Product Comparison Discovery Life and Momentum Myriad

Transcription

1 Product Comparison Discovery Life and Momentum Myriad 1

2 Description Page Choice of LIFE PLAN 3 Funding patterns 4 Premium guarantees 7 Policy structure 8 Benefits for remaining healthy 9 Minimum Protected Fund versus stand-alone benefits 14 Death benefits 16 Protection from adverse economic conditions 19 Lump sum disability benefits 20 Income disability benefits and the Overhead Expenses Benefit 30 Dread disease benefits 44 Combining benefits 52 Female Severe Illness Benefit and Childbirth Benefit 56 Child Severe Illness Benefit 56 Parent Severe Illness Benefit 58 Accidental HIV Benefit 58 Future cover without medical underwriting 58 Premium waivers 61 Cover in "real" currencies 63 Indemnity benefits 65 Homeloan Protector 68 Retirement funding and investment 69 General exclusions 73 August 2010 In formulating the information in this document, Discovery Life has taken due care to ensure that the views and opinions are based on information which is relevant and accurate. The product comparison serves as an illustrative tool only. The information contained herein is subject to change without notice. Where there is a conflict between provisions of this product comparison and the provisions of the policy contract, the provisions of the policy contract will prevail. While every care has been taken before opinions and views are given, no representation, warranty or undertaking (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. 2

3 MYRIAD Discovery s comment With Discovery there are two LIFE PLAN options available: Classic LIFE PLAN Essential LIFE PLAN The following features are unique to the Classic LIFE PLAN: Unlimited multiple claims for Capital Disability and Severe Illness Category C Capital Disability Automatic child and parent Severe Illness coverage Global Treatment Benefit Medical Contribution Funder benefit at age 65 Default 10% cash conversion on the Financial Integrator PayBack The Discovery LIFE PLAN has been designed to offer clients a structured solution to meet their individual needs. Due to the unique benefits offered by the Classic LIFE PLAN, the Essential LIFE PLAN should be used when comparing to Myriad. Choice of LIFE PLAN Premium Comparison Benefit Classic Essential % Life Cover (incl Cover Integrator and Financial Integrator ) Severe Illness Capital difference R R % R R % R R % Disability Total R R % 40 year old male non-smoker, Accelerator, Health Integrator 40% Cover Integrator and 20% Financial Integrator, R 2 mil Life Cover, R 1 mil Severe Illness Benefit and R 1.6 mil Capital Disability 3

4 MYRIAD Discovery s comment Funding patterns Discovery Life has four funding patterns: 1. The AcceleRater Plan: The Automatic Contribution Increases (ACI) and Automatic Benefit Increases (ABI) are set out below: ACI/ABI combinations ACI for Age ACI for ABI next ABI = 3% = 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. 2. The SupeRater Plan: Provides the following: o Discounts on the AcceleRater rates for whole of life benefits of between 12.5% and 20% o The same annual premium increases as the AcceleRater Plan o An additional compulsory increase of 20% every 10 years. The increase every ten years only applies to premiums that were discounted up front and not the total premium. On average, the SupeRater Plan will overtake the AcceleRater Plan after approximately 20 years. Myriad has three funding patterns: 1. The Compulsory Premium Pattern: The Automatic Contribution Increases (ACI) and Automatic Benefit Increases (ABI) are set out below. The ACI's for which each policyholder qualifies depends on the policyholder s age at entry. A compulsory premium pattern of 5% is available for all benefits with a fixed term. Entr y age ACI/ABI combinations ACI for ABI = 0% < 30 3% 30 3 to 5% 32 3 to 6% 34 3 to 7% 36 3 to 8% 38 3 to 9% 40 3 to 10% ACI for ABI = 3% -10% ABI + 3% + age adjustment ABI + 3 to 5% + age adjustment ABI + 3 to 6% + age adjustment ABI + 3 to 7% + age adjustment ABI + 3 to 8% + age adjustment ABI + 3 to 9% + age adjustment ABI + 3 to 10% + age adjustment ACI for ABI = CPI CPI + 3% + age adjustment CPI + 3 to 5% + age adjustment CPI + 3 to 6% + age adjustment CPI + 3 to 7% + age adjustment CPI + 3 to 8% + age adjustment CPI + 3 to 9% + age adjustment CPI + 3 to10%+ age adjustment In the above table the ABI is specified by the client and the ACI shown represents the premium increases required to fund this benefit increase. The additional premium increase required to fund Discovery s premium and benefit increases are quantified, creating certainty for the policyholder of exactly what his premium and benefit increases will be each year. Where a benefit increase is selected under Myriad, the upward premium adjustment required for the additional benefit at the policyholder s age at each anniversary is not guaranteed. Similarly, where a premium increase is selected, the benefit adjustment is not guaranteed. Discovery s AcceleRater Plan is comparable to Myriad s compulsory premium pattern with a 5% compulsory premium increase. Discovery s SupeRater Plan is comparable to Myriad s compulsory premium pattern with a 7% compulsory premium increase. Purchasing Discovery s Integrator entitles additional premium reductions at inception of the LIFE PLAN. These are: 15% to 20% on the Health Integrator 15% to 17.5% on the Vitality Integrator 15% on the DiscoveryCard Integrator 29% to 32% on a combination of the Vitality or Health Integrator and the DiscoveryCard Integrator The Integrator allows policyholders to control their premiums through their health, wellness and DiscoveryCard spend. They may obtain further premium reductions by progressing through the Vitality statuses to Gold or Diamond status. 4

5 MYRIAD Discovery s comment Policyholders may convert from an AcceleRater Plan to a Standard Plan, with a corresponding reduction in benefit if the same premium is maintained, or with an increased premium if the same benefit is maintained. A Lock-in option is available on the AcceleRater where the premium and benefit increases cease after 20 years or at age 65 (depending on what the policyholder selected). At that stage, the policyholder may still choose to have their benefits increase if they wish, in which case an additional premium equivalent to 15% of the premium payable at age 65 will be paid (this amount will increase at the selected ABI). any benefit increases (over and above the fixed compulsory ACI for an ABI of 0%) is equal to the seleted ABI plus an age adjustment to take into account that the policyholder is older every year that they add the cover. In the above table we have assumed that a client selects a benefit increase that they require and have shown the premium increase needed to fund this ABI. The client could however have specified a voluntary premium increases at each policy anniversary and their benefits will increase by the additional cover that their premium increase can purchase based on age at each anniversary. This additional voluntary increase may be between 3% and 20%. 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. In addition the Cover Integrator and Financial Integrator provide additional cover at a significant discount. This is detailed later in the comparison. Myriad allows premium reductions based on the selection of Momentum Interactive. This is detailed later on in this comparison. 3. The Standard Plan Under 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) as follows: ACI / ABI combinations ACI ABI 0% 0% 10% 6.5% CPI + 3.5% CPI A Paid-up option is available where all 2. The 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 the full increase is used to purchase additional cover based on the age of the policyholder at 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. The Discovery Standard Plan should be compared to the Myriad Level Premium Pattern. Discovery Life policyholders may purchase the Integrator which allows them an additional 15% 32% premium reduction on their LIFE PLAN premiums. This makes Discovery s initial premiums cheaper at virtually every age. 5

6 MYRIAD Discovery s comment premiums cease at age 65, even though benefits continue for whole of life without ABIs. At age 65, the policyholder may still choose to have their benefits increase if they wish, in which case 85% of their premium will stop and 15% will increase by the ABI. 4. The ModeRater Plan: Premiums on the Standard Plan for whole life benefits are discounted by up to 15% from inception of the policy. Premiums for these discounted benefits increase at 20% every ten years. On average, the ModeRater will overtake the Standard Plan s premiums after approximately 20 years. 3. The Stepped Premium Pattern: A choice of either a 10- or 15-year period is available. During every 10- or 15-year period, the premium remains level for any level benefit amount. The premium increase at the end 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. The Myriad Stepped Premium Pattern is 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 are well illustrated from the following example: Male, non-smoker, age 35 buys life cover for R1 million Year Increase after 10 years (age 45) Increase after 20 years (age 55) Myriad Stepped 10 year Discover y ModeRat er 171% 20% 222% 20% As can be seen, the increases required for someone ten years older are significant on the Myriad Stepped Premium Pattern. 6

7 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 will enjoy additional premium certainty. The maximum increase of 25% at the end of the 10-year period will be reduced by summing up the percentage reductions for each year at a certain Vitality status 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 Global Investment Linkage option, the Health Plan Protector as well as the Lock-in and Paid Up options as these benefits have unpredictable components such as Rand depreciation and medical inflation. The premiums of all other benefits are guaranteed. Myriad has three different guarantees: Standard guarantee option: provides a guarantee for a fixed term. Extended guarantee option: provides a longer guarantee term at a higher premium than the Standard guarantee. 10-year capped guarantee option: The premium may not be increased during the first 10 years. Thereafter, the premium may be reviewed at any time. The maximum increase after the initial 10 year term is 15% plus an additional 15% for every completed 5-year period thereafter. (The 15% limit excludes all voluntary and compulsory increases.) The capped guarantee is only available if there is life cover on the policy. For the Standard and Extended Option, the guarantee term is extended by 1 year for every: o Two premium increases of 10% or more. o Two premium increases in line with CPI. o Two benefit increases of CPI or RDI o This does not apply to: 10-year capped guarantee Stepped premium pattern Benefits with fixed terms Income Protector Benefit Temporary Income Protector Functional Protector Business Overheads Protector Benefit Business Protector Modified Death Benefit Last Survivor Death Benefit Funeral Death Benefit Education Protector Accidental HIV Benefit Both companies provide a guarantee option providing certainty for whole of life. With Myriad this would be through their 10-year capped guarantee option. There are several weaknesses to this option: o Myriad s premiums could overtake Discovery s over the long term as 15% compounded every 5 years will exceed 25% compounded every 10 o years. Under Myriad 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. Under the Myriad Standard and Extended guarantees, the policyholder has no certainty in terms of future premium increases after the guarantee has expired. Should the Myriad 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 Myriad s Income Protector is calculated for each policyholder and ranges from 5 years to 10 years with no premium guarantees thereafter. This is problematic for individuals who need to protect their income in the case of sickness or disability. After the Myriad guarantee term, the premium increase could be unaffordable when the income they need to protect is significantly higher and the probability of claims is significantly higher. Discovery s Income Continuation Benefit, has a quantified guarantee for the entire term. 7

