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Dear reader,
Thank you on your query, an important and good query.
The brief reply is sure, you possibly can purchase offshore insurance merchandise. Currently, most are administered by offshore firms that almost all South African advisors will not be licensed to promote. However, there’s a South African insurer* that has constructed a variety of options to accommodate this want, with extra insurers anticipated to observe. Over and above life cowl you can even purchase capital incapacity and dread illness cowl. Most of the processes are the identical as buying insurance domestically equivalent to underwriting, premium assortment and administration with some minor adjustments to pay attention to.
Your advantages are denominated in US {dollars} and enhance with the US inflation fee. The main benefit is that upon declare the funds pays from Guernsey to an offshore checking account in a rustic permitted by the Guernsey Financial Services and would not have to be repatriated to South Africa. The worth of the profit is thus not uncovered to forex danger by the rand doubtlessly considerably depreciating.
You/your beneficiaries can nonetheless go for the advantages to be repatriated again to South Africa must you want, however there could also be dangers concerned in changing the funds again, equivalent to forex fluctuations and financial institution expenses.
Your premiums are additionally denominated in US {dollars} and might both be paid by you in rands (debited month-to-month or yearly) or a US dollar-denominated account (solely paid yearly). The rand quantity decided to calculate the US greenback premium is utilized by the Forward Exchange Rate and is obtained by way of Bloomberg.
It is vital to keep in mind that premiums paid for offshore insurance policies are included in an particular person’s annual Single Discretionary Allowance (SDA) of R1 million. No tax clearance is required if this quantity is just not exceeded.
If exceeded, it’s going to kind a part of an particular person’s international funding allowance of R10 million and a tax clearance certificates shall be wanted. The funds of those premiums are reported to Sars on the consumer’s behalf, however it’s the consumer’s accountability to make sure their SDA is just not exceeded.
South African residents residing abroad are additionally in a position to take out offshore insurance, as are South Africans completely residing offshore – however they would want to show their earlier hyperlink to South Africa by way of a South African inexperienced barcoded ID and South African passport.
Offshore life cowl can even cater for numerous different functions: for insurance policies equivalent to business assurance, particularly purchase and promote; contingent legal responsibility; mortgage account safety; and key individual cowl, which have to be rigorously structured with an expert.
As with native life insurance, it’s all the time advisable to seek the advice of a monetary advisor when taking a look at life insurance to construct an answer that’s finest catered on your specific wants personally and professionally.
* This insurer is Discovery Life.
