Comparing Discovery Life to key competitors

Transcription

1 Comparing Discovery Life to key competitors D ISCOVERY LIFE AND MOME NTUM

2 CONTENTS CHOICE OF LIFE PLAN... 3 FUNDING PATTERNS... 4 PREMIUM GUARANTEES... 6 POLICY STRUCTURE... 7 ACCESSCOVER AND ACCESSCOVER PLUS... 8 BOOSTING YOUR BENEFITS...10 BENEFITS FOR REMAINING HEALTHY...11 DISCOVERY S COMMENTS...16 MINIMUM PROTECTED FUND VS STAND-ALONE BENEFITS...16 BENEFITS TO CHARITIES...20 LONGEVITY PROTECTION...20 LUMP SUM DISABILITY BENEFITS...23 DREAD DISEASE BENEFITS...40 COMBINING BENEFITS...46 FEMALE SEVERE ILLNESS BENEFIT AND CHILDBIRTH BENEFIT...48 CHILD SEVERE ILLNESS BENEFIT...49 PARENT SEVERE ILLNESS BENEFIT...50 ACCIDENTAL HIV BENEFIT...50 FUTURE COVER WITHOUT MEDICAL UNDERWRITING...51 PREMIUM WAIVERS...52 COVER IN REAL CURRENCIES...53 INDEMNITY BENEFITS...54 HOMELOAN PROTECTOR...56 RETIREMENT FUNDING & INVESTMENT...57 GENERAL EXCLUSIONS...59 In formulating the information in this document, Discovery Life has taken care to make sure that the views and opinions are based on information that is relevant and accurate. The product comparison serves as an illustrative tool only. The information in this document may be changed without notice. If there is a conflict between provisions of this product comparison and the provisions of the policy contract, the provisions of the policy contract will be followed. While every care has been taken before opinions and views are given, no representation, warranty or undertaking (expressed or implied) is given and Discovery Life accepts no responsibility for the accuracy of the information in this document. Any recommendations made must take into account your clients specific needs and personal circumstances. Any legal, technical or product information in this document is not to be considered as advice by Discovery Life.

3 CHOICE OF LIFE PLAN With Discovery there are two Life Plan options available: 1. Classic Life Plan 2. Essential Life Plan The following features are unique to the Classic Life Plan: Unlimited multiple claims Category C Capital Disability claims underpin Automatic child and parent severe illness coverage Global Treatment Benefit Default 5% Cash Conversion at the earlier of age 65 and ten years after benefit inception on the Cover Integrator Default 10% Cash Conversion on the Financial Integrator at the earlier of age 65 and ten years after benefit inception PayBack The Discovery Life Plan has been designed to offer clients a structured solution for their individual insurance needs. Due to the unique benefits offered by the Classic Life Plan, the Essential Life Plan should be compared with Momentum's benefits. 3

4 FUNDING PATTERNS Discovery Life has three funding patterns: 1. AcceleRater Plan The Automatic Contribution Increases (ACI) and Automatic Benefit Increases (ABI) are set out below: AGE NEXT ACI FOR ABI = 3% ACI FOR ABI = CPI < % CPI + 3.0% % CPI + 3.0% % CPI % % CPI + 6.5% % CPI + 7.5% % CPI + 8.5% % CPI + 9.0% ACI increases linearly within age bands. A Lock-in option is available on the AcceleRater funding plan, where the premium and benefit increases stop after 20 years or at age 65 (depending on what option the policyholder selected). At that stage, the policyholder may still choose to have their benefits increase if they wish, in which case an extra premium will become payable. 2. FlexRater Plan Discounts on the AcceleRater rates for whole-of-life benefits of between 12.5% and 20%. The same annual premium increases as the AcceleRater Plan, plus an additional compulsory increase of 2.25% each year for the first 20 years. The 2.25% increase only applies to premiums that were discounted upfront. Momentum has three funding patterns: 1. Compulsory Premium Pattern Clients can select a compulsory premium increase of between 3% and 10%. The ACI s for which each policyholder qualifies depends on the policyholder s age at entry. A compulsory premium pattern of 5% is available on all benefits with a fixed term. A client s selected compulsory increase will not lead to any increase in the benefit amount. The additional premium increase required to fund any benefit increases (over and above the fixed compulsory ACI for an ABI of 0%) is equal to the selected ABI plus an age adjustment to take into account that the policyholder is older every year that they add the cover. Policyholders may convert from a Compulsory Increasing Pattern to a Level premium pattern, with a corresponding reduction in benefit if the same premium is maintained or an increased premium if the same benefit is maintained. No comparable benefit. Discovery s premium and benefit increases are quantified, creating certainty for the policyholder. Where a benefit increase is selected with Momentum, the premium increase corresponding to the benefit increase is based on the rate for the policyholder s age at each anniversary and is not guaranteed. Similarly, where a premium increase is selected, the benefit adjustment is not guaranteed. 4

5 FUNDING PATTERNS (CONT.) 3. Standard Plan Premiums remain level over the term of the contract for a level amount of cover. Annual cover increases (ABI s) may be selected with corresponding annual contribution increases (ACI s): ACI ABI 0% 0% 10% 6.5% CPI + 3.5% A Paid-up option is available where all premiums stop at age 65, even though level benefits continue for whole of life. The policyholder may still choose to have their benefits increase if they wish, in which case a portion of the premium will continue after age 65. CPI 2. Level Premium Pattern Under the level premium payment pattern, the premiums remain level over the term of the contract. The policyholder may select a premium increase or benefit increase. If a premium increase is selected, this increase is used to purchase additional cover based on the age of the policyholder at the increase date. If a benefit increase is selected, Momentum will calculate the premium required to fund that benefit increase based on the age of policyholder at the increase date. No comparable benefit No comparable pattern. 3. Stepped Premium Pattern A choice of either a 10- or 15-year term is available. During every 10- or 15-year period, the premium remains level for a level benefit amount. The premium increase at the end of each 10- or 15-year period is based on the age of the insured at that time. The stepped premium pattern is not available for benefits with a fixed term. Momentum's Stepped Premium Pattern is equivalent to 10- or 15-year renewable term cover, as the increases after each period reflect the age of the insured at that point in time and are not guaranteed. The increases required could be significant. 5

6 PREMIUM GUARANTEES Discovery s premiums are priced for whole of life. Should an increase in premium be required, the premium is guaranteed not to increase by more than 25% at the end of 10 years and every 10 year period thereafter. This applies to all socio-economic classes of business. Policyholders who are also members of Vitality could enjoy additional premium certainty. The maximum increase of 25% at the end of the 10-year period could be reduced as follows: - Per Blue status year: 0% - Per Bronze status year: 0.5% - Per Silver status year: 1.5% - Per Gold or Diamond status year: 2.5% Discovery Life does not guarantee premiums for the Global Health Protector, the Global Education Protector, the Health Plan Protector and the Lock-in and Paid-Up options, as these benefits are exposed to unpredictable factors such as Rand depreciation, education inflation, medical inflation and investment returns. Momentum has three different guarantees: 1. Standard guarantee option - provides a guarantee for a fixed term. 2. Extended guarantee option - provides a longer guarantee term at a higher premium than the Standard guarantee year capped guarantee option - provides a 10-year guarantee. - The maximum increase after the initial 10 year term is 15%. - Thereafter the premium is guaranteed not to increase by more than 15% over each 5 year period. The 15% limit excludes all voluntary and compulsory increases. - The capped guarantee option is only available if there is life cover on the policy. Under Momentum's Standard and Extended guarantees the policyholder has no certainty after the guarantee has expired. Both companies provide a guarantee option providing certainty for whole of life. With Momentum this would be through their 10-year capped guarantee option for which an additional premium is charged. There are several weaknesses to this option: - Momentum s premiums could overtake Discovery s over the long term as 15% compounded every 5 years will exceed 25% compounded every 10 years. - Under Momentum s capped guarantee, premiums may be increased in years 11,12,13,14 or 15, whereas premiums under Discovery s guarantee will not be increased at any intermediate anniversary between the 10 yearly reviews. Should the Momentum extended or capped guarantee be chosen, the premium for the standard guarantee will be increased by the following percentages: AGE AT ENTRY EXTENDED GUARANTEE CAPPED GUARANTEE % 6.9% % 8.9% % 6.1% *Male, non-smoker, R1 million life cover, level premium The guarantee for Momentum s Income Protector is calculated for each policyholder and ranges from 5 to 10 years with no premium guarantee thereafter. After the Momentum guarantee term has expired, the premium increase could lead to an unaffordable premium. Discovery s Income Continuation Benefit has a quantified guarantee for the entire term. 6

7 POLICY STRUCTURE Discovery Life allows policyholders to structure their policies in three ways: 1. Separate policies for principal and spouse This ensures that claims made by one life do not impact the benefits of the other life. Both lives can integrate their separate policies with reduced initial premiums as long as they are members of Vitality and / or Discovery Health. Momentum allows policyholders to structure their policies in two ways: 1. Separate policies for principal and spouse This ensures that claims made by one life do not impact the benefits of the other life. It is difficult to perform joint financial planning under Momentum's policy structure. For example, a family may need an amount of money for their children s education if one parent dies, rather than a payment on both parents' deaths. 2. One policy for principal and spouse This ensures the correct payout where joint financial planning is done. A claim on one life will reduce the benefits of the other life. This is appropriate in cases where a payout is only required on the first life to die. The surviving spouse can continue with his/her cover free of underwriting if required. 2. One policy for principal and spouse Claims on one life have no impact on benefits of the other life. Note: the spouse above may be replaced by an insured life with insurable interest. 3. One policy for principal and spouse with Minimum Protected Fund This allows protection of benefits on both lives irrespective of the number and amount of claims on either life. Note: the Minimum Protected Fund reinstatements differ between the Classic and Essential Life Plan. 7

8 ACCESSCOVER AND ACCESSCOVER PLUS Allows policyholders to convert life cover into immediate cash on a number of life-changing events under the Medical AccessCover benefit. Clients must have an A1 life cover rating to qualify for this benefit There are numerous qualifying events under the Medical AccessCover benefit in the following major categories: - Cancer - Brain tumours - Transplants - Cardiovascular system - Respiratory system - Gastrointestinal system - Connective tissue disorders - Central nervous system - Renal system Each Medical AccessCover condition has been placed into an AccessCover Category from A to H. Cover can then be accessed according to the following conversion table: ACCESSCOVER CATEGORY A B C D E F G H Conversion rate 70c 65c 60c 50c 45c 40c 30c 20c Policyholders can access up to 100% of their cover on plans with qualifying ancillaries (50% otherwise). The maximum exercise age is 65 next birthday. Following an exercise of AccessCover or AccessCover Plus, the policyholder s life cover will be reduced by the AccessCover or AccessCover Plus amount before the conversion rate is applied. The life cover premium will be reduced proportionately in line with the reduction in life cover. A payment as a result of AccessCover or AccessCover Plus will not be deducted from the policy s PayBack Benefit and has no effect on the Financial Integrator and Cover Integrator Buy-up Cash Conversions. AccessCover Plus Policyholders can select AccessCover Plus at an additional premium of 8% to 13% of the life cover rate. Clients must have an A1 life cover rating to qualify for this benefit. No comparable benefit. No comparable benefit. AccessCover is a world first innovation that allows clients to convert their life cover into immediate cash during times of need. This provides clients with the added flexibility and certainty that they will have adequate cover. This provides financial advisers with Financial Needs Analysis (FNA) fluidity, whereby needs can be reanalysed at claim stage and a portion of life cover can be converted into cash to supplement the ancillary claim payment. 8

9 ACCESSCOVER AND ACCESSCOVER PLUS (CONT.) Includes the following benefits: 1. Medical AccessCover allows policyholders to convert their life cover for all Medical AccessCover conditions at an enhanced conversion rate: ACCESSCOVER CATEGORY A+ B+ C+ D+ E+ F+ G+ H+ Conversion rate 85c 80c 75c 65c 60c 50c 35c 25c 2. Longevity AccessCover allows policyholders to convert up to 50% of their life cover into cash on reaching certain age milestones: LONGEVITY CONVERSION RATE Reaching age 80 Reaching age 85 Reaching age 90 40c 70c 100c 3. Family Debility AccessCover allows policyholders to convert up to 5% of their life cover into cash if they, their spouse or their children are disabled as a result of an accident or violence. Only one payment will be made for each family member for each of the following: loss of speech blindness deafness major head trauma paraplegia or quadriplegia major burns permanent confinement to bed or wheelchair loss of at least one foot or hand A conversion rate of 80c per rand is applied. As people live longer into retirement, there is an increasing risk that their retirement savings will be insufficient. At the same time, their need for life cover diminishes, as they will have fewer dependants and will probably have paid off any outstanding debt. This illustrates the need for Longevity AccessCover. Discovery allows policyholders to access life cover to deal with traumatic events faced by family members and thereby ensures that sufficient funds are available to deal with such events. This benefit is available regardless of whether the spouse or child has any risk cover. 4. Spouse Accidental Death AccessCover allows policyholders to convert up to 5% of their life cover into cash if their spouse dies due to an accident or violence. The conversion rate is 80c per rand. 9

10 BOOSTING YOUR BENEFITS BenefitBooster Increases certain ancillary benefits by up to 40% at no additional cost. Policies will qualify if the principal life's accelerated Capital Disability Benefit is at least 70% of the Life Fund and at least R at inception. The BenefitBooster provides additional cover to the following ancillary benefits: - Principal Severe Illness Benefit - Spouse Severe Illness Benefit - Spouse Capital Disability Benefit - Spouse Life Cover Benefit. No equivalent benefit. The BenefitBooster is an innovative product that returns additional value to clients with larger policies for no extra premium. This is a key benefit aimed at reducing the insurance gap. The boosts applied are as follows: ANCILLARY BENEFIT BOOST PERCENTAGE PERCENTAGE 0-49% 0% 50-59% 10% 60-69% 15% 70-79% 20% 80-89% 30% % 40% Payouts as a result of the BenefitBooster will not impact the Life Fund. The BenefitBooster is available on Classic, Essential and Business Life Plans. 10

