Comparing Discovery Life to key competitors

Transcription

1 Comparing Discovery Life to key competitors D ISCOVERY LIFE AND SANL A M

2 CONTENTS FUNDING PATTERNS... 3 PREMIUM GUARANTEES... 6 BENEFITS FOR REMAINING HEALTHY AND DRIVING SAFELY... 8 BOOSTING YOUR COVER...12 ACCESSCOVER AND ACCESSCOVER PLUS...13 DEATH BENEFITS...15 BENEFITS TO CHARITIES...17 MINIMUM PROTECTED FUND VERSUS STAND-ALONE BENEFITS...17 INCOME DISABILITY BENEFITS AND OVERHEAD EXPENSES BENEFITS...28 DREAD DISEASE BENEFITS...38 FEMALE SEVERE ILLNESS BENEFIT AND CHILDBIRTH BENEFIT...47 CHILD SEVERE ILLNESS COVER...47 FAMILY TRAUMA COVER...48 PARENT SEVERE ILLNESS BENEFIT...48 PREMIUM WAIVERS...50 COVER IN REAL CURRENCIES...51 INDEMNITY BENEFITS...52 GENERAL EXCLUSIONS...54 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 FUNDING PATTERNS Discovery Life has three funding patterns: 1. The AcceleRater Plan An ABI of 3% or CPI can be selected. The ACI is based on the ABI selected and the policyholder's age. Sanlam has five funding patterns: The available payment patterns and growth choices differ between products. 1. Fixed compulsory growth ACI / ABI combinations: ACI ABI 5% 0% 10% 3.5% 12% 5% 7% with whole-of-life guarantee 0% 11% with whole-of-life guarantee 3.5% 13% with whole-of-life guarantee 5% On the compulsory premium patterns, the policyholder is unable to link the growth of his cover to inflation, the highest cover growth option being 5% per year. This will often be inappropriate from a financial planning point of view. It is especially problematic with buy-and-sell agreements, where a policyholder s responsibility (to buy out his partner s share) is linked to the growth of the business. 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. No comparable benefit.. 2. The 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. 2. Age-related compulsory growth Aggressive option and Standard option available. The Aggressive option starts with a lower initial premium, but has steeper premium increases than the Standard option. Aggressive option ACI% FOR THE SELECTED ABI% ABI = 0% ABI = 3.5% ABI = 5% <29 3% 7.5% 9.5% % 8.5% 10.5% % 9.5% 11.5% % 10.5% 12.5% % 11.5% 13.5% % 12.5% 14.5% % 13.5% 15.5% >40 10% 14.5% 16.5% 3

4 FUNDING PATTERNS (CONT.) Standard option ACI% FOR THE SELECTED ABI% ABI = 0% ABI = 3.5% ABI = 5% <31 0% 4.5% 6.5% % 6.5% 8.5% % 7.5% 9.5% % 8.5% 10.5% % 9.5% 11.5% % 10.5% 12.5% % 11.5% 13.5% % 12.5% 14.5% % 13.5% 15.5% >61 10% 14.5% 16.5% The above table applies to whole life products only, the increases are different for income protector products. 3. The 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 3. Level: Growth optional Premiums remain level over the term for a level amount of cover. Growth choices: ACI ABI 0% 0% Not specified in advance* 5% Not specified in advance* 10% Not specified in advance* CPI (min 0%, max 15%) Not specified in advance* R/$ (min CPI, max 35%) Not specified in advance* R/Pound (min CPI, max 35%) Not specified in advance* R/Euro (min CPI, max 35%) *The payment increase will depend on the increase in the benefit amount and the age of a life insured at the time of the cover increase. No comparable benefit. 4

