Copyright 2005 Botswana Life Insurance Limited
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Individual Benefits
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| Botswana Life Insurance Limited Private bag 00296 Tel: +267 3645100 Fax: +267 3905884 webmaster@blil.co.bw |
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Frequently Asked Questions What is insurance? A: This refers to protection against future loss in exchange of periodic payments. A: Life cover is the amount of the benefit payable on the death of the insured during the term of the policy. A: MOMPATI is an effective assurance and investment programme that ensures the attainment of your individual and family financial goals. Q: How Can I be sure that their needs will be catered for? A: With the UNIVERSAL LIFE PROGRAMME (Mompati) long term insurance needs can be tailored to individual requirements. These may include general needs like capital build-up for children’s education, starting a business or more formal requirements such as the provision of a retirement fund, providing alternative income or lump sum in the case of a breadwinner’s premature death, serious illness or disability. Needs may also include more specialized areas like business assurance. The list is as wide as individual needs. Q: What happens when my needs change? A: The flexibility of MOMPATI allows your policy to remain meaningful when your needs change. It can be changed to suit your changed circumstances. Q: How do I make an accurate assessment of my needs? A: Let us guide you through an example. Q: What are your goals in life? A: To own your family home, privately educate your children, start a business or a fruitful retirement. Q: What could prevent you from achieving your goals? A: Permanent disability or death of the breadwinner, difficulty in following an informal saving plan, lack of investment expertise and limited options in investment portfolios. Your financial advisor or broker will assist you in the important task of assessing your immediate and long-term needs, so that the policy you take is tailored to your specific needs. Q: What plans can I choose from? A: Having discussed your needs with your financial advisor or broker you should find that one of the following variations of MOMPATI is suitable:
Q: How flexible are these variations of MOMPATI? A: Each recurring premium plan under MOMPATI must be arranged for a minimum term of 10 years. Where life cover is included, the minimum sum assured, i.e. the minimum sum guaranteed to be paid in the event of eligible death is P10 000. The premium (the regular monthly payment) you pay is determined by you, subject to minimum premium requirements and minimum premium levels if life cover is taken. Ancillary benefits, for example, disability benefit, accidental death benefit, family funeral benefit, etc. may be added, or removed on any anniversary during the term of the policy. An anti-inflation annual premium update facility may be incorporated in the plan and if elected, the basic death benefit may also be automatically increased. Subject to certain constraints, the premium, the sum assured, update options or ancillary benefit levels may be changed at any time. A: The level of premium depends on your needs. Where life cover is required, the minimum premium will depend on the sum assured, age, habits and occupation. The cost of an ancillary benefit will also be added where applicable. Presently, the minimum premium for any plan without life cover and ancillary benefits is P80 per month, inclusive of policy fee. A: Most clients find monthly premiums convenient. Where you opt for a monthly premium, this could be effected through a stop order facility if available or direct debit order. In this case, proof of banking details will be required. However, if you elect to make annual payments, a cash facility is available. A: Your premiums are used to purchase life insurance and ancillary benefits if applicable, and the balance is applied to purchase investment units in the MOMPATI’s Investment Fund. Other investment funds are available for specific products. Expert investment fund managers invest the available funds in the investment market, which includes the money market, capital market, equities (shares) and properties, both in Botswana and offshore. A: MOMPATI should be considered as a long-term investment as the initial expenses charged are high in relation to the premiums paid in the first year. After the policy has been in force for a period of approximately five years however, the effects of the expenses reduce, and positive returns can be expected. It is for this reason that Botswana Life Insurance Limited requires a minimum term of 10 years. Q: May I “cash-in” my policy prior to its maturity? A: After the “initial period” as stipulated in the table below, provided that the policy is in force, it may be terminated for its cash value (surrendered).
However, it is never advisable to surrender a policy, especially in its early years, as this will cause you to lose money. If the policy is surrendered after only 3 years premiums have been paid, then it is unlikely that the cash value will exceed the premiums paid. Q: What additional benefits can I enjoy under my policy? A: The following ancillary benefits can be added: To pay a lump sum if you are permanently and totally disabled as a result of injury or illness. To pay a lump sum if you suffer from one of the following diseases; heart attack, stroke, cancer, renal failure, paraplegia, blindness, chronic coronary artery disease, heart valve replacement, major organ transplant or disease of the aorta. You will also be covered in the event of a clinical diagnosis of AIDS. To pay a lump sum if you die as a direct result of bodily injury caused by violent, accidental, external and visible means within three calendar months of the accident. Provides cover for the immediate family of the insured. Cover can also be taken for any two parents. The insured and the insured’s family are covered up to the termination age. A maximum of six children may be covered. This benefit waives future premiums in the event of the payor’s disability or death. Return of Premium With this benefit, on death all premiums paid to date are returned to the payor. Extended Family Funeral Benefit Provides cover for the extended family of the insured. Cover can be taken for any spouse, children, parents, or parents-in-law not covered by the Family Funeral Benefit (offered as an ancillary benefit by Botswana Life). Cover extends to brothers, sisters, brothers-in-law, sisters-in-law, nephews, nieces, grandparents, grandchildren, adopted children and traditional wives. The insured’s family are covered up to the date on which the insured attains the age of 65; or would have attained the age of 65, should the insured have died before then; or the date on which the policy matures, which ever occurs first. Q: Are there any medical requirements? A: For plans with life cover, medical examinations may be required. This will depend on the amount of life cover, your age, habits, and personal and family health history. Q: Do medical requirements include HIV testing? A: If