Advantages of life assurance investments

Advantages offered by life assurance investment products include:

◆ Investment guarantees – although some of the guarantees are questionable. For example, I received a letter from Liberty on a really ancient policy I have, telling me that its smooth bonus policy is “designed to protect you against market volatility while still giving you access to an investment in equities and bonds, which should ensure return in excess of inflation over time”.

And then Liberty tells me that it is granting nonguaranteed returns of six percent from January to July and 8.5 percent for August and a guaranteed 0.5 percent for the full period. The non-guaranteed part can be removed if markets go south. This is hardly meeting its claim that the product is “designed to protect you against market volatility”, when the inflation rate is about six percent and the only protection I have is for 0.5 percent.

◆ Your entire holdings in life assurance policies cannot be touched for five years by creditors if you go bankrupt. The previous protected amount of R50 000 was made open-ended in recent legislation. If your money is in a collective investment scheme such as a unit trust or exchange traded fund, it could be claimed by a creditor.

◆ All life assurance benefits, whether for risk assurance or investments, can be paid directly to named beneficiaries on your death. This means that they will not be subject to executor fees of 3.5 percent plus VAT.