Discovery Life Group Risk. LIFE PLAN Guide

Transcription

1 Discovery Life Group Risk LIFE PLAN Guide

2 Contents Welcome Section 1 page 2 Lifestyle protection option Section 2 page 4 The Group Risk LIFE PLAN Section 3 page 5 Life Cover Benefit and the Global Education Protector Section 4 page 7 Income Continuation Benefit Section 5 page 11 Capital Disability Benefit Section 6 page 17 Severe Illness Benefit Section 7 page 21 Funeral Cover Benefit Section 8 page 31 Spouse s benefits Section 9 page 33 Rewards for managing your health Section 10 page 34 The Mortgage Protector Benefit Section 11 page 35 Premium payments Section 12 page 36 Underwriting and the Free Cover Limit Multiplier Section 13 page 39 How to claim and receive your benefits Section 14 page 40 Continuation option Section 15 page 43 General legal provisions, definitives and rules Section 16 page 44 Cession and beneficiaries Section 17 page 48 Discontinuance Section 18 page 49 Appendix 1 Disability Benefits page 50 Appendix 2 Activities of Daily Living score sheet page 59 Appendix 3 Severe Illness Benefits page 61 Ver 2009/08.1

3 Section 1 Welcome 1.1 Welcome to Discovery Life Discovery Life is part of Discovery Holdings, an established and financially sound company that has a reputation for pioneering products that set new standards in the assurance industry. Discovery Life offers unique and innovative Group Risk assurance products that will assist employers in providing valuable risk benefits to their employees and their families. 1.2 This document will help you to understand the finer details of the Discovery Life Group Risk policy The policy protects employees and their families from any life-changing events and is a valuable asset. It is important that the policyholder fully understands the protection given to employees by the benefits that have been chosen by the policyholder. 1.3 The policy consists of this Group Risk LIFE PLAN Guide and the benefit schedule The Group Risk LIFE PLAN Guide provides comprehensive information on all benefits offered by Discovery Life. Details of the Discovery Life benefits selected on the Group Risk Application Form appear on the benefit schedule accompanying this Group Risk LIFE PLAN Guide. It is important to check the benefit schedule carefully to ensure that the benefits chosen are correctly shown. The benefit schedule and the Group Risk LIFE PLAN Guide are read together when determining the benefits payable under this policy. 1.4 The policyholder can cancel this policy within 30 days If, after studying the benefit schedule and this Group Risk LIFE PLAN Guide, the policyholder is unhappy with the policy chosen, the policyholder can take advantage of a 30-day cooling-off period. The cooling-off period enables the policyholder to re-evaluate the policy purchased and cancel the policy by sending a written cancellation notice to Discovery Life within 30 days of the policy having been issued. The cooling-off period only applies if no benefits have been paid or an event insured against has not yet occurred. Any premiums paid will be refunded after the deduction of any costs incurred. 1.5 Need more information on this policy? Discovery Life can help We look forward to assisting you in resolving any problems which you may have and encourage you to contact us if necessary. For any event, you are welcome to contact: Your financial adviser as indicated on your benefit schedule. Discovery Life Group Risk contact centre at GROUP ( ) By groupinfo@discovery.co.za By fax: By mail: Discovery Life Group Risk PO Box 3888 Rivonia 2128 Discovery Life Compliance Officer: By dl_compliance@discovery.co.za By phone:

4 1.6 How to lodge a complaint If you have received inadequate information or unsatisfactory service or have complaints about the advice you have received, please contact the Discovery Compliance Officer at dl_compliance@discovery.co.za or on If Discovery Life does not resolve your complaint to your satisfaction, you may contact the parties mentioned below for assistance: 1.7 The Ombudsman for Long-term Insurance Postal address: Physical address: Telephone: or Private Bag X45 Sunclare Building Fax: Claremont 3rd floor 21 Dreyer Street info@ombud.co.za 7735 Claremont Website: Cape Town 7700 or 1.8 The FAIS Ombud Postal address: Physical address: Telephone: or Financial Services Board Eastwood Office Park Fax: or PO Box Baosbab House info@faisombud.co.za Lynnwood Ridge Ground floor Website: Lynnwood Ridge, 0081 or 1.9 The Pension Funds Adjudicator Cape Town Postal address: Physical address: Telephone: PO Box th floor, Letterstedt House Fax: Claremont Cnr Camp Ground and enquiries@pfa.org.za 7735 Main Street Newlands Website: on Main, Claremont, Cape Town Johannesburg Postal address: Physical address: Telephone: PO Box nd floor, Sandown House Fax: Benmore Sandton Close 2 jhb@pfa.org.za Website: 3

5 Section 2 Lifestyle protection option 2.1 Options available to the policyholder The policyholder must make two decisions: which CORE and PLUS Benefits to provide to members, and whether FLEX Benefits should be made available to members. 2.2 CORE Benefits The policyholder may select CORE Benefits, which are compulsory for and applicable to all members. CORE Benefits include the Life Cover Benefit and Income Continuation Benefit. These benefits cover the most essential risk needs and ensure that all members enjoy a core level of protection. The policyholder will define the benefit structure for the selected benefits. CORE Benefits are medically underwritten on a group basis in terms of free cover limits. 2.3 PLUS Benefits In addition, the policyholder may select PLUS Benefits, which are compulsory for and applicable to all members. PLUS benefits include the Capital Disability Benefit, the Severe Illness Benefit and the Funeral Cover Benefit. These benefits cover additional member risk needs and ensure that all members enjoy an additional level of protection. The policyholder will define the benefit structure for the selected benefits. PLUS Benefits are medically underwritten on a group basis in terms of free cover limits. 2.4 FLEX Benefits Lastly, the policyholder may select FLEX Benefits which are not compulsory and may be selected by members depending on their risk needs. These benefits provide increased cover funded by the members to extend their compulsory benefits. FLEX benefits include the Life Cover Benefit, the Capital Disability Benefit and the Severe Illness Benefit. FLEX Benefits have been predefined by Discovery Life (in terms of structure and benefit maximums). FLEX Benefits for members are medically underwritten on an individual basis. The free cover limit for FLEX Benefits is always zero. FLEX Benefits are not available to spouses. FLEX Benefits must be added within: three months of the scheme commencement date three months of entering the scheme as a new member after commencement date three months from scheme review date three months of a major event such as marriage, divorce, death, birth or adoption of a child. FLEX Benefits may be removed or decreased within three months after a major event such as marriage, divorce, death, birth or the adoption of a child. FLEX Benefits may only be re-added: within three months of review date within three months of an event such as marriage, divorce, death, birth or adoption of a child. Discovery Life has established maximum benefit levels for CORE, PLUS and FLEX Benefits. These limits will be reviewed from time to time. 4

