Lichaba Mohoto Brokers

OUR SERVICE OFFERING

Life cover can be used to settle debt, outstanding bonds, estate duty and other financial costs in the event of death. It can pay out an income and provide financial security for your family. It also enables business partners to continue running your business without added capital strain. The types of benefits you can expect to find within the Life Cover category are:

• Death Benefit

The Death Benefit makes financial provision for dependants, debts, estate duty and many other needs. This benefit pays out a lump sum on the death of the Life Covered.

• Accidental Death Benefit

The Accidental Death Benefit is a risk benefit that pays a lump sum to a selected beneficiary in the event of the Life Covered's death due to virtually any kind of accident.

• Key Points

There is no medical testing. The benefit covers all types of accidents. An accident is defined as an external, unexpected event that is not traceable, even indirectly, to your state of mental or physical health before the event. Also included under RISK is a range of disability benefits varying from company to company. RETURN TO TOP

Retirement Planning

While each of us is different, with our own needs and circumstances, there are certain life stages and "watershed" events that are common to most of us in one form or another. To assist you in researching what products may be right for you at this time, we have identified several life stages and matched them to broad product categories:

Singles and Starting out

You are still studying, or have just started your first job, and need to consider your financial needs as an independent adult. You don't have much in the way of responsibility - no dependents and few financial commitments.

Financial Planning

No matter what your life stage or financial needs you need a financial plan and a budget. Both of these will change as your life circumstance change. If you need help complete the return form for tips on how to manage your finances.

Retirement

While retirement may seem like the distant future to you it is never too late to start. Whether you are joining a staff pension plan or are self-employed, an early start could mean the difference between being able to retire and having to work in your old age.

• Advice

Professional financial planning & advice are inv aluable when structuring a financial portfolio. Contact LMb today to help you develop a financial plan that suits your current circumstances and financial position.

Singles & Established

You are in your first or second job and have been financially independent for a couple of years. You are in a committed relationship and have purchased a car. You may be thinking about buying your first house or flat.

Retiring

If you haven't started planning for retirement yet, start now or, continue to build on your existing retirement savings. Perhaps consider supplementing your employer's pension plan with a retirement annuity of your own. Don't forget that an early and generous start could mean the difference between being able to retire and having to work in your old age.

Changing Jobs

One of the questions you need to ask yourself when you change jobs is what you intend to do with your pension/ provident fund money accrued in with your previous employer. LMb - offers a number of retirements or somewhere to park your money until you know where you want to invest it.

Family life

The addition of children to your family alters your financial situation dramatically. Increased responsibilities include higher medical expenses, greater need for disposable income, risk cover, needing a bigger house and last but not least: planning for education. Even with the increase in financial demands you must ensure that you don't sacrifice planning for your retirement.

• Retirement

Your retirement is something that you should have been planning for your whole life. Once you have retired your income will come solely from your Life/ Living Annuity and any other income producing investments or savings you may have. By now you house is probably paid for while your medical requirements have more than likely increased. Your income will be reduced and your investment focus will be on capital preservation. However you would be wise to consult us at LMb regularly to see if your investments are keeping pace with inflation and that your income does not deplete your capital. RETURN TO TOP

Investment Planning

• As we all have goals to meet in our not so far distant future, we keep on looking at ways of putting our monies away where growth and stability are of paramount importance. The investment world is changing profoundly in South Africa and globally, as clients seek new products that match their changing needs. Investors are demanding better value for money all along the investment chain and asset managers are responding by changing the way they manage money and the products that they offer.

• Clients' changing needs

Investors' needs have changed significantly over the past decade because they have had to live with a great deal more uncertainty than they did in the past, particularly when it comes to their retirement. There has been a significant amount of market uncertainty that has dominated global equity markets since the beginning of this decade, following the boom times of the late 90s when investors became used to ever-rising share prices.

Investors' focus on cost

In a more volatile investment environment, investors have understandably begun to focus on the cost of investing and how this ultimately affects the value of their investment. Sharp scrutiny by regulators has given impetus to this focus on the costs and on the actual benefits offered by different investment products. Of most concern to the investor is how much they are actually paying for a product because some costs are not determined upfront but nevertheless do have a significant impact on the overall performance of the investment.

