Namfisa CEB June 2014 Edition - Namibia Financial Institutions

MICROLENDING
INTEREST
RATES
WISE SPENDING
HABITS
ILLEGAL
DEDUCTIONS
How to fight high
fuel prices
A few things you can do to
help go the extra mile. Page 7
“If you’re a victim of identity
theft, it can lead to fraud that
can have a direct impact on
your personal finances and
could also make it difficult
for you to obtain loans, credit
cards or a mortgage until the
matter is resolved.”
Budget Sheet inside!
Page 16
SHOWCASE STORY
TANGENI THE
IDENTITY THIEF
Page 9
Focus Area:
Illegal
Deductions
Page 11
Photo by Ogilvy Namibia
JUNE’14 EDITION
MISSION
NAMFISA’s mission is to effectively
regulate and supervise financial
institutions and to give sound
DISCLAIMER:
The NAMFISA Consumer Education Bulletin is distributed quarterly,
free of charge. Views expressed by contributors are not necessarily
those of NAMFISA. Reproduction, copying or extracting any
part or whole of this publication may not be undertaken
without prior permission from the Editor.
EDITOR:
Isack Hamata
advice to the Minister of Finance.
LAYOUT:
Ogilvy Namibia
VISION
COPYWRITING:
Ogilvy Namibia
NAMFISA’s vision is to be a
respected regulator of the financial
sector that fosters a stable and
safe financial system contributing
PHOTOGRAPHY:
Ogilvy Namibia
Special thanks to PUMA (Eros) for use of their property.
DISTRIBUTION:
to the economic development of
All distribution enquiries should be directed to the NAMFISA
Consumer Education Department at the contact details listed below.
Namibia.
CONTRIBUTIONS:
VALUES
Contributions to this Bulletin are welcome.
The Editor reserves the right to edit submissions.
Send contributions to the Editor at:
[email protected].
CONTACT DETAILS:
•
Teamwork
•
Service
•
Integrity
•
Performance Excellence
Call: +264 61 290 5000
SMS: 3030 (normal charges apply)
Write: PO Box 21250, Windhoek
E-mail: [email protected]
Visit: 2nd Floor, Sanlam Centre
154 Independence Avenue
Windhoek
RECYCLING
PENSION FUND
TIPS
BENEFITS
STOP
EXCESS
SPENDING
FINANCIAL EXPERT
TALKS
JUNE’14
“The most amazing
feeling about my career
is
as a financial planner
the
to witness first-hand
positive impact of financial
CONTENT
”
success on my clients...
Budget Sheet inside!
Page 16
Money Sense
Page 7
Learn easy ways to make
your money go further
every month. It’s like
paying yourself!
Focus Areas:
Complaints
Photo by Ogilvy Namibia
Page 7
IN THIS EDITION:
3.
From the Editor’s Desk
4.
From the Office of the CEO
5.FLI
6.
NAMFISA Complaints: Consumer Testimony
7.
Scammers Use NAMFISA as Bait
8.
Money Saving Tips: Saving on Fuel Costs
9.
Showcase Story: Tangeni the Identity Thief
11.
Focus Area: Illegal Deductions
12.
Wise Spending Habits
13.
Long-term Insurance
15.
Microlending: Interest Rates
16.
Budget Sheet
17.
The A-Z
18.
Fun & Games
Page 6: Consumer Testimony
Page 7: Scammers
“It’s not your
salary that makes
you rich, it’s your
spending habits.”
- Charles A. Jaffe
Page 9: Showcase Story
&
8
Fun Page1
es:
m
a
G
4
3
7
8
5
6
13
11
12
FROM THE EDITOR’S DESK
Mr. Isack Hamata, Editor
Dear Readers,
How time flies! It’s already the month of June and
deep into the 2014 winter, which is promising to be
colder than last year. This calls for caution in terms of
taking care of ourselves and those close to us. Winter
has the habit of bringing with it dreaded ailments such
as common cold and influenza.
It is common knowledge that sicknesses such as flu
keep productive citizens away from work and children
away from school. Studies have been conducted on
the impact of influenza and influenza-like illness on
productivity and healthcare resource utilisation in a
working population. These studies have found that
on average, influenza sufferers were incapacitated or
confined to bed for 2.4 days, missing 2.8 days of work
per episode of illness.
“It is therefore fair
to deduce from the
conclusions that medical
aid claims or expenditure
on medical treatment for
those without medical
aid will increase during
these winter months. This
is however preventable if
we all take the necessary
precautions.”
On return to work, they reported reduced effectiveness
These studies also observed a relatively high level of
3.5 days after the onset of symptoms. There was a
and there was substantial use of both prescription and
and inability to resume normal activity until a mean
positive correlation between the number of symptoms
and bed days and missed work days. There was a
positive correlation between the number of healthcare
contacts and the number of reported symptoms.
3
CONSUMER EDUCATION BULLETIN
contact with general practitioners and pharmacists
over-the-counter medication. The studies concluded
that the impact of influenza and influenza-like
illnesses on productivity in a working population and
the resultant cost to employers and employees are
considerable. It is therefore fair to deduce from the
conclusions that medical aid claims or expenditure on
medical treatment for those without medical aid will
increase during these winter months. This is however
preventable if we all take the necessary precautions.