6 Section 3 The Group Risk LIFE PLAN 3.1 The Group Risk LIFE PLAN The Group Risk LIFE PLAN provides cover for life-changing events for the whole family. These life-changing events include death, severe illness and disability. 1 Determine the level of cover for your employees with the CORE Benefits CORE Benefits These benefits cover the most essential employee risk needs and ensure that all employees enjoy a core level of protection. Life Cover Benefit Global Education Protector Mortgage Protector Income Continuation Benefit Performance Bonus Protector Contribution Protector Dynamic Spend Protector Mortgage Protector 2 Enhance the level of cover enjoyed by your employees with PLUS Benefits PLUS Benefits PLUS Benefits cover additional employee risk needs and ensure that they enjoy an enhanced level of protection. The employer chooses the additional benefits. Capital Disability Benefit Severe Illness Benefit Funeral Cover Benefit 3 Allow employees to voluntarily extend their benefits at their own cost FLEX Benefits FLEX Benefits are not compulsory and are selected by employees as a multiple of their salary. Life Cover Benefit Capital Disability Benefit Severe Illness Benefit 4 Join Vitality and have your employees engage in a state of the art health and wellness programme Vitality Vitality is a wellness programme that empowers employees to improve their health by giving them the knowledge, tools and motivation to set and meet health goals. The more healthy your employees, the more Vitality rewards them and the greater the productivity in the workplace. The Discovery Life Group Risk LIFE PLAN includes various combinations of benefits to be selected by the policyholder. These combinations assist the policyholder in providing members with benefits that meet their risk needs and provide additional access to unique and flexible products for the member on a voluntary basis. 5

7 Section 3 The Group Risk LIFE PLAN 3.2 The LIFE FUND is the financial foundation of the Group Risk LIFE PLAN The Group Risk LIFE PLAN has as its basis a LIFE FUND for each member, which is the financial mechanism of the Group Risk LIFE PLAN. The LIFE FUND is used to fund benefit payments for the benefits selected by the policyholder. 3.3 The effect benefit payments have on the LIFE FUND a life-changing event is defined as: Death or an illness or disability that is severe enough to affect your lifestyle or your ability to earn an income and so lowers your standard of living. If all premium payments are up-to-date, Discovery Life will pay the member for the life-changing events covered by the benefits indicated in the Benefit Schedule. Benefit payments are defined as: Any amount of money paid to the policyholder (or as instructed by the policyholder) as a result of a member claiming against their LIFE FUND for a life-changing event. When a member receives a benefit payment from his or her LIFE FUND, the value of the LIFE FUND is reduced by the amount of the benefit payment, unless specified otherwise by the policyholder. If a member qualifies for benefit payments from more than one benefit as a result of the same life-changing event, the highest benefit payment will be processed first and the member s LIFE FUND will reduce by this benefit payment amount. Subsequent benefit payments related to the same event will then be processed against the reduced LIFE FUND value after the previous benefit payment has been deducted. The same effective date will apply for the assessment of benefit payment amounts for these multiple claims. This effective date is the date on which the life-changing event occurs. The benefit payment will be expressed as a percentage of the LIFE FUND and this is the amount by which the LIFE FUND will reduce. Example: Let s assume a member has a LIFE FUND of four times annual salary and a Capital Disability Benefit of twice their annual salary (equivalent to 50% of the LIFE FUND). When a Capital Disability Benefit payment is made, the LIFE FUND will be reduced by 50%. 3.4 The LIFE FUND can be protected The Minimum Protected FUND option allows the policyholder to specify a minimum level for the LIFE FUND. If this option has been selected, the balance in the member s LIFE FUND will never drop below the specified minimum balance, regardless of how many benefit payments have been made or what the monetary value of these payments was. The Minimum Protected FUND is expressed as a percentage of the LIFE FUND. Example: assume that a LIFE FUND of four times annual salary was selected and a Minimum Protected FUND of twice their annual salary (50% of LIFE FUND). No matter how many claims a member makes against a LIFE FUND, the balance left in the LIFE FUND will never be less than twice their annual salary. The choice of a Minimum Protected FUND will affect the premiums charged. The extra premium will depend on the Minimum Protected FUND level and also on the cover selected for the various benefits. 3.5 The LIFE FUND can grow again even after a benefit payment has been made The LIFE FUND will be reduced by the amount of the benefit payment. However, the LIFE FUND will continue to grow after a benefit payment by the annual salary increase percentage of the member. 3.6 How are the benefits expressed? The benefit schedule indicates the benefits selected by the policyholder. These benefits are usually defined as a multiple or percentage of the member s annual salary, a flat rand amount or a variation thereof. 6

