In partnership with Morningstar: In the words of David Bergmann, “the tax tail should never wag the investment dog”. With that being said, it definitely won’t hurt to know and understand how a Retirement Annuity (RA) can minimise the amount of tax you pay and keep more of your hard-earned cash in your own pocket.
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On the 3rd of August, I got a text message telling me R49,432.31 has been paid into my bank account. How did that happen? And would you like to get it as well? Let's find out!
Hi, Uncle Kevin here. If you have not subscribed to my YouTube channel, please subscribe and click that notification bell, to be notified of my new episodes on personal finance. So in the early morning of the 3rd August 2021, this text message came to my iPhone at 2:48am: Congratulations, your Discovery Life Health Integrator Payback benefit of R49,423.31 that rewards you for looking after your health with Vitality has been released successfully. Later that day, at 9:51am, this text message came to my iPhone: Payment for your Discovery Life policy Health Integrator PayBack for R49,432.31 has been made. It will show in your account in the next four working days. Then I checked my FNB bank account, and indeed I have received this money into my bank account! I was ecstatic. This is a lovely bonus to receive. So why Discovery Life pays me this bonus? It relates to my Discovery Life policy. I took up my Discovery Life policy with my then broker Jose Afonso, in 2003. And I have been paying for it since. How a Discovery Life policy works is, if you are a Discovery Health member, and a Vitality member, you can get your Discovery Life policy Health integrated, to get a discounted premium, as well as Health Integrator PayBacks. With my policy, I receive such paybacks every five years. It is based on my Health claims, or medical aid claims, as well as my Vitality status every year. The lower the medical aid claims, and the higher the Vitality status, the higher the percentage of life insurance premiums is paid back to me. Discovery Life calculates the percentage of payback based on medical aid claims and Vitality status every year, then aggregate over five years, to pay me the payback every five years. Since I have been good at keeping medical aid claims low and maintaining Vitality diamond status, the highest Vitality status you can achieve on Vitality, I get up to 50% of my life insurance premiums back. So essentially I only pay half price for my life insurance benefits. Sounds good? So what do you need to do in order to get 50% of your life insurance premiums back in bonuses? Number 1, you must be a Discovery Health member. Number 2, you must activate Vitality and maintain your Vitality membership. Number 3, you must sign up a Discovery Life policy through a financial advisor, have it Health integrated to enjoy a discounted premium and Health Integrator Payback. To further enhance your payback, open a Discovery Bank account. From time to time, Discovery Life also runs special offers to give you more payback, so watch out for these. Number 4, stay healthy, engage with Vitality and improve your health. You should work to reach Vitality diamond status and stay a diamond member. If you do step 4 consistently, as part of your lifestyle, then you will reap the best rewards from the Discovery ecosystem and a Discovery Life policy. It is important that you understand how Vitality works, how to get Vitality points, so you can get to the highest diamond level as soon as possible. Vitality rules change all the time, at least annually, so it is important to know the changes and play the game to get your points. Vitality does make it harder and harder every year for you to get points, only recently I found to my dismay that 5,000 steps a day can only accumulate 1,000 points a year, not great as I and my wife need to get 100,000 points this year to maintain our diamond status! If you take out a new DIscovery Life policy, you can choose to have Annual PayBack, whereby you get an amount paid back to you annually, then an additional amount every five years. You can also select the Double PayBack option, where you choose to receive your PayBacks five years later and double your payback amount. So if you have or aspire to have a healthy lifestyle, eat healthy, exercise regularly, keep fit, like technology and gadgets, and like a challenge, Vitality is for you, Discovery Life is for you, and you are well on your way to get the best rewards and paybacks. So who is Discovery Life not for? If you do not like to live healthily, you do not watch what you eat, you don't exercise, you don't like to keep up with technology and gadgets, you don't like the idea of working hard to get something back, keeping up with all the changes of the Vitality programme, or you have many medical aid claims, then Discovery Life is probably not suitable for you. If you have any questions or comments, please email [email protected]. In partnership with Morningstar: This document has been created to highlight the most important issues facing investors, share insights from our current research, and help you make better investment decisions as we enter 2022. It has been compiled by our investment leaders and draws on the work of our global team. ![]() Due to pandemic, rising costs and high taxes are eroding pensions and retirement savings in South Africa. Many are forced to use the state-funded healthcare services which is already under pressure, causing long queues and even longer waiting lists. There is no doubt that we want the best medical attention for our elderly parents when they fall ill therefore private health care is our solution. It is important to understand what options is best suited for your aging parent’s needs. Where do you start? You would need to sit down and discuss with your parents and obtain the following information:
Once you have answers to the above, the next set of questions you need to discuss is to do a realistic budget to finance the plan.
What if your parents cannot contribute? If your aging parents are financially dependent on you and you happen to be main member of a medical aid policy, you may consider adding them as your dependent as this means they can pay a reduced rate. However, they will be on the same option plan as you, should your option not be sufficient to cover their needs, your option is to upgrade your plan. If you’re on an option that includes savings, they become eligible for using your savings. You will need to be prepared for savings being exhausted due to extensive care required. What happens when parents don’t qualify as your dependent? If you decide to not add parents as Dependants or due to parents not qualifying to be your dependent, they can always choose a medical option according to budget and below are things to consider for when choosing your option. Full medical cover (with savings): On a comprehensive option, most elements are covered for. Such as hospital admission, chronic medication and day to day expenses, medical equipment, and possibly dentistry and optometry. These plans vary widely therefore, read through entire plan before signing up to make sure it qualifies all your parent’s needs. Basic hospital plan: These covers around 90% of hospital procedures, basic prescribed minimum benefit (PMB) condition and cancer benefit. It excludes expenses such as none PMB approved medication, equipment, doctor’s visits, optometry, or dentistry. This may not be a full coverage but highly affordable option. Gap cover is always recommended by Daberistic as this boosts your unforeseen gap payment by 500%. To read more about gap cover click here. What else to keep in mind?
If you would like cover for your parents, please contact Namhla or Tammy in our health department, email [email protected], Tel 011-658 1333, option 2 for Medical Aid. In partnership with Morningstar: Victoria Reuvers shares an article on The best advice for 2022? Get quality financial advice! It’s an investment that will always ensure the best return – for you. She shares the following: "Households across the globe are increasingly expected to be responsible for more financial decisions, such as determining how much to save for retirement, how to invest savings, how to be tax-savvy and when to retire. It’s a tricky one – especially, if no one in your household is a trained financial planner and/or adviser." In partnership with Morningstar: Victoria Reuvers shares an article once again on "Taking stock and reflecting on the year that was." She shares the following: ''If we look at the various asset classes across the calendar year, the first point that stands out is the broad positive returns across all the nine asset classes in 2021 (as can be seen in the chart below). The second is the rotation in the ranking, highlighting the importance of diversification." |
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