11 BENEFITS FOR REMAINING HEALTHY The Health and Vitality Integrators Discovery's Integrated operating model allows clients to link one Discovery product with another, maximising benefits and getting great rewards There are a number of benefits of Integration: 1. Premium discounts 2. Future premium adjustments based on health and wellness management 3. The PayBack Benefit Momentum Interactive Momentum Interactive applies to the following benefits: - Death Benefit - Comprehensive Disability Benefit - Comprehensive ADW Disability Benefit - Own Occupation Disability Benefit - ADW Disability Benefit - Functional Impairment Benefit - Income Protector - Temporary Income Protector - Business Overheads Protector - Business Protector - Functional Protector - Comprehensive Critical Illness Benefit - Comprehensive Critical Illness Plus Benefit - Elevated Comprehensive Critical Illness Benefit - Elevated Comprehensive Critical Illness Plus Benefit - Comprehensive Living Benefit - Homeloan Protector - Longevity Protector Disability/Income Protector/Critical Illness Momentum Interactive provides: 1. Premium discounts 2. Access to spare cover 3. Access to cover switching The following benefits will not qualify for the Momentum Interactive discount: - The Unnatural Death Benefit - Modified Death Benefit - Last Survivor Death Benefit - Physical Impairment Benefit - Premium waiver benefits - Future Cover Benefits - Business Future Cover Discovery allows premium reductions on all benefits. This, together with Discovery s PayBack of up to 60% of premiums every five years ensures unsurpassed value for Discovery Life policyholders. 1. Premium discounts The Health Integrator provides initial premium reductions of up to 20%. The Vitality Integrator provides initial premium reductions of up to 17.5%.. 1. Premium Discounts The premium discount is determined as the maximum of: - Discount based on active rating factors - Guaranteed minimum discount for Multiply members - Guaranteed minimum discount for Momentum Short Term Insurance regular drivers - Guaranteed discount for Longevity Protectors Plus: - The highest of the annual fitness discounts. These discounts are significantly lower than the premium reductions of 15% 28% offered on Discovery Life's Integrator Plans. All Discovery Life policyholders get upfront discounts. 11

12 BENEFITS FOR REMAINING HEALTHY (CONT.) Discount based on active rating factors The premium discount is determined by using the assessment results of the insured life s active rating factors. The active rating factors include blood pressure, cholesterol, BMI, number of vehicle accidents during the last three years, distance travelled over the last year and marital status. The client is required to complete an online health questionnaire every three years to retain the discount. If the assessment is not completed the discount (including guaranteed and fitness discounts) will be removed. Guaranteed Minimum Discount for Multiply members Multiply status Discount Bronze 10% Silver 15% Gold 20% Platinum 30% Private Club 50% A client's Multiply status is checked on a daily basis and a change in status will result in a recalculation of premiums. Guaranteed minimum discount for Momentum Short Term Insurance regular drivers An insured life linked to Momentum Interactive that is a regular driver of a vehicle covered under a MSTI policy will receive a guaranteed minimum discount of up to 10%. The guaranteed discount only applies to a select group of benefits. Annual fitness discounts The discount is only available to members of Multiply. The discounts are based on fitness levels as follows: Fitness Level Discount 1 0% 2 2% 3 4% 4 7.5% 5 10% Annual assessments are paid for by the insured. 12

13 BENEFITS FOR REMAINING HEALTHY (CONT.) 2. Integrator premium adjustments The Health Integrator uses a client's Vitality status and Discovery Health claims to determine their future premium adjustments. The Vitality Integrator uses a client's Vitality status to determine their future premium adjustments. Discovery Life provides premium certainty to claimants by capping Integrator adjustments at 0% after a qualifying claim. Integration is a no hassles approach using the client's Vitality status and Discovery Health claims data to determine premium levels. It operates seamlessly without the policyholder having to perform annual or three-yearly tests. In practice, it is far easier to progress through the Vitality statuses than Multiply statuses. It is also more difficult to maintain the higher level statuses on Multiply. Vitality also offers superior rewards to Multiply, and comparable rewards on Multiply are typically less valuable and more difficult to access. 2. Access to Spare Cover Provides the option to purchase additional cover with limited underwriting, subject to eligibility rules. 3. Access to Cover Switching The ability to switch cover between benefits with limited underwriting. Constraints may apply. The value of Spare Cover needs to be questioned, considering that it is only available to policyholders in good health as assessed by Momentum Interactive assessments. 3. PayBack The Comprehensive Health Integrator includes the PayBack benefit (on the Classic Life Plan), which provides a return of up to 60% of a policyholder s Discovery Life premiums every five years, depending on their Vitality status and claims on the Discovery Health and Life Plan (25% with the Vitality Integrator, depending on Vitality status and claims on the Life Plan). Clients are given the option to receive PayBacks annually for the first 10 years. Annual PayBacks are guaranteed. Guarantees of up to 30% are possible on the Health Integrator depending on Health Plan type, Vitalitydrive status and DiscoveryCard spend (18.75% on the Vitality Integrator depending on Vitalitydrive status and DiscoveryCard spend). Payback Momentum s Premium Payback Option is available on any stand-alone disability, impairment or critical illness benefit at an additional premium. The percentage return depends on the policyholder s Multiply status: Bronze 0.3% per year in this status Silver 0.5% per year in this status Gold 1.5% per year in this status Platinum 3% per year in this status Private Club 4% per year in this status At the end of every 10 year period (or on death or at the end of the benefit term), an amount equal to 20% of all premiums paid for the main benefit will be returned. Any outstanding debt will be deducted from this amount. The premium for the Premium Payback Option is not guaranteed. Payments are only made if there have been no claims under stand-alone benefit to which the Payback is attached. The Premium Payback Option is essentially an investment policy, as policyholders pay an additional premium of around 12% to get the 20% (plus additional percentage due to Multiply status) refund every ten years. With Discovery, the PayBack Benefit is automatically included on Comprehensive Integrated Classic Life Plans. The Momentum Payback occurs every ten years, while Discovery returns premiums on an annual basis. Discovery's annual PayBacks are guaranteed regardless of claims on the Life Plan. Momentum will not pay at all if there has been a claim under the main benefit. 13

14 BENEFITS FOR REMAINING HEALTHY (CONT.) Clients can increase their guaranteed PayBack by a further 5% by electing to receive their PayBacks every 5 years through the Cumulating PayBack Option. After year 10, PayBack guarantees will be determined using the client's Vitality Memory Score (which is based on historic Vitality engagement). Cover Integrator The Cover Integrator enables policyholders to increase their cover by either 20% or 40% of their Life Fund. This additional cover is known as Integrated Cover and will fluctuate on an annual basis depending on the policyholder s engagement in Vitality and Discovery Health claims (known as Integrated Cover Adjustments). At the later of age 65 and 10 years after inception of the benefit, the Cover Integrator will: - Lock-in the value of the Cover Integrator Fund, with no future Integrated Cover Adjustment into retirement; and - Pay an automatic Cash Conversion (only on Classic Life Plan) equal to 5% of the Cover Integrator Fund. This is payable as a tax-free lump sum that does not reduce the Life Fund. Policyholders can buy-up the Cash Conversion to 50%, 100% or 200% of the Cover Integrator Fund. The Buy-up Cash Conversion Benefit is discussed under the "Longevity Protection" section. No comparable benefit. On average, the cover provided by the Cover Integrator can be bought at 50% of the normal, premium rates. This premium efficiency has been generated through Discovery s Integrator model. Policyholders are able to increase their Cover Integrator Fund to up to 27.5% of their Life Fund on the 20% option and up to 55% of their Life Fund on the 40% option. The policyholder s Integrated Cover will boost all benefits attached to the Life Fund. Financial Integrator The Financial Integrator Fund enables policyholders to increase their cover by either 20% or 40%. This additional cover is known as Integrated Cover and will fluctuate on an annual basis depending on the policyholder s engagement in Vitality and Discovery Health claims (known as Integrated Cover Adjustments). Policyholders will receive default Cash Conversion(s) equal to 10% of the Financial Integrator Fund, depending on their age at benefit inception: No comparable benefit. The annual adjustments to the Financial Integrator Fund work in exactly the same way as the Cover Integrator adjustments. Policyholders are able to increase their Financial Integrator Fund to up to 27.5% of their Life Fund on the 20% option and to up to 55% of their Life Fund on the 40% option by leading a healthy lifestyle. The automatic Cash Conversions provide policyholders with the ability to generate long-term value from their Life Plan through health and wellness management. 14

15 BENEFITS FOR REMAINING HEALTHY (CONT.) Age next at benefit inception Ages at which default 10% Cash Conversion is paid <40 55 and >56 Age at cover inception + 15 years These Cash Conversions are payable as tax-free lump sums that do not reduce the Life Fund. At the later of age 65 and 10 years after inception of the benefit, the Financial Integrator will: Lock in the value of the Financial Integrator Fund, with no future Integrated Cover Adjustment into retirement; and Pay another default Cash Conversion (only on Classic Life Plan) equal to 10% of the Financial Integrator Fund. Policyholders can buy up the default Cash Conversion to 50%, 100% or 200% of the Financial Integrator Fund. The Buy-up Cash Conversion Benefit is discussed under the "Longevity Protection" section. Investment Integrator The Investment Integrator from Discovery Invest offers unparalleled benefits to your Endowment Plan by capitalising on the tax and health assets created by the Discovery Life Plan and Discovery Vitality. There are two Investment Integrators available for you to choose from: 1. Upfront Investment Integrator: Provides a boost of up to 26% on your lump sum contribution to your Endowment Plan. 2. As and When Investment Integrator: Refunds up to 100% of all fees on your Endowment Plan. No comparable benefit. The value created from the Investment Integrator means that the effective premium that a client pays for their Life Plan is significantly reduced. This is because the benefits of the Investment Integrator can be offset against the Life Plan premiums that a policyholder pays. The Health Plan Protector Offers rewards for managing your health: - Health Dividends: Returns a portion of excess health risk contributions over health risk claims every year. - Health Fund: Returns a portion of excess health risk contributions every five years, with the balance payable at the earlier of age 65 or a life-changing event. No comparable benefit. The mechanism of returning a portion of Health Plan contributions based on Vitality status and health risk claims provides a powerful incentive for policyholders to manage their health. The benefit is described in detail in the "Indemnity Benefits" section. 15

16 DISCOVERY S COMMENTS MINIMUM PROTECTED FUND VS STAND-ALONE BENEFITS Discovery allows policyholders to select the Minimum Protected Fund to ensure protection of cover for future events. This maximises the potential of multiple claims, where reinstatement of cover applies to all benefits attached to the Life Fund. If you have chosen the Classic Life Plan, the Minimum Protected Fund will reinstate the Life Fund (and all attaching ancillaries) for all future related and unrelated claims independent of their severity. If you have chosen the Essential Life Plan, the Minimum Protected Fund will also reinstate the Life Fund and all attaching ancillaries, but only related claims of a higher severity than your previous claim will be covered. The maximum payout that the Minimum Protected Fund can add to any related claim is an additional 100% of that benefit amount plus any automatic benefit increases. The Minimum Protected Fund applies to the: - Life Fund - Cover Integrator Fund - Financial Integrator Fund You can select up to a 100% Minimum Protected Fund. Discovery offers the non-accelerated Severe Illness Benefit for both the principal and spouse. Policyholders still need a Life Plan to take advantage of this benefit. The Severe Illness Benefit amount may exceed the amount of life cover on the Life Plan. This benefit automatically includes a 100% Minimum Protected Fund on the Classic Life Plan. Discovery also allows policyholders to select the Impairment Fund, which is a stand-alone Severe Illness Benefit. Claims on this benefit have no impact on the Life Fund. A Minimum Protected Fund may be added to the Impairment Fund, thereby maximizing severe illness payouts over the policyholder s lifetime. Discovery offers the non-accelerated Capital Disability Benefit for the principal life. Policyholders still need a Life Plan to take advantage of this benefit. The Capital Disability Benefit amount may exceed the amount of life cover on the Life Plan by a multiple of up to five times (depending on the policyholder s age at entry). Momentum allows policyholders to choose certain ancillary benefits as stand-alone benefits or attached to another standalone benefit. If attached to another stand-alone benefit, a claim on the ancillary will accelerate the stand-alone benefit to which it is attached, thereby reducing the ancillary cover as well. Momentum s stand-alone dread disease benefit reinstates cover for unrelated claims. However, cover will not be reinstated for related claims. In terms of such claims: - A subsequent claim is only paid if the claim event is more severe than the previous related claims. - The claim is based on the percentage difference in payout between the new claim and the total percentage already paid for the related claims. - This means that the sum assured for related claims is still restricted to the sum assured of the stand-alone dread disease benefit. A stand-alone benefit from Momentum should always be compared to the corresponding nonaccelerated benefit offered by Discovery. The Minimum Protected Fund provides superior value compared to the stand-alone benefits offered by Momentum. To show this value, consider a client who has R1 million Severe Illness cover: Maximum total payout Payment for subsequent nonprogressive related claims (after 14 days) Payment for subsequent unrelated claims (after 14 days) Classic Plan with 100% MPF Unlimited The full claim percentage multiplied by R1 million is paid, regardless of severity The full claim percentage multiplied by R1 million is paid Essential Plan with 100% MPF Up to R2 million for related claims The full claim percentage multiplied by R1 million is paid, but only for higher severities The full claim percentage multiplied by R1 million is paid Momentum Stand-alone Severe Illness Up to R1 million for related claims The difference in claim severities multiplied by R1 million is paid, but only for higher severities The full claim percentage multiplied by R1 million is paid The above table shows that both the Classic and Essential Life Plan with a Minimum Protected Fund of 100% have a higher maximum total payout than the equivalent Momentum stand-alone benefit. The other reason why the Minimum Protected Fund is superior on both the Classic and Essential Life Plan is that it reinstates cover for related severe illness claims. With Momentum's stand-alone Critical Illness Benefit, cover is only reinstated for unrelated illnesses. 16

17 DEATH BENEFITS Discovery only sells whole of life insurance. Momentum offers: 1. Death Benefit Whole of life 2. Death Benefit Term - Terms offered between 5 and 20 years. - Premiums are guaranteed for the selected term. 3. Unnatural Death Benefit - Expiry age 65 next. - Maximum cover: R1 million. - Only available on a level premium pattern. - Can only add premium waivers as ancillaries. - Covers unnatural death as a result of bodily injury. Death must occur within 30 days of the event and the event must be the primary cause of death. Term death benefits are risky, because the policyholder must decide now when they want their cover to expire. There are a number of problems with doing this: 1. A client s needs might change over time. 2. A client may become uninsurable, preventing them from purchasing additional life cover after expiry of the Term Life Cover. 3. The cost of purchasing additional term cover after expiry of the original cover can be unaffordable due to the policyholder's older age. A normal financial needs analysis would calculate how much life cover one requires irrespective of the cause of the death. Therefore this type of life cover is generally only purchased in cases where the policyholder would not qualify for normal life cover due to an existing medical condition. Because death has to occur within 30 days of the event many claims would not be paid, whereas they would have been paid under a normal life benefit covering any cause of claim. 4. Modified Death benefit This benefit is available to lives in substandard health i.e. they have been declined under the death benefit. Maximum cover: R3.5 million. The benefit payable on death as a result of natural causes within the first 3 years of the policy will be equal to a return of the premiums paid (without interest). Premiums are guaranteed for 5 years. Only available on the level premium pattern. 17

