Money Matters: Understanding an endowment policy

An endowment policy is one of several investment options, but one should enlist the help of an adviser to understand the laws and terms which regulate endowments in the country.

This is according to Harry Joffe, Head of Legal Services at Discovery Life, who spoke to #NightTalk's Gugs Mhlungu and Sizwe Dhlomo about endowment policies.

An endowment is a life insurance policy under the Long Term Insurance Act

Harry Joffe, Head of Legal Services at Discovery Life

Joffe says that it is important for one to read the Long Term Insurance Act to understand how endowment policies are governed in South Africa.

According Joffe, the existence of offshore endowments and several rules in endowment policies also make it important for one to know the Income Tax Act.

Offshore endowments are a very tricky part of the Income Tax Act

Harry Joffe, Head of Legal Services at Discovery Life

You're getting a tax benefit in the endowment

Harry Joffe, Head of Legal Services at Discovery Life

Endowment policies are designed to pay a lump sum after a specific term.

Joffe says that regulators put in place tax benefits in an endowment so that a person can be in an endowment plan for at least five years.

There is not a perfect investment. Each investment has its pros and cons

Harry Joffe, Head of Legal Services at Discovery Life

Describing the nature of long-term investments and life insurance plans, Joffe says that it is important for a person to choose a plan which is right for them.

Listen to the conversation below:

Watch Harry Joffe responding to a question on the relationship between loans and endowment policies.


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