Inside this issue. Discovery s Financial Adviser publication MARCH % Insurance gap. 60% Insurance gap. 38% Actual cover.

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1 Inside this issue Life... Drive... BenefitBooster...6 Discovery Life s unique integrated operating model...8 Intermediary support... MACH Discovery s Financial Adviser publication Intelligent life insurance People s lives are filled with experiences that define the path they travel and the decisions they make. Discovery Life provides clients with solutions that offer enhanced protection and value. underinsuance in South Africa After consulting with several of our financial advisers we found that their biggest concern for their clients was that they had insufficient cover due to the inherent affordability constraints. The Actuarial Gap Study undertaken by True South Actuaries in collaboration with ASISA in echoed the concern of underinsurance. The study highlighted the extent to which South Africans are underinsured in case of a life changing event and put the gap between actual and required cover at 8 trillion. The Insurance Gap is a measure of the difference between the amount of cover someone needs and the cover that they actually have. The graphic below reflects the amount of underinsurance in South Africa. DEATH INSUANCE NEED 6% Insurance gap DISABILITY INSUANCE NEED Insurance gap 6 Death insurance need 68 Disability insurance need 8 8% Actual cover % Actual cover Discovery Life aims to reduce this major problem of underinsurance. Our product development focus is therefore to leverage the efficiencies within our product to provide clients the opportunity to access additional cover as efficiently as possible. The Cover Integrator and Financial Integrator, launched in 8 and 9 respectively, provide clients with efficient additional cover. Clients and advisers have capitalised on this enhanced value, resulting in the average client with Cover and Financial Integrator taking up 9% more cover than those without Cover and Financial Integrator. ACTUAL Change in average life cover sum assured % % % % Before After More recently, the special offer was provided to all new business from November to March. The success of this product in bridging the insurance gap can be seen in the adjacent graph which shows the average life cover sum assured before and after the special offer. This experience highlights that the special offer manifested in purely additive behaviour in the marketplace. This has helped bridge the insurance gap in a very meaningful way while still maintaining affordability for all clients. The natural next step has been made to incorporate a similar approach on a permanent basis. In response to a need to increase cover to assist in closing the current insurance gap, Discovery Life s latest product innovations provide new benefits that allow for substantial increases in benefits linked to the at no additional cost. introducing The new enhancements Life This benefit provides an additional % life cover for three years at no additional cost. Drive This benefit increases the free life cover to % for five years for clients who have a reduced risk profile from driving safely. BenefitBooster This benefit dynamically increases cover by up to % on several ancillary benefits to bridge the insurance gap and provide a more efficient accelerated benefit structure. THE DISCOVEE MACH

2 Life % extra free for three years When pricing a life insurance policy, a simplified equation can be used to represent the premium that each policyholder will pay: Premium = Expected frequency of Sum assured The expected frequency of is a function of the underlying risk of the insured population at inception and how that risk changes over the policy term. The lower the risk of your insured population at inception or the lower the risk becomes after inception, the lower the expected frequency of s that you expect to pay. This equation can therefore be expressed as: PEMIUM risk at INCEPTION CHANGE IN HEALTH OVE TIME SUM ASSUED Case study Mark, aged, takes out a Health Integrated LIFE PLAN with million life cover. He also selects % Cover Integrator and % Financial Integrator bringing his total Life Fund to. million. He also qualifies for the Life and as a result he receives an additional % of his base. He now has 6 free additional life cover for the next three years. Total Life Cover : The Life is available to the principal life assured only on both new and existing business (subject to a health declaration). However, a particular life assured can only ever have the Life once, on one policy. The Life is available to Integrated policies with both Cover and Financial Integrator as well as the qualifying ancillaries necessary for Personal Integration. On death s within three years, a maximum of the Life and the default Financial Integrator Protectors will be paid. To qualify for the Life the principal life assured cannot be older than age 66 next birthday and must have a life cover rating of A. This benefit is only available when the policy owner and the principal life assured is the same person or where the policy