8 Policy structure Discovery Life allows policyholders to structure their policies in three ways: Separate policies for principal and spouse: This ensures claims on one life have no impact on benefits of another life. Both lives can integrate their separate policies with reduced initial premiums as long as they are members of Vitality and / or Discovery Health. 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 on another life. This is appropriate in cases where the payout is needed irrespective of which life dies. For example, a family may need an amount of money for children s education should one of the parents die. Therefore they do not need the sum of cover on a principal and spouse but rather the payout on the first life to die. The surviving spouse can continue with his/her cover free of underwriting if required. 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 payouts from the Minimum Protected Fund differ between the Classic LIFE PLAN and the Essential LIFE PLAN Myriad allows policyholders to structure their policies in two ways: Separate policies for principal and spouse: This ensures claims on one life have no impact on benefits of another life. One policy for principal and spouse: Claims on one life have no impact on benefits of another life. Note: the spouse above may be replaced by an insured life with insurable interest. 8

9 Benefits for remaining healthy Discovery Life offers access to Vitality which builds incentives for a healthy lifestyle and rewards policyholders financially for looking after their health. The Health Integrator: Offers initial premium reductions up to 20% and uses Health claims and Vitality status to determine future premium increases or decreases. Includes the PayBack (on the Classic Life Plan) benefit, which provides a return of up to 60% of the policyholder s Life premiums every five years, depending on their Health Plan and LIFE PLAN claims and Vitality status. The Vitality Integrator: Offers initial premium reductions of up to 17.5% and uses Vitality status only to determine future premium increases or decreases. Includes the PayBack benefit (on the Classic Life Plan), which provides a return of up to 25% of the policyholder s Life premiums every five years, depending on their LIFE PLAN claims and Vitality status. The DiscoveryCard Integrator Offers initial premium reductions of 15% and uses Vitality status and DiscoveryCard spend to determine future premium increases or decreases. The DiscoveryCard Integrator can be combined with the Health or Vitality Integrator, resulting in initial premium reductions of up to 32% and 29% respectively. 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 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 Momentum Interactive provides: o Premium discounts o Access to spare cover o Access to cover switching Premium Discounts The premium discount is determined as follows: Maximum of: o Discount based on active rating factors o Guaranteed minimum discount for Multiply members o Guaranteed minimum discount for Momentum Short Term Insurance regular drivers Plus: o The highest of the annual fitness discounts Discount based on active rating factors A premium discount is determined by using the assessment results of the insured life's active rating factors. o The client is required to undergo a reassessment of the active rating Momentum Interactive is not available on certain benefits, resulting in no premium discounts for the following benefits: o The Unnatural Death Benefit o Last Survivor Death Benefit o Physical Impairment Benefit o Premium waiver benefits o Future Cover Benefits o Business Future Cover Discovery allows premium reductions on all benefits. Under Vitality s preventive screening benefit, Discovery pays for annual assessments, which means that clients can become aware of emerging health problems much earlier and take pro-active steps to improve their health. The Integrator is a no hassles approach using the Discovery Health data and/or Vitality status to determine premium levels. It operates seamlessly without the policyholder having to perform annual or three-yearly tests. Myriad illustrates the average three-yearly Interactive discount that one could expect to receive on a quotation. Based on quotations for a male, non-smoker, using the level premium pattern (Standard guarantee), the average discounts are as follows: Benefits 30 year 50 year old old Life cover = R1m 9.1% 9.1% Life Cover = R1m Disability (to age 65) = R1m Critical Illness (to age 65) = R1m 6.5% 6.3% 9

10 factors every 3 years, for which Momentum pays. Any premium discount is guaranteed for three years after which it is reassessed. o Based on this, the discounts may increase, decrease or remain unchanged. o Momentum guarantees that the new premium discount will not be less than 75% of the premium discount before the reassessment (not applicable to changes in multiply status, if the insured is no longer a regular insured driver with Momentum Short Term Insurance or to the fitness discount). o If results are not submitted, discounts fall away until they are resubmitted. The discounts differ by benefit. Premiums payable may not increase above the initial contracted premium. Guaranteed Minimum Discount for Multiply members Based on Multiply status: Bronze 5% Silver 7.5% Gold 15% Platinum 20% Private Club 25% These discounts are significantly lower than the premium reductions of 15% 32% offered on the Integrator Plans One also needs to take into account that Discovery s premium reduction applies to the full premium, whereas benefits such as the Physical impairment, Future Cover Benefits and Premium waivers are excluded from discounts under Momentum s Interactive. This, together with Discovery s PayBack of up to 60% of premiums every five years provides unsurpassed value to Discovery Life policyholders. Multiply status is checked on a monthly basis and a change in the status will result in a recalculation of any premium discounts. 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% (e.g. 35 year old receives 8% discount) Annual fitness discounts There are four fitness assessment criteria: o Annual Virgin Life Care Health & Fitness assessments (only available to members of Multiply), which are paid for by the insured. The discounts, based on fitness levels are as follows: Level 1 1% 10

11 o o o Level 2 2% Level 3 4% Level 4 7.5% Level 5 10% Visiting the gym at least 36 times in the last year (discounts of 1%-10%), only available to members of Multiply, Achieving at least 3,000 average daily steps in the last three months, as measured by a pedometer (discounts of 1%-10%). The policyholder pays for the pedometer (which may be partly subsidised). Only available to members of Multiply), Official completion of a qualifying fitness event (discount of 4% or 10%). PayBack (on the Classic Life Plan) : Discovery s PayBack benefit pays a percentage of a policyholder s Life Plan premiums back every 5 years. For the Health Integrator and Vitality Integrator the Premium return can be up to 60% and 25% respectively No additional premiums are payable for Discovery s PayBack benefits. This benefit is available to policyholders who are also members of Discovery Health or Vitality and is included at no additional cost in the policy. For the Personal Health Integrator, the size of the PayBack depends on the size of the policyholder s Life Plan premiums, Vitality status and claims on the Discovery Health Plan and Life Plan. The percentage PayBack for the Personal Health Integrator is set out in the table below: Vitality Status Access to Spare Cover Provides the option to purchase additional cover with limited underwriting. There are eligibility rules to determine availability of this. Access to Cover Switching The ability to switch cover between benefits subject to limited underwriting. Constraints apply in terms of this feature, which may be declined by Myriad PayBack: Momentum s Premium Payback Option is available on any stand-alone disability, impairment or critical illness benefit at an additional premium. An additional premium is payable for the PayBack benefit The percentage return of premium on the Premium Payback Option will be increased, depending on the policyholder s Multiply status (applied where this benefit has been selected see details of benefit below): Bronze Silver Gold Platinum Private Club 0.3% per year in this status 0.5% per year in this status 1.5% per year in this status 3% per year in this status 4% per year in this status The value of Spare Cover needs to be questioned, considering that it is only available to policyholders in good health as defined by Momentum Interactive assessments. The Myriad Premium Payback Option is essentially an investment policy as policyholders pay additional premiums of around 12% of premiums to get the 20% (plus additional increases due to Multiply status) refund every ten years. With Discovery the PayBack Benefit is automatically included in the Personal Vitality and Health Integrators. The Momentum payback occurs every ten years however with Discovery it is every 5 years. The Momentum PayBack only applies to certain stand-alone benefits, whereas the Discovery PayBack Benefit applies to all Life Plan premiums. The Discovery PayBack is reduced by claims on the Life Plan in the five year term. This may still leave a positive balance in that 5 year period and will have 11

12 Health Claims (R) Blue Bronz e Silver Gold Diamo nd % 25% 35% 50% 60% % 20% 30% 45% 52.5% % 15% 25% 40% 47.5% % 12.5% 22.5% 37.5% 42.5% % 7.5% 17.5% 32.5% 35% % 5% 15% 30% 30% % 2.5% 12.5% 27.5% 27.5% PayBack for a policyholder on Comprehensive or Priority Discovery Health Plan with Family The Cover Integrator The Cover Integrator enables the policyholder to increase his cover by either 20% or 40% of his LIFE FUND. This additional cover is known as Integrated Cover and will fluctuate on an annual basis, based on the Integrated Cover Adjustments which depend on the policyholder s Vitality status. At age 65, the remaining Integrated Cover can be converted to the: Post-retirement Integrated Cover Benefit allowing the remaining Integrated Cover to continue with no future Integrated Cover Adjustments, or Medical Contribution Funder (only on the Classic Life Plan) - which provides a monthly benefit, designed to fund the policyholder s Discovery Health contributions. The Health Plan Protector Described in detail in Indemnity Benefits section. Offers reward for remaining healthy through Health Dividends and the Health Fund Returns a portion of Discovery Health Plan contributions as follows: Health Dividends: Returns a portion of 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 paid. 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 standalone on which the payback is attached. No comparable benefit. no impact on future 5-year periods. Myriad will not pay at all if there has been any claim under the main benefit. This Integrated Cover can be bought at an average reduction of 50% of the normal rates. This premium efficiency has been generated through Discovery s Integrator model. This model has created the opportunity to make use of marginal costing and Discovery s higher levels of persistency to bring down the premiums. By managing their Vitality status, the policyholder is able to increase his Integrated Cover by up to 15% of his LIFE FUND on the 20% option and up to 30% of his 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 a Health Plan in retirement. As a result, Discovery has developed an innovative solution that gives the policyholder the ability to convert his unneeded risk cover at retirement, to fund a portion of his Health Plan contribution (only on the Classic Life Plan). 12