5 FUNDING PATTERNS (CONT.) Discovery has no equivalent premium pattern. 4. Stepped: Growth optional Premiums are guaranteed for a choice of 10, 15, 20 or 25 years. Same premium and cover growth combinations as on the Level option. At the end of the initial guarantee period, the policy is automatically extended and the premium recalculated based on age at the time of increase. Thereafter five-year guarantee periods will commence. The increases after the first guarantee period and every five years thereafter on the Sanlam Stepped option are based on the age of the policyholder at each date. The percentage increase in premiums at each period is as follows: STEPPED Initial premium R153 Increase after 10 yrs 71% Increase after 15 yrs 32% Increase after 20 yrs 35% Increase after 25 yrs 46% Increase after 30 yrs 87% *35 year old non-smoker R1m life cover, 0% ABI The premiums on the Sanlam Stepped option are clearly not sustainable, as can be seen from the high premium increases reflected in the table above. This leaves great uncertainty for policyholders as there is no guarantee on the premium increase from year to year. Discovery has no equivalent premium pattern. 5. Yearly Rated Growth The payment will be recalculated each year using the increased benefit amount (if cover growth applies), payment rates for new business and the age of the life insured at the time of increase. Same premium and cover growth combinations as on the Level option. Rates are not guaranteed. 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. No guarantee period applies to plans with the yearly-rated payment pattern. On the other payment patterns, Sanlam provides the following guarantee options for Whole Life products: 1. Guarantee for life - The initial payment has been calculated for the full term of the benefits. - Only available if compulsory premium growth of 7%, 11% or 13% has been selected at the start of the policy. 2. Guarantee term between 5 and 15 years - The initial payment has been calculated for the full term of the benefits. - Not available for the Stepped and Yearly Rated Growth premium patterns. - At the end of the first guarantee period, Sanlam guarantees that the premium increase will not be more than the following: INITIAL GUARANTEE PERIOD MAXIMUM % PREMIUM INCREASE 5 years 20% 6 years 21% 7 years 22% 8 years 23% 9 years 24% 10 years 25% 11 years 26% 12 years 27% 13 years 28% 14 years 29% 15 years 30% - After the initial guarantee period, premiums are reviewed every five years. - Increases are not quantified at these later reviews. Discovery provides certainty for whole of life on all funding plans, where Sanlam only quantifies guarantees for whole of life on their 7%, 11% and 13% Fixed Compulsory growth plans. On all other plans, Sanlam does not quantify guarantees after the initial guarantee period. This may leave clients in a position where they need their cover to continue, but they cannot afford the premium increases on their policies. 6

7 PREMIUM GUARANTEES (CONT.) 3. Guarantee term of 10, 15, 20 or 25 years - Only available on the Stepped pattern. - The initial payment has been calculated for the guarantee period only. - After the initial guarantee period, premiums are reviewed every five years. - Premium reviews will be based on the life insured's age at that point in time. - No limit to the increases at the end of each guarantee period. On the stepped payment pattern you could expect to see increases that look as follows: AGE PREMIUM INCREASE 40 18% 45 35% 50 42% 55 37% *Assumptions: Male non-smoker; R2 million life cover Sanlam has only one guarantee option on their Income Protector products: - An initial guarantee period of five years applies, at the end of which Sanlam guarantees that the premium will not increase by more than 20%. - After the initial guarantee period, premiums are reviewed every five years. No quantified premium guarantees are offered at these later reviews. - The initial payment has been calculated for the full term of the benefit. Discovery's whole of life premium guarantee also applies to the Income Continuation Benefit. This provides certainty of future premiums. 7

8 BENEFITS FOR REMAINING HEALTHY AND DRIVING SAFELY Health Integrator Provides initial premium reductions of up to 20%. Uses a client's Vitality status and Discovery Health claims to determine their future premium adjustments. Discovery Life provides premium certainty to claimants by capping Health Integrator adjustments at 0% after a qualifying claim. 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 Discovery 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 depending on Health Plan type, Vitalitydrive status and DiscoveryCard spend. 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). Sanlam has no matching benefit. The Integrator mechanism allows policyholders to control their premiums and increase their PayBack through their health and wellness management and driving behaviour. They may obtain further premium reductions by progressing through the Vitality and Vitalitydrive statuses. In addition to the normal premium guarantees, Discovery Life offers a further guarantee on the Health Integrator, Vitality Integrator and Vitalitydrive Integrator through the Maximum Protected Premium. By incentivizing a healthy lifestyle through financial rewards, Discovery Life is able to maintain a healthy risk pool - thereby reducing mortality and morbidity costs. By rewarding good driving behaviour, Discovery Life is able to maintain a risk pool with low involvement in car accidents - further reducing mortality and morbidity costs. This value is then returned to clients through the PayBack benefit. The Annual Guaranteed PayBack provides optimal short-term tangibility and certainty for clients, while Vitality Memory allows clients to build additional longterm certainty and sustainability into their PayBack. 8

