Fact File Guaranteed Return Plans

Transcription

1 Fact File Guaranteed Return Plans

2 Contents 01 Discovery Guaranteed Growth Plan 1 02 Discovery Guaranteed Income Plan 1 03 Access to your investment 1 04 Death before the end of the five-year term 2 05 Contributions to Guaranteed Return Plans 3 06 Fees, commissions and tax 3 07 Cessions and loans 3 08 Fraud and disclosure 4 09 Contact details 4 Guaranteed Return Plans This Fact File is designed for your easy reference. The Guaranteed Return Plans are built on the best thinking, the most tax efficient structures and the best investment strategies so that you can take advantage of optimal investment opportunities. You can choose between the Guaranteed Growth Plan and the Guaranteed Income Plan. This Fact File will allow you to understand your Guaranteed Return Plan and how you can make it work for you.

3 01 Guaranteed 02 Growth Plan Guaranteed Income Plan The Discovery Guaranteed Growth Plan is an endowment policy that provides a guaranteed return on your lump-sum contribution at the end of a five- year term. At the end of this term, your lump-sum contribution plus the growth that has accrued will be paid to you as a lumpsum amount. This is called the guaranteed maturity value. The guaranteed return and the guaranteed maturity value you will qualify for is shown on your policy schedule and is after allowing for all taxes, fees and commissions. You must remain invested for the full five-year term to receive the guaranteed maturity value. The Discovery Guaranteed Income Plan is a combination of an endowment policy and a voluntary annuity. The endowment policy provides a guaranteed return on your chosen percentage of your lump-sum contribution at the end of the five-year term. You must remain invested for the full five years to receive this guaranteed amount at the end of the term. The voluntary annuity is used to provide a monthly or annual income throughout the five-year term. At policy inception you may also choose to have a level income over the five years or for your income to grow at 5%, 10%, 15% or 20% each year. According to current legislation, a portion of the income amount will be taxed according to income tax tables as released by the South African Revenue Service (SARS) every year unless a tax directive is provided to Discovery for a different rate. This taxable income portion is shown on your policy schedule. The percentage of the lump-sum contribution you receive at the end of the term will be paid as a lump-sum amount. Please consult your financial adviser or tax consultant for more details on the tax treatment of your benefits. The guaranteed income (before tax) as well as the lump-sum that you will receive at the end of the five-year term is shown on your policy schedule and is after allowing for all fees and commissions. 03 Access to your investment 3.1 Access to your investment within the five-year term The Guaranteed Return Plans are structured as five-year products and it is recommended that you remain invested for the full term. The guaranteed payout at the end of five years from the endowment policy, shown on your policy schedule, only applies if you are still invested in your Guaranteed Return Plan at the end of the term. If you need to withdraw your money from the endowment policy before the end of the five-year term, the amount you will receive is not guaranteed. In this case you will receive the adjusted market value of the underlying assets that we used to provide the guaranteed return at the end of five years. This adjusted market value changes from week to week. It will depend on how long you have been invested in the Guaranteed Return Plan, the market conditions at the time of your withdrawal as well as the costs and commission incurred when setting up your policy. Note that this adjusted market value may be lower than your initial contribution, especially for withdrawals earlier in your investment term, where the costs and commission on your policy have not yet been recovered through growth in the underlying assets. The return you will receive on withdrawal before the end of the five-year term is limited to a maximum of the guaranteed 1

4 return as reflected on your policy schedule, accumulated to the date of withdrawal. In terms of current legislative restrictions (January 2016), one withdrawal is permitted during the five years of your endowment policy. Any withdrawal may not exceed your initial contribution accumulated at 5% per year compound interest. If the amount you withdraw is less than the adjusted market value of the assets underlying your policy, the difference will be used to recalculate your guaranteed maturity value that will be accessible at the end of the five-year term. For the Guaranteed Income Plan, the voluntary annuity will not be paid as a lump-sum (commuted) but will continue to pay regular income, as stated on your policy schedule, until the end of the five-year term. 3.2 Options available at the end of the five-year term At the end of the five-year term, you will be able to reinvest the proceeds of your Guaranteed Return Plan in any investment options made available by Discovery Invest at the time. Alternatively you may withdraw your proceeds in full. Discovery Invest will send you a letter which will explain the options available to you. The proceeds of your investment will remain within the endowment policy and invested in a cash holding account until you inform Discovery Invest of your decision. 04 Death before the end of the five-year term 4.1 Guaranteed Growth Plan If the life assured dies before the end of the five-year investment term, an amount equal to the guaranteed maturity value reflected on your policy schedule will be paid to your beneficiaries, provided the life assured is younger than age 70 at the time of their death. The policy will then end and no further amounts will be paid. If you, the policyholder, have not nominated a life assured on your application form, the death benefit will apply on your death. The death benefit will not be payable: the life assured is younger than 14 years of age at the inception of the policy If the death is as a result of any pre-existing conditions, physical defects, illnesses, bodily injuries or diseases you, the policyholder, or the life assured (whichever is applicable) has suffered from, was aware of, or received medical treatment or advice for during the three years before the commencement date of the policy If the death is a result of suicide within the first two years after inception of the policy the life assured (whichever is applicable) is aged 70 or above at the time of death. the life assured is aged 70 or above at the time of death, then your beneficiaries or estate will receive the lump-sum contribution accumulated at the guaranteed return reflected on your policy schedule to the date of death. 2

