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OUR PRODUCTS

Understanding your life stage and financial situation is a critical part of the advice process. Whether you are starting your first job, getting married, growing your family or looking forward to retirement, the more your financial advisor knows about you , the easier it will be to recognise potential needs and offer the right financial guidance and solutions.


Every dream deserves a plan! By getting the right advice at the right time, your plans can be turned into reality and you will be able to do great things. Defining those dreams and goals will bring you one step closer to achieving them, so start by writing down your aspirations for the future!

Our product range can be categorised under the following categories –

Protection Planning
Life Cover

Life cover is a core risk protection benefit.  This benefit provides cover for your family or dependents where your whole contribution goes towards covering the risk of your death. There is no investment portion which means that your full death benefit will be paid out directly to your beneficiaries when you die.

This benefit should typically include cover for debt where applicable and/or other monthly budget items like household and healthcare expenses as well as provide for death-related expenses, such as potential estate duty and funeral costs.

Disability Cover

Income Protection / Lump Sum Disability Benefits

The ability to generate an income could be considered as one of your most valuable assets. Protecting the ability to earn your entire future income is therefore of vital importance. If you were to become unable to work as a result of a temporary or permanent disability or as a result of a serious illness, it could have a serious impact on your income. You and/or your family could find yourselves facing serious financial difficulty or having to access investments that have been earmarked for other objectives to maintain and meet your normal monthly living expenses. There are further risks of being faced with medical bills not covered by your medical aid scheme.

The lifestyle you worked so hard to build could quickly be completely destroyed.

The list below indicates the main differences between Income Protection versus the Lump Sum Disability Benefit.

Income Protection

Lump Sum Disability

  • Covers temporary and permanent disability
  • Covers permanent disability
  • Premiums paid are not tax deductible with effect from 01/03/2015
  • Premiums are not tax deductible
  • Income benefits are tax-free with effect from 01/03/2015
  • Lump sum benefit paid out tax-free
  • Waiting period is selected by life assured and could be as low as 7 days
  • Waiting period is stipulated in the policy contract but is typically 6 months (could differ between product providers)

 

The perception is generally that it is more expensive to provide an income protection benefit than a lump sum disability benefit. However, if one makes the comparison you can see from the above table that the assumptions used for the comparison need to be prudent and that it will be difficult to make an “apples for apples” comparison.

Again, the objective for providing the disability cover will generally determine which benefit is more suitable.

A lump sum benefit could be considered for the settling of a debt, e.g. bond, in the event of the policy holder becoming totally and permanently disabled. If the disability is of a temporary nature the income protection policy will provide a monthly benefit which could then enable the policy holder to maintain the bond repayments. A combination of the two benefits could also be considered as a more comprehensive cover.

Severe Illness / Dread Disease Benefits

Severe illnesses and injuries will impact you and your family both emotionally and financially. You will normally need to undergo extensive treatment which you may or may not be able to afford.

The good news though is that because of advances in medical technology, your chance of surviving such an event is high. However, the costs involved can be crippling. You have to ask yourself whether, after escaping a near death experience, would you be able to survive the financial impact and still maintain the standard of living you are used to?

The last thing you need when you are struggling to recover from a severe illness is the added financial worry of paying for your recovery. In fact, research has shown that a positive state of mind goes a long way towards making a full recovery.

A dread disease benefit provides a lump sum benefit payment when you contract or suffer a dread disease event. It is also referred to as Recuperator, Critical Illness Benefit or Trauma Benefit.

This benefit is specifically designed to help make your recovery process easier without you having to worry about the financial burden that a severe illness or injury can place on you and your family.

The definition of a dread disease has changed over the past few years. To help one compare various severe illness protection products in the market, the Association for Savings and Investment SA (ASISA) created a Standardised Critical Illness Definitions Project (SCIDEP) which was set up to standardarise industry definitions.

These were implemented in September 2009 to ensure that consistent and objective decisions are made by the various product providers.

The standard definitions apply to the following four “core” diseases that makes up between 70% and 90% of all dread disease claims:

  • Heart attack
  • Cancer
  • Stroke
  • Coronary artery bypass graft (CABG)

Broadly speaking, conditions listed as dread diseases can typically be differentiated between essential (core) and inclusive (comprehensive) conditions. Essential conditions cover dread diseases such as cancer, heart attack, kidney failure, major organ transplant, paralysis, stroke and blindness, whereas inclusive conditions (typically covered at an additional premium) cover loss of limbs/hearing/speech, coma, burns, multiple sclerosis, motor neuron disease, Parkinson's and Alzheimers, a benign brain tumour, aplastic anaemia, severe ulcerative colitis, severe Crohns disease, primary pulmonary hypertension, acquisition of HIV from blood transfusion and occupational acquired HIV.