is owned by a natural trust. It is not available on Business Assurance policies. The Life will not be allowed if the policyholder has reduced their during the 8 days prior to the date that the Life is added. The Life will only be added once the client acknowledges that they want the Life and they have completed a health declaration which is accepted by Discovery Life. For clients older than age 6 next birthday the free cover as a result of the Life will be 6% and they will not qualify for the Cash Conversion on the Life. The Life will also carry any exclusions applicable to the latest tranche of life cover on an individual s policy. Clients who already have a policy with the Special offer version of will be allowed to upgrade to the new Life in the second quarter of. However, any increases in cover will require a health declaration to be submitted and accepted. The maximum initial amount of free life cover that can be added as a result of the Life is. The AccessCover and AccessCover PLUS benefit will apply to the Life. The free life cover from the Life will fall away if ancillaries are serviced down to below Personal Integration qualifying levels, or if the Financial Integrator is removed in the first three years from the inception of the Life. The Life will be increased or decreased proportionately to any changes in a client s life cover within three years of the Life being added subject to the policy still meeting the qualifying requirements and the maximum amount for the Life. Free for three years For life insurance, statistics from our s experience have shown that there are two predominant causes of death s: natural causes and motor vehicle accidents: Natural causes and motor vehicle accidents account for 8% of s Life (%) 6 Financial Integrator (%) Natural causes (%) Motor vehicle accidents (%) Suicide (%) Crime-related (%) The effects of integration Discovery already rewards clients for committing to improving their health and wellness over time through our Integrated operating model (as explained on page 6) which provides clients with substantial upfront discounts, the ability to control and monitor their health and wellness over time and a facility that returns excess risk premiums. With years of health, wellness, mortality and morbidity data, Discovery is in a unique position to track the effect Integration has had on the underlying health of our risk pool. Other accidents (%) Aircraft-related (%) Drowning (%) By reducing the frequency of natural causes of death and motor vehicle accidents, Discovery Life is able to provide clients with a boost to their life cover sum assured with no corresponding increase in premium. This is achieved by attracting a healthier or safer risk pool at inception and reducing their risk over time. This outcome is reflected in the graph below which shows the average Health Integrator adjustments for groups of clients joining since. It can clearly be seen that as each new group of policyholders joins Discovery Life, the average increase that they experience is lower than the group of policyholders that joined before them. This highlights that over time, Discovery Life is progressively attracting a healthier base of policyholders. Cover Integrator (%) 8 Base mortality data for Discovery Life policyholders with and without Vitality 9% Average Health Integrator adjustment by cohort over time relative to cohort Average Health Integrator adjustments are continually reducing over time - Assumptions: -year old male, non-smoker, rating class, Acceleater ABI=CPI, Personal Health Integration, Comprehensive Health Plan, CPI of %, Classic LIFE PLAN, health s % % % % % % % 8% Unengaged - Blue Discovery Life s experience July June Moderately engaged - Bronze Highly engaged Silver/Gold/Diamond 9% This mortality data highlights two points. Firstly, Discovery Life policyholders become healthier as they engage with Vitality and improve their Vitality status. The second and less widely known phenomenon is that Vitality in itself is attracting healthier clients over time. This is demonstrated by evidence of unengaged clients (those on Blue Vitality status) having a lower mortality rate than clients without Vitality. How the Life works Adding the Life provides a client with % additional life cover for free for three years. After three years the client can buy this cover free of medical underwriting at a reduced rate of up to %, based on their Vitality status during the three years according to the table below: Premium reduction by Vitality status %.% % % % Non-Vitality For example: If a client were to progress from a Blue, Silver and Gold Vitality status in the three years after adding the Life, they will be able to buy this cover after three years at a discount of % (%+%+%) to their premium rate applicable to their age at that point in time. When the life cover is bought up after three years, the Life discounts will be in addition to the applicable Premium Integration discounts that a client will receive. After three years, a client could therefore buy the life cover provided by the Life at a discount of over %. This represents unmatched value to policyholders. Clients will also receive a % Cash Conversion of the Life at age 6. This will be in addition to other Cash Conversions that they may already have on the Financial or Cover Integrator. 