There are inexpensive ways to prevent the spread
of germs that cause respiratory illnesses such as
influenza. Amongst others, these include washing
your hands with soap and water, especially after a
cough or a sneeze; covering your nose and mouth
with a tissue when you cough or sneeze; avoid
touching your eyes, nose or mouth; and try to avoid
close contact with sick people. By adhering to a strict
health regime we will surely beat influenza and other
opportunistic diseases this winter.
I wish you happy reading.
The Editor
“An investment in
knowledge pays the
best interest.”
FROM THE
OFFICE OF THE
- Benjamin Franklin
CEO
Dear readers,
In the previous edition, I shared some insight on the
On the contrary, being excluded from mainstream
As a parting note, I would also like to encourage
wisely. I also shared advice on the need to move
afford to do so will end up paying more for their
of financial inclusion seriously and work towards
need for consumers to save and spend their earnings
from being a mere consumer of goods and services
to being a key player in the provision of those
goods and services. I particularly focused on the
financial industry, which, as we know, was by and
large dominated by foreign players. Namibians are
therefore merely reduced to becoming consumers
financial services means that those who can at least
basic needs, including the cost of energy, as they
cannot benefit from the cheaper tariffs linked to
payments by direct debit. They will invariably pay
more for their credit needs, as they have no access to
affordable rates from credit grantors.
destinies, and they can only do that if they start
“I reiterate that if we
are to move forward as
a country, it’s required
that we start thinking and
doing things differently.”
financial wellbeing.
As regulator of the financial industry and party to
of those financial services and products through
payment of premiums and borrowing of money.
I reiterate that if we are to move forward as a country,
it’s required that we start thinking and doing things
differently. Namibians need to be masters of their
taking an active interest in managing their own
Financial
independence
does
not
happen
automatically. It will require concerted effort
and changes of mind regarding how we treat our
finances. We need to inculcate habits that will secure
our future and those of our offspring in the future,
since financial habits formed early in life influence
behaviour in adulthood. Therefore, combining
financial literacy access to secure savings and/
or business start-up loans can help set positive
financial management habits, build assets, avoid
costly pitfalls, establish a nest egg for future goals
or emergencies and launch a revenue-generating
enterprise. By being financially savvy, we will
inspire the next generation to improved economic
performance.
consumers of financial services to take the notion
educating themselves on the subject of inclusion.
Financial inclusion should not be treated as a
matter for government, regulatory authorities and
the financial institutions. The consumers, too,
should play a role in appreciating the fundamentals
of financial inclusion to ensure that they are not
financially excluded for much longer. If we achieve
financial inclusion as per our Financial Sector
Strategy, we are likely to collectively reduce or
eliminate hardship amongst the most vulnerable and
disadvantaged members of our society.
Phillip N. Shiimi
NAMFISA CEO
the Government’s Financial Sector Strategy, it is
NAMFISA’s goal to create financial inclusiveness
by creating the necessary environment to provide
Namibians with access to appropriate ranges of
financial products and services that allow them
to effectively manage their money, regardless of
their level of income or social status. For financial
inclusion to be achieved, people need to be supported
to have, as a minimum, some basic financial skills,
product knowledge and understanding. This is
therefore a clarion call to all providers of financial
services and products to start working towards
tailoring their products and services to the needs of
those they serve, instead of providing products and
services that add no value other than serving as a
postponed financial burden.
Get in touch with me! I want to hear your comments
and questions, and help empower you the only way possible –
through action! Reach me at: [email protected]
CONSUMER EDUCATION BULLETIN
44
BUDGET
WISE
BUDG
BUDGET YOUR
MONEY Having no budget is having no
BUDGET
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plan. Be CLEAR
on what you spend your
money on. CL
plan.
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EVERY EXPENSE No one can afford to waste
money. Keep
track of what you spend your
on
money
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and cut outand
unnecessary spending.
cut ou
CHECK YOUR
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budget in
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We want to hear what you’re saying.
For more information contact us: For
more
W
inform
Tel: (+264) 61 209 2296, Fax:T
(+264)
61 245 696
el:
(+264)
[email protected]
61
info@fli-nami
www.facebook.com/finlitnam www.facebook
5
CONSUMER EDUCATION BULLETIN
NAMFISA COMPLAINTS
CONSUMER TESTIMONY
COMPLAINT SUCCESSFULLY
RESOLVED
CONSUMER EDUCATION BULLETIN
6
SCAMMERS
USE NAMFISA AS BIAT
JOB OFFERING SCAMMERS USING
NAMFISA AS BAIT
In a previous edition of the Consumer Education
Bulletin, the NAMFISA Chief Executive Officer
alerted the public to a scam doing the rounds, using
the name of NAMFISA as bait.
Another trick of the scammers is to tell the jobseekers
or applicants that they must fax their bank deposit
slips to a certain fax number and then meet their
prospective employers at a certain location.
The modus operandi of the scammers is to place an
advertisement in local newspapers, listing a number
of jobs on offer. Upon enquiry, members of the
public are invited for ‘interviews’ and are told there
and then that they are successful. They are, however,
given a condition that they should first acquire a
registration certificate from NAMFISA before they
are confirmed as employees.
After all the eagerness, energy and enthusiasm with
which the jobseekers go through the process of
getting the money and depositing it into the given
back account, they would then attempt to reach their
prospective employer to get further information on
commencement date, salary and other benefits.
