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Guaranteed Income

Guaranteed Income

Features and Benefits of the Guaranteed Income Plan

By combining a life annuity and endowment policy, you are able to receive a number of benefits.

Guaranteed Growth | Features and Benefits

Key Benefits:

  • All your capital is guaranteed
  • Enhanced net return on your life annuity and endowment policy
  • Benefit upon death, which provides a capital guarantee for your beneficiaries
  • You can get liquidity through one capital surrender
  • Your benefits are paid out free of any tax obligation
  • Tax advantages
  • Your investment can be used as collateral

Guaranteed Income Features:

Tax advantages – this Guaranteed Income policy investment is governed by the Section 10A exemption of the Income Tax Act, which provides for an exemption of the capital portion of a voluntary purchase annuity

Rates are revised weekly – valid from Monday to Saturday each week, rates are applicable on the date that you deposit your funds into the Hollard Wealth bank account and paperwork is received

Guaranteed Income policies begin on the first day of any given month – you’ll be credited with interest from the time your money is received to the date of inception of the policy

The Guaranteed Income policy has a 5-year term – any South African resident between 18 and 80 years old, as well as trusts where the trustees and beneficiaries are all individuals, may invest in this policy

 

Death benefit – upon death of the life assured a death benefit will be paid out to the beneficiaries and the policy will cease to exist

You can surrender the Guaranteed Income policy – one part or full surrender may be taken from the endowment policy portion only. A new policy value and related new maturity value will be calculated using market rates at the time of surrender

Collateral cession – you can use this policy as security to raise a loan from a lending agency or registered South African bank

Outright cession – you can transfer the policy to a new owner (cessionary). The proceeds of the policy will then be paid directly to the new cessionary and not the previous owner or their estate

No capital gains tax (CGT) – under current legislation, maturity is not subject to CGT in the hands of the original policy owner

Your return is guaranteed – provided the Guaranteed Income policy is in force for the 5-year term

Guaranteed Income

Hollard Wealth Guaranteed Income Plan FAQs

Find out everything you need to know about the Guaranteed Income Plan.

Q: What’s the tax advantage of investing in a temporary life annuity policy?
A: This investment is governed by the Section 10A exemption of the Income Tax Act, which provides for an exemption of the capital portion of a voluntary purchase annuity. The monthly income received by the annuitant is made up of capital plus interest. Therefore, it’s only the interest portion of the income payment that’s taxable in the hands of the annuitant.
Q: When do I receive a secure rate of return?
A: Rates are revised weekly and are valid from Monday to Saturday, weekly. The rates are applicable on the date you deposit your funds into the Hollard Wealth bank account and your completed paperwork is received by Hollard.
Q: What happens to my money while it’s in the Hollard Wealth account?
A: Policies commence on the 1st of any given month. You’ll be credited with interest from the time your money is received by Hollard Wealth to the date of inception of the policy. Please note, the interest amount is already taken into account at quotation stage and included in the rate of return and, therefore, the maturity value. Hollard Wealth assumes the funds are received every Monday. As such, interest is calculated from the Monday until the day of commencement.
Q: When is my first annuity payment made?
A: If the investment is quoted in advance, your first annuity is paid on the same day as the date of commencement. If it’s quoted in arrears, your first annuity is paid one month after the date of commencement.
Q: Does the 30-day cooling-off period apply?
A: Due to the nature of this policy, the 30-day cooling-off period is not applicable.
Q: What’s my minimum investment amount?
A: The minimum amount that you can invest is R100,000.
Q: What’s the term of this combined policy?
A: The Guaranteed Income policy has a 5-year term.
Q: Who may invest in Guaranteed Income?
A: Any South African resident between 18 and 80 years old may invest in the Guaranteed Income. This product is not available to pension funds, companies (including Section 21 companies), closed corporations and trusts.
Q: What happens if the life assured passes away?
A: Where no previous surrenders have been taken, the death benefit is guaranteed to be the maturity value as stated in the policy schedule.

Where a part surrender has been taken from the endowment policy, the death benefit will be the fair value of the policy.

Upon death of the life assured, a death benefit will be paid out to the beneficiaries.

The fair value of the policy consists of the value of the endowment plus the commuted value of the monthly annuity payments on the temporary life annuity.

This is calculated from the date of maturity to the date of claim, as signed for in the policy application form and policy quote.
Q: Can surrenders be taken on the policy?
A: One part surrender may be taken from the fair value of the endowment policy portion of the investment. A new policy value and related new maturity value will be calculated at market rates at the time of surrender. Please note surrender charges will apply on a time-based scale.
Q: Can the endowment policy be ceded?
A: Collateral cession – you can use this policy as security to raise a loan from a lending agency or a registered South African bank. The value of such security is at the sole discretion of the lending agency and will in no way imply any liability, either directly or indirectly, on behalf of Hollard.

Outright cession – Hollard Wealth will record a cession of the policy upon the receipt of a written request to do so, and will note the cession without expressing any opinion on the validity thereof. Due to the nature of the temporary life annuity, Hollard Wealth doesn’t permit cessions on the annuity portion of this investment.
Q: Are loans permitted against the policy?
A: Unfortunately, Hollard Wealth doesn’t permit a loan to be taken on either portion of the policy.
Q: How is tax calculated on the temporary life annuity policy?
A: In terms of the law, tax must be deducted at the source (i.e. by the life insurance company). The tax due on the taxable portion is deducted according to the tax tables – SITE and PAYE. The life insurance company will apply the tax tables as if all annuities paid by an insurer to an annuitant are the sole source of income.

Hollard Wealth will pay the tax across to the Receiver of Revenue and issue the policyholder with an IRP5 at the end of the tax year. If no tax has been deducted, Hollard Wealth will issue an IT3A to the policyholder. You can also provide us with a tax directive.
Q: Can the income be changed mid-term?
A: No, the income is fixed for 60 months.
Q: Is this investment subject to capital gains tax (CGT)?
A: Under current legislation, the investment maturity is not subject to CGT in the hands of the original policy owner.
Q: Will my income be guaranteed?
A: Yes, your income is guaranteed provided the policy has been in force for the 5-year term.
In addition to this, any change in tax legislation made by the government may affect the guarantee of the income. 

Please contact us should you require any further Guaranteed Income policy help.

Guaranteed Income

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