Saving for the future

We at LMb have come to understand that putting away a minimum of 10% on your monthly income will result in future great returns. RETURN TO TOP

Healthcare

The purpose of a medical aid is to ensure that you are able to pay for treatment received at the hands of a GP, specialist or while in hospital. The purpose of this section is to assist you in making the right Medical Aid choice for you and your family.

What you need to know

When researching and selecting Medical Aid cover there are a few things to keep in mind:

What type of cover do you need?

How much will it cost?

What chronic medication is covered?

Value added services or benefits - e.g. is there a reward system or programme to promote healthy living; can I add a direct family member like a mother or a brother to the plan?

Type of cover

Types of cover can be split into a two main categories. These are:

Major Medical Expenses: this constitutes major surgery, hospitalisation, and dental surgery. It is basically treatment received in a hospital.

Day-to-Day benefits: this is cover for treatment received outside of a hospital. It is what you would typically pay for GP consultations, the ordinary dental check-up, and prescribed medication. Most medical scheme plans offer a combination of Major Medical, day-to-day and extras such as chronic medication, access to medical rescue and value added benefits. Selecting the right plan Selecting the right plan means looking at your specific requirements. Do you or your family visit the GP regularly (typical of a family with young children)? Then you will need average (to above average) day-to-day cover and major medical expenses. Or, are you a healthy, fit individual who seldom goes to the doctor but wants peace of mind that major medical expenses are covered in case you end up in hospital? In this example, you are looking for minimum day-to-day cover (if any) and a fair amount of major medical expense cover. To help you select the right cover, try and ascertain the amount of visits you have made to a doctor over the past 12 months or if possible over the past two years. This should serve as a guide to the type of plan required. Cost Opting for the cheapest option may not always be the best option. What is important is the cost-to-cover ratio i.e. what are you getting for the amount you are paying. Check for exclusions especially for things like certain types of chronic medication or HIV cover. Ensure you understand the hospital plan's limit and what is covered by the day-to-day pool.

Chronic Medication Cover

A chronic illness is a condition that requires ongoing medical treatment, for example: asthma, epilepsy, bipolar mood disorder, Parkinson's disease and diabetes. Check to see what type of chronic medication is covered in your medical plan choice and what the annual limit is on the type of medication required.

Value added services and benefits:

Rewards

Most medical aid schemes nowadays provide value added benefits to encourage a healthy way of living. The rewards or benefits may distract from the core offering i.e. medical aid cover in the form of a hospital plan and day-to-day benefits. Your choice of Medical Aid should include a balance of relevant cover for your needs and value-adding services or benefits such as reward schemes.

Saving Options

The other question you need to ask is whether your Medical Aid plan offers a savings option. The savings option of a medical aid plan enables you to set aside some funds for:

Shortfall: this is the difference between standard or state defined medical aid rates and private rates.

Reserves:you may find yourself paying a good few medical bills because your medical aid cover has been exceeded. This could put you out of pocket but not as much as is needed to claim back from the taxman. Medical expenses, comprised of non-deductible medical scheme contributions and medical expenses not paid for by the medical scheme, exceeding 7,5% of taxable income, may be deducted from taxable income.
Paying out in an Emergency
The last thing you need in an emergency is to worry about your medical cover (and if there's enough in it to cover what you need). That's why choosing a reputable Medical Aid provider with years of experience is important. Checking the payment record of the Medical Aid Scheme provides a good indication of its reputation.

Estate planning

Make sure your estate is in order. Revise your Will, check your beneficiaries and trusts. Lichaba Mohoto Brokers offers an estate planning service that will help you draft your will, conduct a tax-efficiency analysis and set up any trust.

Advice

Contact LMb today to help you develop a financial plan that suits you current circumstances and financial position. RETURN TO TOP

Business Assurance

There are three key issues to look at under Business Assurance:- namely - Partnership, Business Liability & Key Person Insurance.

Partnership/Buy & Sell Insurance:

Buy and sell/partnership insurance is risk insurance that business co-owners take out on one another's lives to enable them to buy a deceased or disabled co-owner's share in the business. It is one step closer to ensuring business continuity. The loss of a co-owner to death or disability could impact your business in the following ways:

The existence of the business may be in jeopardy.

