Latest news with #Econometrix
IOL News
4 days ago
- Business
- IOL News
The hidden risks of life insurance policies
Discover the surprising truths about life insurance policies, including why they may become less valuable over time and how to ensure your family's financial security. Image: Pixabay Economist Azar Jammine did a little bit of investigative work recently, reviewing a life insurance policy. What he found was rather astonishing: it would pay more for the policy owner to die now because, in about a decade, the premiums paid would amount to more than the value of the policyholder's life in terms of the policy – the sum insured. Jammine, director and chief economist at Econometrix, tells Personal Finance that, in the case of this policy taken out in 2002, this is because the cost of the monthly debit order increases each month, yet the amount someone has insured their life for doesn't. Denise Gabriels, Lead Ombud at the Life Insurance Division in the National Financial Ombud Scheme, said that her office had received some complaints that mirror this issue. Between the late 1980s to early 2000s, insurance in the form of Universal Life policies, which were sold, which Gabriels said were based on a guaranteed period during which time premiums didn't go up, and then they would, either yearly or through an immediate steep increase. Gabriels added that, as the risk of dying increases, so does the cost of life cover. In cases where policies are 'age-rated, the premiums will go up while the cover amount could well stay the same, Wayne Mostert, MD of ASI Wealth, explained. In certain policies, especially permanent ones like whole-life or investment-linked life cover, it's possible to reach a point where you've paid more in premiums than the value you'd get out, he told Personal Finance. Izak van der Westhuizen, chief financial officer at BrightRock, pointed out that the younger you are, the healthier you tend to be, so your premiums will be lower because of a lower risk of claiming. Mostert added, 'Locking in a good rate in your 20s or 30s can save you a lot of money over time. Also, life has a funny way of throwing big responsibilities at us when we least expect it.' Only those who die young, it seems, are worth anything (and also good, based on one of Billy Joel's better-known songs). Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Next Stay Close ✕ Taking all of this into consideration, it may seem like life policies become worthless as you age, hinting at it being a better idea to invest in unit trusts. Yet, they are still an important part of a financial toolkit. Mostert said this concept, of taking the amount you would've spent on premiums and investing it in a unit trust or savings account, may seem good on the surface. 'But there's a catch: investment alone doesn't replace your income if you pass away unexpectedly. You might have some growth over the years, but if you died next week, your family would have only what you've saved – not the R1 million or more that a life policy might have paid,' Mostert said. Van der Westhuizen added that, while there is a chance something might not happen to you, 'you're paying the premium in case it does, much like with a short-term insurance policy. Your car might never get stolen or damaged, but you pay the premium in case it does.' Greg Smith, who is both co-founder and co-CEO of Dis-Chem Life, says: 'Without adequate cover, the financial ripple effects can be devastating. Families often struggle to afford essentials like daily living expenses, school fees or even maintaining their home. In contrast, having appropriate cover in place can provide a buffer of financial stability in times of crisis.' Mostert also noted that some other uses for life insurance are in business settings to protect partnerships or key staff members, such as enabling them to buy out the rest of the business. 'Some people even use it as security, or collateral, when applying for a bond. So yes, it goes beyond just death cover,' he says. However, death, like taxes, is inevitable. Pointing to US-based medical research centre National Institutes of Health data, which shows that 20% of deaths among South Africans aged 35 to 64 are caused by chronic diseases linked to lifestyle conditions, Smith said that the risk of death wasn't theoretical. Mostert added that many life policies in South Africa offer optional dread disease cover. 'This pays out if you're diagnosed with a serious illness like cancer, a heart attack, or a stroke. The money is usually paid as a lump sum and can be used for anything: from medical bills to helping you take time off work or even going on a bucket list trip if that's what you need,' he explained. There's also disability cover, which replaces your income if you can no longer work due to illness or injury, for example, said Mostert. Van der Westhuizen says a comprehensive life insurance policy should include income protection (temporary and permanent disability cover), critical illness cover, and death cover. 'Different types of cover protect different things, so a well-structured policy should include all of them,' it said. Worth noting is that, by law, insurers must hold a certain amount of capital to honour their claim obligations to all their clients, Van der Westhuizen says. 'To comply with these capital requirements, insurers must use certain investment vehicles. Our regulators strictly govern and enforce these requirements and the rules around how these funds are invested to ensure their protection.' Above all else, read the fine print and speak to a financial advisor is a message that always comes through clearly from Personal Finance's experts. PERSONAL FINANCE
eNCA
23-06-2025
- Business
- eNCA
SA takes R27bn loan to unlock growth
JOHANNESBURG - The government and the World Bank have officially signed a R27 billion development-policy loan agreement. The money will support key structural reforms in infrastructure. According to National Treasury, the focus will be on the energy and freight transport sectors, which have dragged growth in the country. READ | Discussion | South Africa secures R26bn infrastructure loan The deal is part of a wider reform plan. The government wants to strengthen institutions, attract private investment, and improve service delivery. The reforms are expected to create jobs and support inclusive growth. Director and Chief Economist of Econometrix Dr Azar Jammine says this is a positive step.