13 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 through. The Financial Integrator Described in detail in Protection against adverse Economic Conditions section. The 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: Upfront Investment Integrator: Provides a boost of up to 26% on your lump sum contribution to your Endowment Plan. As and When Investment Integrator: Refunds up to 100% of all fees on your Endowment Plan. No comparable benefit The annual adjustments to the Financial Integrator Fund work in exactly the same way as the Cover Integrator The policyholder is able to purchase additional cover at a 10% discount to ordinary rate and he can also increase his Financial Integrator Fund, by up to 15% of his initial LIFE FUND on the 20% option and up to 30% of his initial LIFE FUND on the 40% option, for leading a healthy Lifestyle. 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. This is can be illustrated using the Integrators in Action tool. 13

14 Minimum Protected Fund versus standalone benefits Discovery allows policyholders to select the Minimum Protected Fund benefit to ensure protection of cover for future events. This maximises the potential of multiple claims. 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 attached 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 reinstate the LIFE FUND for all ancillaries as well as all unrelated claims in different body systems and only related claims or claims in the same body system that are of a higher severity than your previous claim. The maximum payout that the Minimum Protected FUND can add to any related benefit or benefit in the same body system is an additional 100% of that benefit amount plus any automatic benefit increases. The Minimum Protected Fund applies to the: o Life Fund o Cover Integrator FUND o Financial Integrator FUND You can select up to 100% Minimum Protected FUND. Discovery offers non-accelerated Severe Illness Benefit for both the principle and spouse. Policyholders still need a LIFE PLAN to take advantage of this benefit. The Severe Illness Benefit amount may exceed the amount of the Life Cover on the LIFE PLAN. This automatically includes a 100% MPF 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 further offers a nonaccelerated 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 the Life Cover on the LIFE Myriad allows policyholders to choose certain ancillary benefits as stand-alone benefits or attached to another stand-alone benefit. If attached to another stand-alone benefit, a claim on the ancillary will accelerate the standalone benefit to which it is attached, thereby reducing the ancillary cover as well. Myriad s stand-alone dread disease benefit reinstates cover for unrelated claims. However, cover will not be reinstated for claims in the same or related illness category. In terms of such claims: o A subsequent claim is only paid if the claim event is more severe than the previous claims in the same category. o The claim is based on the percentage difference in payout between the new claim and the total percentage already paid for that category. o This means that the sum assured per illness category is still restricted to the sum assured of the stand-alone dread disease benefit. A standalone benefit from Momentum should alwsys be comparedto the corresponding non-accelerated benefit offered by Discovery. The Minimum Protected Fund provides superior value compared to the standalone benefits offered by Momentum. To show this we use a client who has R 1 million Severe Illness cover: Maximu m total Payout that you can received Payment for subsequ ent related claims (after 14 day reinstate ment) Classic Plan with a 100% MPF Unlimite d Pay for all severiti es. Payment equal to the full claim percent age multiplie d by R 1 million Essenti al Plan with a 100% MPF You can receive up to R 2 million within each body system Only pays for higher severitie s. Paymen t equal to the full claim percent age multiplie d by R 1 million (subject to R 2 million cap within each body system Standal one Severe Illness on Myriad You can receive up to R 1 for related claims Only pays for higher severitie s. Payment equals to the differen ce in claim payouts multiplie d by R 1 million 14

15 PLAN by a multiple of up to five times (depending on the policyholder s age at entry). Payment for subsequ ent unrelate d claims (after 14 day reinstate ment) Equal to the full claim percenta ge multiple d by R 1 million Equal to the full claim percenta ge multiplie d by R 1 million Equal to the full claim percenta ge multiplie d by R 1 million The above table shows that both the Classic and Essential LIFE PLAN s with a MPF of 100%, have a higher maximum total payout and pay more for subsequent related claims, then the equivalent Momentum standalone benefit. The other reason why the MPF is superior on both the Classic and Essential LIFE PLANs is that the MPF reinstates all benefits linked to the Life Fund. With Momentums standalone Critical Illness, only cover for unrelated critical illnesses is reinstated For a full comparison of the standalone Severe Illness Benefits see the Dread Disease Benefit section 15

16 Death benefits Discovery only sells whole of life insurance. All ancillary benefits may be added to the policy. Myriad have various life benefits as follows: 1. Death Benefit Whole of life 2. Death Benefit Term Terms offered between 5 and 20 years. Premiums are guaranteed for term. 3. Unnatural Death Benefit Expiry age 65 next. Maximum cover: R1 million. Only available on level premium pattern. Can only add premium waivers as ancillaries. Covers unnatural death as a result of body injury caused by an event. Death must occur within 30 days of event. Event must be primary cause of death. Term death benefits are risky because the policyholder must decide now whether they want their cover to expire at a future date. There are a number of problems with doing this. A client s needs might change over time. They may become uninsurable, preventing them from purchasing additional life cover after expiry of the Term Life Cover. Another problem is that the cost of purchasing additional term cover after expiry is unaffordable due to the policyholders older age. The unnatural death benefit expires at age 65 and is only available through the level premium pattern. The policyholder would probably get substantially better life cover which covers all causes of death on a compulsory increase premium pattern. 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. This is because a normal financial needs analysis would calculate how much life cover one requires irrespective of the cause of the death. 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. Drunken driving which is a common cause of accidental claims would be excluded under this benefit. 4. Modified Death benefit: The benefit is available to lives in substandard health i.e. declined under the death benefit. Maximum cover equals R Premiums guaranteed for 5 years. 16

17 Only available on the level premium pattern. The death benefit as a result of natural causes within the first 3 years will be equal to a return of the premiums paid (without interest). 5. Last Survivor Death Benefit Pays on death of the last survivor of 2 insured lives. May be selected as term cover (with maximum expiry age of 80) or as whole of life cover. On death of the first insured life, all premiums for the benefit cease. This waiver will cover future compulsory increases only, but not voluntary increases. These benefits are normally used to provide for estate planning, but not for other needs such as covering debt, education etc. No comparable benefit. 6. Funeral Benefit Up to two insured lives, five children and eight extended family members may be covered. Covered for whole of life, expiry age 19 next for children. Maximum cover: R for insured lives, R for children and extended family members. Only available on level premium pattern For extended family members, compulsory increases every 10 years are applicable from the insured life s 30 th to 80 th birthday without an increase in benefits. For the underwritten life the premium s are guaranteed for 10 years. For children and extended family members the premium is not guaranteed. The policyholder may choose benefit increases of 5% or CPI. Benefit increases are not available for children. Death claim is paid 1 working day after claim event, provided necessary documentation is received. No claims period of 9 months for children and extended family members from starting date of policy. 17

18 Advances on Death Claims Immediate advancement of R (to cover funeral costs and urgent family travel). Payment made within 24 hours without forms, via Electronic Fund Transfer. Available on low risk claims (natural causes and where murder is not suspected). Terminal Illness: Discovery pays the lump sum death benefit where the insured is diagnosed with less than 12 months to live. Instant Cash On the lump sum death benefit, Myriad pay a proportion of the benefit (10% up to R50 000) if the insured dies more than two years after policy commencement. Payment is made within 24 hours of death. This does not mean a claim is admitted and will be recouped if the claim is subsequently declined. Terminal Illness: Myriad pay the lump sum death benefit if the insured is diagnosed with less than 12 months to live. 18

19 Protection against adverse economic conditions The Financial Integrator The Financial Integrator FUND enables a policyholder to increase his cover by either 20% or 40% and this increased cover is offered at a 10% premium reduction to normal rates. Benefits available with the Financial Integrator: The Asset Protector guarantees an inflationrelated return on your insured assets. The Currency Protector guarantees that your assets maintain their value in hard-currencies (US$ or EURO). The Debt Instalment Protector ensures that any decrease in savings, due to increased debt instalments, is replaced The DiscoveryCard Interest Protector helps Discovery Card holders pay the interest on their card payments The Severe Illness Benefit Medical Booster pays if the costs for medicine after experiencing a defined sever illness is more than R At age 65, through the Financial Integrator Cash Conversion, 10% to 100% of the Financial Integrator FUND will pay out as cash lump-sum to help with retirement funding. Automatic 10% Cash Conversion is included on the LIFE PLAN Myriad has no equivalent benefits. The Financial Integrator was designed in response to the Financial Crisis beginning in The affect of this event was that individuals who were looking to retire experienced a large fall in the value of their retirement savings. This meant that they had not accumulated sufficient wealth to live the lifestyle that they had planned for themselves. The Financial Integrator is designed to ensure that when a client reaches age 65, they will have the retirement savings that they anticipated through their Financial Needs Analysis (FNA) The Financial Integrator can do this by providing clients with a dynamic financial needs analysis. The client s benefits actively respond to changes in the economic environment to ensure that they are always appropriately covered. When purchasing the Financial Integrator, a client will receive a certain amount of protection, through the benefits listed above, for free. They will also be able to purchase extra benefits for an additional premium. 19

20 Lump sum disability benefits Discovery offers four lump sum disability products, namely Core Capital Disability Benefit Comprehensive PLUS Capital Disability Benefit LifeTime Capital Disability Benefit LifeTime PLUS Capital Disability Benefit All these products can be taken out on an accelerated or non-accelerated basis. All available on both the Classic and Essential LIFE PLAN s Myriad offers six lump sum disability products, namely: Own Occupation Disability Benefit Comprehensive Disability Benefit Functional Impairment Benefit Physical Impairment Benefit Activities of Daily Work Disability Benefit Comprehensive Activities of Daily Work Disability Benefit All products can be taken out on an accelerated or stand-alone basis. Note that the Capped Premium Guarantee option is not available on stand-alone disability benefits. The table below sets out the products on the most like-for-like basis. With Discovery, the Essential Plan should be used due to the unique features of Classic Plan which are not offered by Myriad:*:: Discovery Core No comparable benefit Comprehensive PLUS No comparable benefit LifeTime Capital Disability Benefit LifeTime PLUS Capital Disability Benefit No comparable benefit No comparable benefit Myriad Own Occupation (no taper option) Functional Impairment Comprehensive Disability (no taper option) Physical Impairment No comparable benefit No comparable benefit Activities of Daily Work Disability Comprehensive Activities of Daily Work Disability * Note: The unique features of the Classic LIFE PLAN are: Category C Disability Claims Dynamic Spend Protector Unlimited multiple claims Unique protection on temporary disability (on the Classic LIFE PLAN) By including a loss-of-income underpin in the assessment, Discovery can pay out claims long before Myriad in cases where permanency 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. If loss of income persists, the four-monthly 2.5% payouts are first upgraded to 50% and then to 100% over a three year period, despite the policyholder never being assessed as permanently disabled under any capital disability benefit. 20