9% 8% % % years years 6 years 8 years Duration since policy inception (years) Cohort 6 Cohort 8 Cohort Cohort This extremely powerful outcome has seen the emergence of a super-select mortality period where policyholders who join Vitality are already healthier on average than the non-vitality population. Discovery Life s ability to identify these super-select lives enables us to provide these clients, who have fully Integrated their Discovery policies, with additional life cover through the Life for a period of three years at no additional premium. We can do this without increasing life cover rates as these policyholders improved health at inception offsets the additional cost. Over the first three years of his policy, the free life cover provided by the Life represents a premium saving of 6. Mark s Life also grows with his selected annual benefit increase, despite the fact that he is not paying for the cover. At the end of year three, his Life has grown with annual benefit increases to 88. Normally this cover would cost 8 per month, including the Health Integrator upfront premium discount. His Vitality status over the first three years was Bronze, Silver and Gold respectively. As a result he will pay [8*(-.%-%-%)] per month from year four for the additional 88 life cover. He will also receive a % Cash Conversion of his Life which will amount to 8 6 at age 6. ule of thumb Policyholder profile Cover Integrator % Cover Integrator Action % Cover Integrator and % % Premium increase as a percentage of the BASE PEMIUM 9% 9% Benefit increase as a percentage of the amount 9% % % THE DISCOVEE MACH THE DISCOVEE MACH

3 Drive CoverBooster TM % extra free for five years Free for three years VitalityDrive was launched in May and in a short time, it has already shown remarkable success in making clients understand and improve their driving behaviour. This can be seen in the graphs below which show the frequency of risk activities for a particular group of policyholders over a four-month period in. Trend analysis of risk activities: Policies written in August which showed low risk behaviour in December (% of policies) Harsh acceleration Average frequency There has been a significant improvement in driving behaviour, as indicated by the reduction in harsh acceleration, harsh braking and speeding of this cohort of VitalityDrive TM policyholders over a four-month period. These key VitalityDrive TM measures of risky driving have also shown a high correlation to the incidence of motor vehicle accidents. Policyholders who accelerate harshly, brake harshly or speed are more likely to have an accident and therefore would display higher mortality and morbidity experience. Harsh acceleration elative s ratio: low incidence = Low 8 8 % Medium 6% reduction in harsh acceleration events Aug Sept Oct Nov Dec 8% High Harsh braking Average frequency 6 Harsh braking elative s ratio: low incidence = Low 6 Medium elative s ratio: low incidence = VitalityDrive TM engagement is a measure of a client s level of safe driving. By being a member of VitalityDrive TM, policyholders are educating and empowering themselves in becoming better and safer drivers over time. Discovery Life can provide VitalityDrive TM members with additional life cover at no additional premium as a result of the mortality improvements being achieved. % 9% reduction in harsh braking events Aug Sept Oct Nov Dec How the Drive CoverBooster TM works 69% High Speeding Average frequency Speeding Low 8 9% Medium Aug Sept Oct Nov Dec % reduction in speeding The Drive CoverBooster TM provides % additional life cover for free (including the Life CoverBooster TM ) for five years. % High Case study Consider Mark from our previous Life case study. He had. million life cover including % Cover Integrator and % Financial Integrator. Suppose he is also a member of VitalityDrive and as a result, he now qualifies for the Drive which increases free life cover to for the next five years. During the five years, Mark s (Life plus Drive CoverBooster TM ) grows with his selected annual benefit increase even though he is not paying for the cover. At the end of year five, his has grown with annual benefit increases to 6 8. Without the this cover would cost per month (including the Health Integrator up-front premium discount). His Vitality and VitalityDrive statuses over the first five years were Bronze and Base, Silver and Neutral, Gold and Engaged, Gold and Advanced and Diamond and Advanced respectively. As a result, he will receive an additional discount of %. Mark will only pay (*(-.%-.