Credit facilities may be affected adversely.

Outsiders may obtain a controlling interest.

Remaining co-owners may be unable to afford the deceased's interest or shares.

The business interest may be sold below fair market value.

The Solution

Buy & sell insurance enables business continuity. It works as follows:

The co-owners enter into an agreement where they undertake to

purchase the interest of their fellow co-owners should any of them die or become disabled.

A co-owner effects a Life benefit on the life of another co-owner and vice-versa. Each co-owner will consequently own a benefit on the life of the other and pay the premiums under the benefit of which they are owner.

A Life policy provides the cash to facilitate the purchase of an interest in the business, thus ensuring business continuity and the financial welfare of a deceased's dependants.

When more than one co-owner is involved, the benefit on the life of each co-owner will be jointly owned by the other co-owners, proportionate to their interest in the business.

Features and Benefits

For the remaining co-owners:

No risk of new co-owners joining the business who might be unskilled or incompatible.

An inexpensive way of funding the purchase price.

The business can continue with minimal disruption.

The disabled co-owner and heirs:

An immediate cash payment, which can substitute the income lost as a result of the death or disability of a breadwinner. A negotiated purchase price negotiated by the parties concerned ensuring that the co-owner or his/her dependants receive the full value of the business interest.

Business Liability Protection

An owner of a company often has to provide personal security for a loan taken out by the business. But what happens to the debt should this person die or become disabled? The problem for the owner is that he or she will be personally liable for the debt if the business is unable to repay the loan. Should the owner die before the debt has been settled, the creditor can claim the outstanding money from his/her estate. This has an impact on the business owner's heirs and dependents. It could even result in the estate being declared insolvent if debts exceed assets. Worse still, if the owner becomes disabled, the creditor has the right to claim the amount from him or her personally. Co-owners may feel the impact too. They may be forced to sell some of the business' assets if the funds cannot be raised via traditional means.
The solution
Business liability protection is risk insurance that a business takes out on the life of an individual who stands surety for the debts of the business. The amount of cover should be equal to the loan amount.

How does it work?

The bank gives the business a loan.

The owner stands surety for the loan.

The owner and the business agree that the business will repay the balance of the loan should the owner die or become disabled before the loan is fully repaid.

The business effects a Life policy on the owner's life (which should ideally include life and disability cover).

On the owner's death or disability the Life Cover proceeds are paid to the business.

The business repays the loan and the owner (or the estate) is released from surety obligations.

Key Person Insurance

As a business owner you no doubt value the contributions each of your employees make to your business. However, there are also key individuals who are critical to the continued success of your venture. Losing such a key individual would impact you on a personal as well as business level. Death and disability are a reality of life. The best that you can do is to ensure that you have planned and provided for the necessary funds to overcome the negative impact caused by such a loss.

The possible impact on your business could be:

A slowdown in turnover.

Decline in profitability and/or sales.

Stricter terms from suppliers.

Difficulty in raising finance.

Loss of expertise.

Delay in finding and the high cost of hiring a successor.

The Solution

Key Person Insurance insures the life of a key employee for the purpose of compensating the business for the loss of income that it would suffer in the event of that employee's death or disability. > The Death Cover payment can then be used to absorb disruptions to the business and provide funds to recruit and train a suitable replacement.

As LMB we pride ourselves with the quality of the clientele we currently have on our books. We believe our service will be good value for both the employer administration and the member.

General Conditions

LMB does not hold any shares in the companies with which we are authorised to market. We are remunerated by such companies by commission. Our compliance with FAIS Act is monitors by Masthead Distribution Services (PTY) Ltd, a compliance practice approved by the Financial Services Board. Their contact details are: Tel (021) 686-3588; Fax (021) 686-3589 and PO Box 856, Howard Place, 7450. Masthead Financial Advisors Association also provides us with services such as a practice management and technology support by virtue of our membership. This support helps us to provide you with a more professional service. The compliance service ensures that our business remains fully compliant with FAIS legislative requirements and therefore that you as customer receive sound financial advice. Through the practice management support, we are able to run a more professional business and therefore also able to provide you with an improved service and enhance support. RETURN TO TOP