Swaziland » Glossary

Weighted index of the 35 most liquid Spanish stocks.

A person who seeks life insurance whose health is less than standard or whose occupation is hazardous. See sub-standard lives.

Inception Date description

The date when the risk commences under a policy or contract of insurance.

Number of times losses occur. This statistic measures the expectation of loss. Together with information about loss severity it can be used to calculate premium rates.

Another term used for the return received by an investor through dividends as opposed to capital growth.

One who receives income from a trust.

A feature added to some life insurance policies by way of a rider to the policy providing for a monthly income during disability, in the event of the insured becoming temporarily or permanently disabled.

These are funds that invest in bonds, fixed deposits and other high income earning securities. In order to provide relative capital stability, the average maturity of the underlying assets is limited to a maximum of two years. These funds are less volatile and aim for a regular and high level of income. The benchmark is the JSE Three-Year Bond Index.

An investment with the main goal of generating income in the form of interest, dividends and rental income. Preference shares / bonds (if they are held to maturity) and money-market instruments are income investments.

Adding a dividend to the existing capital sum instead of taking a cash payment.

Insurance policy often provided through a freestanding, employer-owned policy to replace the income of employees who become permanently and totally or partially disabled.

See losses incurred but not reported.

The occurrence of an event as a result of which payment under the terms of an insurance policy will be demanded, or has been demanded, from the insurance company. An incurred claim has not necessarily been reported to the company.

Ratio calculated by dividing incurred losses by earned premiums.

See incurred claim.

The amount paid by the insurer to the insured for loss or damage covered under the insured’s policy. Indemnity value takes into account the effects of depreciation. Short-term insurance contracts may be either indemnity or non-indemnity contracts. If it is an indemnity contract the insured is entitled to recover the commercial value of what is insured, that is depreciated value. Replacement value puts the insured into a position that is better than he/she was at the time of the loss (new for old) and therefore replacement value exceeds the indemnity value of the contract. Life, personal accident and health contracts are all nonindemnity contracts since the claim does not need to bear a relationship to the actual loss.

A release used in cases involving minors that requires the signature of the parents of the minor. Sometimes used in the same sense as release.

Term established to denote those who distribute a range of investment products, including life insurance, from more than one long-term insurer.

A person, other than a representative of a company, who renders services to the company. This definition includes brokers and Lloyd’s correspondents.

A statistical composite used to give investors an indication of increase / decrease in financial markets. It allows investors to compare the return of an investment with the market in general.

Investment fund designed to match the returns on a stock market index. Funds whose portfolios match that of a broad-based index such as the ALSI 40 and whose performance therefore mirrors the market as represented by that index.

A futures contract on an index in the futures market.

A method of varying the deductible and the indemnity of an excess of loss reinsurance contract according to prices, cost of living, wages or similar index. Also referred to as a stability deductible.

Signals used by investment and economic analysts to forecast the direction of the financial markets or the economy, e.g. interest-rate trends, the inflation rate or share trading volume.

Members are given the option of choosing the investments within which they wish to invest, within parameters set by the fund's trustees.

Coverage of a single life. Contrast with group life where many lives are covered.

Life insurance, usually for small sums insured with premiums payable at intervals of less than two months, often weekly and generally collected at the home of the insured by an agent or collector of the life office. In Force 1. Referring to a policy, it means the policy is in effect and has not expired or been cancelled. 2. Referring to premiums, it means the amount of original premiums under all policies currently in force.

The degree to which an investment manager allows the under- or over-weighting of industries in the portfolio relative to the benchmark to dominate a portfolio's return.

The rate at which the general level of prices for goods and services is rising, for example, a bottle of milk that cost R1 10 years ago, today costs R9.

The risk that an investment's return will not beat or at least match inflation.

Returns after deducting the inflation rate.

A bond issued either by government or corporations which links the interest payable and the principal amount payable at maturity of the bond, to inflation.

Calculated by dividing the return above the benchmark by the tracking error or active risk (volatility above the benchmark). Provides information on whether the manager has outperformed the benchmark and the amount of risk taken to do so.

After the bequest of legacies has been detailed, the distribution of ordinary inheritances is set out. The inheritances will come out of the residue (balance) of the estate, after legacies (if any) have been distributed.

Management company fee that is included in the "buy" price of the investment.

Insurance covering goods in transit over land.

The clause that holds the reinsurer liable for his pro-rata share of any loss (or losses) assumed under the treaty, even though the direct company has become insolvent.

A situation where a person or enterprise would be unable to pay off debts even if all assets were liquidated.

A confidential report upon a risk, setting forth the moral and physical hazards that may or may not be present.

A premium paid in installments throughout a policy year, rather than paid annually. Half-yearly, quarterly and monthly premiums are installment premiums.

A settlement option whereby the proceeds of a life insurance or endowment policy are paid in periodic installments rather than in a lump sum.

Organisations (rather than individuals) such as unit trust companies, investment banks, pension funds, life assurers, etc.