Desperate jobseekers are then told that in order for
them to receive the registration certificate, they need
to pay a certain amount of money into the bank
account of the would-be employers. This amount,
according to information obtained from some
applicants, could amount to N$3,000 per person.
Jobseekers, who are in most cases oblivious of what
is happening to them, will go to every length to
find the money, often borrowing it from family or
friends. Some even cause their family members to
borrow money from microlenders (cash loans) and
naturally such loans are to be repaid with interest.
When they do eventually call for this information,
jobseekers find that the number they are calling
no long exists on the operator’s network. When
they visit the office where they first met their
prospective employers, they are told that the people
are no longer doing business from that office and
that, in fact, they merely rented the space for a few
days. When the jobseekers then rush to the bank to
retrieve their money, they find that the account into
which they have paid the money has been closed and
the scammers have withdrawn all the money.
A number of Namibian youth have fallen prey to this
scam and, as a last resort, they approach NAMFISA
to claim their registration or their money back since
they have the mistaken belief that their money has
been paid to NAMFISA for certification. The whole
experience ends very badly for the applicants who
realise too late that they have been scammed. They
now sit with the burden of having to repay those they
loaned money from and to continue their pursuit of
job opportunities.
NAMFISA therefore advises members of the public
that the Authority does not issue certificates to
any individual who applies for a job as a driver,
secretary, legal assistant and/or security guard at any
private company. Any member of the public who
suspects that an individual or individuals are using
NAMFISA’s name to entice people with job offers
in return for payment should immediately report the
matter to the police or approach NAMFISA directly
for swift action to be taken.
“The time to
save money is when
you have some.”
- Joe Moore
7
CONSUMER EDUCATION BULLETIN
Money Saving Tips
FOR HIGH FUEL PRICES
INCREASING PETROL PRICES GETTING
YOU DOWN? WHILE TRAVELLING VIA
CAR IS STILL A DAILY COMMITMENT FOR
MOST, THERE ARE A FEW THINGS YOU
CAN DO TO HELP GO THE EXTRA MILE.
By Hilke Alberto
Manager: Complaints
1
2
3
JUST SLOW DOWN: Every km that you drive faster, the more money you
spend. It’s estimated that every 10 km you drive over
100 km is the equivalent of paying an extra N$1 per
litre of petrol.
DON’T IDLE YOUR FUNDS AWAY: Idling your car can consume up to a litre of fuel per
hour, depending on engine size and air conditioner use.
STAY IN TUNE:
A properly tuned vehicle can improve fuel mileage by
up to 4%, depending on the type of work or repairs.
4
5
6
INFLATION? INFLATE!: Properly inflated tyres can improve your mileage by
up to 3.3%. And that’s not just a bunch of hot air!
PLAN THE SAVINGS:
Several short trips taken from a cold start can use
twice as much fuel as a longer multi-purpose trip
covering the same distance.
DID WE COVER THE CARPOOL?:
Daily commuting to work or school is typically
the largest portion of our monthly fuel expenses.
Therefore, it makes sense to split those costs with
others in similar situations. Set up a carpool route with
a friend or a colleague and enjoy the savings and the
company.
Photo by Ogilvy Namibia
SHOWCASE STORY
TANGENI THE IDENTITY THIEF
And so Tangeni got a new friend. His name was
Hafeni. This guy, Hafeni, had arrived in Windhoek
six months ago and landed himself a good job at one
of the private companies in the city.
Being the good friend that he is, Tangeni always
invited Hafeni to parties and other social events.
Hafeni was impressed by Tangeni’s knowledge
of the social scene. Also, Tangeni seemed to be
connected to every celebrity in the city and always
dropped the names of politicians in his conversations
with Hafeni.
It was not long before the two friends trusted
each other to the extent that they moved into a flat
together. Because they shared bills, Hafeni did not
mind leaving his important documents with Tangeni.
It appeared Hafeni’s job was more demanding and
he had little time to take care of household errands
like paying bills, buying food and organising things
around the house. That was left to Hafeni, who was
all too pleased to oblige.
As weeks became months and months became
years, the friendship grew from strength to strength
and trust between the two was cemented. Hafeni still
loved his work, and weekend parties, and nothing
else really worried him. The only other thing he
looked forward to was the weekend so he could
‘unwind’ in the best ways possible. In any case, his
friend Tangeni always made sure that they went to
the best spots in town.
9
CONSUMER EDUCATION BULLETIN
“Tangeni himself was a fast
mover. All of a sudden he started
acquiring expensive designer
clothes, furnished the flat with
the most expensive furniture and
discarded the cheap stuff. Hafeni
had the thought of asking where
Tangeni got the money from, but
he convinced himself that being the
man about town, his connections
must be sorting him out financially.”
everything else around the flat. Hafeni slumped in
And so the high life continued until one day that
turned around Hafeni’s life completely. He was
visited at his work place by messengers of the court.
They issued him with a warrant of arrest for ignoring
court orders. Hafeni was flabbergasted. He did not
know what to do. When he called Tangeni for quick
advice, the message on the phone said the number
was not in existence. How could that be if he saw
Tangeni the same morning before he came to work?
his cellphone were met by a message stating that the
Something was just not right, but Hafeni did not
have the time to think straight. He was shown copies
of letters of demand by lawyers for goods that he
bought on hire purchase and credit cards over an
extended period. Hafeni denied that he ever opened
accounts or used his credit card to acquire those
items, but letters of demand showed otherwise.