%-%-6%-%) per month from year six for the additional 6 8 life cover as a result of the. Without the Mark would have paid 69 in premiums for the % additional life cover over the first five years of the policy. He will also receive a % Cash Conversion of his which will amount to 69 8 at age 6. TOTAL Life Cover (%) Financial Integrator (%) Cover Integrator (%) 8 Base Assumptions: -year-old male, non-smoker, rating class, Acceleater ABI=CPI, Personal Health Integration, Comprehensive Health Plan, CPI of %, Classic LIFE PLAN, health s CoverBooster TM % extra free for three years Drive CoverBooster TM % extra free for five years : All qualifying rules that apply to the Life CoverBooster TM also apply to the Drive CoverBooster TM along with the following: The Principal Life Assured must have VitalityDrive TM. On death s within five years a maximum of the Drive CoverBooster TM and the default Financial Integrator Protectors will be paid. The maximum CoverBooster TM (Life plus Drive CoverBooster TM ) is 8. VitalityDrive TM, which offers financial incentives for people to improve their driving will be available to all Discovery Life policyholders at a monthly premium of ( plus an additional for the telematics system required for VitalityDrive TM ). This will only be available in the second quarter of. Clients who already have VitalityDrive TM through Discovery Insure may access the Drive CoverBooster TM immediately. The Drive CoverBooster TM will fall away if ancillaries are serviced down to below Personal Integration qualifying levels, or if is removed. The Drive CoverBooster TM will be increased or decreased proportionately to any changes in a client s life cover within five years of the Drive CoverBooster TM being added subject to the policy still meeting the qualifying requirements and the maximum amount for the CoverBooster TM benefit. Drive CoverBooster TM and Life CoverBooster TM are halved to a combined % if the client activates CoverBooster TM after age 6 next birthday. If VitalityDrive TM is cancelled within three years, the client still gets the % (or 6% above age 6 next birthday) Life CoverBooster TM until three years after activation. If VitalityDrive TM is cancelled after three years, the Drive CoverBooster TM benefit falls away. Free for five years After five years the client has the option to buy this cover at a reduced rate of up to % based on his or her annual Vitality status and VitalityDrive status over the period as per the table below: Drive CoverBooster TM Brochure Annual VitalityDrive TM status Annual Vitality status Base %.% % % % Neutral.% %.%.%.% Engaged %.% % % 6% Advanced %.% % 6% % For example, if the client had been on Blue Vitality and Base VitalityDrive TM status at the end of year one, on Silver Vitality and Base VitalityDrive TM status at the end of year two, and on Gold Vitality and Engaged VitalityDrive TM status at the end of year three and four, and Diamond Vitality and Engaged Vitality Drive TM status at year five; the premium discount will be 9% (% + % + % + % + 6%). When the life cover is bought up after five years, the Drive discounts are in addition to the appropriate Integration discounts that a client could receive. After five years a client could buy the life cover provided by the Drive at a discount of over %. Clients will also receive a % Cash Conversion of the Drive CoverBooster TM at age 6. This will be in addition to other Cash Conversions that they may have on the Financial or Cover Integrator. This brochure explains the Drive Benefit which is available to Discovery Life policyholders with VitalityDrive. DIVE COVEBOOSTE You can get up to % additional life cover free for five years People that are good drivers display lower mortality and morbidity risk. VitalityDrive, Discovery s incentive-based driver programme, aims to reduce motor vehicle accident risk, by enabling members to drive better. Discovery Life offers % additional life cover free for five years through the Drive to VitalityDrive TM clients. ule of thumb Policyholder profile Cover Integrator % Cover Integrator Action % Cover Integrator and % % Premium increase as a percentage of the BASE LIFE FUND Premium 9% 9% Benefit increase as a percentage of the BASE amount % % % THE DISCOVEE MACH THE DISCOVEE MACH

4 BenefitBooster The increase in number of Discovery Life benefits available over time as well as the value of the Integrated product offering has resulted in a significant increase in the size and number of ancillaries on the average policy over time. When the initial pricing for all these accelerated ancillaries was done, the acceleration factor in the pricing formula assumed an expected number and size of ancillaries on the. With the success of Integration we have found that over time, the amount and size of ancillaries on the average policy has exceeded the expected amount. Optimising the LIFE PLAN Principal Capital Disability Benefit Principal Severe Illness Benefit Action Premium Increased benefits Spouse Life Cover Spouse Severe Illness Benefit Spouse Capital Disability Benefit Select appropriate ancillary benefit coverage Enhances Integration capability % free BenefitBooster provides up to % free cover for the full benefit term Access to unique features of Discovery Life s comprehensive benefits Accelerated ancillary benefits create an overlap between benefit cover (as seen in the diagrams above) and also cause a greater acceleration of the, diminishing the at a quicker rate. Therefore, the result of this