Below is a summary of recent claims statistics of one of the product providers which highlights the need for this cover.

dread

Retirement Planning

Pre-Retirement

Retirement Annuities

Retirement Annuities (RA’s) have proven to be a beneficial savings instrument for many people because it encourages disciplined savings with accompanying tax incentives.

RA’s provide you with a retirement capital to enable you to purchase a life-long pension income after retirement. It is very important for your long-term financial security to save regularly for your retirement and a RA fund offers you the ideal method to do so tax-efficiently.

Tax Efficiencies
An RA fund provides a tax-efficient method of saving for retirement for people who do not belong to an employer’s pension fund or those who want to top up their retirement provision. The government encourages you to save for your own retirement by allowing you to deduct your RA contributions from your taxable income.

The diagram below sets out a summary of the tax benefits of a Retirement Annuity:

ra

 

Tax Incentives – Deductibility on contributions
Retirement annuity contributions reduce the investor’s taxable income up to certain limits. Part of the contributions comes from tax savings which means that the South African Revenue Service (SARS) is paying a part of the client’s retirement savings.

For example:
This means that for each (say) R10 000 invested in a retirement annuity, R3 000 (for someone taxed at a marginal rate of 30%) is effectively paid back by SARS.

The tax deductibility of retirement funding contributions was amended in March 2015. The amendment brought about a consolidation in respect of the tax deductibility of contributions across all retirement funding vehicles namely, Pension Funds, Provident Funds and Retirement Annuity Funds.

The tax table that sets out the current tax-deductibility on retirement fund contributions came into effect on 01 March 2016.

 

Deductions for all retirement funds

Member contribution to Pension, Provident & Retirement Annuity Funds

Up to 27.5% of the greater of “remuneration” or “taxable income”.

Annual monetary limit of R350 000.

Employer contributions to Pension, Provident & Retirement Annuity Funds

Unlimited deduction. Employer contributions taxed as a fringe benefit in employee’s hands and deemed to be employee contributions.

 

Based on the above parameters, one can calculate the amount of the “tax-efficient” contributions that can be made to a RA policy.  

Tax incentives – on the underlying investment portfolio

Another big tax advantage is that the growth on the investment is tax-free!  Tax is not payable on rental income and interest and no tax is payable on either capital gains or dividends received in the investment fund of a retirement annuity contract or retirement fund.

Tax incentives – at Retirement

Also of value is the favourable tax-treatment of the lump sum proceeds at retirement.  On retirement, the first R500 000 of all retirement funds (cumulatively) is tax-free and the rest of the lump sum taxed at favourable tax scales.

Lump sums accruing between 01 March 2014 and 28 February 2018 are subject to the following:

Retirement Tax Table:

Taxable portion of lump sum

Rate of tax

R           0  - R500 000

Nil

R500 001  - R700 000

18% of the amount exceeding R500 000

R700 001  - R1 050 000

R36 000 plus 27% of the amount exceeding R700 000

Exceeding - R1 050 001

R130 500 plus 36% of the amount exceeding R1 050 000

 

An assessed loss cannot be set-off against the taxable lump sum.

For purposes of calculating the tax-free amount, benefits arising from all pension, provident or retirement annuity funds of which you may be or have been a member are taken into account.

It is important to note that any previous withdrawal benefit/s taken from pension and/or provident funds as a cash lump sum will reduce the tax-free benefit payable at retirement.

Retirement Annuity Characteristics

RA contracts are long-term financial commitments.  An RA will provide the best benefits at retirement provided you keep up your contractual contributions.

To ensure that you will receive the best value for money and make the best provision for your own retirement, you should continue with the contributions until the retirement date and should always attempt not to let the RA policy become paid-up if at all possible.

The paid-up values of traditional RA policies are not very high, particularly in the initial years of the policy term.  The acquisition expenses of insurance products are normally recouped over the full term of the policy but if a policy is made paid-up these expenses are largely recouped from the accumulated policy value at that stage. It is important to realize that the long-term value of an RA policy should not be judged by the relatively low short-term paid-up values. 

As a result of this it has brought about much negative publicity about traditional RA policies and in some instances investors may now doubt the continued value of RA policies.  Some may even stop their contributions and let their policies become paid-up. 

It is not advisable to make an RA policy paid-up if you can afford to pay the contributions.  It is particularly inadvisable to make one RA policy paid-up and replace it with another RA policy.