Then it dawned on him. For many months, Hafeni
didn’t receive mail, as Tangeni was in charge of
collecting mail from the post office and virtually
his chair. He just realised what had happened: For
trusting his good friend with everything, including
his identity documents and bank cards, he found
himself in a very deep mess. Tangeni had shrewdly
made him use his mailbox, which he had no access
to, thus denying Hafeni the chance to know what
mail he had received. How would he explain this to
his employer, colleagues and family?
Sympathetic to Hafeni, the court messengers sat him
down and asked him a few questions about his life,
including when he came to Windhoek, and who he
stays with. It was easy to identify a suspect. Tangeni
was the prime suspect and any subsequent calls to
number has been discontinued and no longer exists.
Hafeni was informed that he was a victim of identity
theft. He wondered how Tangeni got it right over this
many months to clean him out from right under his
nose while they stayed together and partied together.
HERE IS WHAT YOU NEED TO
KNOW ABOUT IDENTITY THEFT
Identity theft is when your personal details are
stolen and identity fraud is when those details are
used to commit fraud.
Identity theft
Identity theft happens when fraudsters access
enough information about someone’s identity (such
as their name, date of birth, current or previous
addresses) to commit identity fraud. Identity theft
can take place whether the fraud victim is alive
or deceased.
If you’re a victim of identity theft, it can lead to
fraud that can have a direct impact on your personal
finances and could also make it difficult for you to
obtain loans, credit cards or a mortgage until the
matter is resolved.
Identity fraud
Identity fraud can be described as the use of that
stolen identity in criminal activity to obtain goods or
services by deception.
Fraudsters can use your identity details to:
• Open bank accounts
• Obtain credit cards, loans and state benefits
• Order goods in your name
• Take over your existing accounts
• Take out mobile phone contracts
• Obtain genuine documents such as passports and
driving licences in your name.
• The first time you know of it may be when you
receive bills or invoices for things you haven’t
ordered, or when you receive letters from debt
collectors for debts that aren’t yours.
Protect yourself against identity fraud
• Don’t throw out anything with your name, address
or financial details without shredding it first.
• If you receive an unsolicited email or phone call
from what appears to be your bank or building
society asking for your security details, never
reveal your full password, login details or account
numbers. Be aware that a bank will never ask
for your PIN or for a whole security number or
password.
• If you are concerned about the source of a call, ask
the caller to give you a main switchboard number
for you to call them back on. Alternatively, hang
up and call your bank back on the legitimate
phone number printed on your bank statements.
• Check your statements carefully and report
anything suspicious to the bank or financial
service provider concerned.
• Don’t leave things like bills lying around for
others to look at.
• If you’re expecting a bank or credit card statement
and it doesn’t arrive, tell your bank or credit card
company.
What should you do if you’ve been a victim of
identity fraud?
• Act quickly – you mustn’t ignore the problem.
Even though you didn’t order those goods or open
that bank account, the bad debts will end up under
your name and address.
• If you believe you’re a victim of identity fraud
involving plastic cards (e.g. credit and debit
cards), online banking or cheques, you must
report it to your bank as soon as possible. Your
bank will then be responsible for investigating
the issue and they will report any case of criminal
activity to the police. The police will then record
your case and decide whether to carry out followup investigations.
• If you think you’re a victim of another kind of
identity fraud, you must report the matter to the
relevant organisation. Depending on their advice,
you should then alert the police.
• You should report all lost or stolen documents –
such as passports, driving licences, plastic cards,
cheque books – to the relevant organisation.
Further advice - Plastic cards
• If your plastic cards are lost or stolen, cancel
them immediately. Keep a note of the emergency
numbers you should call.
• When giving your card details or personal
information over the phone, internet or in a shop,
make sure other people cannot hear or see your
personal information.
Documents
Keep your personal documents in a safe place,
preferably in a lockable drawer or cabinet at home.
Consider storing valuable financial documents such
as share certificates with your bank.
Don’t throw away entire bills, receipts, credit-or
debit-card slips, bank statements or even unwanted
post in your name. Destroy unwanted documents,
preferably by using a shredder.
Passwords and PINs
Never give personal or account details to anyone
who contacts you unexpectedly. Be suspicious even
if they claim to be from your bank or the police.
Don’t use the same password for more than one
account and never use banking passwords for any
other websites. Using different passwords increases
security and makes it less likely that someone could
access any other accounts.
CONSUMER EDUCATION BULLETIN
10
FOCUS AREA
ILLEGAL DEDUCTIONS
How to stop illegal deductions from your
bank account.
Almost on a daily basis, NAMFISA’s Complaints
Department receives and processes numerous
complaints from consumers about the manner in which
they are treated by providers of financial services and
products. These complaints include refusal to pay
pension benefits, refusal to pay out insurance claims,
cancellation of contracts and illegal deductions.
When completing your instruction, you should select
a date for the debit order deduction on which you will
always have sufficient funds to cover the amount to
be withdrawn (for example pay day). Ensuring that
you have sufficient money to fund the debit order will
enable you to avoid any penalty fees for rejected debit
orders from the bank.
For this edition, we will deal with the problem of
illegal deductions, which has become a thorn in the
flesh of many consumers of financial services. Some
claim they have never authorised any third party
to deduct money from their bank account via debit
orders. Others have complained that the debit order
deductions have continued way after they have settled
debts or paid accounts via debit order.