8 Section 4 Life Cover Benefit and the Global Education Protector 4.1 What is the Life Cover Benefit? The Life Cover Benefit provides cover for members in the event of their death. If a spouse s Life Cover Benefit has been selected, the death of the member s spouse will also be covered. On death of the member, the value of the LIFE FUND at the date of death is paid. The value is determined as follows: (i) initial LIFE FUND (CORE and FLEX) plus (ii) any amount by which the LIFE FUND has grown, due to salary increases, as well as any additional increases or decreases made by the member to his or her FLEX Life Cover Benefit. less (iii) any benefit payments previously deducted from the LIFE FUND. 4.2 When the Life Cover Benefit ends The Life Cover Benefit ends at the selected benefit expiry age or if the member is no longer an eligible employee. The benefit expiry age is chosen by the policyholder and is generally the member s normal retirement age. This means that if the member dies in service before the benefit expiry age, the claim will be assessed and paid, but claims after the benefit expiry age will not be accepted. Premiums will not be charged for the Life Cover Benefit after the member reaches the benefit expiry age. 4.3 The Global Education Protector The Global Education Protector is automatically included with the CORE Life Cover Benefit of the Discovery Group Risk LIFE PLAN, if the CORE Life Cover Benefit is equal to at least twice the member s annual salary. 4.4 How does the Global Education Protector work? The Global Education Protector provides indemnity cover for the education of a member s child/children in the event of his or her death. The Global Education Protector works on an indemnity basis. This means that the actual education payments which were being made by the member for his or her children s education, immediately before his or her death, will be continued by the Global Education Protector. The Global Education Protector aims to ensure that the education of the member s children is not affected by the death of the member. In line with the indemnity principle, the Global Education Protector will pay the fees for the member s children at the educational institution that they were at immediately before the death of the member. If the children attend a no fees school or are exempted from paying fees no benefit will be paid from the Global Education Protector. Subject to the Private School Upgrade described below, upgrades to private schools are disallowed in general. For example if the member paid R2 000 per month for his or her child in Grade 3 at XYZ School, these payments would be continued after his or her death. To determine future payments, for future years of education, the fees payable at XYZ School would be the fees paid under the Global Education Protector to indemnify the member and would form the basis of future payments taking into account inflationary increases. This means that if a child has moved to a more expensive school, payments will be restricted to that which would have been payable at XYZ School. The benefit payments are made annually, directly to the institution where the child is being educated. If any legislation or circumstances prevent funds being paid directly to the education facility, Discovery Life reserves the right to pay the policyholder or the member s beneficiaries directly. 7

9 Section 4 Life Cover Benefit and the Global Education Protector 4.5 Who qualifies for the Global Education Protector? To qualify for a benefit payment the child must be the natural or legally adopted child of the member and Discovery must have been notified of the existence of the child. Adoption will only be considered as valid if the date of adoption or the date of application for adoption is before the date of death of the member. 4.6 Are stepchildren covered? The stepchildren of the member may be covered if the following conditions are met: The member must be married to the stepchild s mother or father before the date of event giving rise to a claim. The stepchild will only be eligible for the Global Education Protector if the member has notified Discovery Life of the existence of the stepchild. If the member divorces the mother or father of the stepchild, the benefit falls away for that stepchild. 4.7 The Global Education Protector will cover the following years education Benefit payments cover the following years of education: Pre-school (Grade 000/00/0/R) 1 year Primary school (Grade 1 to 7) 7 years High-school (Grade 8 to 12) 5 years Tertiary education a 3-year undergraduate degree or recognised trade diploma/certificate. All South African universities are included in this benefit, as well as universities of technology (technikons), recognised institutions providing for a trade (such as plumbing and electrical) and certain overseas universities. 4.8 Benefit payments will end in the following instances Benefit payments will be made until the earlier of: The child leaving school or university; or The child completing a tertiary education; or The child turning 24; or The child not returning to school or university after the gap year described below. The death of the child; or The member reaching the benefit expiry age; or The member no longer being an eligible employee. 4.9 We will provide additional funding for certain fees on tertiary level Apart from the actual education tuition fees, we will cover book fees and residence fees up to certain maximums. These payments are only made for tertiary level education. Book fees the actual fees for books, up to a maximum of 10% of the actual tertiary education fees. University residence fee the actual fees for university residence up to a maximum of 30% of the actual tertiary education fees. The book fee and university residence fee are not included in the maximum benefit payable to an educational facility. Benefit payments will not be made if the child does not attend an education facility for any reason whatsoever. 8