9 BENEFITS FOR REMAINING HEALTHY AND DRIVING SAFELY (CONT.) Vitality Integrator Provides initial premium reductions of up to 17.5%. Uses a client's Vitality status to determine their future premium adjustments. Discovery Life provides premium certainty to claimants by capping Vitality Integrator adjustments at 0% after a qualifying claim. Includes the PayBack benefit (on the Classic Life Plan ), which provides a return of up to 25% of a policyholder s Discovery Life premiums every five years, 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 18.75% are possible depending on Vitalitydrive status and DiscoveryCard spend. Sanlam has no matching benefit. Vitalitydrive Integrator Offers initial premium reductions of up to 10% and uses Vitalitydrive status to determine future premium adjustments. The Vitalitydrive Integrator can be combined with the Health or Vitality Integrator, resulting in initial premium reductions of up to 28% and 25.75% respectively. Sanlam has no equivalent benefit. Health Plan Protector Described in detail in Indemnity Benefits section. Offers reward for staying healthy through Health Dividends and Health Fund. 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 at the earlier of age 65 or a life-changing event. Sanlam has no equivalent 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. 9

10 BENEFITS FOR REMAINING HEALTHY AND DRIVING SAFELY (CONT.) 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, where the options available depend on the ancillary take-up on the policy. 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). The maximum entry age for the benefit is age 56 next. Sanlam has no equivalent 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. Discovery has recognized the importance of having extra cashflow available during 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. 10

11 BENEFITS FOR REMAINING HEALTHY AND DRIVING SAFELY (CONT.) 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: 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, where the options available depend on the ancillary take-up on the policy. 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). The maximum entry age for the benefit is age 56 next. Sanlam has no equivalent 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. 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. 11

12 BOOSTING YOUR COVER 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 PERCENTAGE BOOST 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. 12

13 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. 13

14 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 own life cover into cash if their spouse dies because of an accident or violence. The conversion rate is 80c per rand. 14

15 DEATH BENEFITS Discovery Life only sells whole-of-life insurance. 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. 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. 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. No equivalent benefit. No equivalent benefit. Terminal illness (automatically included) 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). Sanlam offers whole-of-life and term assurance. Policyholders can structure their policies in two ways: 1. Death benefits on separate policies for principal and spouse: - This ensures that claims made by one life do not impact the benefits of the other life. 2. First Death of principal and spouse (one policy): - Claims made by one life will impact the benefits of the other life. - If a claim is admitted, the death and accelerator benefits will cease. However, the remaining lives linked to this benefit have the option to take out death and accelerator benefits up to the cover amount at the date of claim, without proof of health. - A claim under an accelerator benefit will reduce the First Death cover amount. The cover amount of an accelerator benefit will then be capped at the reduced First Death cover amount. Death Income Benefit Income payments equal to the cover amount will start on the life assured's death, and will continue until the selected benefit cease age (ranging from age 55 to 90 in five-yearly increments). Accidental Death Benefit Pays a lump sum on the death of the insured life, if death resulted directly and solely from a bodily injury and occurred within 12 months of injury. Terminal illness (automatically included) Sanlam 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). A lump sum death benefit is more flexible in that it can be used (in part or in full) to purchase a whole life or term annuity, or it can be used to cover immediate expenses such as capital loan repayments. 15

16 DEATH BENEFITS (CONT.) Spouse Life Cover BenefitBooster (automatically included) 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. Advances on Death Claims (automatically included) 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). Funeral Benefit Sold as a stand-alone whole of life benefit. Up to 15 lives including 5 children, 4 parents and 4 extended family members. 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 or for a stillborn child). Claims paid within 24 hours of receiving the necessary paperwork. Features automatically included: - Premium PayBack Benefit: returns up to 17.5% of premiums every year (Classic Plan). - Double payout for principal and spouse on accidental death. - Education Benefit: payment of up to R4 500 (R3 900 on the Essential Plan) on the principal or spouse's death for each child on the policy. - Grocery Benefit: payment of up to R3 600 (R3 000 on the Essential Plan on the principal and spouse's death. - Memorial Benefit: payment of R5 000 on the principal and spouse's death. - Spouse premium waiver for one year. No equivalent benefit Funeral and other immediate expenses Benefit Sold as a stand-alone benefit. Pays the benefit within 48 hours of Sanlam s requirements being met. Maximum cover is R per life assured. Whole life or term cover available. Funeral TopCover Only available for lives who do not cover for the Funeral and other immediate expenses benefit. Sold as a stand-alone whole of life benefit. Up to 22 lives including 10 children, 4 parents and 6 other dependants. Maximum Cover: R for principal and spouse and R for other insured lives. Automatic baby cover of R3 000 (payable on death within the first 6 months or for a stillborn child). Pays the benefit within 48 hours of Sanlam s requirements being met. Features automatically included: - Baby Benefit - A Funeral Transport Benefit, where transportation will be arranged for the deceased (and one relative) to a South African funeral parlous nearest to the place of burial. Optional rider benefits: - Waiver of Premium at Death Benefit 16

