Early premium termination agreement

Sanlam clients who, since January 2001, have terminated or reduced contributions on qualifying retirement annuities or premiums on endowment policies may now be eligible to receive enhanced policy values.

In December 2005 the Life Offices' Association (LOA) and the Minister of Finance reached an agreement in terms of the minimum standards on early termination values for retirement annuity policies (RAs) and qualifying endowment policies, which culminated in the Statement of Intent (SOI). Sanlam has now implemented the SOI.
Click here to read two LOA statements – the first issued in December 2005 and a second issued on 22 November 2006.

According to the SOI, a minimum standard of at least 65% of a policy's investment account value will be applied to policies on which premiums have been terminated, or where premium reductions took place, since 1 January 2001. (The investment account value of a policy represents accumulated premiums plus investment returns, less charges, including charges in respect of taxation, risk cover, guarantees and expense recoveries.)

As a member of the LOA, Sanlam has committed itself to offering its clients the minimum standards on early termination values of qualifying RA and endowment policies. We have set aside some R600 million (pre-tax) of shareholders' funds to cover the cost of policy value enhancements. The estimated total cost for the entire industry amounts to an estimated R3 billion.