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Why the Very Wealthy Enjoy Life Cover
The JSE outperformed the S&P 500 in dollars over five years | Via City Wire
Why the Very Wealthy Enjoy Life Cover
Last week, I featured the book by J.D. Rockefeller, containing 38 letters to his son about finances.
While we all understand the requirement for life cover, where it’s needs-based when one is building up assets earlier in their career, most often in practice, I find wealthy individuals have very strong views in favour of, or not.
From my side, “every spouse I have met has always said that their life partner spends too much on life cover, ……….yet I have never met a widow(er) who said the same”.
For wealthier individuals, one of the attributes in creating a successful legacy for the Rockefeller dynasty was using life cover. And they certainly didn’t require this on a needs basis.
For many wealthy persons, their wealth is not liquid. It is often tied up in businesses, real estate, or a farm, or some other assets that will be taxed at death and require liquidity to pay the taxes. Life insurance provides liquidity at death.
The wealth will not be equally distributed, where some heirs may want to continue to run a business or farm. Some can’t, or don’t want to, inherit a business or real estate. None wants the assets sold or donated. Life insurance can equalise the distribution of wealth to heirs and avoid the unwanted sale of the business or farm.
In the article attached by Jaco Gouws, Head of Proposition at Private Clients by Old Mutual Wealth, he explains where life cover for the wealthy can fit into their overall planning.
Many wealthy families have most of their wealth tied up in non-cash assets. Property portfolios, private businesses, farms and private equity stakes often dominate their balance sheets.
An estate worth R300 million but with only R10 million in cash could face more than R100 million in estate duty, capital gains tax and executor’s fees. These costs arise quickly, but SARS and executors don’t accept shares, properties or exotic cars as payment.
Heirs may find themselves forced to sell assets at fire-sale prices to raise cash, potentially dismantling the family business or breaking up strategic property holdings.
Life cover provides immediate liquidity, allowing families to settle taxes and preserve key assets.
While many affluent families master the art of minimising taxes during their lifetimes, death triggers unavoidable tax obligations. Without a liquidity strategy, even carefully built fortunes can become unstable.
Life cover provides flexibility, offering cash for heirs not involved in family assets, enabling charitable giving without reducing inheritances, and simplifying cross-border estate issues.
The Vanderbilts ignored these complexities. The Rockefellers embraced them, and their wealth has endured because of it.
Life cover, at its core, enables fairness without forcing the painful division of cherished family assets.
When embedded in a well-crafted estate plan, life cover delivers what lasting legacies require: liquidity to settle taxes and preserve assets, legacy to ensure fairness in complex family structures, and leverage to power trusts and protect businesses across generations.
It’s the difference between families like the Rockefellers, who planned intentionally, and those like the Vanderbilts, who didn’t.
These outcomes aren’t left to chance. They’re the result of thoughtful design and the right partnerships
PWM Discretionary Solutions at the end of June
For clients invested in our PWM solutions, the end of June, being the halfway mark in the year, is always an opportunity to reflect on past performance. The results for the end of last month are summarised as;

For us, it’s about the credibility of the total investment proposition, in delivering a consistent, prudent and expert investment management experience and outcomes.
Our numbers up to June 2025 (over 3 years) are consistently solid versus what we said we would do 3 years back, and the green shows how much we are ahead of our absolute targets.
The JSE outperformed the S&P 500 in dollars over five years
The performance, flagged by Prescient Investment Management in a research note, was realised despite R150bn in net equity sales by foreigners.
Local investors and foreigners with girth who decided not to dump South African stocks are reaping the benefits of a local equity rally that is beating the S&P 500 over five years in dollar terms.
Since the market dip following US President Donald Trump’s shock tariff announcements on 2 April – the so-called ‘Liberation Day’ – the mega tech-laden S&P 500 index has rallied 24% in dollar terms.
Strikingly, the FTSE/JSE All Share index had gained 19% over the same period, but adding the rand’s strength to the performance has pushed the local gauge to beat the S&P 500 over a five-year term (see graph below).
Total return index

Source: Prescient Investment Management, Bloomberg
‘This outcome is particularly striking considering the strong US equity exceptionalism narrative and the global shift towards dollar-based assets over the past decade,’ Nicholas de Clercq (pictured above), quantitative analyst at Prescient Investment Management, wrote in a research note on Friday.
‘The performance underscores that over this period, the FTSE/JSE All Share index has been a surprisingly competitive investment option for both global and local investors,’ he added.
The All Share index’s boost comes amid steep selling of local equities by foreigners.
‘Foreign investors have remained persistent net sellers of South African equities, with nearly R150bn in net outflows recorded so far this year,’ de Clercq wrote (see graph below).
‘This trend underscores that the main beneficiaries of the market’s strong performance have been local and foreign investors who chose to stay, rather than new foreign capital inflows.’
SA equity sales to foreigners per year

Source: Pient Investment Management, Bloomberg
The boost to local stocks comes on the back of emboldened gold and platinum prices, as investors across the world fled into safe-haven bullion to hedge against uncertainty and on future supply concerns regarding platinum.
‘A major driver behind the stellar year-to-date performance has been the basic materials sector, notably gold miners, who have benefited from a roughly 28% increase in the gold price so far this year,’ de Clercq wrote.
Basic material stocks now constitute roughly a fifth of the Johannesburg Stock Exchange’s market cap.
‘The basic materials sector now accounts for about 21% of the All Share index, only a few percentage points behind the financial sector’s 25% weighting,’ de Clercq wrote.
‘Meanwhile, the telecommunications and technology sectors have also delivered impressive gains, adding to the market’s broad-based rally.’
Friday Food For Thought
