Frequently Asked Questions
What makes a policy restricted?
According to the Long-term Insurance Act only one loan and one part surrender may be taken out of a policy within the first 5 years. Once a loan and part surrender has been made, no further cash advancements or surrenders can be made until the end of the restriction period (5 years from inception). Furthermore, this 5-year restriction is renewed in the event that the policyholder increases the annual premiums by more than 20% (‘the 20% rule”), placing the maturity date 5 years from the increase in premium. Policies can also be restricted purely by the nature of the product specifications which can vary from one Life Company to another. Example: In certain guaranteed growth plans only 1 part surrender is available and thereafter only at maturity.
Are policies in the first 5 years after entry date also restricted?
Yes, cash values of policies are limited to contributions plus 5% per annum in the 5 five years. This could also limit the value that is available to you.
How long will it take before I receive settlement?
48 hours after our office has received the original documentation on a policy we have approved, we do an electronic transfer to the policyholder’s verified bank account.
Can you still purchase the policy with a loan against it?
Yes, our offer is net of any loan or premium debts against the policy and we settle the outstanding debts directly with the Life Office or relevant institution.
What happens if I have lost my original policy document?
We will request you to complete a “Lost Policy Affidavit” (LPA) to apply for a new one to be issued. This supersedes any previously issued policy document. An LPA should not delay the settlement process.
What products do we purchase?
- All endowment policies that are restricted or have no surrender value (Old Mutual; SANLAM; Liberty Life; Momentum; Metropolitan Life; Discovery Life; Cadiz; Hollard; PSG)
- Growth and income plans
- Policies and investments offered by all South African insurers
- Structured products
- Old generation or ‘conventional’ life policies issued before after 1975 and before 1990 from Old Mutual; SANLAM and Liberty Life
What products don’t we purchase?
- Retirement annuities or Living annuities
- Pension / Provident / Preservation fund policies
- New generation pure life cover only policies
- Medical or Disability cover policies
- Funeral policies
- Deferred compensation
- Policies that have already matured
Please note that under current legislation, it is not possible to transfer ownership on any retirement/living annuities or pension/provident/preservation fund policies and therefore they cannot be sold.
Do I pay tax on the sale of my policy?
If you are the original owner, current legislation deems your policy sale not taxable. As individual circumstances may differ, please speak to your Tax Consultant for advice.
If I am a Financial Advisor can I also use Policy Trader for my clients?
Yes, we work with financial advisors as well as direct clients.
Is there a way to convert my policy into cash if it is not a restricted policy?
Yes, there are alternative solutions for different investments. Policy Trader, however, deals with restricted policies. Please refer back to your policy provider for potential solutions.
