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Endowment policies
Wednesday, October 1, 2003
Best interests

Investment management firm Allan Gray has launched a new product, the Allan Gray Endowment, which is intended for clients with a medium to long-term investment objective, and who require capital growth with after-tax returns.

Allan Gray’s philosophy is to provide a focused product range through which investors can access the firm’s investment management expertise. “We only offer what is in our clients’ best interests. Our business considerations come second,” says Johan de Lange, a director at Allan Gray unit trusts.  “We insist that our retail clients are offered products with the same attributes as those that have served our corporate and institutional clients for the past 29 years; attributes such as superior returns and high standards of reporting.
“Our aim is to differentiate our products not through tweaking their fundamentals, but through our investment approach and delivering consistent value for money. For this reason our full range of unit trusts is available as underlying investment options. In line with all of our products we levy no initial fee.”
The minimum investment period is five years, in terms of legislation and in order to reap the full tax benefit of the plan. According to Mr de Lange, investors choose from any of the Allan Gray unit trust funds as the underlying investment options to suit given risk profiles. Clients also have the flexibility of switching between the underlying investments at any stage, subject to the terms and conditions of the options available at the time of the switch.
“Premiums paid by the investor are not deductible for income tax purposes. However, the proceeds represent an after-tax return because the taxable part of the investment build-up is taxed on behalf of policyholders at 30% in the assurer’s hands.”
One withdrawal, in part or full, is allowed during the first five years of the policy, or during any additional or extended restriction period. This is in accordance with the provisions of the Long Term Insurance Act. Providing that the endowment policy is not a so-called second-hand policy, the proceeds are also free of capital gains tax in the investor’s hand. This means that taxpayers can house wealth in endowment policies in cases where their personal capital gains tax position may be higher than 7.5%.
The investment minimums for the product are a lump sum of R50 000, or a minimum debit order of R1 500. There is an annual administration fee of 0.35% (excluding VAT), which is charged by the administrators monthly in arrears.
For further information please contact Johan de Lange or Tracy Hirst on (021) 415-2300

Copyright © Insurance Times and Investments® Vol:16.5 1st October, 2003
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