INVESTMENTS

ENDOWMENTS

Endowment policies cater for the investment of discretionary monies and are suitable for investors seeking capital growth within a cost and tax-efficient vehicle.

FEATURES

Contractual Term
Five Years

Withdrawals
One withdrawal permitted within a five-year restriction period.
Cannot exceed the amount invested plus 5% compound interest per annum.
No surrender penalties for early withdrawal.

Governance
Long-Term Insurance Act.

Cession
May be ceded outright or as collateral for indebtedness.

Contributions
Contributions per annum are limited to the highest of the previous two years' contributions plus 20%.

Beneficiaries
On death, proceeds are immediately available to beneficiaries, thereby saving executor fees.

Liquidity Restrictions
Fall away after five years and investors are able to make tax-free withdrawals and extend the policy term on a premium- paying or non premium-paying basis.

TAX

Contributions
Payable from post-tax monies.

Income Tax
30% on interest, rental income and international dividends is payable by the underwriter on the investor's behalf.

Capital Gains Tax
In terms of current tax practice, if the policy is not a second hand policy, any
gains made within the endowment are subject to capital gains tax and the rate will vary depending on the entity of the policy owner:
For a natural person an effective tax rate of 7.5% will apply.
For close corporations and companies an effective tax rate of 14.5% will apply.
The issuer is liable for the calculation and payment of the capital gains tax.

Withdrawal
Capital withdrawals are not subject to taxation.

NOTES

No tax advantage can be gained unless personal tax rate is higher than 30%. paying or non
....premium-paying basis.
Despite a lower tax bracket being applicable, endowment may still be a suitable where a forced
.... savings plan with limited access.
The underlying portfolios will be selected to suit the client's personal risk profile within the
.... limitations of the underwriter.