Life Cover – Underpinning African Wealth

African economies are some of the fastest growing economies in the world. And with economic growth comes wealth. Today, more than ever, Africa’s wealthy want to ensure their wealth works for them and their future generations.  

Creating and protecting wealth, however, involves a long-term investment strategy that not only allows it to grow, but also protects it from the risks associated with volatile markets, and there are few markets as volatile as those on the continent. To this end, African investors are looking for sound investment solutions. That is where life cover comes into the equation.  

As Carrick is continually upgrading its services to African investors, they have added a high value life cover to their offering. The offerings vary and range from term life insurance to whole life and universal life cover. The cover offers Africa’s high-net-worth investors security in times of financial stress and gives them the peace of mind that their families and businesses will be financially secure in the event of their death or disability. The right life cover has multiple benefits for individuals to ensure their financial security. As Anthony Palmer, Carrick’s Group Commercial Director, says, “Life cover provides a fundamental underpin to any well-designed financial plan.” 

Estate duty 

Unlike a person’s estate, life cover does not have to be subject to estate duties if structured correctly. So where other assets will be taxed at a percentage of the total value of the estate, depending on the jurisdiction, the lumpsum pay-out from life cover does not have to fall under estate-duty tax. This is a complex area of financial planning and very important to get right as spouses trusts or estates can be nominated beneficiaries with different consequences.  

Leveraging compound interest 

Albert Einstein called compound interest the eighth wonder of the world. The reason being that if invested correctly, compound interest will ensure that your money grows exponentially. This applies to life cover in two ways. The lumpsum pay out from a life cover policy will always exceed the value of the policy premiums. So, $1 million in premiums will yield a far better return than $1 million in a bank account. And as your Carrick Private Wealth Manager will tell you, the younger you are when you start contributing, the lower your premiums will be for the same benefit. For example, if you start contributing to your life cover at age 40 your premiums will be far less than if you started the policy at say age 60.  

Less risky than traditional market investments 

Life insurance guarantees a lumpsum pay out on the policy-holders death. Although many investors choose bonds and equities as an investment tool, there is an inherent risk to the value of that investment in the future. Volatility in the markets means that although a lot of money can be made on tradeable products, a lot of money can be lost too. The lumpsum pay out from life insurance is pre-determined, and no matter what the markets are doing, beneficiaries of the policy can rest assured knowing they will receive a guaranteed, predetermined lumpsum.  

An investment tool 

With Carrick’s high value life insurance, policy holders are not only putting money away for future generations, but they can use the policy as an investment tool. Should they require liquid funds, in case of an emergency, they will always have access to their investment immediately.  

Currency protection  

As part of the emerging market landscape, African currencies are at risk every day. Having a dollar life cover means that the value of their investment will never depreciate, as it will always be paid out in dollars. So should regional currencies fall foul of economic and political risks, your investment in Carrick’s high value life cover is secure as a dollar investment.  

Creditor protection 

Cash is a vulnerable asset, but if it is secure in a life cover policy, your investment is protected from creditors should there be any cause for you as a person, or your business to be sued. But beyond this, a life insurance policy will guarantee that all creditors get paid in the event of a financial emergency or in the event of your death. This will ensure the sustainability of businesses and make sure that families can continue to live in the standard to which they have become accustomed, should the policy holder pass away or is unable to earn due to disability or illness.  

Multi-cultural insurance 

Carrick’s life cover offering is unique in that, unlike typical western insurance models, the risk assessment is done on a country basis, and does not take gender, citizenship, ethnicity, or race into account. As such it is the perfect tool for Africa’s multi-cultural families.  

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