18 DEATH BENEFITS (CONT.) 5. Last Survivor Death Benefit Provides a benefit on the death of the last survivor of two insured lives. May be selected as term cover (with maximum expiry age of 85) or as whole of life cover. On the first death, premiums for the benefit will cease. This waiver will cover future compulsory increases. Voluntary increases will end on the first death. Funeral Benefit Classic and Essential structures available. Sold as a stand-alone benefit. Up to 15 lives including 5 children, 4 parents and 4 extended family members. Cover for whole of life. Maximum Cover: R for principal and spouse, R for children and R for extended family members and parents. Automatic baby cover of up to R4 000 (payable on death within the first three months). Claims paid within 24 hours of receiving the necessary paperwork. Features automatically included: - A Premium PayBack Benefit, which returns up to 17.5% of your premiums every year, is included with the Classic Funeral Plan. - Double payout for principal and spouse on accidental death. - Automatic lump sum payment of up to R4 500 (R3 900 on the Essential Plan), depending on plan type, on the principal or spouse's death for each child on the policy through the Education Benefit. - Automatic lump sum payment of up to R3 600 (R3 000 on the Essential Plan, depending on plan type, on the principal and spouse's death through the Grocery Benefit. - Automatic lump sum payment of R5 000 on the principal and spouse's death through the Memorial Benefit. - Spouse premium waiver for one year on the death of the principal life. 6. Funeral Benefit Up to two main lives, five children and eight extended family members may be covered. Covered for whole of life. Maximum cover: R for main lives, R for children and extended family members. Death claim is paid within one working day, provided the necessary documentation is received. 18

19 DEATH BENEFITS (CONT.) Advances on Death Claims Immediate advancement of R on death (to cover funeral costs and urgent family travel). Payment is made within 24 hours without forms, via Electronic Fund Transfer. A two year waiting period applies. Available on low risk claims (e.g. natural causes and where murder is not suspected). Instant Cash On the lump sum death benefit (excluding the Unnatural Death Benefit and the Last Survivor Death Benefit) Momentum will pay a proportion of the benefit (10%, to up to R50 000) within one working day. A two year waiting period applies. Terminal Illness Discovery Life will pay the lump sum death benefit if the insured is diagnosed with a terminal illness (i.e. life expectancy is less than 12 months). Terminal Illness Momentum will pay the lump sum death benefit if the insured is diagnosed with a terminal illness (i.e. life expectancy is less than 12 months). Spouse Life Cover BenefitBooster The spouse on the policy can receive up to 40% additional life cover at no additional premium if the policy qualifies for BenefitBooster. The maximum cover that can be added through the Spouse Life Cover BenefitBooster is R5 million. For more information refer to the BenefitBooster section. No equivalent benefit. 19

20 BENEFITS TO CHARITIE S The Philanthropy Fund is a non-profit initiative that allows policyholders to donate a large amount on death to up to 10 charities of their choice. Every five years, the Philanthropy PayOut donates a percentage of premiums paid for the Philanthropy Fund to the client's chosen charities, depending on Vitality status: No Vitality 20% No comparable benefit. Policyholders have communities that rely on them during their lifetime. These communities are often not provided for by the deceased s estate. Blue 30% Bronze 40% Silver 50% Gold 60% Diamond 70% Policyholders get a Section 18A tax certificate for the Philanthropy PayOut, giving them full tax deductibility for the amount given to their charity. Discovery Life s Philanthropy Fund allows a tax- and cost-efficient vehicle for charitable giving. LONGEVITY PROTECTION LifeTime Severe Illness Benefit Described in detail in the Dread Disease benefits section. Longevity Protector Critical Illness Pays an extra 10% of the Critical Illness amount every five years after certain specified moderate to severe critical illnesses, provided the claimant is alive. Only one claim will be payable under the Longevity Protector. Pays 20% of the Critical Illness benefit if a client reaches age 80 without claiming. There are two key advantages of Discovery s LifeTime Benefit compared to Momentum s Longevity Protector: 1. The LifeTime Benefit applies to all Severity A-D claims. - Momentum s Longevity Protector on the other hand, only covers certain moderate and severe critical illnesses. This means that not only do you not receive boosts for less severe illnesses (which may have a significant long-term impact and would almost certainly result in a greater risk of longevity), but you are also not even covered for all their 100% claim events. 20

21 LONGEVITY PROTECTION (CONT.) - For example, a heart transplant qualifies for a 100% payment from both Discovery and Momentum, but while the LifeTime Benefit will provide a payment of 175% of the benefit amount, Momentum s Longevity Protector will provide no payment. 2. The LifeTime boost is received upfront. - With Momentum the client has to survive and keep their policy in force to receive the five-yearly 10% payments. This is more relevant given Momentum s selection of very severe illnesses which have a low survival probability to begin with. Income Continuation Benefit LifeTime Capital Disability Lump-sum Benefit Upgrade on permanent disability HealthyLiving Protector Longevity Protector Income Disability Provides five additional payments every five years equal to 50% of all the Income Protector benefit payments made during the preceding five year period. To qualify for a claim a client must be permanently unable to perform their own occupation or suffer a 100% functional impairment claim event. Makes a lump-sum payment at age 80 equal to 36 times the final benefit amount under the Income Protector, provided the following conditions are met: - No claim exceeding two years. - The disability benefit is converted at expiry to the maximum allowable Functional Protector amount. - The Functional Protector is kept in force until age 80. Momentum s benefit is effectively protecting a client s income in the event of becoming permanently disabled. Only 75% of a client's income can be insured under Momentum's Income Protector and this is the amount that will be paid on permanent disability, therefore the Longevity Protector is required to fill the gap in cover. While the Longevity Protector must be added at an additional premium, Discovery s Income Continuation Benefit automatically protects clients against the long-term impact of a disability through the following unique features: - Based on the lifetime impact of the disability, a lump-sum payment of up to 36 times the monthly Income Continuation Benefit insured amount is provided on permanent disability. - The monthly benefit payment is upgrade to 100% of income on permanent disability (provided the client has insured more than 40% of their income). 21

22 LONGEVITY PROTECTION (CONT.) - The HealthyLiving Protector provides an additional payment of three times your average HealthyLiving cash back on permanent disability. - These benefits are described in detail under the "Income Disability Benefits" section. Buy-up Cash Conversion Benefit This benefit allows policyholders to receive 50%, 100% or 200% of their Cover and/or Financial Integrator Fund as a tax-free lump sum. The payment will not reduce a client's risk cover. The Buy-up Cash Conversion Benefit will provide a series of four equal benefit payments (e.g. four 50% payments will be made with the 200% option). Payments will start at age 65 and continue four-yearly until age 77 (provided the policy is still in force). On death before age 65, any premiums for the Buy-up Cash Conversion benefit will be refunded. On death between ages 65 and 77, any premiums in excess of payments already received will be refunded. The Buy-up options available depend on the ancillary takeup on the policy. The maximum entry age for the benefit is age 56 next. No comparable benefit. Discovery has recognized the importance of having extra cash flow available at retirement. As a result, Discovery has developed an innovative solution that can give policyholders substantial tax-free liquidity into retirement, without having to sacrifice any risk cover. The Buy-up Cash Conversion Benefit provides a far more effective structure than Momentum's Longevity Protectors to protect a client s long-term financial well-being. 22

23 LUMP SUM DISABILITY BENEFITS Discovery offers four lump sum disability products,: 1. Core Capital Disability Benefit 2. Comprehensive Plus Capital Disability Benefit 3. LifeTime Capital Disability Benefit 4. LifeTime Plus Capital Disability Benefit All products can be taken out on an accelerated or nonaccelerated basis. The non-accelerated Capital Disability Benefit can exceed the Life Fund. The following maximum cover limits will apply at inception of the benefit (subject to an overall maximum of R40 million). AGE NEXT MULTIPLE OF LIFE FUND < > 40 3 Momentum offers five lump sum disability products: 1. Own Occupation Disability Benefit 2. Comprehensive Disability Benefit 3. Functional Impairment Benefit 4. Activities of Daily Work Disability Benefit 5. Comprehensive Activities of Daily Work Disability Benefit All products can be taken out on an accelerated or stand-alone basis. The table below sets out the products on the most like-for-like basis. Discovery s Essential Plan should be selected for comparison, due to the unique features of the Classic Plan which are not offered by Momentum:* DISCOVERY Core Comprehensive Plus MOMENTUM Own Occupation (no taper option) Comprehensive Disability (no taper option) *The unique features of the Classic Life Plan are: - Category C Disability Claims - Dynamic Spend Protector - Extensive multiple claims facility Benefit tapering No reduction of benefit until benefit expiry age i.e. no tapering. Benefit tapering Tapering options with expiry age 65: 1. No taper % per year from anniversary after 60th birthday % per year from anniversary after 55th birthday. Tapering options with expiry age 70: 1. No taper, or 2. 20% per year from anniversary after 65th birthday, or 3. 10% per year from anniversary after 60th birthday. The last voluntary premium or benefit increase will take place on the policy anniversary before the taper begins. As Discovery s benefit does not taper, the no taper option of Momentum must be selected in a comparison. A policyholder with a tapered benefit will on average receive half of their sum assured after tapering starts. This is significant, considering that a 60 year old is 15.5 times more likely to become disabled than a 35-year old. Once the tapering commences, Momentum s future benefit increases cease as well. This means inflation protection is lost during the entire tapering period. Tapered benefits are particularly inappropriate for buy-and-sell agreements, where it is uncertain whether the tapered sum assured will be sufficient to buy out the partner s equity. 23

24 LUMP SUM DISABILITY BENEFITS (CONT.) Waiting period No general waiting period. Conversion option Discovery s Capital Disability Benefit converts to the Severe Illness Benefit for whole of life at benefit expiry age The conversion is available free of medical underwriting under both the accelerated and non-accelerated Capital Disability Benefit. Should the policyholder elect not to convert his cover, his premium for this Capital Disability Benefit will cease, with no implications to the premiums and guarantees on the remainder of the plan. Life-changing events and related illnesses that occur before the conversion will not be covered after conversion to the Severe Illness Benefit; irrespective of whether the illness progresses to a higher severity after conversion. Not available on the Business Life Plan. Waiting period 6 month waiting period under the occupational assessment. 14 day survival period under the functional impairment criteria. If the insured dies within the waiting or survival period, a claim is not paid. The policyholder is responsible for the payment of premiums during the waiting period. Momentum may, in its discretion, choose not to enforce the waiting or survival period. In terms of the Functional Impairment component, the policyholder must: - undergo reasonable optimal treatment, and - impairment is determined after the insured has reached maximal medical improvement (MMI). - At this stage, impairment must be total, permanent and continuous for the foreseeable future. Conversion option Lump sum disability and impairment benefits, as well as the Income Protector, can be converted to Momentum s Functional Protector. The Functional Protector is a monthly stand-alone benefit providing cover for frail care for whole of life. The claims assessment is the same as on the 100% payouts under the Functional Impairment Benefit. The maximum benefit is R pm. The conversion works as follows: - Medical underwriting will be required at conversion where benefits have a loading or exclusion. - Where lump sum benefits are converted, the monthly income under the conversion is limited to 1% of the lump sum at the time of conversion. To wait six months before receiving a payout may cause significant financial difficulty where a policyholder has home loan repayments or other debt, and where his income disability benefit is not enough to cover all of his expenses. Discovery has no general waiting period to qualify for a claim. In certain cases, the medical criteria specify how long a condition must have persisted in order to establish its permanency. Any treatment before the claim would count towards the period. In contrast, with Momentum the waiting periods only commences once a claim is submitted. Waiting and survival periods are especially relevant under stand-alone benefits. Discovery has no explicit survival period. Should a policyholder with Discovery s non-accelerated Capital Disability Benefit die within 14 days, he will receive both his lump sum disability benefit and his life cover benefit. With Momentum he would only receive his life cover benefit. It is unclear when maximal medical improvement will be reached under the Functional Impairment component. Discovery uniquely addresses disability protection pre-retirement and severe illness cover for whole of life within one product. Momentum s benefit converts to a monthly benefit, whereas Discovery s benefit converts to a lump sum benefit. Momentum s benefit only covers 100% impairments. Given the maximum cover of 1% of a client s lumpsum amount, it means a client would need to wait over 8 years until they receive the full benefit amount. Discovery's whole of life option on the Income Continuation Benefit also addresses the issue of being ill, disabled or frail and needing assistance or care in retirement. 24

25 LUMP SUM DISABILITY BENEFITS (CONT.) While Momentum's pre-retirement impairment criteria continue for whole of life, Discovery's claim underpins convert to a range of tailored postretirement medical criteria. This option will be fully described in the "Income Disability Benefits" section. Multiple Claims On the Classic Life Plan: - Subsequent related and unrelated disability claims are permitted, whether the severity is higher, lower or the same severity as the first claim. - The subsequent claim is regarded as independent of the first claim (and paid at the full severity), unless it is a progressive disease. On the Essential Life Plan: - Subsequent related claims are only paid for higher severities. The payout is calculated as the full claim percentage multiplied by the reduced Capital Disability sum assured. - Subsequent unrelated disability claims are permitted whether the severity is higher, lower or the same severity as the first claim. Multiple Claims A subsequent claim in the same category is only paid if the severity of the subsequent claim is worse than the previous claim. If the claim is in the same category, the subsequent claim amount is based on the difference in severity level between the first and subsequent claim. If one claim event progressed from a previous claim event, it is treated as if it was in the same claim category. Due to the multiple claims definitions, Momentum should be compared to Discovery s Essential Life Plan. On Discovery s Classic Life Plan, we will pay a subsequent claim if the severity is the same, higher or lower, regardless of the benefit category claimed in. With Momentum a related claim would only generate a payout if the severity of the subsequent event was higher than that of the first event. Where the Minimum Protected Fund has been selected with the accelerated Capital Disability Benefit, you can claim an unlimited amount for unrelated disability claims and up to 200% for related disability claims on the Classic Life Plan, and up to 200% on the Essential Life Plan. There is no reinstatement of cover on the lump sum disability benefits. Once the policyholder has claimed 100% of their sum assured with Momentum, the benefit ceases. On the Classic Life Plan, even without the MPF, you could claim substantially more than the sum assured. 25

