Ben­e­fi­cia­ries of fund en­hance­ments

Finweek English Edition - - The life offices’ association - COPY: Brent Melville AD­VER­TIS­ING: Shaun Be­sarab

POL­I­CY­HOLD­ERS who made con­trac­tual changes with their life in­sur­ance com­pa­nies be­tween 1 Jan­uary 2001 and 1 De­cem­ber 2006, and who meet the fol­low­ing cri­te­ria, will qual­ify for value en­hance­ments: • RA fund mem­bers who stopped pay­ing their pre­mi­ums or re­duced the pol­icy term with­out the pol­icy com­ing to an end and whose fund val­ues were re­duced by more than 35%. • RA fund mem­bers who low­ered their pre­mi­ums and whose fund val­ues were re­duced by more than 35%, cal­cu­lated as a ra­tio of the pre­mium re­duc­tion (eg if the pre­mium is re­duced by half, then the fund value re­duc­tion may not be more than 17,5%). • RA fund mem­bers who re­tired from their fund be­fore it ma­tured and whose fund val­ues were re­duced by more than 35%. If this ap­plies to you, you must ap­ply for a value en­hance­ment be­fore 1 De­cem­ber 2009 since your pol­icy is no longer on the life in­surer’s books. • RA fund mem­bers who par­tially re­tired from their fund be­fore it ma­tured and whose fund val­ues were re­duced by more than 35% (cal­cu­lated as a ra­tio of the par­tial re­duc­tion). If you have not yet re­ceived your fi­nal ben­e­fit, your life in­sur­ance com­pany will con­tact you. If you have re­ceived your ben­e­fits, you need to con­tact your life in­surer be­fore 1 De­cem­ber 2009. • RA fund mem­bers who lapsed (stopped pre­mi­ums be­fore the fund value ex­ceeded un­re­cov­ered costs) their RA fund pol­icy. If this ap­plies to you, you must ap­ply for a value en­hance­ment be­fore 1 De­cem­ber 2009 since your pol­icy is no longer on the life in­surer’s books. • En­dow­ment pol­i­cy­hold­ers who stopped or re­duced their pre­mi­ums or who re­duced their pol­icy term, but who have left their in­vest­ment with the life in­surer. Again, life in­sur­ers will make sure that you will have re­ceived at least 65% of to­tal fund val­ues (pre­mium re­duc­tions will be cal­cu­lated as with RA funds). This does not ap­ply to sur­ren­dered en­dow­ment poli­cies, where you have al­ready taken the money or the pol­icy has lapsed.

Con­trac­tual changes made af­ter 1 De­cem­ber 2006

Go­ing for­ward, RA fund poli­cies and en­dow­ments that are made paid-up (pre­mi­ums are stopped) or where the pre­mi­ums or term of the pol­icy are re­duced will re­ceive at least 70% of the fund value. An RA fund mem­ber who de­cides to re­tire early will re­ceive at least 70% of the fund value. En­dow­ments that are sur­ren­dered will re­ceive at least 60% of the fund value.

POLI­CIES THAT QUAL­IFY • Re­tire­ment an­nu­ity (RA) fund poli­cies. • En­dow­ment poli­cies. • Preser­va­tion fund poli­cies. • A very small num­ber of whole life poli­cies (th­ese poli­cies do not have a ma­tu­rity date and pro­vide life cover un­til the in­sured per­son dies) that meet cer­tain cri­te­ria. POLI­CIES THAT DON’T QUAL­IFY Risk in­sur­ance poli­cies that cover events such as death, dis­abil­ity, dread dis­ease, loss of in­come. Uni­ver­sal life poli­cies, pri­mar­ily risk re­lated. Rein­sur­ance poli­cies. Poli­cies is­sued to a fund rather than an in­di­vid­ual. • Whole life poli­cies, pri­mar­ily risk

re­lated. • •

When is this go­ing to hap­pen?

Life com­pa­nies have un­til the end of May this year to im­ple­ment the State­ment of In­tent and to en­hance the fund val­ues of qual­i­fy­ing RA fund mem­bers and en­dow­ment pol­i­cy­hold­ers.

How will I know if this ap­plies to me?

If you qual­ify, your life com­pany will con­tact you. The ex­cep­tion is if, be­tween 1 Jan­uary 2001 and 1 De­cem­ber 2006, your RA fund paid you a fi­nal value as a re­sult of con­trac­tual changes or if your RA fund value was re­duced to zero be­cause you stopped your pre­mi­ums. In th­ese cases you need to make con­tact with your life in­surer be­fore 1 De­cem­ber 2009.

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