17 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 comparable benefit. Policyholders have communities that rely on them during their lifetime. These communities are often not provided for by the deceased s estate. No Vitality Blue Bronze Silver Gold Diamond 20% 30% 40% 50% 60% 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. MINIMUM PROTECTED FUND VERSUS 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. Sanlam allows policyholders to choose certain benefits on a nonaccelerated basis. This means that claims on these benefits have no impact on other benefit amounts. The sum assured selected on a stand-alone lump sum disability benefit is the maximum that can be paid out over the lifetime of the policy, i.e. the benefit expires once the full benefit amount has been paid out. On Sanlam s stand-alone dread disease benefits, policyholders can claim more than the original sum assured, if the subsequent claim is for an unrelated illness. A stand-alone benefit from Sanlam should always be compared to the corresponding non-accelerated benefit offered by Discovery Life. 17

18 MINIMUM PROTECTED FUND VS STAND-ALONE BENEFITS (CONT.) 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). The Minimum Protected Fund provides superior value compared to the stand-alone benefits offered by Sanlam. To show this we use a client who has R1 million Severe Illness cover: Maximum total payout Payment for subsequent nonprogressive related claims (after 14 days) Classic Plan with 100% MPF Unlimited The full claim percentage multiplied by R1 million is paid, regardless of severity Essential Plan with a 100% MPF Up to R2 million for related claims The full claim percentage multiplied by R1 million is paid, but only for higher severities Sanlam Standalone Severe Illness Benefit Up to R1 million for related claims The difference in claim severities multiplied by R1 million is paid, but only for higher severities Payment for The full claim subsequent percentage unrelated multiplied by claims (after 14 R1 million is days) paid The full claim percentage multiplied by R1 million is paid 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 Sanlam 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 Sanlam's stand-alone Critical Illness Benefit, only cover for unrelated illnesses is reinstated. 18

19 LUMP SUM DISABILITY BENEFITS Discovery Life offers four lump sum disability options: 1. Core Capital Disability Benefit 2. Comprehensive Plus Capital Disability Benefit 3. LifeTime Capital Disability Benefit 4. LifeTime Plus Capital Disability Benefit Sanlam offers six lump sum disability products: 1. Disability for regular occupation* 2. Disability for regular and reasonable alternative occupation* 3. Disability plus Whole Life Impairment 4. Functional Impairment plus Disability for regular occupation 5. Functional Impairment plus Disability for regular and reasonable alternative occupation 6. Accidental Disability 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 Sanlam:* DISCOVERY Core Comprehensive Plus SANLAM Disability plus Whole Life Impairment Functional Impairment plus Disability for regular occupation* - Sanlam s occupational disability benefits can taper. For a complete like-for-like comparison, select the benefit without tapering. - Back and mental disorder exclusions can apply on the occupational underpin. For a complete like-for-like comparison, the Comprehensive benefit without exclusions for specific conditions must be selected. - The unique features of the Classic Life Plan are: Category C Disability Claims Dynamic Spend Protector Extensive multiple claims facility Claims are assessed based on: Objective medical criteria Activities of daily living Loss of income (Comprehensive Plus option on the Classic Life Plan) Ability to perform nominated occupation Objectively and clinically assessed LifeTime Impact Factors (LifeTime options) Future salary growth (LifeTime options) Covers total and partial permanent disability (partial disability covered at 50% on the Comprehensive Plus option). Claims are assessed based on: Ability to perform regular occupation or any reasonable alternative occupation (depending on option selected) Recognised disability criteria Ability to take care of body or personal interests Functional Impairment definitions (if selected) Physical impairment (if the Disability plus Whole Life Impairment benefit has been selected) Covers total and partial permanent disability (partial permanent disability covered at 25%, 50% or 75% through the Functional Impairment definitions and at 10%-60% through the Physical Impairment definitions). Unlike Sanlam s benefit, Discovery Life s benefit covers temporary disability through a unique lossof-income underpin. boosts the payout based on the long-term impact of the disability. has no survival period condition. offers cover up to age 70. 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. boosts DiscoveryCard cash backs by up to 50% through the Dynamic Spend Protector. 19