26 LUMP SUM DISABILITY BENEFITS (CONT.) 1. Core Capital Disability Benefit Choice of benefit expiry age of 65 or 70. Pays: - 100% upon being totally and permanently unable to perform the duties of your nominated occupation due to sickness, disease, illness or injury (Category D), or - 100% upon your impairment meeting objectively defined medical criteria (Category A). 1. Own Occupation Disability Benefit Available to age 65 for a term of 5 to 20 years. Pays: - 100% upon being totally and permanently unable to perform the duties of your own occupation due to illness or injury, or - 100% upon meeting the requirements of one of the defined Functional Impairment claim events that meet the 100% severity level criteria. Both benefits assess disability in terms of the ability to perform your occupation and medical criteria. Both benefits are designed to pay out where the 100% severity level is reached, i.e. cover is not provided on partial disability. Benefits not covering partial disability are generally used for business assurance purposes. Unlike Momentum s benefit, Discovery s benefit: - Has no general waiting period. - Offers cover up to age 70 on both the medical criteria and nominated occupation underpin. - Offers reinstatement of cover through the Minimum Protected Fund. - Converts to severe illness cover for whole of life at benefit expiry, free of medical underwriting. 2. Comprehensive Plus Capital Disability Benefit Choice of benefit expiry age of 65 or 70. Pays: - 100% upon being totally and permanently unable to perform the duties of your nominated occupation due to sickness, disease, illness or injury (Category D), or - 100% or 50% (depending on severity) upon your impairment meeting objectively defined medical criteria (Category A and B), or - 2.5% of the benefit after a waiting period of four months (Category C) if: You continuously suffer from a medical impairment, injury or illness that renders you unable to fulfil material and substantial aspects of your nominated occupation for four months; and You are following the treatment regime as prescribed by your treating medical practitioner, and You are losing 80% or more of your income earned from your nominated occupation. 2. Comprehensive Disability Benefit Available to age 65, age 70 or for a term of 5 to 20 years. Pays: - 100% upon being totally and permanently unable to perform the duties of your own occupation due to illness or injury, or - 25% 100% (depending on severity) upon meeting the requirements of one of the defined functional impairment claim events. Both benefits assess disability in terms of ability to perform your occupation and medical criteria. Both benefits cover total and partial permanent disability. Unlike Momentum s benefit, Discovery s benefit: - Has no general waiting period. - Offers cover up to age 70 on both the medical criteria and nominated occupation underpin. - Offers reinstatement of cover through the Minimum Protected Fund. - Converts to severe illness cover for whole of life at benefit expiry, free of medical underwriting. The Classic Life Plan also covers temporary disability through a unique loss of income underpin. - By including a loss-of-income underpin, Discovery can pay out claims long before Momentum in cases where permanence is not yet established. - Discovery s loss-of-income underpin also caters for illnesses which cause a low level of impairment yet high loss of income. 26

27 LUMP SUM DISABILITY BENEFITS (CONT.) The maximum number of Category C payments that you can receive for related conditions is 9. This underpin is not available on the Essential Life Plan. 3. LifeTime Capital Disability Benefit Choice of benefit expiry age of 65 or 70. Pays: - 100% upon being totally and permanently unable to perform the duties of your nominated occupation due to sickness, disease, illness or injury (Category D), or - 100% upon your impairment meeting objectively defined medical criteria (Category A). The LifeTime Impact Booster is applied depending on the LifeTime Impact Category of the disability and the salary growth option selected at inception. The Booster provides an extra payment of 5% - 100% of the sum assured. The LifeTime Impact Category is dependent on the following: - Age at disability and expected survival period thereafter; - Invasiveness of any surgery required; - Impact of any pharmacological treatment and its associated side-effects; - Impact of any therapy and rehabilitation required and their associated discomfort; - Impact of any assisted care and devices. No comparable benefit. Momentum offers no benefit that considers the longterm impact of a disability on a person s ability to generate an income. Discovery s LifeTime benefits consider the long-term impact of a disability as well as the future expected salary growth of the claimant and boosts the Capital Disability payout accordingly. Under conventional disability benefits, a sum assured consistent with the maximum impact disability condition must be selected. This ensures that the client is fully insured against the lifestyle impact of all disability conditions. However, this would be inefficient since the policyholder will not need this full amount for lower impact disability conditions. As a result, cover can be bought more efficiently with the LifeTime option. 4. LifeTime Plus Capital Disability Benefit Choice of benefit expiry age of 65 or 70. Pays: - 100% upon being totally and permanently unable to perform the duties of your nominated occupation due to sickness, disease, illness or injury (Category D), or No comparable benefit It is possible for a client to receive a payout in excess of 100% of the sum assured under the LifeTime Capital Disability benefits. Momentum does not offer a payout greater than the sum assured. 27

28 LUMP SUM DISABILITY BENEFITS (CONT.) - 50% or 100% (depending on severity) upon your impairment meeting objectively defined medical criteria (Category A and B), or - 2.5% of the benefit after a waiting period of four months (Category C) if: You continuously suffer from a medical impairment, injury or illness that renders you unable to fulfil material and substantial aspects of your nominated occupation for four months; and You are following the treatment regime as prescribed by your treating medical practitioner, and You are losing 80% or more of your income earned from your nominated occupation The maximum number of Category C payments that you can receive for related conditions is 9. This underpin is not available on the Essential Life Plan. The LifeTime Impact Booster is applied depending on the LifeTime Impact Category of the disability and the salary growth option selected at inception. The Booster provides an extra payment of 5% - 100% of the sum assured to Category A, B and D claims. The LifeTime Impact Category is dependent on the following: - Age at disability and expected survival period thereafter; - Invasiveness of any surgery required; - Impact of any pharmacological treatment and its associated side-effects; - Impact of any therapy and rehabilitation required and their associated discomfort; - Impact of any assisted care and devices. 28

29 LUMP SUM DISABILITY BENEFITS (CONT.) No comparable benefit. No comparable benefit. 3. Functional Impairment Benefit Available to age 65, age 70 or for a term of 5 to 20 years. Pays: - 25% 100% (depending on severity) upon meeting the requirements of one of the defined functional impairment claim events. - A 14 day survival period applies. 4. Activities of Daily Work Disability Benefit Available to age 65 or for a term of 5 to 20 years. Available only to occupations that don't qualify for Momentum s own occupation-based benefits. Two categories of benefits are available, reflecting whether the majority of working time is spent on supervisory and administrative duties or otherwise. Pays 100% if the insured life meets one of the following claims criteria: - Achieving a specified score based on the degree of inability to perform functions from 11 work-related categories. - Meeting the definition for a 100% payout on Momentum s Functional Impairment Benefit. Discovery pioneered the use of objective medical criteria in the assessment of disability claims and remains the benchmark in the industry, with a robust assessment process to ensure that all valid disability claims are met. On the Classic Life Plan, Discovery s assessment includes a loss of income underpin to assess claims where it is difficult to establish permanency. Discovery also uses sophisticated Activities of Daily assessment criteria to cater for subjective claims. ADLs such as communication, sensory functions, social interaction and stress adaptation are considered. Momentum s ADLs consider none of these functions. No comparable benefit. 5. Comprehensive Activities of Daily Work Disability Benefit Available to age 65 next, age 70 next or for a term of 5 to 20 years Available only to occupations not qualifying for Momentum s own occupation-based benefits; Pays: - 100% if the insured life achieves a specified score based on the degree of inability to perform functions from 11 work-related categories; - 25%-100% corresponding to the severity of payout that the insured life meets on Momentum s Functional Impairment Benefit. Two categories of benefits are available, reflecting whether the majority of working time is spent on supervisory and administrative duties or otherwise. Discovery Life's Core and Comprehensive Capital Disability benefits provide simultaneous filters considering not only occupational criteria, but also medical criteria, Activities of Daily Living and loss of income - thereby ensuring the most comprehensive disability coverage option, regardless of an occupational underpin. This is supported by our claims experience, which shows that only 4% of all disability claims qualifed under the nominated occupation underpin in Furthermore, the ADW definitions are already covered under Discovery s Category A and B claims definitions. Hence these definitions do not provide an additional layer of protection. 29

30 LUMP SUM DISABILITY BENEFITS (CONT.) Spouse Capital Disability BenefitBooster The spouse on the policy can receive up to 40% additional capital disability cover at no additional premium if the policy qualifies for BenefitBooster. The maximum cover that can be added through the Spouse Capital Disability BenefitBooster is R5 million. The BenefitBooster applies to claims under Categories A, B and D (if applicable). The boost does not apply to the LifeTime benefit. For more information see the BenefitBooster section. No equivalent benefit. Dynamic Spend Protector Automatically included on the Classic Life Plan. This benefit enhances the DiscoveryCard and Discovery Motor Card cashbacks by multiplying the total spend by a Booster percentage depending on the policyholder s Vitality status at the time of claim, as per the following table: CLAIM CATEGORY: A & D B Vitality Status Term Blue 10% 5% Bronze 15% 7.5% Silver 25% 15% Gold 35% 25% Diamond 50% 35% Up to selected benefit expiry age 10 years Note: these payments are in addition to the usual cashbacks No comparable benefit. Discovery is able to combine its existing Card & Vitality infrastructure to offer clients further cashbacks and discounts at partner stores when a client becomes disabled. These savings can free up substantial cashflow during disability and will allow claimants to direct their lump sum disability payment towards other needs. The following table shows the present value of the benefits provided by the Dynamic Spend Protector as a percentage of the Capital Disability lump sum for various Vitality statuses and inflation levels, i.e. it represents the effective boost to the lump sum payment: Inflation VITALITY STATUS Blue Bronze Silver Gold Diamond Low 10% 18% 29% 41% 58% High 18% 27% 45% 63% 89% Assumptions: Client aged 40 next suffers paraplegia; average DiscoveryCard partner spend at partners before disability = R4,000 p.m.; Capital disability benefit = R750,000; Discount rate = 9% p.a.; Low inflation = 6% p.a.; High inflation = 10% p.a. 30

31 INCOME DISABILITY BENEFITS AND THE OVERHEAD EXPENSES BENEFIT (CONT.) Discovery offers three benefits to protect personal income: 1. Income Continuation Benefit 2. Temporary Income Continuation Benefit 3. Overhead Expenses Benefit. There are two options available under the Income Continuation Benefit: 1. Core 2. Comprehensive. Benefit Maximums Income Continuation Benefit: 75% of a client's net of tax income, capped at R pm (upgraded to a maximum of R on permanent disability). Temporary Income Continuation Benefit: 25% of a client's net of tax income. The sum of the Income Continuation Benefit and Temporary Income Continuation Benefit cannot exceed R Overhead Expenses Benefit: 100% of actual overhead expenses, up to R pm for natural owners and up to R pm on business owned policies. Earnings definition Cost-to-company less PAYE tax for salaried employees. Gross fees for services rendered plus gross profit from trading activities less business overhead expenses less tax (as per the tax tables) for business owners The policyholder has 3 months from the date of the disability event to prove earnings before disability. Expiry age 60, 65, 70 or whole of life (whole of life option only available on the Income Continuation Benefit). Momentum offers five benefits to protect personal income: 1. Income Protector 2. Temporary Income Protector 3. Business Overheads Protector 4. Functional Protector 5. Business Protector. Benefit Maximums Income Protector: 75% of a client's net of tax income, capped at R pm (R for professionals). Temporary Income Protector: R pm (R for professionals). Functional Protector: R pm. Business Overheads Protector: R pm. Business Protector (only available to self-employed professionals): R pm. Earnings definition Income is defined as one of the following: Gross taxable income less income tax payable. Cost-to-company income less income tax payable (for employees). Gross Professional Income less overhead expenses less income tax payable (for professionals only). The income tax payable is determined by applying the relevant year of assessment's income tax tables. Momentum will use the income definition that results in the highest net income. Momentum gives the client 6 months to prove pre-disability income. Expiry age 55, 60, 65 or 70 (except for the Functional Protector which provides cover for whole of life). Discovery's Income Continuation Benefit is unique in that it offers: An immediate upgrade to 100% of income on permanent disability. Certainty and objectivity for you and your family through a range of unique claims underpins. LifeTime Capital Disability Lump-sum Benefit Contribution Protector Retrenchment Protector Family Protector (Comprehensive option) HealthyLiving Protector (Comprehensive option) Transport Protector (Comprehensive option) (Details of these unique benefits are provided below) 31

32 INCOME DISABILITY BENEFITS AND OVERHEAD EXPENSES BENEFITS (CONT.) Whole of life cover option With this option up to 100% of a client's Income Continuation Benefit insured amount will convert to postretirement cover at age 70. The percentage converted is based on the selected waiting period, as per the following table: Waiting period Percentage of cover 7 days 100% 1 month 70% 3 months 50% 6 months 40% 12 months 30% The Contribution Protector continues for whole of life, while the other protector benefits will expire at age 70. Claims underpins include a range of severe illnesses, disabilities and assistive care criteria. There is no waiting period. A 14-day survival period applies. Payments will continue for whole of life and are guaranteed for a minimum period of six months. Functional Protector Pays a monthly amount if the insured life meets the requirements of one of the Functional Impairment claim events. It provides payments of 25%, 50%, 75% or 100% of the insured amount based on the severity of the functional impairment. The Income Protector can be converted to the Functional Protector at expiry, subject to the Functional Protector maximum of R Medical underwriting will be required if exclusions or loadings apply to the Income Protector. An annual certificate of existence will be required and Momentum may also require a reassessment of the condition. The need to receive an income on suffering an illness or impairment does not stop at retirement. Many clients require protection after the age of 70 to provide for the high costs associated with being ill, disabled or frail and needing assistance or care. While Momentum's pre-retirement impairment criteria continues for whole of life, Discovery's claim underpins convert to a range of tailored post-retirement medical criteria. The Contribution Protector is particularly valuable to retired clients as it ensures they can afford their insurance contributions, which often comprise a significant portion of their expenses. The Functional Protector provides very limited cover (monthly benefit of R27 500) for a small set of conditions. Momentum's requirement for ongoing assessments is cumbersome and leads to an uncertain benefit payment term. Claim escalation 0% CPI (capped at 10%) CPI+3% (capped at 13%) Claim escalation The in-claim benefit will increase in line with the selected voluntary benefit increase, subject to a maximum of CPI (CPI+2% for the Functional Protector). Claim increase booster Not available on the Functional Protector. Additional in-claim benefit increases are given to young professionals. These percentages depend on the age of the claimant and vary from 0% p.a. (age 31+) to 15% p.a. (age 26 and younger). Discovery provides policyholders with greater choice by allowing them to select different benefit increases pre and post claim. Momentum's in-claim increases do not provide value to clients who selected a high voluntary benefit increase, since the in-claim increase is limited to CPI. Discovery offers clients an in-claim escalation of CPI + 3% to match the expectation of high future salary growth. It is important to note that this benefit will only add value to longer term claims, which in most cases would be permanent disability claims. Therefore, on comparing the value of this benefit you need to consider that: - On becoming permanently disabled, Discovery Life will automatically upgrade the policyholder s benefit to 100% of pre-disability earnings. 32