Stopping a Debit Order
You must cancel a debit order by providing written or
other appropriate notification to the third party whom
you authorised to make the deductions.
A debit order is an agreement between an individual
and a company or a third party in which the individual
authorises the company or third party to take money
out of his or her banking account for services that
entity provides to him or her. Debit orders may be for
fixed or variable amounts.
You may also stop a future debit order payment for
a given period by requesting that your bank places a
stop payment instruction on your account for the exact
amount of the debit order.
Your bank will advise you regarding the period for
which the stop payment instruction will be effective,
and how it operates. You may also be charged a fee for
implementing this stop payment instruction.
The consumers who complain about illegal deductions
normally allege that they have tried all they could but
have found no joy in having the deductions cancelled.
Understandably, this has caused distress, discomfort
and financial loss. People are forced to go and borrow
money to make ends meet as the money that they have
earned legitimate is being taken by other parties.
You must be aware of any impact cancelling or
suspending a debit order payment may have on your
contractual commitments with the third party.
To ensure that customers do not suffer distress and are
helped speedily, the Bank of Namibia, together with
Bankers Association of Namibia, launched a Code of
Banking Practice in which they, inter alia, advise the
steps that consumers must take to have their situations
rectified speedily.
In particular, you should raise a dispute when the
third party:
• Has withdrawn an amount before the date
specified in your instruction;
• Continues to collect a debit order that you
have cancelled or is subject to a stop payment
instruction;
• Debits your account for an incorrect amount;
• Has collected a debit order you did not authorise
or in a manner you did not authorise (e.g. split
the collection amount or consolidate several debit
orders); or
• Has collected a debit order that is not consistent
with your instruction.
The following are guidelines excerpted from
the Code of Banking Practice to prevent illegal
deductions from causing frustration and financial
loss:
Use of Debit Orders
You may use debit orders as a means of payment for
a range of services. A debit order is an instruction by
you to a third party (including a bank) to allow that
third party to collect a payment from your account on
a regular basis (e.g. monthly or annually). You can
choose whether it will be a fixed amount (e.g. a loan
repayment) or a variable amount (e.g. monthly cell
phone charges).
11 CONSUMER EDUCATION BULLETIN
Disputes about Debit Orders
You should report any disputes relating to your debit
order to your bank.
Your bank may request you to provide proof of
identity and to confirm the dispute. If your bank
determines that the debit order is not authorised by
you, your bank may reverse the transaction and any
related fees. You will not be able to dispute a debit
order if the authorisation was done by you using your
debit/cheque card and PIN.
WISE SPENDING
HABITS
You work so hard for your money that you should be careful
how you spend it. Reading the following tips could help you
save more than a few pennies!
THE BASICS:
SCORE CARD
• Decide how much you’re going to spend before
you go shopping and stick to your budget.
• Use coupons! At the end of the year you will be
surprised at how much you will have saved and
how easy it was.
• Shop alone and do it quickly. Spending too
much time in a shopping mall will only make you
buy more unnecessary stuff.
• Always compare prices and don’t assume that
if it’s on sale it’s cheaper. Be aware of marketing
strategies that try to get you to buy more.
• Buy wise: When nonperishable items are on sale
buy in bulk and use later. Buy winter clothing
in summer and summer clothing in winter when
shops are clearing for seasonal stock.
• Prepare a shopping list and stick to it when you
do your groceries.
• Don’t shop when you are hungry… Junk food
is more expensive than home cooked meals. It can
really make a difference!
• When shopping online, be aware of hidden fees.
Items such as shipping, taxes, and customs can
increase the total significantly.
• Before buying something, ask yourself: Is this
essential for me to have? Is it a need or a want?
Will I really regret it tomorrow if I don’t buy it
now? This will help you screen out things that are
not worth spending your money on.
Use this score card to see if you are a wise spender:
More than 6 A’s (Always) - you are above the average
Between 5 -3 S’s (Sometimes) - you need to improve
More than 6 N’s (Not at all) - you are in danger
1
2
3
4
5
I only buy when items are on sale
Always
Sometimes
Not at all
I don’t buy junk food when I am doing
shopping
Always
Sometimes
Not at all
I stick to my shopping list
Always
Sometimes
Not at all
I use coupons
Always
Sometimes
Not at all
I buy online
Always
Sometimes
Not at all
6
7
8
9
10
I never regret buying items
Always
Sometimes
Not at all
I compare prices
Always
Sometimes
Not at all
I don’t decide how much to spend
Always
Sometimes
Not at all
I buy in bulk when items are on sale
Always
Sometimes
Not at all
I enjoy shopping alone
Always
Sometimes
Not at all
CONSUMER EDUCATION BULLETIN
12
LONG-TERM INSURANCE
THINGS POLICYHOLDERS SHOULD KNOW
It is very important to invest in a safe long-term
financial plan while you are still young. Purchasing
a long-term insurance policy or product is one way
of saving money and providing for either retirement,
or for your dependents upon your death or disability.
Long-term insurance policies can also be used as
security to cover your debt upon death or disability.
Long-term insurance is therefore insurance that
covers life-changing events such as death, disability
or retirement. There are various long-term insurance
products and it is important that you as the consumer
understand the various products and how these
products suit your specific situation, risks and needs.
