to dependents after person dies (if you die and UIF still
owes you for that month, itll be paid to dependents)
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