FLEXI-GUARANTEE LIVING ANNUITY (FGLA)

Transcription

1 FLEXI-GUARANTEE LIVING ANNUITY (FGLA) The purpose of an FGLA The purpose of an FGLA is to offer the client one annuity that allows for a variable income and a guaranteed income. The FGLA is a combination of the Personal Portfolios Living Annuity and a Guaranteed Income Annuity (provided by Sanlam s Plan 2 or Plan 3 Life Annuity). The Personal Portfolios Living Annuity will generate the variable income where money is invested in unit trusts, while the guaranteed income will be generated by the conventional life annuity. Sanlam underwrites both the conventional life annuity and the Personal Portfolios Living Annuity. Only Sanlam s conventional life annuities will be used. No other conventional annuities are allowed. This product is not available for Namibia. Benefits of an FGLA The FGLA has the following benefits for the investor: Investment is flexible, as a portion is invested in different investment options, such as: Collective investment schemes including Wrap Funds, Fusion Funds and Multi-Manager Funds Shares Flexible annuity portion (amount invested in the Personal Portfolios Living Annuity) allows the client to switch between unit trust funds at any time. The variable income may be changed on income revision date. The variable income is combined with the guaranteed income. The balance of the capital invested in the flexible annuity portion is preserved at death. Spouse s pension can be provided on conventional life annuities. Product description The FGLA is a combination between a guaranteed life annuity and a personal portfolios living annuity and therefore consist of two parts, i.e.: Flexible annuity portion, and Life annuity portion Flexible annuity portion This is invested in the Personal Portfolios Living Annuity. It provides a variable income and can be invested in a range of collective investment schemes. As this is a Personal Portfolios Living Annuity, the same rules and regulations apply. Life annuity portion This is the amount used to purchase the life annuity with Sanlam. On inception of the policy, the guaranteed income is calculated and will be paid to the client monthly. A LICENSED FINANCIAL SERVICES PROVIDER FOR INTERMEDIARY USE ONLY

2 Options available The following options are available on the life annuity portion of the product: With or without term certain Single life Joint life Income growth Product features Investor type Only natural persons are allowed to invest in this product. Minimum investment amount The minimum investment amount is R and is split as follows: R to be invested in the Personal Portfolios Living Annuity R to purchase the life annuity. Beneficiary to an FGLA More than one beneficiary is allowed, providing that the beneficiaries to the Personal Portfolios Living Annuity and the life annuity are the same. If the joint-life option was chosen on the life annuity, the second life insured is processed as a beneficiary with a second life-insured status. The second life-insured option is only available with the joint-life option. Transfers Transfers allowed Funds with the following origins can be transferred to an FGLA: Retirement and/or death benefits from: Retirement annuity Preservation provident fund Preservation pension fund Employer s provident fund Employer s pension fund Transfers from an existing living annuity. Transfers not allowed Transfers from an existing life annuity cannot be made. Transferring an ILLA to an FGLA Transferring a Personal Portfolios Living Annuity to an FGLA A client can change from an ILLA to an FGLA, but cannot change from an FGLA to an ILLA. The reason for this is because the client purchased a guarantee, which cannot be changed. Page 2 of 5

3 A portion of the ILLA must be transferred to Sanlam for the life annuity and R must remain on the Glacier platform. The funds from the ILLA can be withdrawn from specific funds, or proportionately from all funds. Requirements when transferring from an ILLA to an FGLA Completed and signed (ILLA) application form Valid Glacier and Sanlam quote signed by the client The date of the Sanlam quote must be the day the money is available to be transferred to Sanlam. No fees and score is payable as the intermediary received this when the initial ILLA was issued. The ILLA application form makes provision for the life annuity. Inception dates Glacier: The inception date of the Personal Portfolios Living Annuity is the date the original investment was issued. Sanlam: If the investment is issued before the 15 th of the month, the inception date will be the first of that month. If the investment is issued after the 16 th of the month, the inception date will be the first of the next month. Example The investment is issued on the 10 th January; the policy s inception date will be the 1 st of January. If the investment is issued on the 17 th January, the policy s inception date will be the 1 st of February. Impact on the income The transfer from the ILLA to the FGLA can only be done after the client has received an income from the ILLA. The reason for this is to allow sufficient time for the processing of the FGLA before the next income is due. The next income due could be the end of the following month, depending on when the life annuity is processed. Example If the life annuity is processed before the 15th of the month, the income will be payable at the end of that month. If the life annuity is processed after the 16 th of the month, the income will only be payable at the end of the next month. The client could therefore receive the next income later than usual. Fees Glacier fees Normal Glacier initial fees on the total investment apply. Annual administration fees (sliding scale) will apply to the amount invested in the Personal Portfolios Living Annuity. Life annuity fees The fees on the life annuity portion of the investment will be as follows: No annual administration fees Page 3 of 5