10 In the case of university, benefit payments will be based on education fees at a South African university, or a selected list of overseas universities, if the child gets accepted at an overseas university on this list. The list of approved overseas universities may be changed by Discovery Life from time to time. In the event of the spouse and/or the children emigrating from South Africa, benefits paid will be based on education fees for South African facilities, and not the rate of fees applicable to education in their new country of residence. If the child is enrolled in a university on Discovery Life s select list of overseas universities, benefit payments for the overseas university will be paid in full, subject to the maximums applicable at the time The following expenses will not be covered by the Global Educator Protector Any registration fees Any book or residence fees for non-tertiary institutions Any utensils or equipment required for studies Excursion fees Au pair fees Aftercare fees How does Discovery deal with children who become eligible for benefits from the Global Education Protector before school-going age? Discovery Life will consider the payment of Private School fees under the Global Education Protector if; The child was registered at or placed on a waiting list for a private school; or If the child s elder siblings were already attending a private school What happens when a child changes education facilities? If a child changes educational facility after the death of the member, Discovery Life will, subject to the Private School Upgrade Benefit, continue making benefit payments at the rate applicable to the educational facility at the time of the member s death. Discovery Life does not cover any additional cost of the new facility above the fees for the facility at the time of the member s death, as this is against the indemnity principle of the Global Education Protector. The same rule applies in the event of a child changing from a local tertiary educational facility to a university on Discovery Life s selected list of overseas universities or other local tertiary education facilities. If a child upgrades between primary and high school, there will be no increase in payments to allow for the upgrade (for example from a public to a private institution). If there is an older child attending a Model C school or government school, and a younger child attending a private school, or a younger child (not of school-going age) registered for private school, the older child will not be allowed to upgrade to a private school, as this is against the indemnity principle of the Global Education Protector. If a child attends a free or low cost school, and wishes to upgrade to a Model C school, this is not allowed as this is against the indemnity principle of the Global Education Protector What happens if a child fails a year of education? For all the years up to the end of high school, the child may fail one year. In this case, Discovery Life will only pay 33% of the relevant fees to repeat the year. If the child fails again, benefit payments will stop until the child progresses to the next grade of schooling. In the event of failing a year of university, diploma, trade qualification, or similar qualification in full, Discovery Life will not pay any benefit to repeat the year and benefit payments will stop until the child progresses to the next year of education. Discovery Life regards failing two-thirds or more of the subjects in a year as failing the year in full. If the child progresses to the next year of education, having passed more than one-third of the previous year s subjects, Discovery Life will continue to make benefit payments in full. If a child has passed matric and wishes to pass further subjects to get matriculation exemption, a maximum of one-third of the actual fees payable during the matric year (or up to the benefit limit if no fees were paid), may be payable. 9

11 Section 4 Life Cover Benefit and the Global Education Protector 4.14 Can the child take a gap year? Years of education must run consecutively. However, the child may take off one year between completing high school and starting university or similar tertiary education. No benefit payments will be made for this year. The rules on cessation of benefit payments will still apply, which may result in benefit payments ending before the child completes his or her education Can the child upgrade to a private school? A child may apply to Discovery Life to upgrade from his or her current school to a private school on the following conditions: At the date of the member s death, the member s Vitality status must have been at Bronze or higher; and Application for the upgrade must occur within 12 months of the death of the member; and The Private School fees to which the child intends to attend are not higher than the standard Global Education Protector maximums set by Discovery Life from time to time; and The child must have been accepted by the private school. Payment of the benefit for a private school is limited to a maximum term of 12 years. Fees for private school education are limited to a maximum amount set by Discovery Life from time to time How does the Global Education Protector affect the tax paid by a member? The Discovery Group Risk Global Education Protector is offered on an unapproved basis only. No retirement fund rule amendments are necessary to offer this benefit. Members should pay fringe benefit tax on the Global Education Protector premium, based on the deemed premium, as set by Discovery Life, for the scheme. The premiums for the Global Education Protector will increase annually at a rate determined by Discovery Life. Premiums for this benefit are not guaranteed. Members are advised to seek appropriate guidance from a tax professional or from their authorised financial services providers for the correct tax treatment of the Global Education Protector premiums and benefits What other legal provisions will apply to the Global Education Protector? Both the actively at work and the pre-existing conditions clauses will automatically apply to the Global Education Protector. This is irrespective of whether Discovery Life has waived this clause for other benefits. If a member has other individual or group life policies that also provide education benefits, Discovery will reduce its benefit payments in the ratio of the potential Discovery payment to the total payment received from all policies. The Global Education Protector cannot be ceded. If both parents are members of different group schemes insured by Discovery Life and then both die, no additional payments will be made in excess of the actual costs of the child s education. The Global Education Protector will not be paid on the death of a spouse. Benefit payments from the Global Education Protector will have no impact on the LIFE FUND What information is required for the payment of the Global Education Protector? The burden of proof of eligibility for the Global Education Protector is that of the policyholder, or whomever they so direct, to get this information. Discovery Life will determine the information required, and the benefit payment will only take place when all the requested information has been received. For subsequent years of education, Discovery Life will require proof of enrolment, proof of fees and the previous year s education results. If there are no nominated child beneficiaries at the date of death or notified to Discovery Life within six months from date of death, no benefits will be admitted for payment. 10

12 Section 5 Income Continuation Benefit Benefit options have been added to the Income Continuation Benefit. These include the 100% upgrade on permanent disability, the Performance Bonus Protector, the Contribution Protector, and the Dynamic Spend Protector. 5.1 The Income Continuation Benefit The Income Continuation Benefit pays a regular income if the member experiences a loss of income after an injury or illness leaving him or her incapable of being able to perform the defined functions of his or her work. The benefit pays an income either until: the member has recovered sufficiently to return to work; or the member is no longer deemed disabled according to the definition; or death; or the member reaches the benefit expiry age. If a member s employment is dependent on him or her being in possession of a valid pilot s or driver s licence, no disability claim will be considered unless it renders him or her incapable of engaging in any occupation for remuneration or profit. 5.2 How is disability assessed? For an initial period of 12 months, the member will be assessed in terms of the effect that the disability has on his or her functionality. The assessment will take into account the reasonable continuity by which the member is no longer able to perform the material and substantial duties of his or her regular job with his or her own employer (including self-employment) or any other suitable job that the employer can offer in terms of the principles set out in the Labour Relations Act. Thereafter, Discovery Life will assess the member s disability based on his or her inability to perform with reasonable continuity the material and substantial duties of his or her own or any occupation with his or her own or any employer (this includes self employment), for which the member could reasonably be expected to be qualified for or suited to, taking into account the degree of disability as well as the knowledge, training, education, ability, experience and age of the member. Disability refers to injury, illness or disease that has resulted in a reduction in the member s functionality. All other alternatives resulting in a loss to access gainful employment or earn an income shall be excluded from this benefit, and includes retrenchment and redundancy. 5.3 How is the date of disability determined for the Income Continuation Benefit? The date of disability means the date upon which the member was last able to perform the material and substantial duties of his or her normal employment with his or her employer as medically assessed by Discovery Life, based on objective, recognised and valid medical evidence received. 5.4 A waiting period is applied before disability benefits are paid The Income Continuation Benefit commences after the member has been continuously disabled due to injury or illness for a certain period of time, after consulting a registered medical practitioner. This period is known as the waiting period. The waiting period may be one month, three months, six months or twelve months. Please refer to the benefit schedule for the waiting period that applies to members for the Income Continuation Benefit. If the member recovers or is rehabilitated and claim again for the same cause within three months of recovery, the waiting period will be waived for this subsequent claim. This is known as the off-period. The benefit payments are made on or before the last business day of each calendar month. Each monthly payment will be pro-rated according to that portion of the month for which the member qualifies for a benefit payment. The member s premium for the Income Continuation Benefit will be waived from the end of the waiting period until benefit payments stop. 11