increase in the size and amount of ancillaries taken up, has actually decreased the overall expected amount per through the life of the policy, albeit at an accelerated frequency. This has manifested in the ability to increase the payout on certain ancillary benefits linked to the through the BenefitBooster at no additional premium. The BenefitBooster has been incorporated as a feature of all qualifying LIFE PLANs (including existing policyholders), providing a dynamic boost to ancillary benefit payouts. How the BenefitBooster works The BenefitBooster provides up to % additional cover to the following accelerated benefits: Principal Severe Illness Benefit Spouse Severe Illness Benefit Spouse Capital Disability Benefit Spouse Life Cover Policies will qualify for the BenefitBooster if the principal life has accelerated Capital Disability Benefit of at least % of the. The BenefitBooster percentage for each qualifying ancillary is as follows: BenefitBooster in Action Brian is a -year-old doctor who has purchased the following LIFE PLAN: = Severe Illness Benefit = 8% Capital Disability Benefit = % Brian s accelerated ancillary structure means he will receive an additional % severe illness cover of 6 through the Severe Illness BenefitBooster. Three months after taking out his policy, Brian suffered a heart attack. Then one year later he suffered another heart attack of the same severity. The following graphs show the payouts he would receive, with and without the BenefitBooster. Without BenefitBooster Each circle represents an ancillary on the. 8 % Upfront discount of up to % Ancillary percentage (before BenefitBooster ) % to 9% % BenefitBooster TM percentage ule of thumb Full Personal Integration Cover Integrator % and Financial Integrator at % % % Cover Integrator at an average % discount to base premiums Financial Integrator at a % discount to base premiums Unchanged PayBack % for % for PayBack of up to of premiums every five years % extra life cover for three years through the LIFE Default % Cash Conversion on Cover Integrator, % on Financial Integrator and % on the Life Ability to increase cover at no additional premium and free of underwriting % cash conversion on Drive Increase to % extra Life Cover for five years for free through the Drive % cash conversion on Drive % to 9% % to 69% % % to 9% % 8% to 89% % 9% to % The will not be reduced by the BenefitBooster TM payout. : To qualify for the BenefitBooster : Clients must be on the latest Capital Disability Benefit version VI. The accelerated Capital Disability Benefit amount of the principal life assured must be at least % of the and at least at inception. To keep the BenefitBooster after the expiry age of your Capital Disability Benefit, clients must convert their Capital Disability Benefit to the Severe Illness Benefit. If at any time thereafter, they reduce their converted Severe Illness Benefit, their BenefitBooster will fall away. The maximum entry age for the BenefitBooster is 66 next birthday. For the BenefitBooster to apply on a particular ancillary, the health rating must be A and no exclusions must apply on that ancillary. The BenefitBooster is available on both Classic and Essential LIFE PLANs. The BenefitBooster will only apply to Severities A and B for the Principal and Spouse Severe Illness Benefit and Categories A, B and D (if applicable) for the Spouse Capital Disability Benefit. The BenefitBooster applies to all personal and business assurance policies. The BenefitBooster does not apply to individual Severe Illness Benefits or Category Family Illness Benefits. LifeTime and Extender payments will not be boosted. The BenefitBooster percentages are expressed as a percentage of the ancillary benefit being boosted. The maximum free Severe Illness Benefit cover that can be added by the Principal and Spouse BenefitBoosters is, million. The maximum cover that can be added through the Spouse Life Cover and Spouse Capital Disability BenefitBoosters is million. educed nd Total payout =. million = % of benefit amount With BenefitBooster 6 BenefitBooster = 6 educed BenefitBooster = nd Total payout = = 6% of benefit amount educed educed The optimal LIFE PLAN structure provides the most efficient risk cover in the market From the chart above, we can see that a non-integrated Essential LIFE PLAN is in line with the market when comparing like-for-like benefits. Significant discounts are available when using the full Integration capability of the Discovery LIFE PLAN. This graph illustrates how much additional cover a policyholder would be able to buy-up through Integration and benefit savings while maintaining a premium that is in line with the market. THE DISCOVEE MACH THE DISCOVEE MACH Monthly Premium LIKE-FO-LIKE PEMIUM COMPAISON Non-Integrated Add Health Integration Add Cover and Financial Integrator Qualify for % Life Qualify for % Drive Qualify for BenefitBooster % lower Add DiscoveryCard Integration Competitor A Competitor B Competitor C Sum Assured ADDITIONAL COVE POVIDED BY DISCOVEY LIFE ELATIVE TO MAKET 6 Competitors 6% % % Using full Integration savings, and BenefitBooster to buy-up cover Life Cover Severe Illness Benefit Capital Disability Benefit