Below are a few things you, as the consumer, should
know about:
have an investment portion or just funeral with no
investment portion.
acquaint yourself with the terms and conditions,
exclusions and definitions.
There are various types of retirement annuities, such
as conventional or fixed-asset annuities which pay the
policyholder (in return for a monthly premium) a fixed
amount of money at maturity of the policy for the rest of
the policyholder’s life. Living annuities work slightly
different in that you, the policyholder, carry both the
investment and mortality risk. Composite annuities
on the other hand are a mixture of conventional and
living annuities and to some extent offer the best of
both as it provides you with a flexible income from
the living annuity portion and a fixed income from the
conventional annuity.
Cooling-off Periods
Types of Long-term Insurance
Disability insurance is usually added to life cover
as a rider benefit and covers you in the event of
disablement, which can be temporary or permanent.
There is a capital disability cover, where a lump
sum is paid only upon proof of permanent disability
(not greater than the life amount) and then there is
an income protector disability cover that provides
you with a monthly income with an annual increase.
If you are permanently or temporarily disabled, it can
replace your full salary until date of death or date of
recovery or date of maturity, whichever comes first.
It is important that you fully understand the terms and
conditions, as well as the definitions when claiming a
disability benefit.
Long-term insurance comprises the following main
classes: life insurance, disability insurance, funeral
insurance, fund insurance, sinking fund insurance and
health insurance. Long-term insurance can also be
a combination of one or more of these main classes
listed above.
Under life insurance there is whole life cover, which
is ordinary life cover valid until the date of death of the
policyholder or the life assured or on the surrender date
of the policy. In addition, there is also universal life
cover, which is similar to whole life cover, however
it includes an investment component. The returns on
investment are dependent on the investment vehicles
used. Furthermore, there is also endowment life
insurance, which is in effect a savings plan designed
to pay you during your lifetime rather than your
beneficiaries after death. Term life insurance or fixed
insurance is ideal if you need to provide life cover for
a set period of time, for example while paying off your
mortgage loan. After the agreed period of time, the
cover simply expires or the policy ends in the event
of death. It is important that consumers know the
advantages and disadvantages of the various products
as the fixed/term life insurance is a risky product,
with no cash values and the value of the sum insured
fluctuates on a sliding/reducing scale over the term of
the policy.
Funeral insurance covers the expenses and costs
incurred for burial and provides peace of mind that
you are not burdening dependents with the costs of
your death. This product can either cover the costs
of the funeral or a lump sum can be paid to the
beneficiaries. Funeral insurance policies may either
13 CONSUMER EDUCATION BULLETIN
Health insurance is the business of providing or
undertaking to provide policy benefits under health
policies. A health policy is a contract in terms of
which a person, in return for premium, undertakes
to provide policy benefits upon a health event. The
amount paid is calculated according to what was done
and not on how much it cost.
Sinking fund insurance is the business of providing
or undertaking to provide policy benefits under
sinking fund policies, which is a contract other than a
life policy, in terms of which a person, in return for a
premium, undertakes to provide one or more sums of
money at a fixed or determinable future date as policy
benefits.
It is imperative that you as the consumer understand
the various products under the various classes of longterm insurance business to ensure that you purchase
the long-term insurance best suited to your risk profile
and needs. Furthermore, it is also important to fully
Each and every insurance contract should have a
30-day cooling off period in which time you, the
policyholder or the insurer, can change your mind and
cancel the policy without incurring any costs.
Alterations, amendments and/or cancellation
of policy
It is imperative that you ensure your terms of contract
are kept up to date, that beneficiary nomination forms
are completed and updated as and when required. It
is also recommended that you inform beneficiaries
of such nominations and provide them with contact
details and copies of the documents in order to ensure
the benefits are claimed upon a life-changing event.
If you do this through your broker/agent, it is your
responsibility to follow up and ensure that the insurer
has received the documents and that your policy files
are updated accordingly.
Should you wish to cancel the policy, you will have to
ensure familiarity with the terms and conditions of the
contract as well as the cost implications of cancellation
so that your personal interests are protected in the best
possible way.
Role of the broker versus insurance company
The broker represents the interests of the policyholder,
and tends to serve as an intermediary for one or
various insurance companies. It is your responsibility
as a policyholder to ensure that each broker or agent
is registered with NAMFISA and that the agent or
broker provides you with more than one quotation
from various insurers in order to ensure a product is
best suited to your unique situation, risk and needs
analysis. The broker, on your behalf, deals with the
insurer to ascertain that the product purchased is
the most suitable for your situation, needs and risk
and also to ensure that all relevant documents are
submitted to the insurer.
Important tips that you should know as the consumer:
• You have the right to direct access to the insurer
and do not have to go through the broker/agent
each and every time you have an enquiry;
• You should ensure that the application forms
and other documents are a true reflection of
your situation and that no blanks are left for
completion by your broker/agent. When you sign
the document, it should be the final version that
gets sent to the insurer.
Other important matters for consideration
• It is imperative that you as the consumer are fully
familiar with the terms, conditions and exclusions
of your contract.
• You should keep copies of the documents in a
safe place.
• You have the responsibility to give true, correct
and complete information so as to avoid any
repudiation of claims.
• You are entitled to a grace period, meaning that if
you miss a payment you should still be covered
for that month. As policies differ, make sure to
acquaint yourself with what the grace period
on your policy is, however it is the consumer’s
responsibility to ensure consistent premium
payment to avoid any disappointments when a
claim needs to be submitted.