life cover is required the premium rates applicable to clients that submit a negative HIV anti-body test result are a fraction of those where one chooses not to go for HIV testing. In addition all ancillary benefits are available where the client has submitted a negative HIV anti-body test result. In this case, in the event that you contract AIDS later and die from it, you will be fully covered. If you do not wish to submit HIV test results the ancillary benefits listed above are not available for selection. The maximum sum assured is then limited to 5 times one’s annual salary, or P200 000, whichever is less A: Provided a policy has acquired a surrender value, it may be made paid-up. In this case contributions cease and reduced benefits are enjoyed for the remainder of the policy term. In terms of section 100 of the Insurance Industry Act of 1987, you may within 90 days of signing your proposal form, or within 30 days of receipt of your policy document, inform Botswana Life Insurance Limited of your intention to cancel the policy. In this case you may expect a full refund of premiums paid. Should you stop paying your premiums after the policy has acquired a surrender value then you may leave your policy as a paid-up investment or you may request payment of the surrender value. If you decide to leave a policy with life cover in a paid-up state, the future cost of the life cover may gradually reduce the cash value eventually causing the policy to expire. A: All MOMPATI policies (excluding Retirement Annuities) can be ceded. A Financial Institution may require this when you borrow money. Ceding a policy transfers full rights to the policy value and death benefit from the owner to the cessionary. A: An encashment is the withdrawal of a certain percentage of the accrued value of a policy. Q: Which policies qualify for an encashment? A: Tshireletso (UTSH) policies, Single premium (SPPE) policies, Educational (ULM3&ULM4) policies, and EX-BIC (BIF5, BIF7) policies. Who qualifies to be given an encashment from Botswana Life? Anyone who has any of the above policies with Botswana Life and that policy having passed the initial period and has a surrender value. The amount that can be encashed is 60% of the surrender value of the policy. Q: What is the initial period? A: This is the period in the life of the policy where contributions in the policy are directed towards expenses and risks inherent in the policy such that no amounts are invested. The period varies according to the term of the policy. Q: What is the minimum/maximum that one can apply for? A: The minimum encashment given is P550.00 including the administration fee of P50.00.The maximum is determined by what the policy has accrued. Q: Is there any interest charged on these encashments? A: There is no interest charged on the encashment, but the value of your policy is affected by the withdrawal made in the policy. The value of the encashment is based on the number of units encashed as well as the unit price. Q: Do I have to repay the encashment? A: Yes. Although it is not compulsory you are advised to do so, so that the long term value of your policy is not negatively affected. Q: Is it compulsory to apply for an encashment after my policy has accrued a surrender value? A: No. Most insurance policies are long term investments; hence it is advisable to let the policy run until maturity so that one can reap the full benefits of the policy. Q: Which policies qualify for a loan? A: Ex IGI, Ex- BIC, and all Mompati policies excluding those mentioned above for encashments. A: Anyone who has a policy that qualifies for a loan. This policy would have passed the initial period and acquired surrender value. Q: Can I take a loan against my pension policy? A: No. The Government is providing a tax relief on contributions for pension policies, a tax free investment and tax free cash at retirement; it is for these reasons that funds should not be borrowed from pension policies. Pension policies can neither be surrendered, nor be used as a security at the Bank. Q: What is the minimum/maximum that one can apply for? A: The minimum borrowed from a policy is P550.00 including the administration fee of P50.00.The maximum is determined by what the policy has accrued Q: How much interest is charged on the loan? A: An interest of 1.5 percent per month is charged on the loan balance. Q: Do I have to repay the loan? A: Yes. There are two main reasons for repaying the loan. A: The loans may be serviced through a Bank stop order or paying cash at any nearest Botswana Life Office. Q: Is it possible to know the maturity value of my policy before maturity date? A: It is not possible to know the maturity value of any policy before it matures. This is so because contributions made in all the policies are invested and the value is calculated using the current unit price which fluctuates on a monthly basis. Q: Why do you take my policy document when the policy matures or when a loan is given against the policy? A: A policy document is surrendered when getting a loan so that it can not be used any where else as security. It’s taken at maturity for the same reasons and for the fact that the contract would have ceased at this stage. Q: When does the policy lapse? A: This is an automatic termination of the policy by our system. The policy would lapse if it has cumulative arrears of three months and does not have surrender value. If it falls in to three months arrears and it has some value it would automatically make premium advances from the value to maintain the policy. However these advances made from the value of the policies would attract a 1.5% interest on a monthly basis until the arrears are cleared. This automatic premium advances is termed NON–FORFEITURE LOAN. Q: Can my policy be re-activated? A: Your policy can be re-activated or reinstated provided all the outstanding premiums have been paid and a period of more than eleven months has not passed since the lapse effective date. For Life cover policies the above condition applies as well as the client having to undergo medical tests. Q: What are the requirements of a funeral claim? A: The following are required for a funeral claim:
Q: How long does it take to process a funeral claim? A: Provided all the required documents have been submitted, the claim will be processed within six hours. Q: How long does it take to process a death claim? A: A death claim will be processed within 72 hours provided all required documents have been received. Q: What is the difference between a funeral and a death benefit? A: Both are death claims,but the death of a policy holder or owner who is also the insured , will result in a death claim and the closure of that policy. Whereas , covered persons will receive funeral benefits. Q: How do we claim funds remitted to the Guardian Fund? A: Proceeds forwarded to the guardian fund are for minor beneficiaries and deceased persons. Upon receipt of the money, the guardian fund communicates the claiming procedure with the relatives. Q: Can I reduce or increase my policy term? A: It is not possible to reduce the term of the policy. |
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