5 HealthyFood In partnership with HealthyCare In partnership with HealthyGear In partnership with Discovery Life s unique integrated operating model Upfront Integrator premium discount Integration is the cornerstone of Discovery s unique product offering. By Integrating a Life policy with Discovery Health, Vitality and DiscoveryCard, policyholders can receive initial discounts of up to %. These discounts are made possible because of Discovery s wealth of information on policyholder health, wellness and spend which enables a more accurate risk assessment over time. % upfront discount This enables Discovery Life to offer the lowest initial premium in the market as illustrated below: PAYMENT IN TODAY S MONEY (AND) AVEAGE OF COMPETITOS 8% % 8 6 EMPOWEED TO MANAGE YOU HEALTH WITH VITALITY Vitality provides incentives for policyholders to understand and improve their health over time. Over the years, engagement in Vitality has increased drastically on the back of an increase in several point-scoring activities, partners and rewards. This has allowed Vitality to consolidate its standing as the world s largest and most sophisticated wellness programme. In, Discovery Life had Vitality members of whom % were engaged (participating in at least one point-scoring activity) and less than % were highly engaged (more than three point-scoring activities). Today the number of Vitality members with a LIFE PLAN has increased to over of whom 9% are engaged and % highly engaged. The number of point-scoring activities as well as their accessibility has increased significantly over the years. DiscoveryCard Miles DiscoveryCard Fast Miles Medical Savings Booster Additional International destinations on British Airways GYM VISITS (MILLION, CALENDA YEA) 8 6 kulula.com FLIGHTS (CALENDA YEA) Integrator benefits.% upfront discount % upfront discount Integrated clients qualify for up to % upfront premium discount because of the breadth of client information available to facilitate dynamic underwriting Competitor A Competitor B Competitor C Integrated Classic LIFE PLAN Integrated Essential LIFE PLAN Assumptions: -year old male, non-smoker, million life cover, % accelerated Severe Illness Benefit, 8% accelerated Capital Disability Benefit, Acceleater funding pattern, Health Integrated with % Cover Integrator and % Financial Integrator. The consumer response to the upfront premium discounts and savings has been to increase risk cover, which has resulted in a far higher average sum assured than the rest of the market. % 8% % % 8% 9% Gym visits - Quit smoking - Goal weight - Fitness assessments - Cholesterol tests - Mammograms - Pap smears - Online Nutrition Centre - Online Stress Centre - Enhanced clinical focus of Vitality points Point-scoring activities increase - Nutrition assessment at dietician network 6 - Personal goals - Dental check-up - GP Wellness assessment - Paediatric questionnaire - Diamond status - Personal Health eview 8 Vitality partners increase - HealthyFood TM purchases - Personal Pathways Online fitness assessment CUMULATIVE HEALTHYFOOD SPEND SINCE LAUNCH (M) Feb-9 May-9 Aug-9 Nov-9 Feb- May- Aug- Nov- Feb- May- Aug- Nov The number of partners that offer rewards with Vitality and the value of the rewards have increased tremendously, creating strong incentives for health management. As of December, one in six Health Integrated Discovery Life members were on Gold or Diamond Vitality status. Over three years, Gold and Diamond members have more than doubled with Blue members down over %. % % % Without the Cover and Financial Integrator With the Cover and Financial Integrator DYNAMIC UNDEWITING BASED ON YOU HEALTH STATUS Information (health management, medical status, socio-economic factors) Achieves lowest cost entry point available *New business over the last six months Average Base Average Cover and Financial Intergrator FUND Having access to information on policyholder health and wellness over time enables Discovery Life to dynamically assess policyholder mortality and morbidity risk more accurately. This dynamic pricing is achieved through annual Integrator adjustments as can be seen in the adjacent Personal Health Matrix. The matrix can be simplified into four quadrants: Vitality status 6 POSITIVE OUTCOMEs OVE THE LONG TEM Integration and engagement in Vitality has manifested in some extremely powerful outcomes in terms of persistency improvements and s experience at the different Vitality statuses as illustrated in the following graphs: Low health s Naïve healthy A transitional quadrant representative of policyholders who are currently healthy but are not managing their health properly. Healthy engaged This quadrant represents genuinely healthy policyholders who are managing their long-term health status. LIFE LAPSES BY VITALITY STATUS % % % 8% SEVEE ILLNESS CLAIMS BY VITALITY STATUS % % % % % % % 8% 9% High health s Unengaged sick This quadrant represents policyholders who are in poor health and are not engaging in health management activities. Managed risky This represents less healthy policyholders, such as