4 Normal Sanlam policy fees are payable: - Sanlam issuing fee - Monthly policy fee Sanlam can be contacted for details on the Sanlam fees. Score on an FGLA The score is split as follows: 1% on amount invested in the living annuity 0.25% on the amount invested in a life annuity at Sanlam When an ILLA is transferred to an FGLA, no score and fees for the intermediary are allowed. The reason no score and fees are allowed is because the intermediary would already have received score and fees on the initial investment. This transfer is not considered new business and therefore no score and fees are paid again. Intermediary fees Initial fees The maximum initial commission allowed is 1.5%. The intermediary receives commission on the full amount and the commission is paid by Glacier. The intermediary will therefore receive no commission from Sanlam on the life annuity (as this would be double commission). However, Sanlam s system cannot accommodate zero commission when a case is issued. The Sanlam policy is therefore issued with commission, and the commission is paid to Glacier and reinvested in the Personal Portfolios Life Annuity. Annual fees The intermediary receives the annual commission from Glacier. The amount will be calculated on the portion invested in the Personal Portfolios Living Annuity only. The maximum amount allowed is 1%. Regulation 28 The amount invested in the Personal Portfolios Living Annuity does not need to comply with the Regulation 28, but Regulation 28 should be used as a guideline. Ad hoc investments An ad hoc is only allowed on the portion invested in the Personal Portfolios Living Annuity. No ad hocs are allowed on the life annuity. If the client wants to purchase another guarantee, a new FGLA must be issued (with a portion invested in the Personal Portfolios Living Annuity and a portion used to purchase the life annuity). A life annuity is purchased with the initial amount. Sanlam determines what the guaranteed income will be and this amount is fixed. No ad hoc can be done when doing a guaranteed investment, as the guarantee is calculated at the inception of the policy using the client s sex and age to determine the income. Page 4 of 5

5 Death On the Personal Portfolio Living Annuity the death claim will be handled as normal. Sanlam will handle the death claim on the life annuity. Sanlam and Glacier will inform the other party if a death claim is received. The person receiving the death benefit must be the same at Sanlam and Glacier. If this is not the case, the payments will not be made. Quotations A quote is compulsory with an FGLA application. Both the Glacier (Investment Hub) and the Sanlam (Office quote) quotes must be submitted. Validity of the quote The quote is valid for one day. The date of the Office quote must be the same as the date the funds are available in Glacier s bank account. (The rates are valid for a week but the date on the quote must be same as the date the money is in Glacier s bank account, and therefore the quote is only valid for one day). If the Office quote is submitted with the application form and the quote is still valid, Sanlam must be contacted and the quote does not need to be signed by the client. If the quote is not valid, a new quote must be drawn up and the client must sign the quote. If the money was paid into Glacier s bank account before the quote expired, the quote will be valid. However, if there are outstanding requirements, and the money is in Glacier s bank account, a new quote (signed by the client) must be obtained on the day that all the outstanding requirements are in Glacier s possession. New business requirements The following documents need to be submitted to Glacier: Personal Portfolios Living Annuity application form GQS Quote (Glacier quote) Officequote (Sanlam quote) FAIS documents if the intermediary is an advisor. The Living Annuity Application Form makes provision for the conventional living annuity details, and the client does therefore not need to sign a Sanlam form. Page 5 of 5