20 LUMP SUM DISABILITY B ENEFITS (CONT.) No general waiting or survival period. All products can be taken out on an accelerated or nonaccelerated basis. No equivalent benefit. No equivalent benefit. 30-day survival period applies to the Functional Impairment component and a 14-day survival period applies to the Accidental Disability Benefit. All products can be taken out on an accelerated or nonaccelerated (stand-alone) basis, except for the Accidental Disability benefit, which can only be taken on a stand-alone basis. 1. Disability for regular occupation Pays 100% on the following: - Inability to perform occupational demands of occupation engaged in before disability. - The total, permanent and irrecoverable loss of: vision in two eyes, or use of two hands, or use of two feet, or use of one hand and one foot. - Disability, so that insured is totally, permanently and continuously unable to take care of body or personal interests, or unable to engage in the occupational demands the insured was engaged in immediately before the disability. Choosing Sanlam s top-of-the-range benefit (Functional Impairment plus Disability) results in a 30-day survival period (without life support) being forced on the policyholder. The probability of a claim arising from a loss of two eyes, two hands, two feet or a combination thereof is small, compared to all other causes of disability. The definition of regular occupation is similar to our "nominated occupation" definition. Products that only use the occupational disability definition lacks objectivity, which creates uncertainty for policyholders. Discovery Life s Capital Disability Benefits uses objective medical criteria spanning all body systems in the assessment of a claim, making cover more comprehensive. 2. Disability for regular or any reasonable alternative occupation Same as above, except that the definition of occupation is defined as follows: - the occupation the insured engaged in for income immediately before the disability, as well as an occupation we may reasonably expect him/her to engage in, taking into account education, training and experience. 20

21 Discovery s Comments LUMP SUM DISABILITY BENEFITS (CONT.) 1. Core Capital Disability Benefit 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). 3. Disability plus Whole Life Impairment Benefit Pays: - 10% - 100% (depending on severity) on meeting the conditions of one of the defined physical impairment claim events % on disability, so that insured is totally, permanently and continuously: unable to take care of body or personal interests unable to engage in the occupational demands the insured was engaged in immediately before the disability. 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 nonaccelerated Capital Disability Benefit. 2. Comprehensive Plus Capital Disability Benefit 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 4. Functional Impairment plus Disability for regular occupation Pays: - 100% on being totally and permanently unable to take part in the occupational demands the insured took part in immediately before the disability - 25% - 100% (depending on severity) on meeting the conditions of one of the defined functional impairment claim events. Both benefits assess disability in terms of the ability to meet occupational and medical criteria. Unlike Sanlam's benefit, Discovery Life s benefit covers temporary disability through a unique loss of income underpin offers cover up to age 70 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. By including a loss-of-income underpin in the assessment, Discovery can pay out claims long before Sanlam in cases where it hasn t been confirmed if the condition is permanent. The loss-of-income underpin also covers illnesses that cause a low level of impairment, yet a high loss of income. 19% of our Capital Disability claims qualified under Category C in Examples include: knee replacement; multiple fractures (MVA), gunshot (nerve graft left foot), broken pelvis (quad bike) and 21

22 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. bowel resection (complications). Some policyholders made a full recovery, while others got 50% and 100% payouts when the condition was confirmed to be permanent. No equivalent benefit. 5. Functional Impairment plus Disability for regular and reasonable alternative occupation Same as above, except that the definition of occupation is defined as follows: a. the occupation the insured engaged in for income immediately before the disability, as well as an occupation we may reasonably expect him/her to engage in, taking into account education, training and experience.. 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; No equivalent benefit. Sanlam does not offer a benefit that considers the long-term impact of a disability on a person s ability to earn 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. It is possible for a client to receive a payout in excess of 100% of the sum assured under the LifeTime Capital Disability benefits. Sanlam does not offer a payout greater than the sum assured. 22