21 Benefit tapering No reduction of benefit until benefit expiry age ie no taper of benefit. No general waiting period. Benefit tapering (not applicable to the Physical Impairment Benefit) Expiry age 65: Must select one of the following tapered options: 1. No taper, or 2. At 20% per year from anniversary after 60 th birthday, or 3. At 10% per year from anniversary after 55 th birthday. Expiry age 70: Must select one of the following tapered options: 1. No taper, or 2. At 20% per year from anniversary after 65 th birthday, or 3. At 10% per year from anniversary after 60 th birthday. The last voluntary premium or benefit increase will take place on the policy anniversary before the taper begins. 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. Examples of actual claims include: knee replacement; multiple fractures (MVA), gunshot (nerve graft left foot), broken pelvis (quad bike) and bowel resection (complications). Some policyholders made a full recovery, while others got 50% and 100% payouts when permanency was established. Benefit tapering Myriad s premium for the no taper option is on average 20% higher than a benefit that tapers from age 60. As Discovery s benefit does not taper, the no taper option of Myriad must be used in a comparison. A policyholder with a tapered benefit will on average receive half of his sum assured after age 60. This is significant, considering that a 60 year old is 15.5 times more likely to become disabled in the next five years than a 35-year old. Once the taper commences, Myriad s future benefit increases cease as well. This means inflation protection is lost during the entire taper period. In addition, the premium remains level and does not reduce as the benefit tapers. Tapered benefits are particularly inappropriate for buy-and-sell agreements where it is uncertain as to whether the tapered sum assured will be sufficient to buy out the partner s equity. How soon can a payout be expected? 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 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 21

22 before the claim would count towards the period. In contrast, waiting periods only start when a claim is submitted. Myriad s 6-month waiting period is like a 6-month survival period, as no claim is paid if the policyholder dies within the waiting period. This, and the 14-day survival period on the function impairment criteria, is especially relevant under their stand-alone benefit option. Discovery has no explicit survival period. Should the 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 Myriad he would only receive his life cover benefit. Conversion option (Not available on Business Assurance Policies) 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. 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 Myriad s Functional Protector. The Functional Protector is a monthly standalone benefit providing cover for frail care for whole of life. The claims assessment is the same as on the 100% payouts on the Functional Impairment Benefit. The maximum benefit is R pm Momentum may use voluntary annuities to minimize taxation of this benefit. The conversion to this benefit works as follows: At conversion, a declaration of health will be required if the benefits are ancillary (accelerated) or if policyholder chooses to convert a pre-tapered amount. It is unclear when maximal medical improvement will be reached under the Functional Impairment component. Discovery uniquely addresses disability protection and severe illness cover for whole of life within one product. Myriad s conversion option has the following limitations: The conversion option is only free of underwriting for stand-alone lump sum disability or impairment benefits and only for a pre-tapered amount. Where a policyholder only needs accelerated disability cover, he would need to take out a separate Functional Protector or Critical Illness Benefit if he wants to ensure that he is covered for whole of life, as he may not qualify for a conversion in terms of his declaration of health. No conversion is allowed if a claim has been submitted (or, with the 22

23 Medical underwriting will be required at conversion on the above benefits, where any of the benefits have a loading or exclusion. A benefit may not be converted if a claim has been submitted under a lump sum benefit or if a claim is in payment under an income benefit. Where the lump sum benefits are converted, the monthly income under this conversion is limited to 1% of the lump sum at the time of conversion. Income Protector, if a claim is in payment). With Discovery, the balance of the Capital Disability Benefit will still convert to severe illness cover, despite a claim having been paid out. The benefit converts to a monthly benefit (with potential tax implications), whereas Discovery s benefit converts to a lump sum benefit with tax-free payouts. Multiple Claims On the Classic LIFE PLAN: o Subsequent related and unrelated disability claims are permitted whether the severity is higher, lower or the same as the severity of the first claim. o 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: o Subsequent related claims, or claims in the same body system, are only paid for higher Categories. The payout is calculated as the full claim percentage multiplied by the reduced Capital Disability sum assured. o Subsequent unrelated disability claims are permitted whether the severity is higher, lower or the same as the severity of the first claim. Where a Minimum Protected Fund has been selected (available on the accelerated Capital Disability Benefit) you can claim an unlimited amount on the Classic LIFE PLAN an up to 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 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 in the same claim category, ie a related claim at the same severity level would not be paid (even if this would fall in a different claim category). There is no reinstatement of cover on the Capital Disability Benefits. Due to the multiple claims definitions, Myriad 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. The Classic LIFE PLAN pays for many related claims that would not be paid by Myriad or the Essential LIFE PLAN. This is because with Myriad, and on the Essential LIEF PLAN, a related claim is treated in the same category as the primary event and would therefore only generate a payout if the severity of the related event was worse than that of the first event. For example: in the case of kidney failure following paraplegia, both claims would be treated under the paraplegia category. Myriad does not offer a reinstatement option under their disability benefits. Claims at severities below 100% will permanently reduce the sum assured and once the policyholder has claimed 100% of the sum assured, the benefit ceases. In the example above, where paraplegia leads to kidney failure, the Discovery policyholder can receive double his sum assured where he has selected the Minimum Protected Fund. On the Classic LIFE PLAN, even without 23

24 200% on the Essential LIFE PLAN. The non-accelerated Capital Disability Benefit amount can exceed the LIFE FUND. The following maximum cover limits will apply at inception of the benefit (Subject to an overall maximum of R10 million). Age next Multiple of LIFE FUND < 30 5 < 40 4 > Core Capital Disability Benefit: Choice of benefit expiry age of 65 next or 70 next. Pays 100% upon being totally and permanently unable to perform duties of nominated occupation due to sickness, disease, illness or injury (Category D). or 100% upon medical impairment meeting objectively defined medical criteria under Category A (ie only pays for events that meet the 100% severity level criteria). 1. Own Occupation Disability Benefit: Available to age 65 next or for a term of 5 to 20 years Own occupation definition only available to age 65, even where expiry age 70 has been selected Pays 100% upon being totally and permanently unable to perform duties of 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. the MPF you can claim substantially more than the sum assured. Example: a policyholder has a LIFE FUND of R 1 million and a Capital Disability Benefit of R If they have two Category A claims they will receive R in total which is almost double the sum assured Both benefits assess disability in terms of ability to perform occupation and medical criteria. Both benefits are designed to pay out where the 100% severity level is reached, ie cover is not provided on partial disability. Benefits not covering partial disability are generally used for business assurance purposes. Unlike Myriad 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. See comments above for general product information 2. Comprehensive Plus Capital Disability Benefit: Choice of benefit expiry age of 65 next or 70 next. 2. Comprehensive Disability Benefit: Available to age 65 next, age 70 next or for a term of 5 to 20 years Unlike Myriad, Discovery maintains the occupational underpin to age 70. By extending the occupational underpin from expiry age 60 to 65 in 2004, Myriad has had to increase their premiums on the Comprehensive Disability Benefit by between 5% and 21%, depending on age. This reflects the value of offering 24

25 coverage at the later ages. Pays 100% upon being totally and permanently unable to perform the duties of nominated occupation due to sickness, disease, illness or injury (Category D). or 100% or 50% (depending on severity) upon medical impairment meeting objectively defined medical criteria under Category A and B severity level criteria. or 2.5% every four months if 80%-100% of income is lost over previous four months (Category C). If this loss of income lasts 24 months, 50% of the Capital Disability amount is paid. If it lasts 36 months, 100% of the Capital Disability amount is paid. This is not available on the Essential LIFE PLAN. Pays 100% upon being totally and permanently unable to perform the duties of 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 occupation and medical criteria. Both benefits cover total and partial permanent disability. Unlike Myriad s benefit, Discovery s benefit: Covers partial mental disorders and pays consistently more for back disorders. 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 3. LifeTime Capital Disability Benefit: Choice of benefit expiry age of 65 next or 70 next. Pays 100% upon being totally and permanently unable to perform duties of nominated occupation due to sickness, disease, illness or injury (Category D) or 100% upon medical impairment meeting objectively defined medical criteria under Category A (ie, pays for events that meet the 100% severity level criteria) 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 score, which determines No comparable benefit Myriad offers no benefit that considers the long-term 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. Cover can be bought more efficiently with the LifeTime option: Without it, to be fully insured against the lifestyle impact of all disability conditions, a sum assured must be selected consistent with the maximum impact disability condition. However, this would be inefficient since the policyholder will not need this full amount for lower impact disability conditions. 25

26 the LifeTime Impact Category of the disability, is dependant 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. The LifeTime Impact Booster is applicable to categories A, B and D claims. 4. LifeTime PLUS Capital Disability Benefit: Choice of benefit expiry age of 65 next or 70 next. Pays 100% upon being totally and permanently unable to perform the duties of nominated occupation due to sickness, disease, illness or injury (Category D) or 50% or 100% (depending on severity) upon medical impairment meeting objectively defined medical criteria under Category A & B severity level criteria or 2.5% every four months if 80%-100% of income is lost over previous four months (Category C). If this loss of income lasts 24 months, 50% of the Capital Disability amount is paid. If it lasts 36 months, 100% of the Capital Disability amount is paid. (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 The LifeTime Impact Booster is only applicable to categories A, B and D The LifeTime Impact score, which determines the LifeTime Impact Category of the disability, is dependent on the following: Age at disability and expected survival period thereafter; Invasiveness of any surgery required; No comparable benefit With the LifeTime PLUS Capital Disability Benefit, it is possible to get paid 100% more than the sum assured. Myriad does not offer a payout greater than the sum assured. 26