• If a life policy is ceded for the benefit of a spouse,
child or held in trust for any other person and
the person has been unable to pay the premium,
arrangements can be made with the insurance
company to convert such a policy into a paid-up
life policy or borrow from the insurance company
money necessary to keep such a policy in force or
apply the value of any bonuses accrued on such
policy to pay any premium that has fallen due.
• A life policy can be used to afford protection
during life, death, or the realisation of a policy.
In other words, should you become insolvent, die
or surrender the policy, only N$50,000 will be
protected from debtors, other claimants, etc.
Sources
• FSB Consumer Education
• Long-term Insurance Act (No. 5 of 1998)
“Someone’s
sitting in the shade
today because someone planted a tree a
long time ago.”
- Warren Buffet
CONSUMER EDUCATION BULLETIN
14
MICROLENDING
INTEREST RATES
In terms of the Usury Act, 1968 (Act No. 73 of
1968) a moneylender is defined as any person
who is granting or has granted a loan or a sum
of money to a prospective borrower in terms
of a money lending transaction. The Minister
issued Exemption Notice No. 189 of 25 August
2004 under section 15A of the Usury Act, 1968
defining a microlender as a person registered
with the Registrar and whose business includes
the carrying on of micro loan transactions.
A micro loan transaction is defined as a money
lending transaction in respect of which the loan
amount:
1.
2.
3.
Does not exceed N$50,000;
Together with the finance charges, which
is owed by the borrower, must be paid to
the microlender, whether in installments
or otherwise, within a period of 60 months
after the date on which the sum of money
has been advanced to the borrower; and
Is not paid in terms of a credit card scheme
or withdrawn from a cheque account with
a bank so as to leave that cheque account
with a debit balance.
Moneylenders, except microlenders, are not
obliged to register with NAMFISA. In terms of
Exemption Notice No. 196 of 25 August 2004,
moneylenders are only allowed to charge
maximum annual finance charges at an average
prime rate times 1.6. It is currently 9.25% times
1.6 equaling 14.8% per annum.
Moneylenders are also not allowed to keep the Bank
Cards/PINs of borrowers.
Where borrowers find that moneylenders charge in
excess of the maximum allowable finance charge
rate, they should report this anomaly immediately
to NAMFISA.
For clarity or more information, kindly contact the
Microlending and Credit Agreements Department
at: (061) 290 5000 (main), Ms. Lucrecia Lombardt
at (061) 290 5120 or e-mail: llombardt@namfisa.
com.na, or Mr. Alfred van Rooi at (061) 290 5127
or e-mail: [email protected]
15 CONSUMER EDUCATION BULLETIN
Example:
If a borrower borrows N$1,000 in respect of a 30-day loan, the annual finance charge will be calculated
as follows:
Annual finance charge = (Loan amount x (average prime rate x 1.6)) ÷ 12
= (N$1,000 x (9.25% x 1.6)) ÷ 12
= (N$1,000 x 14.8%) ÷ 12
= N$148 ÷ 12
= N$12.33
Total amount payable in respect of a 30-day loan = Loan amount + annual finance charge
=N$1,000 + N$12.33
=N$1,012.33
If a borrower borrows N$1,000 in respect of a 6-month loan, the annual finance charge will be calculated as follows:
Annual finance charge = Loan amount x (average prime rate x 1.6) x (6 ÷ 12)
= N$1,000 x (9.25% x 1.6 x (6 ÷ 12))
= N$1,000 x 14.8% x (6 ÷ 12)
= N$148 x 0.5
= N$74
Total amount payable in respect of a 6-month loan = Loan amount + annual finance charge
=N$1,000 + N$78
=N$1,078
If a borrower borrows N$1,000 in respect of a 12-month loan, the annual finance charge will be calculated as follows:
Annual finance charge = Loan amount x (average prime rate x 1.6)
= N$1,000 x (9.25% x 1.6)
= N$1,000 x 14.8%
= N$148
Total amount payable in respect of a 12-month loan
= Loan amount + annual finance charge
=N$1,000 + N$148
=N$1,148
Budget
Sheet
TAKE CONTROL OF YOUR FINANCES
1: MONTHLY INCOME
Income is the total sum of everything your household earns. Income can come from the salary of a steady job or work
you do on the side that brings in money.
You: Monthly salary (after tax)
Husband/wife: Monthly salary (after tax)
TOTAL INCOME (A)A:
2: MONTHLY EXPENSES
Expenses are everything that you spend your money on each month, such as food, water and electricity, and airtime.
Rent/mortgage/bond
Food (cooking at home)
Take-aways (KFC, Nandos)
Taxi/bus/petrol
Car loan repayment
School fees
Crèche/day care
Water and electricity
Airtime
2.1 EXPENSES YOU SHOULD HAVE
Medical aid
Life insurance
Funeral insurance
2.2 OTHER EXPENSES
TOTAL EXPENSES (B)B:
3: SAVINGS
We always stress the importance of putting money aside for the future.
Savings C:
4: ADDING IT ALL UP
Take your Income (A) and subtract the total of your Expenses (B) and then subtract your Savings (C) to see how much money you
will have left over at the end of the month.
E.g.
Income (A) = N$5,000; Expenses (B) = N$3,850; Savings (C) = N$500
Therefore: N$5,000 - N$3,850 - N$500 = N$650 left over at month-end.