33 INCOME DISABILITY BENEFITS AND OVERHEAD EXPENSES BENEFITS (CONT.) - Discovery Life gives policyholders the option of selecting an in-claim benefit increase of inflation + 3%. This is especially relevant to professionals who would generally expect their earnings to increase at a rate higher than inflation. Income Continuation Benefit The payout is defined as the highest claimable amount under each of the following; Sickness underpin - Pays up to 100% of sum assured based the amount of time booked off work, without requiring proof of loss of income. - Available for 24 months at no extra cost. Loss of income underpin - Discovery will match the loss of income upon becoming fully or partially unable to follow your nominated occupation due to injury or illness. Capital Disability underpin - Pays 50% of the benefit amount for up to 5 years on suffering a Category B Capital Disability. - Pays 100% of declared earnings (or 2.5 times the benefit amount if less than 40% of earnings has been insured) until benefit expiry on suffering a Category A Capital Disability. Income Protector The payout is defined as the highest claimable amount under each of the following: Occupational disability caused by bodily injury or illness: - 25%-100% of the benefit amount, corresponding to the extent to which the insured life is unable to perform the main duties of his/her occupation. - Only applies during the first year after the claim event (two years for professionals). - Includes a partial claim upgrade: if the full benefit amount has been paid continuously for three months, the full amount will continue to be paid while the policyholder is at least 25% unable to perform the main duties of their own occupation, but only for a maximum of one year (two years for professionals). Loss of income: - Calculated as the difference in income earned before and during disability, up to a maximum of the benefit amount. Two years after the claim event, loss of income is calculated as 75% of pre-disability income less income still earned. Functional Impairment: - the same conditions as covered under the Functional Impairment Benefit) SEVERITY LEVEL PAYMENT % OF SUM ASSURED PAYMENT PERIOD 25% 25% 2 years 50% 50% 5 years 75% 75% Until retirement 100% 100% Until retirement 33

34 INCOME DISABILITY BENEFITS AND OVERHEAD EXPENSES BENEFITS (CONT.) LifeTime Severe Illness underpin - Pays 100%-215% of the insured amount on suffering a Severity A Severe Illness. The payment percentage depends on the number of LifeTime upgrades a client receives as well as the number of financial dependants at claim stage. - Pays for six months for policies with a seven-day waiting period, or five months for policies with a one month waiting period once your waiting period has expired. Critical Illness - Pays 100% of the benefit amount for the conditions covered at 100% under the Comprehensive Critical Illness benefit. - Available under the 7-day or 1 month waiting periods. The payment terms are limited to 6 months and 5 months respectively. By including the LifeTime Severe Illness Underpin, Discovery allows clients to receive up to 215% of their Income Continuation Benefit sum assured. With Momentum they can only receive 100% of their sum assured. Family Protector - Pays 100% of the Income Continuation Benefit amount for up to six months if your spouse or children suffer a Severity A or B severe illness. It also pays 100% of the Income Continuation Benefit amount for one month if your spouse dies. There is no waiting period for this benefit. No comparable benefit. Injury and Hospitalisation underpin - Pays 100% of your monthly Income Continuation Benefit and Temporary Income Continuation Benefit sum assured for up to three months if you fracture certain bones, or are hospitalised for longer than a week. - Payments will commence once your selected waiting period has expired. - This Underpin does not apply to waiting periods longer than one-month. Fracture and hospitalisation events - Pays 100% of your monthly sum assured for up to three months if you are hospitalized for longer than a week or fracture certain bones. - Only applies to benefits with a seven-day or one-month waiting period. - Payments will commence once your selected waiting period has expired. Discovery covers more fractures than Momentum including: - Skull (except bones of the nose or face) - Facial Bones - Hindfoot - Spine (i.e. Compression fracture more than 50% of the vertebral body or burst fracture). Temporary Income Continuation Benefit Functions as a top-up benefit to the Income Continuation Benefit. Provides a payment in addition to the Income Continuation Benefit amount when you claim under the Income Continuation Benefit. Payment period is up to 24 months less the waiting period. Must be selected in conjunction with the Income Continuation Benefit. Temporary Income Protector Functions the same as the Income Protector, except that the benefit term is limited to 6, 12 or 24 months. The combined amount under the Income Protector and Temporary Income Protector is limited to 100% of income. 34

35 INCOME DISABILITY BENEFITS AND OVERHEAD EXPENSES BENEFITS (CONT.) Upgrade on permanent disability Payment immediately upgraded to 100% of declared earnings (or 2.5 times the benefit amount if less than 40% of income is insured) if permanently disabled. The waiting period is waived. Permanent disability is assessed based on objective medical criteria and ability to perform nominated occupation. LifeTime Capital Disability Lump-sum Benefit Permanently disabled clients (according to Category A criteria) may qualify for an additional lump-sum payment of up to 36 times their monthly Income Continuation Benefit insured amount, where the multiple is based on the disability's LifeTime impact as per the following table: Momentum s Income Protector pays out a maximum of 75% of income on permanent disability. The Functional Protector can used to top up the Income Protector benefit amount, at an additional cost. No comparable benefit. Policyholders receive a maximum of 75% of earnings on most disability income products as an incentive for them to return to work. In the case of permanent disability, where it is clear the policyholder cannot return to work, he is penalised by an incentive which he can never attain. Discovery Life recognises this and upgrades his income to 100%. This benefit is an automatic feature of the Income Continuation Benefit. With this benefit we recognise that certain disabilities require an immediate payment to meet lifestyle expenses incurred upfront as a result of the disability. LifeTime Impact Multiple of Income Continuation Benefit amount Score Band Core option Comprehensive option Guaranteed Insurability Benefit Additional benefit received at no extra charge. Allows policyholders to increase income by up to 20% every three years without evidence of health or insurability. Maximum number of options: six. Available until age 50. Available if you have not been disabled or made a claim under the Income Continuation Benefit during the three year period up to and including the relevant option date. If the life assured tests HIV-positive, Discovery Life reserves the right to modify or cancel the benefit. Guaranteed Insurability Included free of charge on Momentum s income protection benefits (excluding the Functional Protector benefit). Allows the policyholder to increase their benefit amount without medical underwriting, provided the insured life s income increases at a rate exceeding the maximum voluntary benefit increase. The maximum total annual increase rate (including voluntary increases) is twice the inflation rate, capped at 20%. Not available to clients who: - Don t have a plan with voluntary increases With Momentum, a voluntary benefit increase must have been selected to receive this benefit. Momentum imposes an additional inflation-based limitation to the possible increase amount. Lives who carry health loadings still receive the Guaranteed Insurability Benefit with Discovery. 35

36 INCOME DISABILITY BENEFITS AND THE OVERHEAD EXPENSES BENEFIT (CONT.) - Are older than 55 - Are disabled or were disabled at some stage during the 12 months prior to the date of the benefit amount increase - Have health loadings. Premium waiver Premiums are waived from the end of the waiting period until benefit payments cease. Premium waiver Premiums are waived during claim. On the Temporary Income Protector, Income Protector and Business Protector, where a 7 day waiting period has been selected, premiums are only waived if the insured has been continuously disabled for at least 28 days. Waiting periods Waiting periods of 7 days, 1 month, 3 months, 6 months and 12 months. Claims for the seven day waiting period are paid retrospectively from day one. For certain professionals in private practice, Discovery offers a 1 month waiting period with benefits paid retrospectively from day one. Conditions that need to be met for retrospective payment are as follows: - Hospitalisation for at least 24 hours - An infectious disease such as chicken pox or measles (conditions such as common colds and influenza are excluded) - In the case of back disorders, if there is identifiable pathology on an MRI scan - In the case of anxiety, stress or depression, if there is specialist confirmation of the inability to work - Chemotherapy or radiotherapy - In the case of fibromyalgia or chronic fatigue syndrome, there is specialist confirmation of the inability to work. Waiting periods Waiting periods of 7 days (for self-employed individuals only), 1 month, 3 months, 6 months, 12 months and 24 months. For the seven day waiting period, the claim payment will be made retrospectively from day one if the claim is not a result of: - Cosmetic surgery; - Influenza and bronchitis*; - Mental or psychiatric disorders*; - Gastric influenza*; - Gastritis*; - Constipation*; - Diarrhoea*; - Headaches and migraines*; - Stress-related disorders; - Chronic fatigue syndrome; - Laryngitis, sinusitis and pharyngitis; - Abortions; - Surgical procedures for infertility; - Back injury; - Fybromyalgia. *only covered if hospitalisation is required for longer than 24 hours. 36

37 INCOME DISABILITY BENEFITS AND THE OVERHEAD EXPENSES BENEFIT (CONT.) Contribution Protector On temporary disability, Discovery Life s Contribution Protector will pay up to 25% for up to 12 months (Core option) or up to 100% for up to 24 months (Comprehensive option) of all your premiums/contributions which you were paying before disability for your Discovery products. Payment is capped at 33% of the Income Continuation Benefit plus Temporary Income Continuation Benefit insured amounts. If the policyholder insured less than 75% of their income (100% of income if the Temporary Income Continuation Benefit has also been selected) the Contribution Protector payment will be reduced proportionately. No comparable benefit. This benefit provides full insurance and retirement savings protection on temporary disability, thereby increasing the client's disposable income. It is included automatically at no additional premium. HealthyLiving Protector Available with the Comprehensive option. Provides an additional monthly payment on permanent disability equal to three times your average HealthyLiving cashback over the six months prior to the disability event. Payments will increase with inflation. Payment is capped at 25% of the sum of your Income Continuation Benefit and Temporary Income Continuation Benefit insured amounts. No comparable benefit. With the HealthyLiving Protector, permanently disabled clients are able to protect up to 100% of their average HealthyFood, HealthyCare and HealthyGear spend every month until benefit expiry, when combined with the cash back received from Vitality. Transport Protector Available with the Comprehensive option. Gives disabled clients access to Uber services for 60 days to the value of R5 000 if they are booked off work for a period exceeding their selected waiting period. Only available on policies with a seven days or one month waiting period. Payment is capped at 20% of the sum of your Income Continuation Benefit and Temporary Income Continuation Benefit insured amounts. No comparable benefit. With this benefit Discovery recognises that the mobility of the client and their family is a critical consideration during disability. 37

38 INCOME DISABILITY BENEFITS AND THE OVERHEAD EXPENSES BENEFIT (CONT.) Retrenchment Protector Provides a payment of 25% (Core option) or 100% (Comprehensive option) of the client's contributions for their other Discovery products for up to 6 months on retrenchment, at no extra cost. A one-month waiting period applies. Only available on policies with a 7-day or 1-month waiting period. Maximum cease age is 70. Payment is capped at 33% of the Income Continuation Benefit plus Temporary Income Benefit insured amounts. Two retrenchments will be covered. Retrenchments within the first six months are not covered. Premium Waiver - Retrenchment Available as a rider benefit at an additional premium. Pays the premium of the stand-alone and attached ancillary benefits on retrenchment for a fixed period of 12 months. A one-month waiting period applies. Maximum cease age is 65. Two retrenchments will be covered. Retrenchments within the first six months are not covered. Discovery Life's Retrenchment Protector is automatically included at no additional premium. It does not only waive the premium for the client's Income Continuation Benefit, but also covers the client's contributions for their other Discovery products, thereby ensuring continuity of insurance and retirement benefits on retrenchment. Professionals For certain professionals in private practice, Discovery offers a one month waiting period with benefits paid retrospectively from day one. Aggregation The benefit payments may be reduced in the following circumstances: If the benefit amount is greater than 75% of a client s predisability income in the case of the Income Continuation Benefit and 100% of income if a client also has the Temporary Income Continuation Benefit Where you still generate earnings despite your disability, Discovery Life will not reduce your benefit payments if you meet any of the following claims definitions: - Automatic Sickness Underpin - LifeTime Severe Illness Underpin - Injury and Hospitalisation Underpin - Capital Disability Underpin. Professionals For certain professionals in private practice, Momentum offers the following: - The occupational disability criteria and partial claim upgrade applies for two years instead of one. - Maximum benefit of R pm (instead of R pm). Aggregation The benefit amount will be reduced to ensure that it does not exceed 75% of the policyholder s pre-disability income. The claim amount plus income from other policies cannot exceed 100% of pre-disability income (75% after two years). If the policyholder claims under the loss of income criterion, the benefit payment will be calculated as the difference between 100% of the insured s pre-disability income (75% after two years) and any income that the insured life earns during disability, up to the benefit amount. Functional Protector and lump sum disability payments are not taken into account for the purposes of aggregation. Discovery s one month waiting period paying retrospectively from day one is ideal, as it can potentially pay out the same amount as under the seven day waiting period, but with an average premium saving of 22% relative to the seven day waiting period. Unlike Momentum, Discovery's occupational disability criteria applies until the selected expiry age regardless of when a claim incepted. 38