It is never wise to speculate with your long-term retirement provision based on short-term market trends.  You may decide to invest elsewhere in addition to a secure and tax-efficient RA policy but never do that instead of an existing RA policy.

We recommend that a unit trust RA be considered as opposed to a contractual RA, also known as a portfolio of a Collective Investment Scheme. This type of RA is an arrangement that enables investors to pool their money and have it professionally managed and invested in a range of underlying assets. The underlying assets of a portfolio vary depending on the portfolio’s investment objective. Portfolios are commonly referred to as unit trusts or funds.

This RA arrangement is more flexible and one is able to stop the contributions should there be circumstances beyond one’s control that necessitate this action.  Ad-hoc payments, subject to certain minimum criteria, may also be made into your unit trust RA.

A unit trust RA is also very cost-effective in that the fees are deducted monthly as and when the contributions are paid.  This ensures that cessation of contributions or making the RA paid-up will not result in any termination costs reducing your fund value.

There are a wide choice of investment funds and products offered by product providers.  Should the existing underlying investment portfolio become unsuitable you can easily switch the investment fund into a more suitable portfolio of your choice or you may even have more than one investment fund per contract to ensure that your investments will match your changing needs.

An annual tax certificate is issued by the product provider setting out the information pertaining to the total annual premiums paid towards your RA for the respective tax year.  This tax certificate must be submitted with your annual tax return so that you can ensure that the deductibility is applied to your annual remuneration and that you benefit from the relevant tax relief provided by the contributions paid for the respective tax year.

 

How does the Fund work?

The diagram below illustrates how you, the administrator, the fund and the trustees interact.

ra

 

What is the purpose of the Fund?

To provide: 

  • you with a benefit at retirement, or
  • your dependents and/or beneficiaries with a benefit on your death.

What is the role of the Trustees?

Although there is a sponsor of the Fund, it is a separate legal entity governed by the Board of Trustees. Some of the trustees must be independent (which means that they must not be employed by the sponsor). The trustees must protect the interests of members and act with impartiality, due care, diligence and good faith. The law specifically requires the trustees to apply the rules of the fund, appoint a principal officer, communicate with members and ensure proper administration. The trustees have put governance procedures in place to fulfil these responsibilities to members.

What does the Fund do with your contributions?

The Fund invests your contributions in the unit trusts or investment portfolios which you have selected. The investments are owned by the Fund and you have no right to specific investments held by the Fund. The investments are held via a nominee company.

How does the Investment Account work?

You must choose any one or a combination of the unit trusts/investment portfolios made available by the Fund as the underlying investments of your investment account. The value of the investment account is directly linked to the market value of the underlying investments and is not guaranteed (i.e. may move up and down). The value of the investment account is increased by your contributions (including transfers from other retirement funds) and positive investment returns.

The Fund re-invests all dividends and interest earned in the unit trust. The value of the investment account is reduced by negative investment returns and any relevant fees and charges.

Past performance of the underlying investments is not necessarily a guide to the future. You carry the risk of the value of the investment account being reduced.

When does your membership of the Fund start?

Your membership starts once:

  • the administrator has received your application and supporting documents, and
  • the administrator on behalf of the Fund has accepted your application, and
  • your contribution is received in the Fund’s bank account.

When does your membership of the Fund end?

Your membership of the Fund will end when the total value, less fees and charges, of all your investment accounts are paid out, for example on withdrawal, retirement, death or transfer to another retirement annuity fund.

Post Retirement

Conventional Annuities

The first option, commonly known as a conventional annuity, is a lifelong policy that pays a guaranteed income based on the amount invested.  Investors can choose an income that increases to offset the negative effects of inflation, although this option requires a higher initial capital outlay or a lower initial income benefit.  Here retirees only have to ensure that the income payments are sufficient to cover their income needs.

Types of Conventional Annuities

There are three broad types of annuities, namely:

i     Life Annuities – the payment of the annuity instalments is contingent upon one or more annuitant’s lives, ceasing on death.  A guaranteed term may be selected to provide an element of protection of the capital.

ii    Term Certain Annuities – the payment of the annuity instalments continues for a defined period.

iii    Temporary Annuities – are payable for a defined period or till the earlier death of the annuitant (e.g. if Joe buys a 10-year Temporary Annuity it will be paid for ten years or until Joe’s death, whichever occurs first).

Savings & Investment Planning
Tax-free Savings Plan

If you are investing for the long term or if you are already paying income or capital gains tax on your existing investments, you can invest in unit trusts via a tax-free investment account and benefit from tax savings on your investment return.