those on chronic medicine who are taking steps to manage their health accordingly and therefore reduce their long-term health risk. Vitality status Blue Bronze Silver Gold Diamond Premium certainty Lapses as a % of non-vitality Non- Vitality Unengaged Moderately engaged Highly engaged Blue Bronze Silver/Gold/Diamond Discovery Life provides premium certainty and affordability through several mechanisms, including the Maximum Protected Premium, which ensures your premium will never increase above a specified level. In addition, Discovery Life has a quantified whole-of-life premium guarantee where the premium will never be increased by more than % every years, above the selected annual increases. This limit on the premium increase can be further reduced through engagement in Vitality. Certainty and sustainability of premiums are highlighted by the fact that average annual Health Integrator adjustments are decreasing rapidly each year as indicated in the adjacent graph. Health and Vitality Integrator adjustments on premiums will no longer be considered after a qualifying. This is in keeping with our philosophy of premium affordability and certainty by ensuring that clients will have a sustainable premium in the long term after having ed. The feature applies to or B Severe Illness s or Category A, B or D Capital Disability s for the principal or spouse (if applicable) on the LIFE PLAN. The maximum Health Integrator or Vitality Integrator adjustment at policy anniversary will be % after ; however, negative adjustments will still apply for those clients who are highly engaged. This will apply to new and existing ants. If clients increase their premium through servicing on the policy after, the cap on Health Integrator adjustments falls away. 9% 9% 8% 8% % % Non- Vitality AVEAGE ANNUAL HEALTH INTEGATO ADJUSTMENTS ELATIVE TO THE LEVEL 9% 9% 9% 6 8 9% 9% 88% 9% 9 There have been significant reductions in the Health Integrator adjustments as a result of management of health and wellness over time as reflected in the below grid. This grid shows the migration of policyholders towards the upper right healthy engagement quadrant of this particular Personal Health Matrix since 9: Family: Comprehensive / Priority Health Plan Vitality status Health s (in rands) - % 6% % % 9% - 6% % 8% % 68% - 9 % % 6% % 9% % % 6% % 6% 6 9-9% 6% % 6% % - 8 % % 6% % % 8 + % % % % % The above table shows that there are % less policyholders in the bottom left cell than there were three years ago. This has coincided with the percentage of policyholders in the top right cell nearly trebling. Building a financial asset in your life assurance policy Policyholders who manage their health and wellness reduce their mortality and morbidity risk and therefore reduce the long-term liabilities that Discovery Life expects to pay. Accordingly, we can afford to hold fewer assets to match these reduced liabilities. This in turn enables us to generate surplus assets which can then be released to the healthy policyholders who are responsible for creating them through the PayBack benefit. Discovery Life has already paid over million in PayBacks and has a further million vesting over the next two years. ICB TEMOAY AUTOMATIC LIFETIME educe mortality and morbidity > educe long term liability Significant increase within this cell Significant decrease within this cell Generate surplus assets > eleased through PayBack Policyholders manage their health >>> WE EXPECT TO HAVE PAID OVE 8 MILLION BY OVE MILLION HAS BEEN PAID TO DATE THE DISCOVEE MACH THE DISCOVEE MACH 8 9

6 Intermediary support The SmartAdviser ipad app enabling a quicker and simpler servicing experience Discovery has developed a unique ipad-based application to enhance the ability of an adviser to service clients better. what can the SmartAdviser ipad app do for you? With a few swipes and taps, the application allows you to effortlessly identify, request and submit servicing quotes in minutes. Using intelligent integrated database mining and a re-engineered servicing process, you are now able to: View all your clients and their key information See a pre-defined range of upgrade and cross-sell opportunities are available for each client equest a servicing quote for a particular opportunity Immediately receive the servicing quote directly on your ipad Get your client to electronically sign the servicing quote on the ipad Electronically submit the signed servicing quote for activation Look out for more information The SmartAdviser ipad app will be launching soon, and will be free to all financial advisers via download on the Apple App Store. Look out for more information on the Financial Adviser Zone and in your weekly ediscoverer. Additional product changes SmartCPD, the smart approach to financial services compliance What can the SmartCPD platform do for you? Discovery has developed SmartCPD, a platform which assists financial advisers in managing their Continuous Professional Development (CPD) points as required by the FAIS Fit and Proper requirements. At the core of our business, financial advisers provide specialised advice to assist clients in managing