IOL News
12-06-2025
- Business
- IOL News
South Africa's gold legacy: The psychological impact of rising gold prices
Despite losing its title as the world's gold capital, South Africa continues to benefit from the rising popularity of gold as a safe haven, with implications for the local economy and currency Image: Ai Despite having lost its crown as the gold capital of the world, South Africa is still indirectly – and psychologically – benefitting from the yellow metal's gain in popularity as a safe haven. As of 12.30pm on Tuesday afternoon, the precious metal was rising towards $3,340 an ounce, although off its $3 500 record high in April, it is still 'holding up,' as Dr Azar Jammine, director and chief economist at Econometrix, said. Gold is 'holding up' as its underlying value is a hedge against economic uncertainty, said Jammine. Speaking with IOL, Jammine noted that gold is still benefiting both the local currency, as well as gold miners. The rand is still flirting around the R17.70 to the dollar level and could drop into the R16 to R16.99 range, according to Old Mutual chief economist, Johann Els. Gold has a long history in South Africa, which was once the world's biggest gold miner, losing that crown to China in 2006. The fact that it is no longer even in the top ten is, as Jammine said, 'very sad'. Gold's history in South Africa dates back to the late 1800s, when a rush saw an effective shanty town developed in what is now Johannesburg. Pilgrims Rest and Barberton are historical sites for mining, with tourists still being able to pan for alluvial gold in Pilgrims Rest in Mpumalanga's Drakensburg area. South Africa cannot claim to be gold's oldest source though, as the Royal Mint said that gold was first smelted in Egypt in 3 600 BC. The metal's history includes the first gold coins being struck in what was then Lydia, Asia Minor, in 600 BC. The Minerals Council of South Africa notes on its website that, even though the Witwatersrand Basin remains the world's largest gold resource, more than half of the South African gold mining industry is 'marginal'. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ Ad loading The discovery of gold in South Africa in the late 19th century led to the development of Johannesburg, also known as Egoli or the City of Gold, as well as numerous towns near the gold diggings, such as Barberton and Pilgrim's Rest, the Council stated. In the 20th century, significant gold mines were established on the West Wits line, and towns like Carletonville and Klerksdorp became vital centres around the renowned gold mines, it added. However, the Council said that the prominence of the gold sector began to decline in the early 21st century as mining operations reached deeper levels to access rich reef patches. At the same time, the gold price experienced a substantial decrease from its previous highs, and the global economy encountered challenges, culminating in the 2008 financial crisis. 'Although the crisis has eased in many countries, the effects on the South African mining industry have been profound and enduring,' it noted. Joburg's oldest working mine, incidentally, is at Gold Reef City. Jammine said that South Africa is benefitting from the safe haven appeal of the yellow metal mentally. The price has a psychological value on shares and the currency, said Jammine. He added that the perception is that South Africa is still a major gold producer and, as people think South Africa will have a large benefit from the metal, there is a psychological advantage for the rand and gold mining shares. IOL
eNCA
30-04-2025
- Business
- eNCA
Economist unpacks possibilities for Budget 3.0 on 21 May
PARLIAMENT - The finance minister is ignoring calls to resign, as he prepares to table his third budget on 21 May. READ: Unpacking the political perspectives on Budget 3.0 This comes after the Western Cape High Court set aside Parliament's adoption of the 2025 Fiscal Framework. Enoch Godongwana announced on Wednesday that he will present a revised national budget on 21 May, 2025. Director and Chief Economist at Econometrix Dr Azar Jammine spoke with eNCA about the budget's third iteration.
IOL News
29-04-2025
- Business
- IOL News
Rand and dollar's steady climb as Trump wanes in popularity good news for consumer spending power
The stronger rand, meanwhile, boosts spending power for consumers buying anything in greenbacks – the currency against which all other forex is benchmarked. Image: Armand Hough/Independent Media US President Donald Trump's continued trade war – as well as his constant backtracking on tariffs as he bows to market pressure – have seen his popularity drop. However, both the local currency and gold, which is the ultimate safe haven, have benefitted from the situation in the US as the greenback has slowly declined in value. What does this mean for South Africa? Continued gains in the gold price lead to a psychological increase in the value of gold miners' shares and the currency, Dr Azar Jammine, director and chief economist at Econometrix, has said. Rand's growth in April Image: Morningstar The stronger rand, meanwhile, boosts spending power for consumers buying anything in greenbacks – the currency against which all other forex is benchmarked. Gold seems set to continue its meteoric rise, having breached $3 500 on April 21 – an all-time high. Although the yellow metal is down to $3 320 this morning, this could well be a blip. In February, JP Morgan predicted that gold would hit $3 000 this year. That figure has since been upgraded to $3 675 by late 2025 and even $4 000 in the middle of next year. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ A one-year view of the gold price as of April 29, 2025 Image: Trading Economics 'Traders are watching how South Africa will deal with the budget gap after cancelling the VAT increase. With local risks fading, the rand is now more influenced by global events, like upcoming US jobs and gross domestic product data,' said Cilliers. On Tuesday morning, the local currency was trading at R18.55 at around 10am – a relatively flat rate when compared to a year ago. In between last April and now, South Africa saw the election of the first true coalition government since the dawn of democracy, which bolstered the currency. However, Trump's April 2 'Liberation Day,' when he announced the initial set of tariffs, pushed the rand down to R18.94. It breached the key R19 level to the dollar on April 8.