39 INCOME DISABILITY BENEFITS AND THE OVERHEAD EXPENSES BENEFIT (CONT.) For the loss of Income underpin and claims under the Category D definition, benefit payments will only be reduced in the first 2 years to the extent that the sum of these benefit amounts, plus income still earned, exceed 130% of your earnings before disability for Category D claims and 105% for loss of income claims. Benefit payments continuing for more than two years from the date of the disability event will be reduced to the extent that the benefit amount, plus income still earned, exceed 100% (75% in the case of the loss of Income underpin) of your earnings before disability. Discovery Life will not reduce the benefit payments by the following earnings: Interest, rent, dividends and earnings generated before disability but only received after disability or additional payments from the Contribution Protector or Family Protector. If you receive disability income/sickness benefits from other policies and these benefits together with your Income Continuation Benefit exceed 100% of pre-disability income (75% on temporary disability after 24 months), benefits will be adjusted proportionately. Lump-sum disability payments are not aggregated against. The Overhead Expenses Benefit Provides a monthly amount to assist in covering business overhead expenses on temporary or permanent disability. On individually owned policies, this benefit may only be selected if the Income Continuation Benefit is selected. Choice of a seven-day or one-month waiting period. Potential retrospective payment from day one (same conditions apply as for the Income Continuation Benefit). Payable for a maximum of 24 months for a specific cause. The Business Overheads Protector Provides a monthly amount to assist in covering business overhead expenses in the event of temporary or permanent disability, impairment or illness. The payout is defined under the same claims criteria as the Income Protector, but without the loss of income criterion or the partial claim upgrade. Must be selected as a stand-alone benefit. Choice of waiting period of seven days, one month or three months. Potential retrospective payment from day one on the seven day waiting period (same conditions apply as for the Income Protector). Payable for a maximum of 24 months for a specific cause. 39

40 INCOME DISABILITY BENEFITS AND THE OVERHEAD EXPENSES BENEFIT (CONT.) The Business Protector Only available to self-employed professionals. Combination of the Temporary Income Protector and the Business Overhead Protector. Covers 100% of a professional s gross fees and net income from trading activities, less income tax payable. Benefit term of 24 months. Waiting periods of seven days or one month, with retrospective payment from day one. The monthly benefit amount for a single cause (including related causes) will be limited to 24 months. This is the same as combining Discovery s Income Continuation Benefit with the Overhead Expenses Benefit. The advantage is that the Income Continuation Benefit has no restrictions on the amount of payments arising from the same (or related) causes. DREAD DISEASE BENEFITS Discovery offers four severe illness benefits: 1. Comprehensive Severe Illness Benefit 2. Comprehensive Plus Severe Illness Benefit 3. LifeTime Severe Illness Benefit 4. LifeTime Plus Severe Illness Benefit Provides cover for all body systems. The policyholder may select cover for an individual body category in cases where the complete benefit is declined due to ill health. Expiry age 65 or whole of life. All benefits may be taken out on an accelerated, standalone (Impairment Fund) or non-accelerated basis. Momentum offers four severe illness benefits: 1. Comprehensive Critical Illness Benefit. 2. Comprehensive Critical Illness Plus Benefit. 3. Elevated Comprehensive Critical Illness Benefit. 4. Elevated Comprehensive Critical Illness Plus Benefit. The benefit covers all body systems. Expiry age 65 or whole of life. Term cover is also available (minimum 5 years and maximum 20 years. All benefits may be taken out on an accelerated or nonaccelerated (stand-alone) basis. The table below sets out the products on the most like-for-like basis. Discovery s Essential Plan should be selected for comparison, due to the unique features of the Classic Plan that are not offered by Momentum.* DISCOVERY MOMENTUM Comprehensive Comprehensive Plus LifeTime 100% Max LifeTime Plus 100% Max Comprehensive Comprehensive Plus Elevated Comprehensive Elevated Comprehensive Plus *The unique features of the Classic Life Plan are: - Unlimited multiple claims - Automatic parent cover (ParentCare) - Global Treatment Benefit 40

41 DREAD DISEASE BENEFITS (CONT.) Comprehensive Severe Illness Benefit Pays 25% - 100% upon meeting the requirements of one of the defined severe illnesses, depending on severity. Comprehensive Critical Illness Benefit Pays 25% - 100% upon meeting the requirements of one of the defined critical illnesses, depending on severity. Benefit payments of both companies depend on the severity of the severe illness. Benefit payments are made at 25%, 50%, 75% and 100% severity levels. Comprehensive Plus Severe Illness Benefit Pays 5% - 100% upon meeting the requirements of one of the defined severe illnesses, depending on severity. Comprehensive Critical Illness Plus Benefit Pays 5% - 100% upon meeting the requirements of one of the defined critical illnesses, depending on severity. The Plus benefit of both companies covers additional severity levels E, F and G with payouts at 5%, 10% and 15% respectively. LifeTime Max 100% Severe Illness Benefit Provides a base payout of 25% - 100% upon meeting the requirements of one of the defined severe illnesses, depending on severity. The base payout is then increased by the applicable number of LifeTime Upgrades, which depends on the LifeTime impact score for the illness. The LifeTime Impact score is dependent on the following factors: - Expected duration of the severe illness - Invasiveness of surgery - Impact of any therapy and rehabilitation required and its associated discomfort; and - Impact of any assisted care and devices. Each LifeTime Upgrade adds 25% to the base payout percentage, subject to a maximum boosted payout of 100%. Discovery Life will pay an additional 5% per dependant (up to a maximum of 15%). This boost is not subject to the Max selected. Payouts for SCIDEP illnesses are guaranteed at 100%. Boosts will also be applied to non-scidep conditions. Elevated Comprehensive Critical Illness Benefit Pays: 25% - 100% upon meeting the requirements of one of the defined critical illnesses, depending on severity. Conditions paid at 50% and 75% on the Comprehensive Critical Illness Benefit are elevated to 100%. Discovery's LifeTime benefit considers the long-term impact of an illness, as well as the policyholder's family composition at claim stage, to ensure that the claim payout matches the financial impact of the severe illness on a client s lifestyle. The average LifeTime boost was 129% in The LifeTime benefit offers an efficient solution for extensive severe illness cover, as the charge for this benefit is only 26.5% more than the Comprehensive option. 41

42 DREAD DISEASE BENEFITS (CONT.) LifeTime Plus Max 100% Severe Illness Benefit Provides a base payout of 5% - 100% upon meeting the requirements of one of the defined severe illnesses, depending on severity. The base payout is then increased by the applicable number of LifeTime Upgrades, which depends on the LifeTime impact score for the illness. The LifeTime Impact score is dependent on the following factors: - Expected duration of the severe illness - Invasiveness of surgery - Impact of any therapy and rehabilitation required and its associated discomfort; and - Impact of any assisted care and devices. Each LifeTime Upgrade adds 25% to the base payout percentage, subject to a maximum boosted payout of 100%. Discovery Life will pay an additional 5% per dependant (up to a maximum of 15%). This boost is not subject to the Max selected. Payouts for SCIDEP illnesses are guaranteed at 100%. Boosts will also be applied to non-scidep conditions. The LifeTime Upgrades are applicable to Severities A - D. Elevated Comprehensive Critical Illness Plus Benefit Pays: - 5%, 10%, 15%, 25% or 100% upon meeting the requirements of one of the defined critical illnesses, depending on severity. - Conditions paid at 50% and 75% on the Comprehensive Critical Illness Benefit are elevated to 100%. Discovery's LifeTime benefit considers the long-term impact of an illness, as well as the policyholder's family composition at claim stage, to ensure that the claim payout matches the financial impact of the severe illness on a client s lifestyle. The average LifeTime boost was 129% in The LifeTime benefit offers an efficient solution for extensive severe illness cover, as the charge for this benefit is only 26.5% more than the Comprehensive option. LifeTime (Plus) Severe Illness Benefit with a Max of 125%, 150% or 200% Similar to above, except that the boosted payout (excluding the dependant boost) is subject to the higher Max, as selected. No comparable benefit. Momentum does not offer a benefit that considers the long-term impact of an illness on a person s lifestyle. The LifeTime benefits offer the potential to receive up to 215% of the sum assured, whereas Momentum will never pay more than the sum assured. The expected increase, for the LifeTime Max of 200%, is 170% of the original sum assured (plus an extra amount up to 15% for financial dependants). By choosing a LifeTime Max of 125%, 150% or 200%, a client can receive the highest payment in the market for a severe illness claim. 42

43 DREAD DISEASE BENEFITS (CONT.) - Discovery Life recognises that a payment in excess of the selected sum assured is required in certain circumstances. The LifeTime benefits thus offer a unique, efficient solution that allows the payout to flex such that more than the sum assured can be paid when necessary. Severe Illness Extender Benefit Can be added to each of the Severe Illness Benefits at an additional premium. Increases the payout for Severities A, B, C and D by an additional 25%. The additional 25% payment will not accelerate the Life Fund or Impairment Fund. The 25% increase is not boosted further by any LifeTime Impact boosters. Severe Illness BenefitBooster Both the principal and spouse can receive up to 40% additional severe illness cover at no additional premium if the policy qualifies for BenefitBooster. The maximum cover that can be added for each of the principal and spouse is R1.5 million. The BenefitBooster applies to Severity A and B claims. The boost does not apply to LifeTime and Extender benefits. For more information see the BenefitBooster section. No comparable benefit. No equivalent benefit. The Severe Illness Extender benefit does not reduce the client s Life Fund or attaching ancillary benefits. This benefit is very powerful when it is combined with Discovery s multiple claims facility on the Classic Life Plan. For example, if a client has a 100% accelerated Severe Illness Benefit and suffers two Severity B illnesses, he will receive 125% of the sum assured in total with the Extender Benefit and 93.75% without it. Multiple claims Classic Life Plan: Multiple claims are permitted whether the severity of the subsequent related claim is of a higher, lower or same severity as the first claim. A subsequent claim for the same or related illness is regarded as independent of the first claim (i.e. the full applicable severity level is paid), unless it is a progressive disease such as cancer. Multiple claims Subsequent claims in the same illness category will only be paid if the severity is worse than the previous claim. The amount that is paid is based on the difference between the percentage payout for the new claim and the total percentage paid for that category. Where a claim for an illness is related to a previous claim in the same or different illness category, the claim is treated as if it is in the same illness category as the claim it has progressed from Where subsequent claims are in a different illness category, previous claims do not affect the payout percentage. Multiple claims Unlike Discovery's Classic Life Plan, Momentum only pays multiple related claims if the severity of the subsequent claim is higher. Where the severity is higher, the subsequent claim payment will be reduced by the previous claim payment. On the Classic Life Plan, the non-accelerated benefit reinstates cover for related claims and the full percentage is paid for non-progressive claims. There is no limit to the amount that you may claim on the Classic Life Plan. 43

44 DREAD DISEASE BENEFITS (CONT.) Maximum payouts: - Accelerated: no maximum, you can claim provided you have Life Fund available. - Non-accelerated: No maximum. Essential Life Plan: Subsequent related claims will only be paid where the severity level of the subsequent claim is higher than the previous claim. The payment will be equal to: - the difference in severities based on the full sum assured (non-accelerated benefit) - the full severity based on the reduced sum assured (accelerated benefit). Maximum payouts: - Accelerated without Minimum Protected Fund = sum assured. - Accelerated with Minimum Protected Fund = 2 times sum assured for related claims. - Non-accelerated = sum assured for related claims. Maximum payouts: - When selected as an ancillary benefit, the total of the multiple claims may never exceed the sum assured for the Critical Illness Benefit. - When selected on a stand-alone basis, cover is reinstated for unrelated claims, however, payouts will not exceed the original sum assured for any related claims. Momentum effectively only reinstates cover for unrelated claims under their stand-alone benefit. Examples where Momentum does not reinstate cover (i.e. where the policyholder will never be able to claim more than 100% of the sum assured) include the following: - Subsequent claim for a heart attack or stroke - Heart attack leading to a stroke - Kidney failure as a result of paraplegia - Blindness as a result of Multiple Sclerosis - Stenosis of a vessel as a result of heart attack Due to the different definitions used by Momentum and Discovery, Momentum's benefit should be compared to the Essential Life Plan, as Discovery will pay far more for multiple claims on the Classic Life Plan. Discovery s Minimum Protected Fund reinstates cover for the same, related and unrelated illnesses, allowing the policyholder to claim more than the sum assured on both the Classic and Essential Life Plan. The importance of multiple claims can be seen from Discovery s 2014 claims experience, where we found that a significant number of subsequent claims fell in the same body system. For example, if your first claim was in the heart and artery body system, the chances of you having a subsequent claim in this body system is 75%. We also found that 48% of subsequent claims in the same body system are of the same or lower severity than the previous claims. These two statistics illustrate the importance of not having a cap on the maximum amount you can receive for claims in the same body system and in paying multiple claims regardless of their severity. Simultaneous claims arising from a single cause The claim event resulting in the highest payment is admitted first. The second claim is admitted if the second condition is still present after six months. Simultaneous claims arising from a single cause Only the highest payment will be made. No further claims will be paid due to a single event. Discovery's treatment of multiple claims arising from a single event means that a substantially higher payout will be made compared to Momentum. 44

45 DREAD DISEASE BENEFITS (CONT.) Survival period No explicit survival period. In certain cases a waiting period is specified to establish severity. Severe Illness cover for children On the Classic Life Plan, the Severe Illness Benefit of the principal and/or spouse will automatically include severe illness cover for their children. The amount of automatic cover is equal to 10% of the main Severe Illness Benefit sum assured, subject to a maximum of R per child per claim event. A claim will not accelerate the Life Fund or reduce the Severe Illness Benefit of the principal and/or spouse. Covers all body systems covered under the main Severe Illness Benefit, including the following conditions which are applicable to children: - Surgical correction of congenital heart disease - Acute lymphoblastic leukaemia - Congenital anomaly repair - Rheumatic fever with cardiac complications - Type 1 diabetes mellitus - Poliomyelitis with permanent paralysis - Juvenile rheumatoid arthritis, septic arthritis, osteomyelitis - Hirschsprung s disease - Surfactant therapy - Cleft palate/lip repair - Disorders of amino acid metabolism ParentCare On the Classic Life Plan, the Severe Illness Benefit of the principal and/or spouse will automatically include frail care cover for their parents, objectively defined by self-care Activities of Daily Living criteria. The benefit amount is 5% of Severe Illness Benefit per parent, subject to a maximum of R per parent. Benefit payouts will not impact the Life Fund. Survival period A survival period of 14 days is applied. Momentum may, at its discretion, waive the survival period at claim stage. Critical Illness cover for children The Critical Illness Benefit of the principal and/or spouse will automatically include severe illness cover for their children. The benefit amount under the Critical Illness Cover for Children is equal to 10% of the Severe Illness Benefit sum assured, subject to a maximum of R A claim will not reduce the Critical Illness Benefit amount or any other benefit on the policy. No comparable benefit. The survival period is especially relevant for Momentum's stand-alone benefit. No Severe Illness benefit will be paid if the policyholder dies within 14 days after qualifying for a claim. Discovery does not apply a general survival period. There is only a 14 day survival period for the Minimum Protected Fund to reinstate a client s cover. Discovery Life was the first insurance company to recognise that the illness of a child has an effect on the parents financial situation and lifestyle. Momentum will not pay for any illnesses that affect children within their first year of life. Momentum offers no buy-up benefit (as is the case with Discovery). Discovery policyholders can insure their children for up to R1.435 million through the combination of the automatic cover for children and the additional Child Severe Illness Benefit (refer to relevant section for details). As is the case with the main Severe Illness Benefit, Discovery offers complete peace of mind with regard to multiple claims, as subsequent claims are paid irrespective of the severity level. Momentum s Critical Illness Cover for children covers the same conditions as the parent's benefit. Certain illnesses unique to children will therefore not be covered. Discovery has recognized that the severe illness of a parent can place a significant financial burden on the policyholder. Additional buy-up cover on the parents lives are also available. 45

