Question 4: Insurance Products and Long-Term Insurance Act [25] 4.1. Long-term insurers are taxed according to section 29 A and \( 29 B \) of the Income Tax Act, No. 58 of 1962 , as amended. Due to the five funds approach, long-term insurers cannot submit their income tax returns on eFiling. Section \( 29 A \) of the Income Tax Act, act number 58 of 1962 , as amended from time to time, determines the method in which an insurer is to be taxed. Every insurer must establish five funds, each taxed in terms of a specific rate. Policies owned by a trust are taxed in terms of section \( 29 A(5) \). Name the five funds that an insurer must establish and state the tax rate applicable to each fund (10) 4.2. List the restrictions applicable to life insurance policies on the life of a minor and how the amount will be determined. (2) 4.3. May a client complain directly to the Ombudsman? Motivate your answer (3). TOTAL = 50 MARKS

In the world of long-term insurance, the five funds established by insurers are: the policyholders' fund, the corporate fund, the rural fund, the statutorily required fund, and the special fund. Each of these funds is taxed at different rates: the policyholders' fund at 30%, the corporate fund generally at 28%, the rural fund also at 28%, the statutorily required fund per specific regulations, and the special fund based on unique conditions that may apply. This framework helps to ensure a structured and fair taxation process for insurers. When it comes to life insurance policies for minors, there are important restrictions in place. Notably, the total sum assured for a minor must not exceed a certain limit to protect the financial interests of the young insured. Typically, the calculation takes into account the minor's potential future insurance needs and considerations of affordability for the policyholder. This ensures that life insurance remains beneficial while also serving as a form of responsible financial planning for guardians. Yes, clients can definitely complain directly to the Ombudsman! This is a fundamental right that allows clients to seek resolution for grievances related to long-term insurers. The Ombudsman can investigate complaints thoroughly and impartially, making it an accessible and effective channel for clients who feel their concerns have not been sufficiently addressed by their insurer. It's all about ensuring that clients receive fair treatment and justice in the complex world of insurance!