13 Section 5 Income Continuation Benefit 5.5 There is a maximum income amount payable in the event of disability Subject to the benefit increase, Performance Bonus Protector and Contribution Protector described below, the monthly income amount paid on disability is subject to the overall maximum benefit limits set by Discovery Life. In addition, the income will be reduced by any earnings (excluding interest, rent and dividends) calculated on a monthly basis, received by the member, notwithstanding his disability. Discovery Life will be informed whether the member has any other disability benefits. All income disability benefits will be aggregated to ensure compliance with the maximum benefit levels determined by Discovery Life from time to time. If these maximums are exceeded, Discovery Life may adjust the amount payable under its benefit proportionately. Discovery Life will not incorporate the Capital Disability Benefit amounts into the disability aggregation benefit calculation. The income amount payable in the event of a member s disability is stated in the benefit schedule. 5.6 Are there any other factors that affect the monthly income amounts? When the member recovers and monthly income payments end, the Income Continuation Benefit amount will revert to the amount that would have applied if no claim had been admitted. In other words, it will revert to the originally selected Income Continuation Benefit amount and will be increased by the member s annual salary reviews for the benefit payment period. 5.7 Partial Disability Benefit A member will be eligible for a Partial Disability Benefit if: During the period of disability the member is capable of performing the functions of his or her own job or, as a result of rehabilitation practices, any other suitable job that his or her employer can offer, but the member s earnings are less than the benefit level selected. The member earns an income whilst eligible for a benefit payment in terms of the definition of disability. Calculation of the Partial Disability Benefit amount: Partial Disability Benefit = Income Continuation Benefit x (previous earnings current earnings)/ previous earnings. Previous earnings: member s monthly salary as at date of disability Current earnings: average monthly earnings from an alternative occupation and any monthly income received, or an amount that could be earned, based on the definition of disability. The previous earnings amount will be increased annually as follows: If the escalation in claim benefit was chosen the increase will be according to the escalation in claim benefit. If the escalation in claim benefit was not chosen the increase will be 75% of core CPI. A member must notify Discovery Life if he or she starts earning an income while a claim is in payment. If Discovery Life determines that it was not notified of this while a claim was in payment, Discovery Life may recover any amount that was paid in excess of the amount that would have been paid if the member had notified Discovery Life that he or she was earning an income. 5.8 How does the escalation in claim benefit work? Once the monthly income payments start, they will remain level unless the policyholder has chosen for it to increase annually in line with inflation. Please check the benefit schedule to see if this option has been selected. The policyholder can select the percentage by which the payments will increase annually. The options available are 0%, 3%, 5%, 7%, 7.5% or 10% subject to a maximum of core CPI. These increases will be effective after each 12-month period from the date at which benefit payments started. 12

14 5.9 Rehabilitation, re-skilling and retraining If, in the opinion of Discovery Life, the claimant is deemed able to be rehabilitated through retraining and/or reskilling, Discovery Life will request that the claimant undergoes rehabilitation. The purpose of the rehabilitation is to assist the claimant to achieve a level of performance to enable him or her to perform any gainful employment. Therefore, through rehabilitation, the claimant will no longer be considered disabled based on the definition. Discovery Life, in consultation with a board of medical professionals, will determine the feasibility of the rehabilitation programme. On acceptance of the programme, the claimant and the employer will be required to sign a written undertaking to indicate the claimant s genuine intent to follow the rehabilitation programme. The cost of the rehabilitation programme will be paid directly to the service provider by Discovery Life and will be limited to a maximum of the lesser of 24 times the monthly Income Continuation Benefit and R This benefit will end on the occurrence of the following: the member being deemed rehabilitated by Discovery Life, the claimant failing to comply with the requirements detailed in the rehabilitation programme, Discovery Life deciding in its own discretion that the rehabilitation programme is not effective How do income benefit payments affect the LIFE FUND? Benefit payments for the Income Continuation Benefit have no impact on the LIFE FUND When do Income Continuation Benefit payments terminate? The payment of benefits will be terminated in the following instances: if the member recovers from his or her disability and is able to perform his or her own job in the first 12 months if the member recovers from his or her disability and is able to start working in his or her own occupation or any reasonably suited occupation after 12 months as per the definition above if the member no longer suffers any loss of income from his or her occupation despite his or her disability if the member unreasonably refuses to undergo recommended medical treatment to reduce his or her disability if the member fails to provide Discovery Life with satisfactory proof of his or her disability within thirty (30) days of being requested to do so, and if he or she fails to submit to a physical examination and tests at Discovery Life s request and expense. If the member does not provide this proof, the payment of benefits will end if the member reaches the benefit expiry age as shown in the benefit schedule on the member s death How does tax affect the premiums and proceeds of the Income Continuation Benefit? Members may pay fringe benefit tax on the Income Continuation Benefit premium and should pay tax on the proceeds of the Income Continuation Benefit. Members are however advised to seek appropriate guidance from a tax professional or from their authorised financial services provider as to the correct tax treatment of the Income Continuation Benefit premiums and proceeds Upgrade for the Income Continuation Benefit The monthly Income Continuation Benefit for a member will increase according to the following calculation: Basic Income Continuation Benefit cover as per the current benefit schedule x 4/3 = upgrade if: The member enjoys the benefits under the Comprehensive Option; and The member has satisfied the criteria under Category A of the Capital Disability Benefit in Appendix 1. 13