CONSUMER EDUCATION BULLETIN
16
The A - Z
OF WHAT WE MEAN
Throughout the NAMFISA Consumer Education Bulletin you may come across words that
you do not know. Whenever that happens, flip to this section to learn what that word means.
Beneficiary: A person who derives advantage from something, especially
a trust, will, or life insurance policy.
Insurance: The compensation paid by an insurer in the event of loss,
damage, illness or death, in return for a monthly contribution.
Cancellation Notice: A notice (usually written) to discontinue the
services offered by a provider.
Legitimate: Conforming to the law or to rules.
Cheque: A payment order to a bank, written on a specially printed paper
as a substitute to cash or cards.
Claimant: A person making a claim.
Complaint: An expression of dissatisfaction/unhappiness.
Confidential: Intended to be kept a secret.
Contract: A written or oral legal agreement set up between two or more
people.
Cooling-off Period: A period of time after a sale contract is agreed during
which the buyer can cancel the contract without incurring a penalty.
Coverage: The degree to which an insurance contract protects you.
Credit agreement: A contract that declares a person may take goods
or property with the promise to pay for it at a later date.
Credit card: A card issued by a bank, clothing store, etc., allowing the
holder to purchase goods or services on credit.
Debit card: A card allowing the holder to transfer money electronically
from their bank account when making a purchase.
Jurisdiction: The official power to make legal decisions and
judgments.
Loan: Money borrowed that is to be repaid with interest.
Matured Policy: A policy that has reached the point where it is ready
to pay out.
NAMFISA: Namibia Financial Institutions Supervisory Authority.
Obligation: An act or course of action to which a person is legally
bound. That which one is obliged to do.
Online Trading: Trading securities, foreign exchange or financial
derivatives electronically.
Quotation: A formal statement establishing the estimated cost of a
product or service.
Repudiated: Refused or rejected.
Rights: A moral or legal entitlement to have or do something.
Risk: A situation involving exposure to danger or negative outcome.
Debt: To owe money to someone.
Savings: Money set aside for later.
Dependant: S/he who is in need of financial or other support.
Scam: A dishonest scheme/fraud.
Disability: A physical or mental condition that limits a person’s
movements, senses, or activities.
Scammer: A person who swindles by means of deception or fraud.
Financial Literacy: The ability to understand how money works in
the world.
Solvency: The ability to meet maturing obligations as they become
due.
Fine Print: Everyday term for important information hidden in
contracts that is usually overlooked.
Spam: Irrelevant or unsolicited messages sent over the internet,
typically to a large number of people.
FLI: Financial Literacy Initiative.
Stakeholder: A person with an interest in a company/business.
Fraud: Wrongful or criminal deception intended to result in financial
or personal gain.
Welfare: Social efforts intended to help people in need.
STAY UP-TO-DATE BY CATCHING THE NEXT CONSUMER EDUCATION BULLETIN FOR MORE
EXPLANATIONS AND EXAMPLES OF YOUR FINANCIAL RIGHTS AND RESPONSIBILITIES.
Proudly brought to you by NAMFISA.
“Good fortune
often happens when
opportunity meets
with preparation.”
17 CONSUMER EDUCATION BULLETIN
- Thomas Edison
“The mint
makes it first, it is
up to you to make
it last.”
FUN
- Evan Esar
GAMES
3
4
5
7
6
8
11
12
14
DOWN: 1. Jurisdiction; 3. Creditagreement; 4. Loan; 5. Spam; 8. Stakeholder; 9. Save; 10. Coverage; 12. Broker; 15. Insurance; 16. Contract
ACROSS: 2. SSC; 6. Fraud; 7. NAMFISA; 10. Confidential; 11. Debt; 13. Legitimate; 14. Obligation; 17. Dependent; 18. Repudiate; 19. Claimant
ANSWERS OF DECEMEBER EDITION
13
15
16
ACROSS
5.
A period of time after a sale contract is agreed during which the DOWN
1.
Namibian Financial Institutions Supervisory Authority (abbr.)
2.
Trading securities, foreign exchange or financial derivatives
or death, in return for a monthly contribution
3.
A written legal agreement set up between two or more people
7.
A dishonest scheme/fraud
4.
A physical or mental condition that limits a person’s movements, 8.
A situation involving exposure to danger or negative outcome
9.
Value added tax (abbr.)
11.
Refuse or reject
buyer can cancel the contract without incurring a penalty (7-3,6)
6.
The compensation by a company in the event of loss, damage, illness electronically (6, 7)
senses, or activities
10. A card issued by a bank, clothing store, etc., allowing the holder to purchase goods or services on credit
12. A person who derives advantage from something, especially a trust, 13. The degree to which an insurance contract protects you
will, or life insurance policy
15.
Financial Literacy Initiative (abbr.)
14. A formal statement establishing the estimated cost of a product or service
15. Wrongful or criminal deception intended to result in financial or personal gain
16.
To owe money to someone
CONSUMER EDUCATION BULLETIN
18
CONTACT DETAILS:
Call: +264 61 290 5000 | SMS: 3030 (normal charges apply)
Write: PO Box 21250, Windhoek
E-mail: [email protected]
Visit: 2nd Floor, Sanlam Centre
154 Independence Avenue
Windhoek
19 CONSUMER EDUCATION BULLETIN