27 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. The LifeTime Impact Booster is applicable to categories A, B and D claims. Payouts under the medical criteria are reflected in Appendix 2. No comparable benefit 3. Functional Impairment Benefit: Available to age 65 next, age 70 next 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. 14 day survival period. Payouts under the functional impairment definitions are reflected in Appendix 2. Comparing medical criteria 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. To illustrate our product leadership, consider how back and mental disorders are covered by Discovery and Myriad. Myriad does not cover partial mental disorders. Discovery covers mental disorders at 50% and 100%. On the Classic LIFE PLAN, Discovery s assessment includes a loss of income underpin to assess claims where it is difficult to establish permanency, such as back and mental disorders. Discovery has a sophisticated Activities of Daily assessment to cater for subjective claims. ADLs such as communication, sensory functions, social interaction and stress adaptation are particularly suitable in assessing mental disorders. Myriad s ADLs consider none of these functions. For further examples where Discovery pays more under the medical criteria, please see Appendix 2. No comparable benefit 4. Activities of Daily Work Disability Benefit Available to age 65 or a term of 5 to 20 years only Available only to occupations not qualifying for Myriad s ADW Benefits These benefits are only available to occupations not qualifying for a Myriad own occupation definition. The Discovery Life Core and Comprehensive Capital 27

28 Myriad s own occupation-based benefits; Pays 100% if the insured life meets one of the following claims criteria: o Achieving a specified score based on the degree of inability to perform functions from 11 work-related categories; o Meeting the definition for a 100% payout on Myriad 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. Disability products are designed as simultaneous filters considering not only occupational criteria but also medical criteria, Activities of Daily Living and loss of income, which ensure the most comprehensive disability coverage option, regardless of an occupational underpin. This is supported by the Discovery Life disability claims experience, in that less than 6% of all disability claims are based on the Discovery Life nominated occupation underpin. No comparable benefit 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 Myriad s own occupation-based benefits; Pays: o 100% if the insured life achieves a specified score based on the degree of inability to perform functions from 11 work-related categories; o 25%-100% corresponding to the severity of payout that the insured life meets on Myriad 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. 6. Physical Impairment Benefit Available for whole of life, to age 65 next, or for a term of 5 to 20 years Pays 15% - 100% (depending on severity) upon meeting the requirements of one of the defined physical impairment claim events. Available for a term, to age 65 or whole of life On a stand-alone basis, it is only available on the level premium pattern and not the compulsory Under Myriad s Physical Impairment benefit, a small subset of disabilities are covered ie those relating in general to limbs, vision and speech. There are very few instances indicated when the maximum benefit will be paid. For example, it pays the maximum if you lose both hands/feet/legs/arms or a combination thereof. There is an extremely low probability of this occurring. For something more common, like a loss of a thumb, the maximum payout would be R Discovery s disability benefit provides far more comprehensive cover for the 28

29 Vitality Status increase pattern. There is a stipulated maximum payout for 17 out of the 25 events listed. Benefit covers the following: o Permanent loss of use of or loss of limb o Loss of eye/eyes o Loss of speech o Loss of hearing in one/both ears o Amputation of digits o Permanent confinement to bed/wheelchair/ mental institution o Third degree burns A benefit will not be paid if the disability can be substantially removed by reasonable treatment, including surgery, which the insured can reasonably be expected to undergo. There is a 6 month waiting period. If the insured dies within the waiting period, a claim is not paid. musculoskeletal system. Physical impairment would not be paid by Myriad if the condition can be cured by surgery. Due to the general ease in assessing physical impairment conditions, a 6-month waiting period is particularly inappropriate for this benefit. The Physical Impairment benefit cannot be regarded as a substitute for disability cover as the major causes of claims such as cancer, cardiovascular, stroke etc are not covered. Dynamic Spend Protector (Not available on the Essential LIFE PLAN.) All Classic Plan disability products include the Dynamic Spend Protector at no extra charge. This benefit enhances the DiscoveryCard and Discovery Motor Card cashbacks (depending on the policyholder s Vitality status at the time of the claim event) by multiplying the total DiscoveryCard partner spend and DiscoveryMotor card spend by a Booster percentage taken from the following table: Claim category: A & D B Blue 10% 5% Bronze 15% 7.5% Silver 25% 15% Gold 35% 25% Diamond 50% 35% Term Up to selected 10 benefit expiry years age Note: these payments are in addition to the usual cashbacks. No comparable benefit The Dynamic Spend Protector s extra cashbacks provide additional protection against the higher cost of living due to possible lifestyle changes following disability. Myriad offers no such benefit. The following table shows the present values of the Dynamic Spend Protector Benefit as a percentage of the Capital Disability lump sum for various Vitality statuses and inflation levels and represents the effective boost to the lump sum payment: Infla -tion Low High Blu e 10 % 18 % Vitality Status Bron Silv Gol ze er d 18% 29% 41 % 27% 45% 63 % Diamo nd 58% 89% Assumptions: Client aged 40 next suffers paraplegia; average DiscoveryCard partner spend at partners before disability = R4,000p.m.; Capital disability benefit = R750,000; Discount rate = 9% p.a.; Low inflation = 6% p.a.; High inflation = 10% p.a. 29

30 Discovery offers one benefit protecting personal income namely the Income Continuation Benefit There are two options available under this Income Continuation Benefit, namely Core Comprehensive Myriad offers four benefits protecting personal income, namely: 1. Income Protector 2. Temporary Income Protector 3. Business Overheads Protector 4. Functional Protector 5. Business Protector. Benefit Maximums Maximum benefit amount of R pm (upgraded to R on permanent disability)for Overhead Expenses Benefit there is a maximum benefit of 90% of actual overhead expenses up to R for natural owners and up to R per month on business owned policies. Benefit Maximums Maximum benefit amount of R pm (R pm for professionals) on Income Protector; R pm (R for professionals) on Temporary Income Protector; R on Business Overheads Protector R pm on Functional Protector R pm on Business Protector (only available to self-employed professionals) Income Disability Benefits and the Overhead Expenses Benefit Earnings definition Earnings are defined as follows: Cost-to-company for salaried employees. Gross fees for services rendered less business overhead expenses for business owners (including professionals). Payments are made once the waiting period has expired and the policyholder has 3 months from the date of the disability event to prove earnings before disability. Expiry age Choice of expiry age of 60, 65 or 70. Earnings definition Income is defined as the highest of the following: Gross taxable income. Cost-to-company income (for employees). Gross Professional Income less overhead expenses (for professionals only). Choice of expiry age of 55, 60 or 65 or whole of life for the Functional Protector only The fact that the Discovery policyholder has 3 months to prove his earnings means that his cash flow is not interrupted, which is particularly valuable for business owners. Discovery allows people to be covered until age 70 as it is evident that people are finding it more difficult to retire at age 65. After age 65 one is, on average, 3.9 times more likely to claim in a single year than before age 65. Claim escalation Core option: can choose o 0% o CPI (capped at 10% p.a.) Post-claim benefit will increase only where voluntary pre-claim benefit increases have been selected. Post-claim increase will increase at the selected benefit increase subject to a maximum of CPI (CPI+2% for the Functional Protector). Discovery provides a policyholder with greater choice by allowing them to select different benefit increases pre and post claim. Myriad s post claim increases do not provide value to clients who select a high 30

31 Comprehensive option: can choose o 0% o CPI (capped at 10% p.a.) o CPI+3% (capped at 13% p.a.) On permanent disability, the escalation would be the higher of: o The selected escalation in claim rate o The R/$ depreciation up to 20% per annum if the Global Investment Linkage Benefit is selected. voluntary benefit increase. This is because even if the policyholder selects a high voluntary benefit increase, their actual post claim increase is limited to CPI. The post claim benefit increases for different combinations of CPI and different voluntary benefit increases are shown below: Voluntary Benefit increase Level of CPI 4% 8% 0% 0% 0% 5% 4% 5% 7.5% 4% 7.5% 10% 4% 8% This table shows that if CPI is low, clients with a high voluntary benefit increase do not receive a larger increase than a client with a lower voluntary benefit increase. This is a problem as a client who selects a high benefit increase, pays a higher premium than a client with a lower benefit increase. It also makes it impossible for clients with high future salary growth expectations to have a benefit that increases faster than inflation. Discovery on the other hand offers clients an in claims escalation of CPI + 3% to match a client expectation of high future salary growth. Guaranteed Insurability Benefit Additional benefit received at no extra charge (with Comprehensive option) which allows policyholder to increase income by up to 20% every three years, without evidence of health or insurability Maximum number of options: six Must be exercised prior to age 50 Guaranteed Insurability Included free of charge on all Myriad s income protection benefits except the Functional Protector. Allows the policyholder to increase the benefit amount by an additional amount without any medical underwriting: o Provided the insured life s income increases at a rate exceeding that of the maximum voluntary benefit amount increase; o The maximum total annual increase With the Global Linkage Benefit, Discovery uniquely offers the potential upside of indexation combined with the certainty of premium increases only linked to inflation. With Discovery, the client has this benefit regardless of premium pattern. However, with Momentum, a voluntary benefit increase must have been selected to receive this benefit. If a client does not have an annual benefit increase (and hence will not receive the benefit from Momentum) an allowance of approximately 15% of the premium rate should be made for this benefit. Myriad imposes an additional inflationbased limitation to the possible increase 31