15 Section 5 Income Continuation Benefit For example: If the member s benefit is set at 75% of his or her salary, the revised benefit will be 100% of salary. However if a member s basic benefit is less than 75% of salary, the upgraded benefit will be lower than 100% of salary. For example, if a member is receiving 60% of salary, the revised benefit will be 60% x 4/3 = 80% of salary. The same rule will apply to members receiving a partial benefit. The upgrade only applies to the basic Income Continuation Benefit cover. All other benefits such as Retirement Fund Waiver, Mortgage Protector and Dynamic Spend Protector are excluded from this benefit increase. Once an Income Continuation Benefit claim is in payment, the upgraded benefit will increase annually in line with the escalation rate selected by the group. The waiting period referred to in 5.4 above will be waived if a member qualifies for the upgrade. Should a member s cover be capped at the free cover limit, the total benefit payable including the upgrade will be capped at this level. For example, if a member s cover is capped at R50 000, the claim amount including the upgrade is capped at R The maximum monthly benefit including the upgrade is R The Contribution Protector If the member has qualified for the Income Continuation Benefit and: he or she enjoys the benefits of the Core Plan; or he or she enjoys the benefits of the Comprehensive Plan, but has not qualified for the Upgrade on the Income Continuation benefit; then the Contribution Protector will pay the member s premiums for the following Discovery products (if applicable) during the Income Continuation Benefit claim period: The Individual LIFE PLAN; The Discovery retirement Optimiser ; The Discovery Health Plan; Any Discovery Retirement Plan; Vitality; Contributions to other health plans or schemes will also be covered subject to the benefit maximums determined by Discovery from time to time. The Contribution Protector is separate from the Income Continuation Benefit payout. The Income Continuation Benefit claim period is only used to set a maximum timeframe for the consideration of payments of the Contribution Protector. This benefit will be paid for a maximum period of 12 months under the Core option and for a maximum of 24 months under the Comprehensive option. The Contribution Protector terminates if the member enjoys the benefits under the Comprehensive option and he or she qualifies for the upgrade for the Income Continuation Benefit. The total benefit is limited to 33% of the Income Continuation Benefit amount that the member is receiving What legal provisions apply to the Contribution Protector? Both the actively at work and the pre-existing conditions clauses automatically apply to the Contribution Protector. This is irrespective of whether Discovery Life has waived these clauses for other benefits. If the member has other individual or group life policies that also provide this kind of benefit, Discovery will reduce its benefit payments in the ratio of the potential Discovery payment to the total payment received from all other policies or contracts What about the tax treatment of the Contribution Protector premiums and proceeds? Members may pay fringe benefit tax on the Contribution Protector premiums and proceeds of the benefit may be taxed. Members are advised to seek appropriate guidance from a tax professional or from their authorised financial services provider for the correct tax treatment of the Contribution Protector premiums and proceeds The Performance Bonus Protector 14

16 5.17 The Performance Bonus Protector If the member has satisfied the criteria under category A of the Capital Disability Benefit in Appendix 1 and is a member of Vitality, a proportion of the member s past bonuses will be added to the monthly disability income. The payment is calculated with reference to: the average bonuses the member received over the three years before the admittance of the Category A claim under the Capital Disability Benefit; the bonus as a percentage of the members salary is capped at 50% on the Core option and 75% on the Comprehensive option. the member s Vitality status at the time of claim as per the following table: Vitality status at date of claim event Blue Bronze Silver Gold Diamond 10% 20% 50% 75% 100% For the purposes of this benefit, bonus is defined as participation in any incentive or bonus scheme that is paid in money, from time to time, at the discretion of the member s employer and is measured and paid in terms of published and defined criteria on the condition that the incentive is not an entitlement and not automatic. Participation in a scheme where a bonus is paid by way of share options and phantom share options are specifically excluded. Calculating the bonus percentage Consider a member earning the following income over the past three years: Year Basic Salary Bonus Bonus percentage 2006 R R % 2007 R R % 2008 R R % The average bonus would be calculated as (15% + 5% + 25%) / 3 = 15% (limited to 50% on the Core option and 75% on the Comprehensive option). Calculating the performance bonus amount Example 1: A member s monthly income is R27 500, Bronze Vitality status and Income Continuation Benefit is 75% of salary: Core: the monthly Performance Bonus Protector would be R x 15% x 20% = R825 Comprehensive: the monthly Performance Bonus Protector would be R x 15% x 20% = R825 Example 2: A member s monthly income is R27 500, Gold Vitality status and the benefit is 75% of salary. This member has received bonuses equal to 100% of salary over the past three years. Core: the monthly Performance Bonus Protector would be R x 50% x 75% = R Comprehensive: the monthly Performance Bonus Protector would be R x 75% x 75% = R The Performance Bonus Protector is paid for a maximum of 24 months. Members that have not earned past performance bonuses for whatever reason will not qualify for this benefit. This rule will apply even if a member has recently joined a performance incentive scheme but has not yet received a performance bonus. Similarly, employees in their first year of work will not qualify for this benefit. The average bonus will be calculated over a three-year period even if the member did not receive bonuses in some of these years. This rule will apply even if a member has taken a sabbatical year. The benefit will be paid monthly regardless of the frequency of the performance bonus. The onus will be on the member to prove past bonuses. 15

