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2.1 Name any FOUR examples of long-term insurance - NSC Business Studies - Question 2 - 2022 - Paper 2
Question 2
2.1 Name any FOUR examples of long-term insurance. 2.2 Elaborate on the meaning of excess as an insurance concept. 2.3 Identify the type of visual aid that was use... show full transcript
Worked Solution & Example Answer:2.1 Name any FOUR examples of long-term insurance - NSC Business Studies - Question 2 - 2022 - Paper 2
Step 1
Step 2
Elaborate on the meaning of excess as an insurance concept.
Answer
In insurance, excess refers to the amount that an insured must pay out-of-pocket before the insurance coverage kicks in. It serves to reduce the insurer's risk by preventing small claims, thus keeping premiums lower. Essentially, it is the responsibility of the insured to cover a part of the loss.
Step 3
Step 4
Explain the difference between limited liability and unlimited liability.
Answer
Limited liability protects an individual's personal assets when a business incurs debt or faces legal action, exposing only the investment amount. Conversely, unlimited liability requires owners to bear full financial responsibility, affecting personal assets if the business fails.
Step 5
Describe the functions of the Johannesburg Securities Exchange (JSE).
Answer
The JSE serves several crucial functions:
- It provides a platform for buying and selling shares, ensuring liquidity in the market.
- It facilitates investment opportunities for both institutional and individual investors.
- It plays a role in capital formation for businesses seeking funds to expand.
- The JSE acts as a regulator, ensuring transparency and fair trading practices in the market.
- It offers information on stock performance and economic conditions, benefiting investors.
Step 6
Calculate the simple interest that Thapelo will receive after two years. Show ALL calculations.
Answer
To calculate the simple interest, use the formula:
where:
- P = principal amount (R7,000)
- R = interest rate (10%) = 0.10
- T = time (2 years)
Now, substituting the values:
Thus, Thapelo will receive R1,400 in interest after two years.
Step 7
Discuss the impact of fixed deposits as a form of investment.
Answer
Fixed deposits offer stable returns, ensuring investors earn interest at a fixed rate regardless of market fluctuations. Advantages include:
- Predictability of returns allows better financial planning.
- Lower risk compared to other investment options.
- They serve as a safeguard against inflation if extended for a longer period. However, drawbacks include limited liquidity, as funds are locked in until maturity.
Step 8
Advise businesses on the advantages of insurance.
Answer
Insurance provides several vital benefits to businesses:
- Risk mitigation by protecting against significant financial losses.
- Security for assets, safeguarding companies from unexpected events.
- Peace of mind, allowing business owners to focus on growth without the stress of potential liabilities.
Step 9
Suggest ways in which the presenter can handle feedback after a presentation in a non-aggressive and professional manner.
Answer
To manage feedback effectively, the presenter should:
- Remain composed and open to suggestions.
- Listen actively to audience input without interruption.
- Respond politely and acknowledge valid points raised.
- Clarify any misunderstandings or uncertainties promptly.
- Thank the audience for their feedback to encourage a positive dialogue.