Insurability

A long-standing principle enshrined in life insurance law is that the person taking out or effecting a life insurance policy should have an "insurable interest" in the person whose life is to be insured. This principle has a long history and was first introduced in England to counter the practice of gambling - mainly by taking out policies on the lives of prominent persons such as a prime minister, with whom the policyholder had no connection whatever. The insurable interest of a policyholder in his or her spouse is obvious and accepted. The death of one could seriously affect the finances of the other, and this effect illustrates the main condition for the existence of an insurable interest, namely financial loss if death were to occur. In business an employer can have an insurable interest in the life of an employee, particularly a person who is vital to the business, but then only to the extent of the probable loss if that employee should die. This situation presents "key-person insurance", which is usually provided for by a term insurance on the employee\'s life, owned and paid for by the employer. Another instance of insurable interest is an employee being struck down by a long-term illness. This creates an insurable interest for the effecting of disability or accident and sickness insurance. Another area where life insurance is very often used to cover a liability is the purchase of a family home. The objective of such a policy is to pay off the balance of the mortgage loan if the purchaser dies, which protects his family from losing their home on his death. The life insurance policy provides the capital to repay the mortgage bond on death.

A person who may legally insure the life of another person is said to have an insurable interest in the life of that other person. Every person has an unlimited insurable interest in his own life. The question of insurable interest is of primary importance in connection with designations of beneficiaries. A man has an insurable interest in the life of his wife as does a wife in that of her husband and, to a lesser extent, parents have an insurable interest in the lives of their children. Siblings, however, do not have an insurable interest in one another’s lives. A partner has an insurable interest in the life of a fellow partner. A creditor has an insurable interest in the life of a debtor and an employer in the lives of employees.

An interest in, relationship with or liability with respect to the subject matter of the insurance which is of such a nature that damage to the subject matter or injury or damage caused by or liability arising from the subject matter would result in tangible loss to the person concerned.

A risk that can be insured in terms of an insurer’s underwriting standards.

The stated value in an insurance policy. It can be the market value, the declared value or the replacement value.

A system where the losses of those that are covered by a policy, are paid from the premiums of all those that the insurer covers.

The term used to refer to both the Short-term Insurance Act and the Long-term Insurance Act.

An agent on behalf of the insured who negotiates the terms and cover provided by the insurer in the insurance policy.

Insurance is based on the principle of risk-sharing. An early example of this was worked out by Chinese merchants almost 5 000 years ago - they shared out one another\'s cargoes among all their boats. Thus, if a boat sank, each merchant lost only a small portion of his own shipment, and no one lost his entire cargo. However, it was only in the 17th century that the first insurance contracts involving monetary amounts came into being in places such as Amsterdam and London. These were marine insurance contracts, insuring ships against loss at sea. For instance, in London the name of the ship and the details of its next voyage were written on the wall of Lloyds\' Coffeehouse. Each person who was willing to accept a portion of the risk signed his name directly below these details, together with his share of the risk. These people (risk bearers) were therefore know as "underwriters". This idea of risk-sharing was later applied to people. Under the first type of life insurance policy a cash sum was paid if the person died within one year. The cost of this one-year insurance depended mainly on the person\'s age, and was known as the "premium". Thus, if a person took out a series of successive one-year policies, his premiums would probably increase each year, because the older the person, the greater the probability of his dying. This would continue until the premiums become unaffordable. The next innovation was, therefore, to charge level annual premiums instead of increasing premiums. These premiums would start at a higher level but would remain constant for the term of the policy. This was a direct result of using death statistics of people to estimate total expected costs beforehand. In England, which is one of the countries where life insurance had its modern-day beginnings, the history of the industry is widely accepted as dating to the formation of the Amicable Society for Perpetual Assurance Office established in 1705. However, there is a record of the first life insurance contract being effected in England some 120 years before that - possibly the first "term insurance" contract ever written. An insurance contract for a year on the life of one William Gybbons, of London, was underwritten by 16 persons for an amount of £386 6s 8d. Gybbons died 20 days short of the year and the underwriters had to pay. It was only in the early 18th century that societies began to be formed with the object of granting life insurance. In 1762 the Equitable Assurance Society of London was established, and this society is today regarded as the originator of the model system of life insurance. It was the first organisation to issue policies for fixed amounts against the payment of agreed premiums established according to age. The first American society was formed in Philadelphia as a company providing pensions for retired Presbyterian ministers and their dependants. Life insurance in South Africa owes its origins partly to the coming to this country of the 1820 Settlers. In 1826 two British offices - United Empire and Continental Life, and the Alliance British Foreign Fire and Life Company - were established in the Cape colony. Five years later the first local company to be established in South Africa, known as South African Life, came into being. Other local companies followed, many of them to be absorbed by British offices already established or being established. The South African Mutual Life Assurance Society (Old Mutual) was founded in 1845 and is the only local life insurance society established in that period still in existence today. By 1967 there were 60 life insurance companies transacting life business in South Africa, 36 of them local companies. In later years amalgamations and take-overs resulted in a reduction of the number of companies doing business. At the end of December 2002 there were 26 life insurers and 6 re-insurers registered with the Life Offices Association (LOA).