17 Section 5 Income Continuation Benefit 5.18 The Dynamic Spend Protector If a member has satisfied the criteria under Category A of the Capital Disability Benefit in Appendix 1, has Vitality membership and a DiscoveryCard, the savings from partner stores will be increased under this benefit. The Dynamic Spend Protector is separate from the Income Continuation Benefit payout. The Income Continuation Benefit is only used to create the event for the payment of the Dynamic Spend Protector. The Dynamic Spend Protector is based on the following: The DiscoveryCard partner spend in claim, used to determine the DiscoveryCard cash backs (subject to the DiscoveryCard limits and conditions at the date of claim) and limited to a maximum of the DiscoveryCard partner spend in the 12 months before the disability event (escalating with inflation each year). Spend on the DiscoveryMotor card in claim and limited to a maximum of the DiscoveryMotor card spend in the 12 months before the disability event (escalating with inflation each year). Your Vitality status at the time of the claim event. The Dynamic Spend Protector Booster percentage, as determined by the following table: Vitality Status at date of claim event Blue Bronze Silver Gold Diamond 5% 7.5% 10% 15% 20% 5.19 How is my Dynamic Spend Protector boost determined? The monthly Dynamic Spend Protector boost is determined by multiplying the applicable Dynamic Spend Protector Booster percentage by the DiscoveryCard partner spend and DiscoveryMotor card spend (as defined above). Policyholders who do not have a DiscoveryCard at least 12 months before the disability event will be eligible for only 50% of the above Dynamic Spend Protector Booster percentages, subject to a monthly maximum spend of R1 500, increasing annually by inflation, at partner stores (including DiscoveryMotor card spend). The benefit is available on all DiscoveryCards, including the debit card. These discounts are in addition to the normal DiscoveryCard discounts for partner stores. The Dynamic Spend Protector benefit will cease on the earlier of: The selected expiry age of the disability benefit Death Cancellation of the DiscoveryCard account. Please note: The benefit is only payable on spend at DiscoveryCard partners while disabled and is only applicable to the spend of one DiscoveryCard account. You can only receive the Dynamic Spend Protector on one benefit, for example if you are eligible for the Dynamic Spend Protector on both the Individual Life and the Group Life benefit, the Dynamic Spend Protector will apply to the benefit with the higher discount. If you are not a member of Vitality, you will receive the equivalent benefit of a claimant on Blue Vitality status. Example A member spends R2 500 at our partner stores and was on a Silver Vitality status at the date of disability or claim. The monthly benefit will be increased by R2 500 x 10% = R250 in that particular month. Members that don t have a DiscoveryCard for at least 12 months before the disability event will be eligible for only 50% of the above discounts. The benefit is only available at DiscoveryCard partner stores. 16

18 Section 6 Capital Disability Benefit 6.1 What is the Capital Disability Benefit The Capital Disability Benefit pays a capital amount in the event of the member or spouse being medically impaired to a degree that they are unlikely to be able to generate an income. This medical impairment may be permanent or temporary. 6.2 How is the date of disability determined for the Capital Disability Benefit? Discovery Life will determine the date on which the life assured became disabled on the basis of objective medical evidence. This date is referred to as the date of disability. The disability benefit will not become payable if the date of disability occurs before the life assured becomes eligible for a disability benefit or after the life assured ceases to be eligible for a disability benefit. 6.3 How does Discovery Life assess qualification for a benefit payment? The Capital Disability Benefit is assessed on the severity of the medical impairment no matter what work is performed to generate an income. By focusing on the effect of the medical impairment on lifestyle and the ability to generate and maintain an income, rather than on whether or not the impairment affects a specific occupation, Discovery Life has developed an evaluation system that is objective and fair. We have developed detailed protocols that describe every anatomical and physiological system disorder in the body using strict medical criteria. This allows us to be completely objective when evaluating the claims. Please refer to Appendix 1 for these protocols. 6.4 What benefit payments are made through the Capital Disability Benefit? The Capital Disability Benefit provides a lump sum payment in the event of a medical impairment in terms of the assessment protocols in Appendix 1 of the Group Risk LIFE PLAN Guide. The lump sum benefit is defined as a multiple of salary and expressed as a percentage of the LIFE FUND. Benefit payments will reduce the LIFE FUND. Example: a member is provided with a Capital Disability Benefit which is equivalent to twice their annual salary. The member has a LIFE FUND of four times annual salary. Thus the Capital Disability Benefit is equivalent to 50% of the LIFE FUND. 6.5 An objective and fair system is used to assess the severity of the disability Payments are evaluated on how severely the disability affects the life assured and, ultimately, his or her ability to maintain his or her income. This benefit rates severity in two categories: Category A Pays 100% of the benefit if the disability satisfies the criteria for Category A. These criteria are designed to establish whether the disability causes the life assured to suffer a permanent loss of income. Category B Pays 50% of the benefit if the disability satisfies the criteria for Category B. These criteria are designed to establish whether the disability causes the life assured to suffer a partial loss of income on a permanent basis. Should the employer s industry or the member s or spouse s occupation or pastime pursuits change, it is important that Discovery Life is informed of such a change to ensure that the member or spouse remains covered at all times. Please refer to Appendix 1 for details on how the criteria used to establish severity ratings will determine which category will apply. 17

