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Endowment

What are the investment terms for the Endowment
The investment terms are 5, 10 or 15 years.

Who can invest in the Endowment
Natural persons, Trusts – whether the beneficiaries are natural persons, Trusts where the beneficiaries are juristic, Companies and Close Corporations

What are the tax benefits of investing in the Endowment
Favorable tax rules apply to endowment policies that result in tax-efficient savings after a minimum of five years. Investment income that accrued to an endowment policy during its term is taxed on a four funds basis of taxation. Each life company pays the necessary income tax on behalf of the individual policyholder according to the four funds approach. The proceeds of endowment policies after five years are therefore generally exempt from personal income tax in your hands.

Are there CGT implications in an Endowment Investment 
There is no CGT in your hands, because CGT is payable by the life insurance company under the four funds basis of taxation during the term of the policy. You can disregard the effects of capital gains and capital losses in respect of maturity benefits received from long-term insurance policies issued by a South African life insurance company, provided you remain the original beneficial owner of such policy.

Can a withdrawal be made before the end of the term of the policy
Yes, although this is not advisable, as you will incur penalty costs.

What are the minimum debit order and lump sum contributions in the Endowment funds ?
The minimum investment amounts differ for each of the regions. In South Africa the debit order contribution is R500.00 per month, with an annual escalation applying to all debit orders under R500.00 of 15% per annum. The minimum initial lump sum contribution is an amount of R5,000.00.

Is the debit order amount flexible in terms of stopping the contribution in the event of the client being unemployed?
You can stop, reinstate, increase and decrease the debit order with a written signed instruction sent to our Administration Department.

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