A contract whereby one party (the insurer), in return for consideration known as a premium, agrees to indemnify another party (the insured) against specified damage, loss or liability arising from the occurrence of specified risks or to compensate the insured or beneficiary upon the occurrence of a specified event .Written evidence of an insurance contract and its terms.

See portfolio.

The person whose interest is insured, usually the policy owner.

A portion of the employer's contributions used to provide members with death, disability and funeral benefits.

Source of loss which is covered under an insurance policy.

Company offering risk protection via insurance policies.

This is a trust that you register and implement during your lifetime.

A central counterparty in the bond market.

The price paid for borrowing money, expressed as a percentage rate over a period of time.

A dividend paid out at the end of the first six months of a financial year.

A person who negotiates contracts of insurance or reinsurance with the insurer or reinsurer on behalf of the insured or reinsured.

Specified assets by reference to which the value of policyholder benefits is determined.

The International Endowment Balanced Fund offers a 100% offshore exposure in overseas assets with investments in equities, fixed-interest investments and cash in selected foreign currencies. The share component of the fund consists of equities listed on overseas stock exchanges, whilst the fixed-interest investments consist of overseas government bonds.

The attempt to reduce risk by investing in more than one country, by diversifying across nations whose economic cycles are not perfectly correlated.

The International Endowment Equity Fund provides the potential for the excellent capital growth offered by investing in equity funds, but can also include fixed-interest investments and cash in selected foreign currencies. The share component of the fund consists of equities listed on overseas stock exchanges.

The meaning given to wording in the policy.

This is the law that prescribes how your estate will be divided, should you die without leaving a valid will (that is if you die intestate).

The current value of a security based on the expected flow of income and capital from that security.

An investment channel is also called a specialist asset portfolio. It is a pool of assets which exhibits common fundamental economic characteristics and which behaves in a consistent manner in terms of reactions to economic changes. A pool or grouping of commodity shares would be an example of an investment channel. Sector heads manage channels on behalf of asset management companies and decide on actual asset selection from specific asset types. Unitised investment products invest in assets through investment channels. These products mix and weight the channels to achieve the desired risk/return level for that particular product. An investment channel may be a product itself, which means that investors could invest in the channel directly (similar to a retail investment product).

A life insurance contract, the main purpose of which is the accumulation of capital for the policyholder.

Expenses incurred in connection with the investing of funds, the management of investments and the obtaining of investment income.

An investment policy offers investors, big or small, the opportunity to invest in an array of investment funds. This makes it easy as very view people have the financial knowledge to manage their own investment portfolios. Examples of the different investment funds are those in Sanlam\'s well-known Stratus Investments.

Also known as Investment Regulations or Prudential Guidelines. Used to describe the investment regulations governing retirement funds in terms of Regulation 28 of the Pension Funds Act.

The length of time for which an investment is intended.

Income derived from investments comprising interest, dividends and rent received or receivable as well as realised and unrealised changes in market value of investments in securities and other financial instruments.

A savings oriented form of permanent life insurance similar to investment contracts except that the policy owner does not have a separate savings account with the company to which interest is periodically credited. Instead, the savings element of premiums paid is pooled with all other policies of the same class to form a separate fund, sometimes by means of unit trust scheme. The value of a policy owner’s savings is represented by his share of the market value of the underlying assets less any fees which may be payable on realisation

A person appointed by a fund in terms of an agreement or policy whereby the board of trustees delegates its function to invest the fund's assets.

A legal contract that specifies investment objectives (ie: the risk-and-return objectives of the investor's portfolio), the investment guidelines to be followed by the manager and applicable fees.

The basic rules that govern all investment actions of an investment manager.

An investment policy is a financial product aimed at providing some form of growth on your savings. This is done, not only to provide you with a larger sum of money at a future date, but also to ensure that the value of your money is not depleted by inflation. The purpose should be to maximise the return on your money. An investment policy does exactly that, as it does not have other features like life or disability cover that needs to be funded from your investment. You may invest by means of a single premium or recurring premiums and the benefits are normally paid out after a contractual period of five years or longer term.

The collection of shares, bonds, money-market securities and other financial instruments or types of assets that make up an investor's assets.

Also known as Investment Performance. The amount by which a portfolio's investments appreciate or depreciate in market value over a particular period, usually expressed as a certain percentage per year.

The degree of aggressiveness permitted to the active manager to add value above the benchmark return.

A term used by a reinsurer to describe a treaty which has been accepted.

A beneficiary for whom another may not be substituted.

An irrevocable guarantee is one of the ways of establishing the security needed for reinsurance ceded for a foreign reinsurer to be regarded as approved reinsurance under the Insurances Acts. The guarantee has prescribed wording and needs to be issued by a locally registered bank.

\'By representation per stirpes\' means that where a beneficiary predeceases the testator, his portion will devolve upon his children (the children of the beneficiary). In other words, if some of the children have already died, the predeceased child\'s inhereitance is divided equally amongst that child\'s children.

Refers to the number of shares listed for any company. This quantifies the number of shares necessary to own the entire company.