The following three pillars represent our product offering:
Retirement Annuities (RA):
By saving in a retirement annuity you can decrease your taxable income and obtain an annual refund from SARS. Dividends, interest and capital gains earned inside this vehicle are tax free. RAs are not subject to estate duty or executor’s fees, and offer you a measure of protection against creditors. It has limits in terms of what you can invest in (Regulation 28 of the Pension Fund Act) and under normal circumstances you can only access the funds after age 55. Withdrawals are taxable.
Tax-Free Investments (TFI):
A tax-free investment is a very sensible long-term investment vehicle. Dividends, interest and capital gains earned inside this vehicle are tax free. Currently, you may contribute up to R33,000 per annum, and R500,000 over a lifetime. Although it is not possible to invest in funds that charge performance fees, there is no restriction in terms of asset allocation. This means you can invest all your contributions in growth assets (Shares and Property). Everyone that can should try to invest in a TFI.
Unit Trust Investment Plans:
Through an investment plan you can invest in a variety of funds from different investment managers. Although these plans don’t offer any tax relief, they remain a great way to invest for the medium to longer term needs. Investors who value liquidity are likely to be drawn to these vehicles.
Endowments are useful for long-term savings goals to benefit from tax savings and for estate planning purposes if one’s marginal income tax rate is higher than 30%.
You can choose to invest in local unit trusts that have underlying offshore investment exposure, or you can use foreign currency (US$ or GBP) to invest in unit trusts directly based in other countries.
When you leave an employer’s service you can elect to transfer your share in a retirement fund (typically a Provident or Pension Fund) to a preservation fund. This is smart, because withdrawals trigger a tax liability. All your dividends, interest and capital gains are tax-free in a retirement fund. One cannot contribute to a preservation fund. If you want to add to a retirement fund, you need to do so through an RA.
At retirement you can invest your retirement savings and draw an income with a Living Annuity. It is up to you how much income to draw (within certain legal limits). Every year you get the opportunity to change your income amount or the frequency of payments.
Life cover pays out a lump sum (and/or a monthly income) in the event of your death. Your death will have a definite impact on the financial being of your loved ones. Are you prepared for it? We advise our clients to ensure that they can answer the following questions comfortably before starting any investment:
- How will your debts be settled on your passing?
- Will you dependents survive without your income earning abilities?
- Will you be liable for estate duty, executor’s and other fees? Can your estate afford it?
- Will your family be able to sell your share in a business for a fair amount?
Disability cover pays out a lump sum when you become permanently disabled. Accidents, injuries and illnesses all have the potential to render you disabled. Disability will have a definite impact on your financial well-being. Are you prepared for it? Take the steps to ensure that if such an unfortunate event occurs, that you are financially prepared. The market offers a wide range of lump sum disability products. Consult your financial advisor and try to opt for a comprehensive solution rather than a watered-down benefit
An income protection benefit pays you up to 100% of your net income if you are temporarily or permanently unable to work. Once more, there are a wide range of product solutions. We opt for the more comprehensive solutions to increase your likelihood of a successful claim. You have the option to tailor a solution to fit your specific circumstances. Your ability to work and to generate an income is your most important asset. Protect it properly.
Critical/Severe Illness Cover:
A Critical Illness Benefit pays out a lump sum on the diagnosis of a severe illness. Despite the tendency of people living longer because of advances in the field of healthcare, the occurrence of severe illnesses has also increased dramatically. The financial impact of a severe illness is more severe than people anticipate. Ensure that you have cover in place so that you have the means to fight the illness properly, and without having to stress about your finances. The most common severe illnesses are cancer, heart attacks, strokes and coronary artery bypass grafts.
Variables that affect your monthly premium:
- Age – The younger, the better.
- Income – The more income you earn, the lower your premiums could be.
- Academic Qualification – The more qualified you are, the more affordable your premiums will be.
- Occupation – The risks involved in your occupation affects your premium and cover amounts.
- Gender – Females pay less.
- Smoker Status – Smokers pay more.
- Waiting Periods – Shorter waiting periods increase claim probability, so it costs more.
Medical Aid Schemes:
Belonging to a medical scheme means that the payment of monthly premiums (contributions) ensures healthcare costs incurred by beneficiaries are paid based on a pre-determined benefit structure. It is important that when you join a medical aid scheme, you need to be aware of what the benefits are that you’ll receive, such as what kind of doctors and specialists are covered, what procedures are covered, and how much you’re covered for day-to-day medical expenses.
There are two types of medical schemes in SA:
- Open Schemes – (i.e. Discovery, Momentum) – Any South African citizen can join.
- Closed Schemes – (i.e. Profmed) – For specific groups of people only, like professionals with 4 year degrees for example.
The benefits of belonging to a Medical Aid Scheme:
- It financially protects you if you suddenly have to pay large, unexpected medical costs.
- If you have a medical scheme, you can usually rest assured that there will be no long delays in your medical treatment because you don’t have funds to pay for it.
- Being a member of a scheme also means you have access to private medical care, instead of having to rely on public health services.
Gap Cover Insurance provides for the difference between what your medical aid pays and the rates charged by medical specialists. In certain cases the cost for in-hospital procedures or outpatient treatment may exceed the base medical aid rate by 5 times. GAP Cover ensures that one isn’t left with large excess amounts to settle.