23 LUMP SUM DISABILITY BENEFITS (CONT.) - Impact of any therapy and rehabilitation required and their associated discomfort; - Impact of any assisted care and devices. 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 - 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; No equivalent benefit. Sanlam does not offer a benefit that considers the long-term impact of a disability on a person s ability to earn 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. It is possible for a client to receive a payout in excess of 100% of the sum assured under the LifeTime Capital Disability benefits. Sanlam does not offer a payout greater than the sum assured. 23

24 LUMP SUM DISABILITY BENEFITS (CONT.) - 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 equivalent benefit. 6. Accidental disability Similar to the Disability for regular occupation benefit, but the disability must be caused directly and solely by a bodily injury and must have manifested within 12 months after the injury. Exclusions and medical criteria Chronic fatigue syndrome and fibromyalgia are excluded under Category C and D claims. Exclusions and medical criteria Sanlam provides policyholders with two options: 1. "With exclusions for specific conditions" - depression or dysthymia, whether as an episode or disorder, or as part of the symptom complex of another psychiatric diagnosis - post-traumatic stress disorder - fibromyalgia - chronic fatigue syndrome and its synonyms - a back condition, unless it is paraplegia, quadriplegia, malignant tumours of the spinal cord and vertebral column, or failed back syndrome after multiple spinal surgery - an injury or illness that directly or indirectly resulted from, or is traceable to, any of the above causes - a complication that directly or indirectly is attributable to any of the above causes, or to such an injury or illness - a side-effect of treatment for any of the above causes, or for such an injury or illness, or for such a complication. 2. "Comprehensive" - does not have the exclusions for psychological or back conditions. Given that back conditions are one of the fastest growing causes of disability worldwide, comprehensive cover in this area is a necessity. Consider how back and mental disorders, which make up about half of all disability claims, are covered by Discovery and Sanlam: Sanlam s Functional Impairment Benefit provides a maximum of 25% per region of the spine (cervical, thoracic and lumbosacral). Discovery Life covers each region at 50% to 100%. Sanlam does not cover partial mental disorders. In fact, Sanlam only covers certifiable mental conditions that result in the patient being permanently committed to an institution. Discovery Life covers mental disorders at 50% and 100%. Discovery Life s assessment includes a loss of income underpin to assess claims where it is difficult to confirm the permanency of a condition, which is especially relevant for back and mental disorders. 24

25 LUMP SUM DISABILITY BENEFITS (CONT.) Discovery has a sophisticated Activities of Daily Living (ADL) assessment to cover subjective claims. ADLs such as communication, sensory functions, social interaction and stress adaptation are particularly suitable in assessing mental disorders. Sanlam does not explicitly cover the following conditions: - Schizophrenia - Inability to comprehend and communicate language symbols - Profound short-term memory loss - Moderate to severe cognitive impairment - Persistent confusional state - Permanent hemianopia - Persistent disabling monoplegia - Complete deafness in one ear - Persistent, continuous disturbance of bowel function with evidence of organic disease - Central nervous system manifestations of hepatic insufficiency - Significant ongoing ascites which is refractory to treatment - Permanent primary sclerosing cholangitis - Awaiting liver transplantation - End-stage renal disease - Grade IV retinopathy - Advanced AIDS - Cauda equina syndrome - Severe facial disfigurement - Ongoing skin disorder affecting more than 50% body surface area - Cancer is only covered when it results in permanent functional impairment. The cancer must have been optimally treated and must have reached the stage of maximal medical improvement before functional impairment can be assessed and a claim be considered. There are many situations where the payouts under the Functional Impairment Benefit are unrelated to the financial liability that the policyholder has. For example: There is no payout for severe cognitive impairment. Only 50% is paid for severe dementia. Only 50% is paid for malignant tumours in the spinal cord. Permanent assistance with all Activities of Daily Living would only qualify for 50% under the nervous system. Inability to swallow without choking and suctioning only qualifies for 75%. Inability to control eyelid closure only qualifies for 50%. Discovery Life recognises that Stage III and IV cancer will result in an inability to work, if not immediately, then in the near future. Therefore a payment is made on diagnosis of Stage III and IV cancer where ongoing medical care is required. 25