46 DREAD DISEASE BENEFITS (CONT.) Global Treatment Benefit The Global Treatment Benefit is automatically included with the Severe Illness Benefit on the Classic Life Plan. The benefit offers the policyholder a choice of either: - Having the treatment performed in South Africa and receiving the normal Severe Illness Benefit amount, depending on the severity of the illness. - Having the treatment performed in the USA and receiving 80% of what they would have received from the first option, plus the actual cost of treatment at the overseas facility subject to a maximum of the benefit amount that would have been payable under the first option. No comparable benefit. Rapid advances in healthcare technology and the emergence of global specialist centres of excellence have prompted Discovery to offer the Global Treatment Benefit. The benefit ensures that policyholders have access to the best medical treatment for a given illness. The benefit empowers claiming policyholders to choose whether they want their illness treated locally or in the USA through the Discovery Network. COMBINING BENEFITS Capital Disability Benefit Combines permanent and temporary disability cover (Category C loss of income underpin) in one benefit. It also includes an automatic conversion to severe illness cover at benefit expiry, free of medical underwriting. Additional severe illness cover can be purchased through the Severe Illness Benefit. The benefit will pay: - 100% upon being totally and permanently unable to perform the duties of your nominated occupation due to sickness, disease, illness or injury (up to age 65 or 70) - 50% 100% upon meeting the objectively defined medical criteria (up to age 65 or 70) - 2.5% of the benefit every f four months if you continuously suffer from a medical impairment, injury or illness that renders you unable to fulfill material and substantial aspects of your nominated occupation, resulting in a loss of more than 80% of income. Comprehensive Living Benefit This is a combination of the Comprehensive Disability Benefit and Comprehensive Critical Illness Benefit. Claims will be assessed under the definitions of both the above benefits and the highest severity qualified under will be paid. The benefit will pay: - 100% upon being totally and permanently unable to perform the duties of your own occupation due to illness or injury (up to age 65) - 25% - 100% upon meeting the requirements of one of the defined functional impairment claim events (up to age 70) - 25% - 100% upon meeting the requirements of one of the defined critical illnesses - Up to 10% of the sum assured (limited to R ) in the event of the insured life s biological or legally adopted child meeting the requirements of one of the defined critical illnesses. Combining capital disability and severe illness cover in one benefit does not make sense from a financial planning point of view. Capital disability cover represents the present value of future lost income, which has no relationship to the sum assured of severe illness cover, which caters for the cost of lifestyle changes, such as: - modifying a house or car - private nursing - hiring a driver or au pair - access to medical technology, etc. With Discovery, the policyholder can select the appropriate amount of capital disability and severe illness cover to suit his needs. At benefit expiry, the Capital Disability Benefit automatically converts to severe illness cover, free of medical underwriting. The policyholder s severe illness cover is thereby increased at a time when the incidence of severe illnesses is highest. Discovery s combination of cover for permanent disability and loss of income results in unmatched objectivity and protection on temporary disability. 46

47 COMBINING BENEFITS (CONT.) Can be selected on an accelerated or non-accelerated basis. The Minimum Protected Fund is available to reinstate cover after an accelerated claim. Subsequent related claims are paid at the full severity level, irrespective of the severity of the subsequent claim. Benefit maximum: R40 million (including the Cover and Financial Integrator). Term: age 65 or 70, with automatic conversion to whole of life severe illness cover. The benefit has no general waiting period or survival period. Can be selected on an accelerated or stand-alone basis. Cover will only reinstate on the stand-alone benefit. However, subsequent related claims will only be covered if the severity is higher and only the difference in severities will be paid. On the accelerated benefit cover ends once the full benefit has been paid. Benefit maximum: R 5 million (R 5.5 million for professionals). Term: Whole of life, to age 65 or a term of 5 20 years. Own occupation disability cover ceases at age 65. Functional impairment cover ceases at age month waiting period for the own occupation disability underpin. Premiums are payable during the waiting period. Momentum may, in its discretion, choose not to enforce the waiting period. A 14-day survival period applies to the Functional Impairment and Critical Illness benefits. The maximum benefit of R5 million is inappropriate for high earners, who need a high amount of disability cover. The premium for Momentum's Comprehensive Living Benefit stays the same throughout the term, even though the occupational disability component falls away at age 65 and the functional impairment component falls away at age 70. The Minimum Protected Fund protects all benefits that accelerate the Life Fund. An unlimited number of reinstatements are available on the Classic Life Plan. The 6-month waiting period on Momentum s own occupation underpin is like a 6-month survival period, as no claim is paid if the policyholder dies within the waiting period. This is especially relevant under their stand-alone benefit option. Discovery Life applies no general waiting or survival period. There is only a 14-day survival period for the Minimum Protected Fund to reinstate cover. 47

48 FEMALE SEVERE ILLNES S BENEFIT AND CHILDB IRTH BENEFIT Discovery Life covers illnesses that females are most exposed to through the Female Severe Illness Benefit and the Childbirth Benefit. Conditions covered by the Female Severe Illness Benefit include: - Cancers specific to females - Pregnancy complications - Complications of osteoporosis Conditions covered by the Childbirth Benefit include: - Congenital birth defects - Multiple births There is no waiting period. There is no survival period for claims. This is an accelerated benefit. Female Severe Illness Benefit may be selected to age 65 or whole of life. Childbirth benefit expires at age 40. No comparable benefit. There are many conditions that only affect females and where cover is required, such as female-specific cancers, complications of pregnancy and osteoporosis. 48

49 CHILD SEVERE ILLNESS BENEFIT Covers all body systems and conditions covered under the main Severe Illness Benefit. Also includes the following conditions that are more relevant to children: - Surgical correction of congenital heart disease - Acute lymphoblastic leukemia - Congenital anomaly repair - Rheumatic fever with cardiac complications - Type 1 diabetes mellitus - Poliomyelitis with permanent paralysis - Juvenile rheumatoid arthritis, septic arthritis, osteomyelitis - Hirschsprung s disease - Surfactant therapy - Cleft palate/lip repair - Disorders of amino acid metabolism No comparable benefit. In keeping with the philosophy of covering the entire family for any major life-changing events, we have developed a benefit that covers severe illnesses that affect children. Instead of having to focus on financial problems, you can care for your child should they fall ill. The payout varies by the severity of the illness. Multiple claims are allowed. No survival period. No requirement for the parent to have the Severe Illness Benefit. Maximum benefit of R1.3 million per child. Automatically includes the Global Treatment Benefit. Cover is available from birth. Cover ceases when the child turns

50 PARENT SEVERE ILLNES S BENEFIT Under the Parent Severe Illness Benefit, the parent is covered for all illnesses covered by the Comprehensive Severe Illness Benefit. Claims don t accelerate the Life Fund but accelerate the cover provided to that parent. The Minimum Protected Fund does not apply and the benefit will cease once 100% of the sum assured has been paid out. Maximum benefit: R per parent plus R under the ParentCare Benefit. Global Treatment Benefit automatically included. The benefit is available for whole of life. No comparable benefit. Discovery Life recognises that clients could incur a large financial burden if any one of their parents becomes severely ill. For this reason, the principal life and spouse can purchase severe illness cover for each of their parents, provided that they have the Severe Illness Benefit. ACCIDENTAL HIV BENEFIT Accidental HIV is automatically covered under Discovery s Severe Illness Benefit. The Accidental HIV Benefit pays a lump sum if the policyholder accidentally contracts HIV. Also covered automatically under Momentum s Critical Illness Benefit. Can only be taken as a stand-alone benefit. Benefit term is whole of life. Maximum benefit amount is R , R2 million for medical occupations and R for students. Premium increases follow the Level premium pattern and the premium guarantee term is 5 years. Infection must be due to: - Blood transfusion - Organ transplant (donor service must accept liability) - Medical procedure performed on insured life - Involvement in a road traffic accident. - Involvement in a violent crime - Involvement in a rape or indecent assault crime - Executing duties as medical or dental practitioner In the last four cases, proof must be provided that a course of antiretroviral drugs has been completed. An HIV test needs to be performed within 24 hours to confirm an HIV-negative status before the event. 50

51 FUTURE COVER WITHOUT MEDICAL UNDERWRITING Discovery offers the Future Fund Benefit, which allows policyholders to increase the Life Fund and all ancillary benefits linked to it without evidence of health (except for a negative HIV test) or insurability. Policyholders can exercise between 7.5% and 15% of their nominated Future Fund every year until the benefit expiry age. An option must be exercised at least once every three years to retain the benefit. The amount that can be exercised is increased automatically each year. An option for severe illness or disability cover cannot be exercised if the insured had any claim on these benefits in the past at Severities A-D on the Severe Illness Benefit and Categories A, B and D on the Capital Disability Benefit (or Category C within the three years prior to the option date). Maximum benefit amount is R7 million. The Future Fund Benefit is only available to lives who have health loadings of less than or equal to 25%. Momentum offers the following benefits: - Future Cover Death - Future Cover Death and Disability These benefits allow policyholders to increase their life cover and/or disability and impairment benefits on pre-defined events without evidence of health (except for a negative HIV test) or insurability. Depending on the pre-defined event, clients can take up to 100% of the selected benefit amount per event, while 10% can be exercised on a benefit anniversary. Policyholders can select a maximum benefit term of 15 years. Policyholders may not exercise options for disability or impairment cover if they have claimed for disability or impairment with any insurer in the past. Maximum benefit amount is R5 million. Discovery s Future Fund Benefit allows a policyholder to increase all benefits linked to the Life Fund. This includes Severe Illness Benefits (including Child Severe Illness), Family Trauma and Capital Disability. Discovery also includes a Guaranteed Insurability Option on the Income Continuation Benefit, which allows policyholders to increase their insured income by up to 20% every 3 years without underwriting. No comparable benefit. Discovery Life allows young professionals to buy extra life cover up to the non-accelerated capital disability amount without medical underwriting on the following events: - The registration of a bond - Marriage - Birth or adoption of a child - Establishing a new practice as a professional. Homeloan Future Cover Only available on the Homeloan Package. Offers the option to increase death cover without underwriting (except for a negative HIV test) on registering a new bond or increasing an existing mortgage bond. Additional cover is restricted to the bond amount, subject to a maximum of R5 million. Maximum benefit term is 10 years. Available at an additional premium. Student conversion options Only available as part of the student package. In terms of disability benefits, students only qualify for the Functional Impairment and Functional Protector benefits. The Functional Impairment Benefit can then be converted to one of the following: - Comprehensive Disability Benefit, - Own Occupation Disability Benefit, - Income Protector, - Temporary Income Protector (subject to the normal qualification criteria) Discovery addresses the need for future cover in the context of a bigger home loan with the Future Fund. 51

52 PREMIUM WAIVERS Discovery offers three premium waiver benefits: 1. Premium waiver on Death (expiry age 75) 2. Premium waiver on Disability (expiry age 65) 3. Premium waiver on Severe Illness (expiry age 65) The Premium Waivers cover annual contribution increases up to 20% per year. The disability waiver is triggered on Category A or D disability. The severe illness waiver is triggered on a Severity A illness. All premiums on the Life Plan are waived, including Vitality premiums. There are no waiting periods for the waiver benefits. The normal premium guarantees apply to the Premium Waivers. The Premium Waiver Benefit is only available to the principal life. Momentum offers four premium waiver benefits: 1. Premium waiver on Death (expiry age 75): Pays the premiums for the stand-alone and attached ancillary benefits on the death of the insured life under the Premium Waiver Benefit. Voluntary increases on level premium cases and increases at guarantee review dates are not covered. Premiums are waived until each benefit s expiry date. 2. Premium waiver Comprehensive Disability (expiry age 70): Pays the premiums for the stand-alone and attached ancillary benefits if the life assured is permanently and totally unable to perform their own occupation or meets the criteria of one of the 100% functional impairment events. Own occupation component has a 6-month waiting period (during which premiums are payable). There is a 14-day survival period for the functional impairment component. Voluntary increases on level premium cases and increases at guarantee review dates are not covered. Premiums are waived until each benefit s expiry date. Discovery covers the annual contribution increases on the policy up to 20% per year, whereas Momentum only covers increases up to CPI (subject to a max of 15%) per year. Unlike Discovery, Momentum does not cover increases at guarantee review dates. Discovery s waivers cover all premiums on the Life Plan, whether they accelerate the Life Fund or not. Momentum only waives premiums for benefits that accelerate the main benefit to which the waiver is attached. There is no explicit waiting period on Discovery s disability and severe illness waivers, whereas Momentum applies a 6-month waiting period on their disability waiver. No equivalent benefit. 3. Premium waiver Functional Impairment (expiry age 70): Pays the premiums for the stand-alone and attached ancillary benefits if the insured meets the criteria of one of the 100% functional impairment events. A 14-day survival period applies. Voluntary increases on level premium cases and increases at guarantee review dates are not covered. 4. Premium Waiver Retrenchment Waives a client s risk premiums for a period of 12 months in the event of retrenchment. The premium waiver on retrenchment has a number of conditions attached to it: - Clients must be employed for at least two years prior to retrenchment, of which at least one year must be with their current employer. - The benefit is only available for salaried employees. - There is a six month no-claim period from inception. - There is a one month waiting period from retrenchment. 52