their health and financial wellbeing. Operating in a highly competitive and regulated environment, ongoing training, education and support are crucial to the success of a financial adviser s business. SmartCPD is a tool you can use to do just that. How does SmartCPD help you stay Fit and Proper? SmartCPD allows you to access FSB-accredited events, keep track of CPD points and stay up to date with industry news. This online tool also facilitates CPD event bookings and payments, making the attendance, payment and point allocation of events seamless. SmartCPD offers you the opportunity to stay up to date with industry trends as you browse through the library section, ask your peers questions, post an employment opportunity or send personalised communication to your clients from the online tool. Look out for more information SmartCPD will be launching soon. Look out for more information on the Financial Adviser Zone and in your weekly ediscoverer. Extending the maximum entry ages of Cover and Financial Integrator The Cover and Financial Integrator maximum entry ages have been extended to age 66 next birthday, on both the Classic and Essential LIFE PLANS. These changes, together with the entry age for the CoverBooster TM above age 6 next birthday, allows Discovery Life to offer enhanced value at older ages. Adjustments as a result of Vitality status cease at the later of years after inception of the benefit or age 6. Default Cash Conversions on the Classic LIFE PLAN will still apply and be paid out at the later of years after inception of the benefit or age 6. No buy-up Cash Conversions are available if the client is older than age 6 next birthday. The caps for the default Financial Integrator Protectors are reduced for clients above the age of 6 next birthday. As a result of the fact that the is now available to the older ages, it has been repriced and will now be at a discount of % to base rates. Increased Immediate Needs Benefit to To better assist those with funeral arrangements after death of a loved one, Discovery Life has now increased its upfront benefit offering from to. Enhancing progressive definitions The 9-day rule on progressive s has been removed. This means that progressive payments will be based on a which is not reduced by previous payments as a result of the disease progression. Previously this would only have happened if the progression occurred within 9 days after the first. This applies to all new and existing business for all future s. emoving the alcohol exclusion The consumption of alcohol above the legal limit exclusion that applied to disability, severe illness or family illness s has been removed. PayBack TM rule clarification If clients reduce their monthly LIFE PLAN premiums, their total PayBack TM accrued to the date of their premium reduction will be reduced proportionately. Change to the Category C Benefit The definition of Category C s on the Discovery Capital Disability Benefit has been clarified to incentivise the rehabilitation of ants so that their wellness is improved and they can return to work. To this end, automatic upgrades based on duration of two or three years are being removed. These upgrades will occur once the client satisfies Category A or B objective medical criteria. This applies to Capital Disability Benefit version VI. The maximum number of Category C payments clients can receive for related conditions is nine. On qualifying for a Category A or B payment related to any Category C payments received, the payment percentage will be reduced by.% for every related Category C paid. In this case, the reduced payment percentage will be applied to what the Capital Disability sum assured would have been if it had not been reduced by any other related Category C payments. ParentCare benefit The Automatic Parent Severe Illness Benefit has been rebranded as ParentCare and the number of self-care Activities of Daily Living (ADLs) required for a has been reduced from four to three. Double PayBack for clients with SPECIAL OFFE This special offer entitles integrated clients who have the to double PayBack for the first five years of their policy term. This means that for the first five years, an average member on Blue Vitality status will double their PayBack percentage from % to % on the Health Integrator and from % to % on the Vitality Integrator. The benefit applies to new business only. This offer is available to all new clients with a date of commencement from April to July. The client must either integrate their health or Vitality policy, with or without the DiscoveryCard Integrator. The client must have the (including or excluding the Drive ) and retain this benefit for the entire first five years of their policy to receive the Double PayBack at the end of the first five years. This means that in the case of the Life, the client must elect to purchase the additional cover provided by the Life at the end of the first three years. The maximum PayBack annual accrual that you can receive within the first five yearly PayBack period is. Normal PayBack accumulation will apply after the first years. THE DISCOVEE MACH 9DI_//