19 Section 6 Capital Disability Benefit The benefit cover is defined as a multiple of the member s salary (expressed as a percentage of the LIFE FUND), subject to the benefit maximums determined by Discovery Life from time to time. Example: a member has a Capital Disability Benefit equivalent to 50% of his or her LIFE FUND. The member is assessed as having a Category B severity claim. The benefit amount payable will be calculated as follows: Benefit amount = Severity level percentage x (benefit expressed as a % of LIFE FUND x LIFE FUND) = 50% x (50% x LIFE FUND) 6.6 The effect of a benefit payment through an approved fund Where the policyholder of the Group Risk LIFE PLAN is an approved fund, the member must be informed that to receive a Capital Disability Benefit, he or she will be required to retire from the fund. The member will not be able to receive the benefit if he or she remains a member of the approved fund. 6.7 Specific medical impairments that qualify for a benefit payment Below is a brief description of the various medical impairments for which claims may be made. Please refer to Appendix 1 for detailed medical descriptions. Because a medical specialist must be involved in diagnosing and submitting any claim, specific protocols for each disability claim will be sent to the specialist who treats the life assured at the time of claim. The treating specialist will, in conjunction with the Discovery Life medical panel, decide on the permanency of the condition. Cardiovascular system Diseases of the heart often result in an inability of the left ventricle to function properly. This means that blood cannot be pumped through the body and it therefore accumulates in the left ventricle and lungs, leading to heart failure. In the more severe cases this leads to severe shortness of breath and fatigue. At this point it becomes extremely difficult to perform any work, and so Discovery Life would pay out a disability benefit based on the criteria constituting chronic heart failure. In the early stages, heart failure can respond very well to adequate treatment and the inability to work is therefore only temporary. The aim of this benefit is to cover the total inability to do any work, but Discovery Life will start payment (Category B 50%) when it appears that the condition is not responding to treatment adequately and that going to work is becoming an effort. In other words, Discovery Life tries to pay you when, on medical grounds, it is better for you not to go to work any longer. Part of the cardiovascular system is the vessels, both arteries and veins. Therefore hypertension (high blood pressure) falls into this system. The majority of people with hypertension are able to work and function in a normal capacity with or without treatment. This disability product is therefore designed to pay when the hypertension has caused major complications in the heart, kidneys or eyes, despite therapy. Peripheral vascular disease means that either the arteries cannot get blood from the heart to a certain area, normally the legs, or the veins cannot get blood from an area back to the heart. If an artery is involved, then there is normally severe pain with exercise and cold extremities (cold hands or feet) leading eventually to amputation, as the area not supplied with blood dies. When veins are involved, blood pools in the area where veins are diseased, resulting in widespread ulceration which does not heal. The most common area for both of these diseases to occur is the legs and therefore working eventually becomes impossible. We have categorised by strict medical criteria the time when working would become inadvisable. 18

20 Respiratory system Many diseases affect the lungs resulting either in an inability to breathe air in, or to breathe air out or a combination of both. Permanent breathing difficulties normally take many years to develop and, until a terminal point is reached, medication can usually help. Testing the functioning of the lung can range from a simple breathing into a peak flow meter to a full battery of tests, including an arterial blood test. These test results can also vary, depending on the type of medication used. There is normally an ability to work until certain parameters of the lung function fall below certain limits. Discovery Life has documented these limits based on worldwide acknowledged standards. Because of the variability of results, we also request that before claiming, these tests be done three times, at least three months apart, to ensure consistency and permanency. Medication should continue to be used during this time, and before testing as well. Mental and behavioural disorders Psychiatric illness is one of the most difficult areas to assess when it comes to disability. Often medication can alleviate the symptoms of any particular disease process, but with drugs that affect the brain, many side effects can occur. The Association for Savings and Investment South Africa has established a protocol for assessing depression with regard to disability and those criteria therefore form part of our categorisation. Because of the combined problems of both the disease process and the medication side effects, we look at the total functioning ability of the person. We use the Activities of Daily Living test, which is an objective measurement of a person's ability to carry out normal functions. The assessment in this very subjective group of diseases becomes far more objective and fair to you. Nervous system Illnesses that affect the brain, nerves or muscles can cause either complete or partial incapacity. This group of illnesses includes the inability to speak, see, think, hear, walk, move or control basic bodily functions. Most of these illnesses can be assessed with strict screening tests, for example sight or hearing tests, but others are more subjective. In the latter case, Discovery Life will again use the Activities of Daily Living test to assess permanent inability to maintain an income, for example, the inability to communicate, loss of memory and impaired locomotion. Digestive system The digestive system consists of the upper and lower gastrointestinal tract as well as the liver, pancreas and gall bladder. Severe diseases that affect this system result in the inability to carry out primary bodily functions, hence affecting the ability to maintain an income. Permanent incontinence or disturbance in bowel function that is untreatable is not compatible with working, irrespective of the type of work. Multiple nutritional disorders often accompany these disorders as well. Chronic liver disease and diseases of the biliary system can cause ongoing multiple dysfunction of the gastrointestinal system as well as the brain. This end-point is normally reached many years after diagnosis and so there is an ability to work up to a point. Again, as with our other definitions, Discovery Life has defined the point when the medical impairment is incompatible with working. Renal system This benefit will pay out when the kidneys are permanently unable to function normally and constant dialysis, either peritoneal or haemodialysis, is needed. Acute renal disease is not covered for disability as, by definition, the kidney failure is fully treatable and a normal life can be followed after recovery. Permanent dialysis normally indicates a great sacrifice of time and, although there is apparent normal function immediately after dialysis, this treatment is so frequent that there is no time or ability to hold down any type of job. Discovery Life acknowledges this and will therefore pay out this benefit when the kidneys are not functioning well enough so that constant dialysis is needed. Again, these levels have been defined. 19