32 rate (including voluntary increases) is twice the inflation rate, capped at 20%. Not available to clients who: o Don t have a plan with voluntary increases; o Are older than 55; o Are disabled or were disabled at some stage during the previous 12 months; o Have health loadings. amount while Discovery doesn t. Lives who carry health loadings still receive the Guaranteed Insurability Benefit with Discovery. Premium waiver Premium is waived from the end of the waiting period until benefit payments cease. Claim payments have no impact on other benefits. Premium is waived during claim payment. On the Temporary Income Protector, Income Protector and Business Protector, if the 7day waiting period is selected, premiums are only waived if the insured has been continuously disabled for at least 28 days. No comparable benefit Claim increase booster Not available on the Functional Protector Additional in-claim benefit increases are given to young professionals who claim. 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). 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 policyholders benefit to 100% of their pre-disability earnings. Discovery Life give policyholders the option of selecting an in-claim benefit increase rate of inflation + 3%, applicable throughout the claim term. This benefit increase rate is especially relevant to professionals that would generally expect a higher than inflation increase in their earnings therefore offering a close match to future expected earnings growth. The value of the claims increase booster can best be seen through a comparison of a permanent disability claim event: Consider a policyholder claiming for paraplegia at age 26. Pre-disability 32

33 1. Discovery s Income Continuation Benefit Maximum sum assured of 75% of personal income. Claims definition Definition based on nominated occupation throughout 1. Income Protector Maximum sum assured of 75% of personal income. Claims definition 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 of inability to perform own occupation s main duties. For example, if it is established that the policyholder cannot perform 50% of the main duties of his own occupation, he will qualify for a 50% payout under this criterion. If the insured can perform more than 75% of the main duties of his own occupation, the claim payment stops. Applicable only to first year after claim event (and first two years for professionals). Includes 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 his own occupation, but only for a maximum of one year (two years for professionals). earnings are R per month (pm) and the benefit amount equals R22 500pm. The claimant selected a benefit expiry age of 65. The payouts between Discovery Life s Income Continuation Benefit and Myriad s Income Protection benefit (including the Claims increase booster) are shown in the following table: Descriptio n Present Value over 5 years Present Value over 10 years Present Value over 15 years Present Value to age 65 Discovery (Inflation + 3%) R 1,685,311 R 3,295,397 R 4,833,616 R 11,554,098 Myriad R 1,407,549 R 2,712,596 R 3,797,003 R 7,015,459 % Differen ce 33 20% 21% 27% 65% Assumption: Inflation = 6%, Discount Rate = 10%, ignore the Dynamic Spend Protector The higher value of the Discovery Life benefit is due to the longer duration of having a higher benefit increase rate and the claimant receiving 100% of predisability earnings on becoming permanently disabled. With a claim under Myriad s occupational disability caused by bodily injury/illness category (effectively their sickness benefit), a number of scenarios can be analysed with reference to Discovery s pure loss of income definition: A shortterm claim scenario (i.e. shorter than 3 months): The sickness leads to an immediate loss of income, e.g. for a fee-based selfemployed individual or an employed individual without sick-leave or group cover.

34 Loss of income: Calculated as the difference in income earned before and during disability, up to a maximum of the benefit amount. After two years from the claim event, only 75% of the loss is covered. Severity of the impairment/illness: 25%-100% of the benefit amount is paid. The payment period depends on the disability event and the chosen waiting period. Claimable events are based on definitions in terms of: Functional Impairment (the same conditions as covered under the 25%-100% severity levels of the lump sum Functional Impairment benefit). To be able to claim under this category, the policyholder must: Undergo reasonable optimal treatment, and Reach his Maximum Medical Improvement (MMI), and A specialist approved by Momentum must declare that the impairment claimed on is total, permanent and continuous for the foreseeable future. Critical Illness Only the conditions covered under the 100% severity level under the Comprehensive Critical Illness benefit are covered; Only available under the 7-day or 1 month waiting periods, and the payment terms are limited to a maximum of 6 months and 5 months respectively. Fracture and hospitalisation events. Only available under the 7-day or 1 month waiting periods with fewer conditions covered on the 1 month waiting period. The benefit payment terms are Conclusion: The claim will be covered under Discovery s loss of income definition and hence both Discovery and Momentum will make similar payments The sickness doesn t lead to an immediate loss of income (e.g. a salaried employee with sick leave or a selfemployed individual in retail): Conclusion: Loss of income approach will not make a payment however in these cases, a longer term waiting period matching the expected duration during which a loss of income will occur is a more cost effective approach that meets the need. For example, selecting a 1 month instead of a 7 day waiting period could lead to a 22% premium saving. If however a policyholder has selected the correct waiting period both the loss of income and bodily injury/illness definitions.will result in a similar payments A long-term claim scenario (longer than 3 months): The incidence of sickness and loss of income will be very similar over the long term. Conclusion: The claim will be covered under Discovery s loss of income definition and hence both Discovery and Momentum will make similar payments With a claim under Myriad s severity of impairment/illness benefit definition it is also likely that a loss of income will result. As a result Discovery and Momentum will make similar payments. Discovery s Income Continuation Benefit is unique in that it offers: An immediate upgrade to 100% of income on permanent disability. 3 month non-aggregation period* and 2 year non-aggregation period* for professionals in private practice. *except earnings from other disability income/sickness benefits Protection of business owners earning ability through a robust 34

35 Upgrade on permanent disability Payment immediately upgraded to 100% of earnings if permanently disabled, irrespective of amount of cover requested for temporary disability, subject to a maximum of R pm. Permanent disability is assessed based on objective medical criteria and ability to perform nominated occupation. limited to a maximum of 3 months and 2 months respectively. Upgrade on permanent disability No upgrade on permanent disability, unless the Functional Protector is added as an additional stand-alone benefit at an additional cost. The Functional Protector pays a monthly amount if the policyholder is permanently functionally impaired and meets the defined definitions for 100% payments. The claim event is not linked to occupation. income definition which is not based on personal taxable income. With Discovery, income is defined as gross fees for services rendered less business overhead expenses. Full cover up to age 70. A one month waiting period paying retrospectively from day one (for professionals in private practice). With Myriad, this is only available on the Business Protector. The Comprehensive option which has the following unique features: An additional payment of up to 100% of all Discovery Life, Discovery Health, Discovery retirement Optimiser and Vitality contributions for up to two years through the automatic Contribution Protector; The Guaranteed Insurability Benefit is automatically included; Protection against interest rate movements through the Interest Rate Protector; Enhanced DiscoveryCard cashbacks through the Dynamic Spend Protector. The Contribution Protector is also automatically included on the Core Option, and (in addition to the Income Continuation Benefit payments) pays up to 25% of all Discovery Life, Discovery Health, Discovery retirement Optimiser and Vitality contributions for up to one year. In addition, all Income Continuation Benefit premiums are waived in full during claim payment periods. Discovery s Category C payments under the Capital Disability Benefit can supplement the payout of the Income Continuation Benefit on temporary disability. To minimise any potential additional expenses on temporary disability, Discovery provides a unique case 35

36 Note on upgrade: The upgrade is not based on the sum assured, but on the full earnings which the policyholder indicated to Discovery at policy inception, increased from date of inception to date of claim with the benefit escalation rate applicable to this benefit. The Income Continuation Benefit will upgrade on meeting the Category A or D criteria on the Capital Disability Benefit. Category A contains medical conditions covered at a 100% while Category D contains the nominated occupation definition. The maximum Functional Protector benefit is R per month. Note that premiums for the Functional Protector are not tax deductible. The Functional Protector s definitions are the same as the 100% payment definitions on the Functional Impairment Benefit, ie all the conditions must occur at a 100% severity level. management service, which includes assistance with rehabilitation. Discovery may also cover the cost thereof if a policyholder is not a member of a medical scheme. 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. Myriad s Income Protector pays out a maximum of 75% of income on permanent disability. Example: A policyholder earns R pm with a disability income benefit of R pm. If permanently disabled, the present value (at 9%) of the benefit would be as follows: Duration of permane nt disability Discovery Life - CPI* in claim escalatio n (with 100% upgrade) Discovery Life CPI* + 3% in claim escalatio n (with 100% upgrade) Myriad in claim escalatio n of 10%* p.a. (75% of income paid) 5 years 1,750,257 1,849,273 1,312, years 3,582,288 4,063,697 2,686, years 7,507,132 9,890,641 5,630,349 *Assumptions: CPI increase of 10% p.a.; Age next: 35 The upgrade by Discovery results in a minimum additional 33% payout for these permanently disabled lives. Policyholders who will continue to receive an income should they on a temporary basis be unable to work, but want to protect their income on permanent disability, could achieve a massive saving through Discovery by using the upgrade. 36

37 Waiting periods Waiting periods of seven days, one month, three months, six months and twelve months. Claims for the seven day waiting period are paid retrospectively from day one. For certain professionals in private practice, Discovery offers a one-month waiting period with benefits paid retrospectively from day one. Conditions that need to be met for retrospective payment on the seven day and one month waiting periods are as follows: Hospitalisation for at least one full day and one full night, or An infectious disease such as chicken pox or measles (common colds, influenza and gastro-enteritis are excluded), or In the case of back disorders, if there is identifiable pathology on an MRI scan, or In the case of anxiety, stress or depression, if there is specialist confirmation of the inability to work, or If there is a complication of pregnancy (routine pregnancy is excluded), or Chemotherapy or radiotherapy, or Any outpatient treatment that renders the policyholder unable to work. Aggregation The policyholder receives his full sum assured for the first three months from the disability event, irrespective of any income still earned during disability. Income from other disability income benefits will still be aggregated. Thereafter, benefits may only be reduced with income earned during disability to the extent that it exceeds 30% of pre-disability earnings. Waiting periods of seven days (for self-employed individuals only), one month, three months, six months, 12 months and 24 months. Claims for seven day waiting period paid retrospectively from day one. For the seven day waiting period, the claim payment will be made retrospectively from day one if the policyholder is disabled for at least seven days and 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. *These conditions will be covered if they require hospitalisation for longer than 24 hours. Aggregation The benefit amount is reduced in two ways: The benefit amount will be reduced to ensure that it does not exceed 75% of the policyholder s pre-disability income. The claim amount will be reduced as follows for income from other policies: Example: Policyholder earns R pm but takes out a sum assured of only R pm, as he will earn other income on temporary disability. On permanent disability, Discovery will pay him R pm. With Myriad, should he need to cover his full income on permanent disability, he will have to take out the maximum sum assured on temporary disability and top it up with the Functional Protector. The Functional Protector should be added to the Income Protector to ensure a likefor-like comparison. There are, however, some crucial differences: The Functional Protector must be added at an additional cost, while the upgrade on permanent disability is an automatic feature of Discovery s Income Continuation Benefit. Discovery s upgrade on permanent disability can be up to R per month. Since the maximum benefit of Myriad s Functional Protector is R17 000, Myriad s maximum payout on permanent disability may fall short in terms of high income earners. The premiums of the Functional Protector are not tax-deductible, whereas Discovery s full Income Continuation Benefit premiums are tax-deductible. See Appendix 2 for examples where a Discovery policyholder will qualify for an upgrade to a 100% of earnings, yet will not qualify for a payout under the Functional Protector. Discovery has far less onerous requirements to get retrospective payments from day one utilising a seven day waiting period. On temporary disability in the first two years a policyholder can receive in total105% (75% + 30%) of pre-disability 37

