KEEP UP TO DATE WITH ALL THE IMPORTANT COVID-19 INFORMATIONCOVID-19 RESOURCE PORTAL

FANews
FANews
RELATED CATEGORIES
Category Life Insurance

Sanlam Life declares highest bonus in 20 years

02 February 2007 Sanlam Group Communications

Sanlam Life has declared the highest bonus rates on its Stable Bonus Fund since 1986. The bonus rates for the 2005 bonus year are between 17.5% and 19.5%, depending on the type of policy. These excellent rates are mostly the result of the bull run on the local equity market, in which a portion of the Stable Bonus Fund is invested.

The Stable bonus Fund aims to offer smooth growth from year to year as far as possible. This means that the bonus rates for a particular year do not necessarily equal the investment performance achieved in that year. In times of high returns, such as the past year, part of the actual growth is held back. This is then added in times of low returns, to smooth out bonuses over a number of years. The investment fund therefore offers investors protection against volatile markets.

For endowment policies the declared bonus rate for 2005 is 18%. The corresponding bonus rate for retirement annuity policies is 19%, and the bonus rate for policies of non-taxable institutions amount to 19.5%. Rates like these are exceptional for a smoothed bonus fund, especially in the current low inflation environment.

Inflation beating returns over medium to long term

The history of the Stable Bonus Fund shows that it has consistently beaten inflation over the medium to long term. Over the past 20 years there have only been three years where the bonus rates on retirement annuities have not beaten inflation. The average bonus rates over the last 10 years were almost 4% above the average inflation rate for the same period. For the 10 years before that the Stable bonus rate outperformed inflation even further, by 4.6% per year. This clearly shows how policyholders have retained the purchasing power of their retirement and savings money.

Further good news: arrear bonuses paid out again

Sanlam Life has, for the second year in a row, also decided to pay these increased bonuses in arrear in respect of all Stable Bonus policies that matured between 1 October 2006 and 1 March 2007. Maturity values for these policies were calculated on the previous lower bonus rates. In addition, arrear bonuses will this year also be paid on reversionary bonus policies maturing over the same period. The claims bonuses for this portfolio have been increased, leading to the additional payments.

The additional payments will reflect the higher bonus rates and may increase the original maturity value by as much as 12%. For endowment policies the additional payment will be made directly into the bank account of the policyholders, whereas on retirement annuities it will take the form of a one-off increase to the income on the compulsory life annuity purchased from the proceeds.

Quick Polls

QUESTION

Each year ordinary consumers and their financial and wealth advisers flock to dozens of asset manager ‘outlook’ presentations to find out about economic and investment trends, and the next ‘hot’ company. What do you want asset managers to share during these events?

ANSWER

Asset allocation strategies
Big picture investment themes and how to position portfolios for them
Investment methodologies and historic fund yields
Share tips by the score
fanews magazine
FAnews June 2022 Get the latest issue of FAnews

This month's headlines

A free smoothie does not make a loyal customer
Consequential loss policy court cases
Everything you need to know about death, disability and severe illness cover post-emigration
Are advisers doing all they can for clients’ portfolios?
Financial advisers need help - navigating the complex ESG fund environment
Subscribe now