This week’s line up on Talk Money is that I will try to speak to Alan Derby, The Chairman of the S.A Gold Coin Exchange again to continue our discussion on investing in Gold Coins.
On Wednesday, we will be discussing short term insurance in Afrikaans so that should be interesting!
Today, I briefly discussed recent “sales tactics” of a few unscrupulous financial advisors going around spreading rumours that clients policies are not safe with Liberty Life. This, due to recent negative publicity in the press regarding Liberty Life’s recent financial results. Very similar rumours emerged about Old Mutual a few months ago after they also posted negative results causing thier share price to tumble.
Liberty Life’s earnings were very negative as one can read in the many recent articles pointing out the issues of negative earnings and management issues with Liberty Life. But no press has ever accused Liberty Life or Old Mutual of not been able to cover policy holders.
As policy holders are protected under very strict conditions and earnings have nothing to do with the ability of life companies covering claims, there is no reason to worry.
In fact Liberty Life holds 2.5 times the capital of it’s life book, in other words if each person had to claim at any given time, Liberty Life has 2.5 times the amount of the book available in cash to cover these claims.
If that is not enough peace of mind Liberty Life is also owned by Standard Bank, the best capitalised bank in Africa with the largest bank in the world as a shareholder. Liberty Life
is a crucial part of Standard Bank, one only needs to look at Stanlib to verify that.
A similar rumour happened to Old Mutual a few months back when OM posted bad results. However Old Mutual policy holders are protected by capital in reserves to cover their book and as proven earnings have nothing to do with Old Mutual having the ability to cover its claims.
Therefore, if an advisor tries to instill fear with regards to Liberty Life or Old Mutual going broke this is utter nonsense.
If you are in the process of switching policies, make sure the motives are good and not just a financial advisor trying to enrich his or herself to your detriment.
