Important updates - Short-term, Medical aids & Regulation 28

It is Important to update your short-term policy

I recently had a scare when I lost my wedding band and began to institute a claim from my short-term policy. I say almost as I managed to find it after three weeks, my insurance provider was just as pleased to hear that news. My point is to bring your attention to the value of your jewelry on your short–term policies.

Jewelry values on a short-term policy are set at the time you take it out. These values do not, annually, increase in line with inflation or a massively over-valued gold price. Using me as an example, I got married in 2010 and between this date and today the gold price has risen from R 1,155 to R 1,760. This is an increase of over 50 % on the value of my ring. Great thing if I want to sell it but what if I need to replace it due to a loss or theft? Luckily I didn’t have to but if I had had to buy the same ring it would have cost me 50 % more than it did in 2010. Who wants to downgrade their ring if they lose it?

Make sure that when we look at your portfolio of products and policies we update your short-term policy in this manner. It is the same for all your financial planning; ensure that it is up-to-date and pertinent to your current life situation. Too often we don’t look at these things till we have to and then it is often too late.

Just be aware that the opposite is true for platinum. If we had gone for this more fashionable option when we were married it would have stayed pretty much the same as when we first bought them. Diamonds are the same: there are great deals on diamonds currently so if you are planning on getting married soon – go for platinum and diamonds. Save the gold for the anniversary!

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Medical aids

Now is the time to consider changing medical aids or upgrading your current option to be effective 1 Jan 2013. If you don’t change your medical aid will automatically default to the same plan you are on currently.  If you would like to up/down grade your medical aid, please inform us or your medical aid soon. This process needs to be completed by the end of November.

Thinking of changing your medical aid provider?

Medical aids cannot refuse you entry, however they can ‘underwrite[1]’ anyone that is joining them.  This may involve questionnaires, queries or a full medical report & relevant tests that go along with this.  Once they have undertaken this process they are entitled, under South African legislation, to impose 3 restrictions on your joining their medical aid:

1.     A 3 month-general waiting period can be imposed during which you will have limited or no cover. Limited cover will be for life threatening conditions and the prescribed minimum benefits. &/OR

2.     A condition-specific 12-month waiting period can also be applied; &/OR

3.     Late joiner penalties – otherwise known as LJPs; are only applied to members older than 35 years of age and only if you have not been a member of a medical aid over the age of 30. 

Generally, if you are under the age of 40 and are completely healthy, you should not have any waiting periods or penalties enforced on your membership of a medical aid.  This is a rule of thumb and is not a definitive declaration on all medical aid schemes out there. If you are considering it do your homework.

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Regulation 28

A number of notices have gone out regarding your Retirement investments compliance with Regulation 28. You may have gotten a generic document or one specific to your investment. This should not alarm you as it is a legislated requirement to ‘protect’ your investments from yourselves and uneducated advisors.

This section from the Pension Funds Act restricts your exposure to certain asset classes. If your investment exceeds these restrictions than your investment house/policy provider, may choose to switch you automatically into Cash, thereby brining you in line with Reg 28 and avoiding any risk on their side. This is often not the best thing for your investment and if you have a long time to go to your retirement is actually the worst thing for your returns. It is, however, a regulation that now has to be followed and all the companies we represent are enforcing it in one way or another.

Regular rebalancing of your portfolio is an important part of your financial planning. If you have any concerns about this or would like to discuss your Reg 28 letters or investment portfolios please get in touch with me. It is important for us to meet regularly to ensure these types of alterations are discussed and actioned where necessary.