The tax-free investment account is also a useful product for estate planning purposes. The maximum amount you can put into your account per tax year is currently R33 000 with a lifetime maximum of R500 000.

 

Tax benefits
The interest, capital gains and dividends you earn are completely tax-free.

 

Estate planning
Your investment can be paid to your beneficiaries immediately and there are no executor fees.

 

Investment Contributions
The maximum you can invest per tax year is R33 000, with a lifetime maximum of R500 000. These investment limits are for all tax-free savings and investment accounts you may have across different product providers. SARS will apply a 40% tax penalty on any amount you invest in excess of the maximum.

 

Withdrawals
You may withdraw from the account at any time. However, this withdrawal does not increase your annual and lifetime contribution limits.

Credit Life Insurance Schemes
Credit Life Insurance Schemes

Credit life insurance is a type of life insurance policy designed to pay off a borrower's debt if the borrower dies.  The face value of a credit life insurance policy decreases proportionately with the outstanding debt amount as the debt is paid off over time, until both reach zero value.

This cover may also be set up on a group basis whereby a group credit life assurance scheme may be put in place.

The group policy covers loans advanced by the credit provider that offer credit facilities to third parties such as individual clients, trusts, partnerships and/or companies.

The main objective of the group credit cover is to provide a capital sum on death of any member of the scheme, equal to the loan outstanding in the books of the credit provider at the time of death of the member.

A loan cover may be extended to provide a capital sum on the total and permanent disability of any participating member of the scheme equal to the loan outstanding in the books of the credit provider at the time of the total and permanent disability of the member.

Estate Planning
Last Will & Testament

At some point or another everybody thinks about preparing a Last Will and Testament. Most people know that they will need a Will and many intend to make out their Wills yet surprisingly most people never do.

Some are of the view that they do not need a Will as they do not have substantial assets. Others do not prepare Wills for reasons that range from simple laziness to discomfort at the thought of one’s own death.

For many, thinking about their own death makes the concept real. As long as they can avoid thinking about it, they can ignore the inevitable.  Unfortunately, failing to plan for one’s death won’t prevent it from happening.

It is often said that the only thing certain in life is death and taxes.  Taking this into account, would you really feel comfortable leaving your assets for someone else to handle?

There are many reasons why you should have a valid Will at all times. It is important to ensure that upon death the right people should benefit from your estate. Also, with a Will, you have the right and ability to appoint executors of your choice.

By making and leaving a Last Will and Testament you are in a position to decide and instruct how your assets are to be distributed and dealt with after your death.  In this way, you can ensure that only the people you choose will benefit from your estate and you can accordingly exclude people that you would not want to benefit.

By making a Will, you thereby ensure that the distribution of your estate would be in accordance with your wishes.

Should you however die without leaving a valid Will, your assets will be divided and distributed according to the Law of Intestate Succession as opposed to your own wishes and directions.

Invariably, the distribution of your assets in this event will, in all probability, not be what you had intended.

If you decide at some stage of your life to dispose of and divide your estate after your death, then you must make your wishes known in your Last Will and Testament.  The Wills Act regulates the formalities of drawing a Will and determines who may make a Will.

The importance of a Last Will and Testament cannot be overstated. A Will is arguably the most important legal document that the average person will ever sign. Many people incorrectly assume this is solely the domain of the wealthy.  A Will directs the distribution of assets at death.  Under this logic, presumably those with limited assets think they need not worry about how it will be distributed. This is a mistake regardless of how much or how little assets someone has.  A Will gives that person control over what happens to their assets.

Do not wait until it is too late - make the necessary preparation to take care of the ones you care for.  Let us help you draft your Will today!

SEED Branded Products
SEED BC Wrap Fund Solutions

A wrap fund is a portfolio consisting of underlying collective investment funds managed or “wrapped” according to a specific investment mandate.

In association with SMMI and Glacier Invest we have created several different risk profiles to guide the creation of tailored investment solutions, appropriate for clients with certain risk profiles. 

These ‘model’ portfolios are run by a professional investment committee headed up by an investment professional and of which we, as your financial advisor, will form an integral part. 

Your portfolio will be implemented and continuously monitored by this team of investment professionals. The investment committee allows us to perform a far more thorough investigation and detailed analysis of your portfolio’s funds in a disciplined, structured manner.

We also benefit from specialist asset manager and economic research undertaken by the Glacier research team and that of Sanlam’s multi-manager business, one of the largest multi-managers in South Africa. We then overlay this research with clearly defined investment guidelines, appropriate for your particular risk profile.

 

Download the full Brochure in: English

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