38 Since the maximum benefit amount is 75%, it follows that the policyholder can still earn up to 105% in total after disability (75% + 30%). This applies for two years in claim. Income from other income disability benefits will be apportioned to ensure that these benefits plus Discovery s benefit does not exceed 75% of pre-disability income on temporary disability, and 100% of pre-disabiltiy income on permanent disability. Dividends, rental income and interest are not taken into account when aggregating with other sources of income. Lump sum disability benefits, including Category C payments are not aggregated. Note: Payments made through the Contribution Protector, Dynamic Spend Protector and Interest Rate Protector are not aggregated with any other income.no aggregation for professionals in private practice or partnership for the first two years, except from other income disability benefits and sickness benefits. o In the first two years, the claim amount plus income from other policies cannot be more than 100% of pre-disability income. o After two years, the claim amount plus income from other policies cannot be more than 75% of pre-disability income. o Functional Protector and lump sum disability payments are not taken into account. If the policyholder claims under the Loss of Income criterion, the benefit payment will be o In the first two years: difference between 100% of the insured s predisability income and any income that the insured life earns during disability, up to the benefit amount; o After two years: the difference between 75% of the insured s pre-disability income and any income that the insured life earns during disability. income with Discovery but only 100% with Momentum. For permanent disability it is 130% for Discovery and 100% for Momentum. After two years for temporary disability the amount a policyholder can receive is the same (75%) however under permanent disability it is 100% under Discovery and 75% under Momentum In addition for certain professionals in private practice or partnership who have the Discovery Income Continuation Benefit, there is no aggregation of other earnings for the first two years. This implies that the policyholders could earn up to 175% of income on temporary disability and up to 200% of income on permanent disability for the first 2 years. Professionals For certain professionals in private practice, Discovery offers a one month waiting period with benefits paid retrospectively from day one Claims are based on gross professional income less practice expenses. Maximum benefit amount of R per month on temporary disability and R per month on permanent disability (same maximum for all policyholders applies). These professionals include: General practitioners, dentists and other medical or dental specialists with a specialist registration with the Health Professions Council of South Africa, lawyers, attorneys, accountants, actuaries, auditors, architects, engineers and veterinarians. Contribution Protector Policyholders get an additional payment of 25% (with Core option) or 100% (with For certain professionals in private practice, Myriad offers the following: Claims based on gross professional income less practice expenses. Maximum benefit of R per month (other policyholders qualify for R per month). These professionals include: Medical practitioners, dentists and other medical or dental specialists with a specialist registration with the Health Professions Council of South Africa, lawyers, attorneys, accountants, actuaries, auditors, architects, engineers, pharmacists, certified financial planners and veterinarians. No comparable benefit. Professionals can often afford to insure themselves for one month. Discovery s one month waiting period paying retrospectively from day one is ideal in such a case, as it can potentially pay out same amount as seven day waiting period, but with an average premium saving of 22% relative to the seven day waiting period. 38

39 Comprehensive option) of their Discovery Life Discovery Health, Discovery retirement Optimiser and Vitality contributions for up to one year (with Core option) or two years (with Comprehensive option) through the Contribution Protector, at no extra cost. Payment is capped at a maximum of 33% of the Income Continuation Benefit being paid. If the policyholder selected less than 75% of earnings, the 100% Contribution Protector payout will be reduced proportionately. This benefit is automatically at no additional premium and its value is illustrated in the below case study of a typical Discovery Life client with a monthly salary of R who has the following monthly premiums: Product Premium Discovery Life Plan R Discovery Retirement R Optimizer Discovery Health Plan R Health Plan Protector R 260 DiscoveryCard R 148 Protector Vitality R 128 Total R Dynamic Spend Protector Available with Comprehensive option Enhances DiscoveryCard and Discovery Motor Card cashbacks on claim categories A and D. These extra cashbacks depend on the policyholder s Vitality status at the time of the claim event and are calculated as the total DiscoveryCard partner spend and DiscoveryMotor card spend multiplied by a Booster percentage taken from the following table: No comparable benefit A client on the Comprehensive Option will receive 100% of the above contributions on temporary disability, in addition to the monthly payment that they receive from Discovery Life. This means that the client will receive R ( R R 8 047) from Discovery as opposed to R (75% of earnings) from a traditional insurer like Momentum. This represents an additional payment of 21%. The Dynamic Spend Protector s extra cashbacks provide additional protection against the higher cost of living as a result of potential inflationary movements. 39

40 Vitality Status Claim category: A & D Blue 10% Bronze 15% Silver 25% Gold 35% Diamond 50% Term Up to selected benefit expiry age Note: these payments are in addition to the usual cashbacks. The Dynamic Spend Protector benefit is paid out tax-free. Interest Rate Protector Available with Comprehensive option If interest rates increase by more than 1% from the lowest rate in the 12 months before the claim event, claim payouts are boosted by 5% to 15% depending on the extent of the interest rate increase. No comparable benefit. No comparable benefit Temporary Income Protector Same as the Income Protector, except that the benefit term is limited to 6, 12 or 24 months. Maximum monthly benefit: R150,000 and R200,000 for professionals subject to 100% of policyholders pre-disability income Combined amount under Income Protector and Temporary Income Protector limited to 100% of income. If a policyholder has financial obligations, his income during disability will be significantly impacted by interest rate movements. The Interest Rate Protector provides valuable protection against such interest rate movements. For example, the prime interest rate at 1 July 2007 was 13% and at 1 July 2008 it was 15.5%. This 2.5% increase in interest rates would imply an additional 7.5% payout with Discovery. Discovery s Category C payouts under the Capital Disability Benefit can supplement the payout of the Income Continuation Benefit on temporary disability. To minimise any potential additional expenses on temporary disability, Discovery provides a unique Case Management service, which includes assistance with rehabilitation and will cover the cost thereof if a policyholder is not a member of a medical scheme. While meeting the policyholder s needs on temporary disability, Discovery s Income Continuation Benefit is upgraded to a 100% of income on permanent disability, at a time when the policyholder faces uncertain income requirements due to 40

41 lifestyle changes.discovery s Comprehensive option makes a payout of more than 100% possible on temporary and permanent disability as follows: The benefit received on temporary disability can be increased by up to 48% through the Contribution Protector and Interest Rate Protector, resulting in a payment on temporary disability of up to 123% of the selected benefit amount. (For each disability event, the Contribution Protector is payable for up to two years (on the Comprehensive option) and up to one year (on the Core option) and the Interest Rate Protector for up to two years.) Discovery doesn t aggregate the equivalent of 30% of income earned prior to disability for the first two years in claim. This means that policyholders can receive up to 105% of their income on temporary disability. The Dynamic Spend Protector means that the claimant can receive up to 50% off his/her DiscoveryCard partner spend and Discovery Motor Card spend on permanent disability. The Overhead Expenses Benefit Provides a monthly amount to assist in covering business overhead expenses on temporary or permanent disability. Definition based on nominated occupation. On individually owned policies, this benefit may only be selected if the Income Continuation Benefit is selected. 2. 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 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. On business owned policies (including Sole Proprietors), this benefit may be selected without the Income Continuation Benefit, subject to a minimum Life Fund of R

42 Expiry age 60, 65 or 70. Maximum benefit of 90% of actual overhead expenses up to R if taken on the same policy as the Income Continuation Benefit Maximum benefit up to R per month on a business owned policy. Overall maximum: R1.8 million. Fixed one month waiting period. For professionals in private practice or partnerships selecting a seven day waiting period for the Income Continuation Benefit as well as the Overhead Expenses Benefit, the waiting period on the OEB will be automatically upgraded to a seven day waiting period. Payable for a maximum of 24 months for a specific cause. No equivalent benefit Expiry age 55, 60 or 65. Maximum benefit amount R per month. Choice of waiting period of seven days (with retrospective payment from day one under the same conditions as the Income Protector), one month or three months. Payable for a maximum of 24 months for a specific cause. 3. Functional Protector Pays a monthly amount if the insured life meets the requirements of one of the Functional Impairment claim events with a 100% payout The Income Protector can be converted to the Functional Protector at expiry of the Income Protector (subject to maximum benefit of Functional Protector). Cover up to age 70 is particularly relevant for self-employed policyholders who often work beyond age 65. Disability could significantly erode a policyholder s retirement funds, especially if he has huge business overheads. The Functional Protector provides very limited cover (monthly benefit of R ) for a small set of conditions and is not in line with the need or impact of not being able to work. 4. 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 Maximum benefit of R300,000 per month Benefit term of 24 months Waiting periods: o Seven days, with retrospective payment from day one; o One month, with retrospective payment from day one. 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. 42

43 Premiums are tax-deductible and the proceeds are taxed. The monthly benefit amount for a single cause (including dependent causes) will be limited to 24 months. 43

