Middlesea Valletta Life Assurance Company Limited has registered a substantial increase in the demand for its Single Premium Plan. When compared to January 2002, the number of new policies issued in January 2003 has increased by 83% and the premiums written has increased by 123%.
The Single Premium Plan is essentially a life assurance policy which offers a relatively safe investment opportunity and this is proving to be very popular with Maltese investors especially in the current volatile investment climate where protection of one’s capital is an important priority.
As its name implies the Plan involves the payment of a single premium (with a minimum of Lm1,000) and therefore there is no commitment on the part of the policyholder to pay further premiums. Nevertheless it is also possible to add to the original amount invested by making additional top-ups with as little as Lm200 whenever the policyholder wishes to do so.
The premium invested (together with further additional premiums) is tied to the with-profits fund of Middlesea Valletta Life and therefore benefits from the stability provided by the fund which essentially guarantees the investment under the plan. The investment return on the plan, which primarily takes the form of an annual reversionary bonus is another attractive feature of this plan because it is effectively locked into the policy once it is declared by the company. The average annual rate of reversionary bonus paid over the period 1996 to 2001 is 6.3%. The plan is also a tax-efficient method of investing because under current legislation, no tax is payable by the policyholder on the proceeds of the policy.
The with-profits fund
The with-profits fund is an investment portfolio managed by Middlesea Valletta Life on behalf of its policyholders. Conscious of the need to protect capital first and foremost, Middlesea Valletta Life manages the fund on a conservative basis and as at 31/12/02 the fund was broadly invested as follows:
- 15% in property.
- 48% in fixed income securities.
- 14% in equities.
- 23% in short term cash deposits.
The fund invests a significant proportion in prime commercial sites in Malta and fixed income securities and this generates a constant income stream as well as a stable annual appreciation. The total value of the fund as at 31/12/02 was Lm92million.