5 4.2 Guaranteed Income Plan If the life assured dies before the end of the five-year investment term, an amount equal to the guaranteed maturity value of the endowment portion of the policy will be paid to your beneficiaries, with no further payment at the end of the five-year term if the life assured was younger than age 70 at the time of death. The income from the voluntary annuity will be paid to your beneficiaries until the end of the five-year term and will not be paid as a lump-sum amount (commuted). Only the amount allocated to the guaranteed component of your five-year Guaranteed Income Plan qualifies for a death benefit. If you, the policyholder, have not nominated a life assured on your policy schedule, the death benefit will apply on your death. The death benefit will not be payable: the life assured is younger than 14 years of age at the inception of the policy If death is as a result of any pre-existing conditions, physical defects, illnesses, bodily injuries or diseases you, the policyholder, or the life assured (whichever is applicable) has suffered from, was aware of, or received medical treatment or advice for during the three years before the commencement date of the policy If death is as a result of suicide within the first two years after inception of the policy the life assured (whichever is applicable) is aged 70 or above at the time of death. If you, the policyholder, or the life assured is aged 70 or above at the time of death, then your beneficiaries or estate will receive the amount allocated to the endowment policy at the start of the policy, accumulated at the guaranteed return reflected on your policy schedule to the date of death. 05 Contributions to the Guaranteed Return Plans 07 Cessions and loans You may only make a once-off lump-sum contribution to the Discovery Guaranteed Return Plans. 06 Fees, commissions and tax Your policy may only be ceded to another natural person or trust with a natural person as the beneficiary. It may not be ceded to a company or close corporation. You may not take a loan against the policy. Your financial adviser will receive financial adviser fees for providing advice. The guaranteed rates and income levels that you will receive will take into account all fees payable to Discovery and your financial adviser so there are no further amounts payable.all tax on the endowment policy is taken into account in the rates and income provided by Discovery and shown on your policy schedule. If there are any changes to legislation or the tax treatment of these policies, we reserve the right to amend your guaranteed rate or income levels. 3

6 08 Fraud and 09 disclosure Contact details 8.1 Your policy and all its benefits will be cancelled if you: Submit a fraudulent claim Use any fraudulent means or devices to make your claims Provide false information to obtain a benefit Knowingly allow anyone acting on your behalf to provide false information to obtain a benefit. 8.2 Consent to disclosure You are required to consent to the exchange of information, including medical information, between Discovery Invest, Discovery Life, any medical practitioner you have consulted or any other life office, Discovery Health and the Discovery Health Medical Scheme. Please remember that in addition to talking with your financial adviser, if you have any questions or service needs, you can call the dedicated Discovery Invest contact centre on You can also visit for additional resources and an electronic version of this Fact File (downloadable as a PDF file). 4

7 Discovery Invest Contact Centre DiscoveryInvestSA Discovery_SA The Fact File is part of Discovery Invest s commitment to fairness and full compliance with legal requirements for financial service providers to provide detailed easy-to-understand information about how each product works. Each investor must consult their own financial adviser who must be an authorised financial services provider to advise the investor as to the suitability of the products and funds for the investor s personal investment needs. Discovery Life is a registered long-term insurer and an authorised financial services provider. Registration number 1966/003901/06. Discovery Invest is an authorised financial services provider. Registration number 2007/005969/07. Copyright Discovery Invest All rights reserved GM_52523DI_02/05/2018_V1 IGRFFE 04/18