53 COVER IN REAL CURR ENCIES Dollar Life Plan Offers risk protection in dollars, which is insured and paid internationally. Ancillary benefits available on the Dollar Life Fund include: - AccessCover Benefit (automatically included). - Accelerated Core or Comprehensive Plus Capital DisabilityBenefit (excluding the Category C underpin). - Minimum Protected Fund. - Dollar Discovery Retirement Optimiser - These benefits are discussed in the relevant sections. Benefits will increase annually in line with US inflation. Premiums will increase in line with the AcceleRater pattern and will be denominated in dollars. Provides significant financial benefits for managing your health and wellness, to supplement and diversify your retirement savings. This is achieved through two mechanisms: Dollar PayBack Fund - Automatically included on Integrated policies where the sum of the Cover and Financial Integrator equals 60%. - The initial fund value is equal to 250 (Core Integrator) or 500 (Comprehensive Integrator) times the monthly life cover premium. - The fund grows in line with US inflation plus an adjustment based on Vitality status and Health claims (if Health Integrated) % of the Dollar PayBack Fund is paid at age 65 or 20 years after fund inception, whichever is later. Momentum offers an ACI/ABI combination based on the Rand depreciation Index (RDI). RDI is defined as the greater of the depreciation of the Rand against the US dollar or against the Euro. Should the policyholder not be able to afford the premium increase required for the amount of cover increase, the increase can be declined. If it is declined for two consecutive years, future increases are cancelled. Cover increases vest annually at each policy anniversary. By taking out an offshore life insurance policy denominated in the most widely used currency, clients are protected against the financial impact of a life-changing event - no matter where they may find themselves in future. A significant number of clients either have or could in future have offshore liabilities. Risk protection in dollars is therefore critical to ensure that a client's liabilities are fully matched. The Dollar Life Plan provides an efficient vehicle for clients to supplement and diversify their retirement savings into offshore markets. Buy-up Cash Conversion Benefit - Available at an additional premium. - Option to receive 25% or 50% of the Cover and/or Financial Integrator Fund as a tax-free lump sum at age This payment will not reduce your risk cover. 53

54 INDEMNITY BENEFITS Discovery provides three indemnity benefits: 1. Global Health Protector Provides cover for procedures that cannot be performed in South Africa or where the prognosis is significantly better if the procedure is performed in the USA. A maximum of $1 million may be claimed over the insured's lifetime. The benefit covers the costs of transporting the insured and, if medically necessary, a family member, organ donor, doctor and/or nurse to the US, as well as accommodation and other daily costs. 2. Health Plan Protector Available to policyholders who are members of Discovery Health and Vitality (or KeyClub in the case of KeyCare members). Waives Discovery Health Plan contributions for 5 or 10 years on the death, disability or severe illness of the principal life. Returns a portion of your excess Discovery Health Plan risk contributions over Discovery Health risk claims as follows: - Every year through the Health Dividend option, or - Every 5-years with the PayBack option, with the balance at age 65 or an earlier life-changing event. May be selected as an ancillary on the Life Plan or on a stand-alone basis. The Health Plan Protector converts at expiry to provide additional life, disability and severe illness cover depending on the contingencies covered on the Medical Premium Waiver. No comparable benefit. Health Waiver (marketed by Momentum Health) The Health Waiver pays a monthly amount equivalent to the contributions being paid to Momentum Health and Save Thru Spend s Multiply Option for a 5- or 10-year period on the death, functional impairment or critical illness of the principal member and/or spouse. The Health Waiver benefit expires at age 65. Given the rapid advancements in medical technology, this benefit provides essential cover at top medical facilities in the USA. The Health Plan Protector offers unique indemnity protection for the entire family, thereby ensuring that medical expenses are covered in the event of death, disability or severe illness. Discovery s Health Plan Protector provides a powerful incentive for policyholders to manage their health by returning a portion of their excess Health Plan contributions to them, depending on their Vitality status. Momentum's Health Waiver Benefit has no comparable feature. 54

55 INDEMNITY BENEFITS (CONT.) 3. Global Education Protector Pays for the child's education on the happening of a life-changing event. The benefit may be selected to cover just the principal life or the first of the principal life or spouse to undergo the life-changing event. Life-changing events that can be selected: - Death - Severe illness (Severity A, five years on Severity B) and disability (Category A and D) - Death, disability (Category A and D) and severe illness (Severity A, five years on Severity B) - happening to the principal life, or the first of principal or spouse The benefit covers the following years of education: - Pre-school: 1 year - Primary school: 7 years - High school: 5 years - Tertiary education: duration of undergraduate degree/diploma/certificate The child has the option to upgrade to private education and to study at one of several top overseas universities. It pays the following additional amounts: - Up to 30% of actual fees for university residences - Up to 10% of actual fees for books. The amount paid is subject to the limits set by Discovery Life. The benefit expires when the child reaches age 24. The education costs are settled directly with the institution. At expiry, the Global Education Benefit converts to provide additional life, disability and severe illness cover depending on the contingencies covered on the Global Education Benefit. Education Protector The Education Protector is a lump sum risk benefit that is intended to cover the education cost of children on the happening of a life-changing event. Life-changing events that can be selected: - Death - Death and Disability (own occupation and functional impairment) - Death and impairment An annual benefit amount between R2 000 and R can be selected. The child s education cease age is selected by the client and must be between the ages of 19 and 25. It is subject to a minimum term of 10 years and maximum term of 24 years. The claim amount is calculated as the maximum of the annual benefit amount multiplied by the outstanding term and 100% of all premiums paid for this benefit, and may be used for any purpose. Benefit increase amount: - 0% - 3% 10% - CPI - RDI (Rand Depreciation Index) The Future Cover Option allows you to increase the benefit amount by up to 20% every 5 years. The premiums for the benefit will be returned to the policyholder (without interest) at benefit expiry if they have not claimed or lapsed their policy. Momentum s Education Protector is essentially decreasing term assurance. Despite careful planning, Momentum s benefit leave policyholders exposed to a number of uncertainties, since the correct level of is cover based on a number of assumptions: - the term selected - Whether the child will attend public or private school - Whether the child will attend university and where. The actual annual benefit will depend on how the lump sum is invested and could be very different from the selected amount. To determine the amount of cover, assumptions will therefore have to be made for: - Future interest rates - Future inflation - Future education inflation - Future investment returns To compensate for the uncertainty of whether assumptions are correct, the policyholder would need to take out more cover than what may be required. Discovery's benefit indemnifies the client (subject to benefit maximums set out per education phase), which facilitates simpler and more efficient planning and leads to more certainty that the need is catered for. Further competitive advantages of Discovery s Global Education Protector Cover is available on the occurrence of a severe illness. The benefit allows for full private schooling. Covers the cost of 19 overseas universities (including Harvard, Yale, Oxford and Cambridge) should the child gain enrolment to these facilities. The fees are approximately $ a year for these facilities. The benefit pays up to an additional 40% for books and residence. 55

56 INDEMNITY BENEFITS (CONT.) The benefit provides indemnity cover while the child is being educated and lump sum cover thereafter (through the conversion). Momentum policyholders will only get their premiums back at the end of the term provided they have not lapsed the benefit. Discovery policyholders can take advantage of the PayBack Benefit on the Classic Plan. HOMELOAN PROTECTOR No comparable benefit. Only available as an ancillary to the death benefit on the Homeloan Package. Maximum cover of R5 million (R5.5 million for professionals). The benefit covers critical illness, occupational disability, functional impairment and retrenchment. - Under the functional impairment and critical illness components, 100% of the benefit amount will be paid if the policyholder meets the 100% severity level % of the benefit amount will be paid on occupational disability. - Under the retrenchment component, the claim amount will be 4% of the benefit amount after 3 months of continuous unemployment as the result of the insured life being retrenched. Expiry ages: - Occupational disability: 65 - Retrenchment: 65 - Functional impairment: 70 - Critical illness: whole of life Waiting periods - Retrenchment cover: 3 months. - Occupation disability cover: 6-month waiting period. - Premiums are payable during the waiting period. With a Discovery Life Policy, policyholders can cover their home loan in the event of death, disability and severe illness. The retrenchment cover is very restrictive in that the insured has to be in a permanent fulltime job for at least 2 years, of which 1 year has to be with the current employer. A 6-month waiting period on occupational disability doesn t meet the need of funding a home loan on disability. It is unlikely that a policyholder will be able to maintain the home loan repayments during these 6 months. The same can be said for the 3-month waiting period applicable to the retrenchment cover benefit. 56

57 RETIREMENT FUNDING & INVESTMENT Discovery retirement Optimiser The Discovery retirement Optimiser is a retirement annuity vehicle that is available as an ancillary on the Life Plan. The Discovery retirement Optimiser includes four benefits which are briefly discussed below. Momentum has two savings vehicles: 1. The Retirement Provider - A retirement annuity (RA) that allows for either lump sum or recurring contributions. 2. The Savings Benefit - An endowment-type vehicle with recurring contributions. These products can only be accessed if a client has a qualifying risk product with Momentum. Both products provide bonuses that will form part of the fund value if kept to maturity. Momentum will pay 75% of the accumulated fund administration fees as a loyalty bonus on maturity or death. Accrued bonuses will be removed or reduced if a client cancels or adversely alters their benefit. The loyalty bonus will be applied at the end of the initial savings term to the recurring investment value at that time. The accumulated fees will grow at the same rate (net of tax, management and performance fees) as the fund. Single premium benefits do not qualify for a loyalty bonus. The Discovery retirement Optimiser is unique in that it views retirement as a life-changing event. Through a structural breakthrough, it harnesses risk benefits to create a powerful boost to a policyholder s retirement funding. Momentum does not offer a comparable product. Discovery gives investors access to a wide range of funds such as Target Retirement Date Funds, Discovery multi-manager risk profiled funds and all Escalator and Geared Escalator Funds. Discovery does not charge investors additional administration fees when they select external fund managers. Momentum charges performance fees on many of their funds. This fee is not reflected in the RIY and can understate the cost of the product. 1. Retirement Investment Integrator - Gives you a reduction of between 50% and 100% on the yearly fees on the retirement annuity, which allows your investment to grow faster. - The percentage reduction is based on your monthly retirement annuity contributions. 2. Retirement PayBack Booster - Boosts your Integrator PayBacks by up to 100% at retirement if you choose to reinvest them. No equivalent benefit. No equivalent benefit. 57

58 RETIREMENT FUNDING & INVESTMENT (CONT.) 3. Life Plan Optimiser - Converts your unneeded risk cover to boost your retirement savings. - Risk cover needs typically decline due to: Children becoming financially independent. Reducing future life expectancy. Large part of debt being settled. - The draw-down of the Life Fund is matched with annual taxfree instalments that increase with inflation from the selected retirement date until the policyholder s death. - The size of the boost depends on: Level of Life Plan ancillary take-up Size of a client s Life Fund Term to selected retirement age - The maximum draw-down is 4% of the Life Fund per year. - The Life Fund will not be reduced below 50% of the Life Fund value at the selected retirement age as a result of these deductions. Retirement Booster The Retirement Provider is enhanced by the Retirement Booster if: - Risk benefits are held to maturity. - The qualifying Momentum benefit has one of the following regular annual increases: Premium increases of 10% or more. Premium increases in line with CPI. Benefit increases of 5% or more. Benefit increases below 5% in combination with a compulsory premium increase. Benefit increases in line with CPI or the Rand Depreciation Index (RDI). The Booster is calculated as 1.5% x risk premium x outstanding duration until retirement. The 1.5% can be reviewed by Momentum. The Longevity Protectors receive an enhanced boost of 4.5%. The boosted allocations is paid out free of tax. No interest is earned on allocations. Allocations cease when the retirement annuity is made paid up. 4. Ill-health Income Booster - Boosts your retirement income to reduce the risk of exhausting your retirement savings in the event of a serious illness or disability. - It increases your retirement income by up to 25%, depending on your average income over the 12 months before the accident. No equivalent benefit. 58

59 GENERAL EXCLUSIONS Discovery Life may refuse claims if: Your death or death of any of your dependants is due to suicide and occurs within two years of cover commencing or reinstatement of your policy. Your disability, severe illness or family illness or that of any of your dependants was deliberately self-inflicted. You fail to disclose information about physical disabilities or medical conditions that affect you or any of your dependants at the time that cover commences. You fail to notify Discovery Life of your correct occupation at policy inception, or of a change in occupation from that nominated at policy inception, where the new occupation is classified by Discovery Life as falling into a risk category for which the relevant benefit would not have been granted.discovery Life is unable to obtain sufficient medical or financial (if applicable) evidence from the assured lives, your dependants or treating medical practitioner to fulfill our criteria for making a benefit payment. The disability, severe illness or family illness claim was a result of: - Willful and deliberate breaking of any law or willful involvement in any riot, insurrection, usurpation of power, martial law or war. - Regular participation in any hazardous sport or pursuit which was not disclosed to Discovery Life at any point in time prior to the claim. - Intentional and negligent consumption of poisons, drugs and narcotics, unless prescribed by a registered medical practitioner (neither you nor your dependants may perform the role of registered medical practitioner in such a case). Additional exclusions on the Income Continuation Benefit, Temporary Income Continuation Benefit and Overhead Expenses Benefit: - Treatment/rehabilitation for alcohol or narcotic abuse. - Routine pregnancy, including maternity leave. Momentum may refuse claims in the following circumstances: If the insured life commits suicide within two years of the starting date of the benefit. When restarting the benefit, a new two-year period will apply. If the insured life increases the benefit amount, a new two-year period will apply to the increased portion from the date of the increase. The claim will not be admitted if it arose, directly or indirectly, as a result of: - The insured life or policyholder s participation in any terrorist activity, riot, civil commotion, rebellion or war. - The insured life or policyholder s wilful and deliberate breaking of any criminal law that accelerates or increases the risk. - The insured life or policyholder s intentional or grossly negligent self-inflicted injury. - Radioactivity and nuclear explosion. Maternity leave is an exclusion on the Income Protector, Temporary Income Protector, Business Overheads Protector and Business Protector. The exclusions have been taken directly from the policy documents of the relevant companies. 59

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61 This document compares the most comparable benefits available from Discovery Life and its competitors. There are however differences in features between the comparable benefits which cannot be in these one pagers. For more details please consult the full product comparison which are available on the Discovery website. Disclaimer: While every care has been taken before opinions and views are given, no representation, warranty or understanding (expressed or implied) is given and no responsibility or liability is accepted by Discovery Life as to the accuracy of the information contained herein. Any recommendations made must take into account your clients specific needs and personal circumstances. Any legal, technical or product information contained in this document is not to be construed as advice by Discovery Life. Discovery Life is an authorised financial services provider. Registration number 1966/003901/06 Discovery Life 155 West Street Sandton PO Box 3888, Rivonia 2128 Contact centre Fax