44 Dread Disease Benefits Discovery offers four severe illness benefits, namely: Comprehensive Severe Illness Benefit Comprehensive PLUS Severe Illness Benefit LifeTime Severe Illness Benefit LifeTime PLUS Severe Illness Benefit Available on both the Classic and Essential LIFE PLAN. The benefit covers all body systems. The policyholder may select cover for an individual illness in cases where the entire benefit is declined due to ill health. Expiry age 65 or whole of life. All benefits may be taken out on an accelerated, stand-alone (Impairment Fund) or non-accelerated basis. If more than one claim event takes place as a result of the same 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. 1. Comprehensive Severe Illness Benefit Pays out: 25% - 100% (depending on severity) upon meeting the requirements of one of the defined severe illnesses. Myriad offers four severe illness benefits, namely: Comprehensive Critical Illness Benefit. Comprehensive Critical Illness Plus Benefit. Elevated Comprehensive Critical Illness Benefit. Elevated Comprehensive Critical Illness Plus Benefit. The benefit covers all body systems. Expiry age 65 or whole of life (various other terms available). All benefits may be taken out on an accelerated or non-accelerated (stand-alone) basis. Note that the Capped Premium Guarantee option is not available on stand-alone severe illness benefits. Only the highest payment will be made. No further claims will be paid due to a single event. 1. Comprehensive Critical Illness Benefit Pays out: 25% - 100% (depending on severity) upon meeting the requirements of one of the defined critical illnesses. The table below sets out the products on the most like-for-like basis. With Discovery, the Essential Plan should be used due to the unique features of Classic Plan which are not offered by Myriad*: Discovery Comprehensive Comprehensive Plus Comprehensive (with Extender) Comprehensive Plus (with Extender) LifeTime Severe Illness Benefit (with or without Extender) LifeTime PLUS Severe Illness Benefit (with or without Extender) Myriad Comprehensive Comprehensive Plus Elevated Comprehensive Elevated Comprehensive Plus No comparable benefit No comparable benefit Note*: The unique features of the Classic LIFE PLAN are: Unlimited multiple claims Automatic parent cover Global Treatment Benefit If a policyholder qualifies for more than one claim as a result of the same claim event, Discovery Life will process the highest claim amount first. After 6 months, if the policy holder still qualifies for the claims due to this event, a further claim will be processed off the reduced Life Fund. An example of this is paraplegia and kidney failure as a result of a motor vehicle accident This will result in a substantially higher payout from Discovery compared to Momentum Benefit payments of both companies depend on the severity of the severe illness. 44

45 The benefit covers all body systems. The policyholder may select cover for an individual illness in cases where the entire benefit is declined due to ill health. 2. Comprehensive Plus Severe Illness Benefit Pays out: 5% 100% (depending on severity) upon meeting the requirements of one of the defined severe illnesses. The benefit covers all body systems. The policyholder may select cover for an individual illness in cases where the entire benefit is declined due to ill health. Comprehensive Severe Illness (with Extender) Increases payout for severities A, B, C and D by an additional 25% of the total Severe Illness Benefit at the time of the claim Pays out: 50% to125% (depending on severity) upon meeting the requirements of one of the defined critical illnesses. Comprehensive Plus Severe Illness (with Extender) The benefit covers all body systems. 2. Comprehensive Critical Illness Plus Benefit Pays out: 5% 100% (depending on severity) upon meeting the requirements of one of the defined critical illnesses. 3. Elevated Comprehensive Critical Illness Benefit Under the Elevated benefits, conditions paid at 50% and 75% on the Comprehensive Critical Illness Benefit are elevated to 100%. Pays out: 25% or 100% (depending on severity) upon meeting the requirements of one of the defined critical illnesses. 4. Elevated Comprehensive Critical Illness Plus Benefit Under the Elevated benefits, conditions paid at Benefit payments are made at 25%, 50%, 75% and 100% severity levels. Unlike Myriad s benefit, Discovery s benefit on the Classic LIFE PLAN. Covers multiple claims irrespective of severity and reinstates cover for same, related and unrelated illnesses through the Minimum Protected Fund. Provides additional funding for overseas medical treatment. Provides automatic cover for parents. The Plus benefit of both companies covers additional severity levels with payouts at 5%, 10% and 15%. Unlike Myriad s benefit, Discovery s benefit on the Classic LIFE PLAN: Covers multiple claims irrespective of severity and reinstates cover for same, related and unrelated illnesses through the Minimum Protected Fund. Provides additional funding for overseas medical treatment. Provides automatic cover for parents Allows multiple claims within the same body systems in excess of the selected cover amount with or without the Minimum Protected Fund. Comparison of payouts is shown in the below table: Without Extender or Momentum s Elevated Option Discovery s Extender Option Elevated 25% 25% 50% 50% 100% 75% 75% 100% 100% 100% 100% 125% 45

46 Increases payout for severities A, B, C and D by an additional 25% of the total Severe Illness Benefit at the time of the claim Pays out: 5% to125% (depending on severity) upon meeting the requirements of one of the defined critical illnesses. 3. LifeTime Severe Illness Benefit Pays 25% - 100% (depending on severity) upon meeting the requirements of one of the defined severe illnesses The LifeTime Impact Booster is applied depending on the LifeTime Impact Category of the illness the Booster ranges from 115% to 200% The LifeTime Impact score, which determines the LifeTime Impact Category of the illness, is dependent on the following: Expected duration of the illness; 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; Number of financial dependants assessed at time of claim The benefit covers all body systems The LifeTime Impact Booster is applicable to severities A - D. 4. LifeTime PLUS Severe Illness Benefit Pays 50% and 75% on the Comprehensive Critical Illness Benefit are elevated to 100%. Pays out; 5%, 10%, 15%, 25% or 100% (depending on severity) upon meeting the requirements of one of the defined critical illnesses. No comparable benefit No comparable benefit Discovery pays more for 25% and 100% claims Discovery pays out the highest in the market for 100% claims where we pay out 125% of the sum assured Because the additional 25% does not reduce the LIFE FUND it does not reduce the other risk benefits associated with the LIFE FUND. Combined with Discovery s multiple claims definitions on the Classic LIFE PLAN, this benefit is very powerful. For example, if you have two illnesses with a 75% payout, you will receive 125% of the Severe Illness Benefit compared to 93.75% without the Extender Benefit. This is because it does not reduce the LIFE FUND Myriad offers no benefit that considers the long-term impact of an illness on a person s lifestyle Discovery s LifeTime benefits provide more appropriate payouts by considering: o The long-term lifestyle o impact of an illness The policyholder s family composition at the time of claim. This also ensures that cover is dynamically adjusted to meet the policyholder s needs. The LifeTime benefits offer the potential to receive double the sum assured Myriad does not pay more than the sum assured. Cover can be bought more efficiently with the LifeTime option: o Without it, to be fully insured against the lifestyle impact of all illnesses, a sum assured must be selected consistent with the maximum impact illness. This would be inefficient since the policyholder will not need this full amount for 46

47 5% - 100% (depending on severity) upon meeting the requirements of one of the defined severe illnesses The LifeTime Impact Booster is applied depending on the LifeTime Impact category of the illness the Booster ranges from 115% to 200% The LifeTime Impact score, which determines the LifeTime Impact category of the illness, is dependent on the following: Expected duration of the illness; 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; Number of financial dependants assessed at time of claim The benefit covers all body systems The LifeTime Impact Booster is applicable to severities A - D. lower impact illnesses. The LifeTime benefits offer an efficient solution to severe illness cover as the charge for this benefit is an additional 25% (compared to the equivalent Discovery option which does not include the LifeTime benefit) and the boost is up to an additional 100% of the benefit amount. Combined with the Severe Illness Extender Benefit it can result in a payout of 225% of the claim amount Multiple claims Multiple claims are permitted for the Classic and Essential LIFE PLANs as follows Classic LIFE PLAN: Multiple claims are permitted for the same, related or unrelated illnesses They are also permitted whether the severity of the subsequent claim is higher, lower or the same as the severity of the first claim. A subsequent claim for the same or related illness is regarded as independent of the first claim unless it is a progressive disease such as cancer. For example, if you have a heart attack at a 50% level followed by a heart attack five years later at a 75% level, a claim of 75% will be paid for the second heart attack. Multiple claims are possible even without the Minimum Protected Fund. 1. Multiple claims Multiple claims are permitted for the same illness, unrelated illnesses and for related illnesses. The payout is calculated as follows: Accelerated Critical Illness Benefit - - Related claims or claims in the same illness category: - Subsequent claims in the same illness category are only paid if the severity is worse than the total percentage paid out for previous claims in the category. For example: if a heart attack is paid at 50% level and another heart attack occurs five years later at the same severity level, the Multiple claims The impact of the different definitions is that Myriad should be compared to the Essential Life Plan as Discovery will pay far more for multiple claims on the Classic Life Plan. This is because Myriad only pays multiple claims for the same or related illnesses if the severity of the subsequent claim is higher, and then only the difference in severity. For example, subsequent heart attacks or strokes at the same severity level will not be paid out by Myriad. Discovery s Classic Life Plan pays far 47

48 o For instance, if the policyholder has R1 million life cover with a 50% Severe Illness Benefit and claims at a 100% severity, R would pay out and he will still have R left to claim again for another severe illness. o Where a Minimum Protected Fund has been selected, the total of claims may exceed the sum assured for the Severe Illness Benefit and even the LIFE FUND irrespective of the body system claimed on, ie the policyholder may claim more than the sum assured within the same disease category. Essential LIFE PLAN: o o o o o o o Accelerated Severe Illness: You may claim for subsequent claims where the claim is unrelated to any previous claim and in a different body system from the previous claim. The subsequent claim will be based on the Severe Illness Benefit percentage multiplied by the reduced LIFE FUND. You may also claim for subsequent related claims or claims in the same body system as a previous claim, however, in this case you may only claim where the severity level of the subsequent claim is higher than the previous claim. The subsequent claim will be based on the Severe Illness Benefit percentage multiplied by the reduced LIFE FUND. The maximum payouts are as follows: Accelerated without Minimum Protected Fund = sum assured Accelerated with Minimum Protected Fund MPF = 2 times sum assured for each body system Non-accelerated Severe Illness You may claim for subsequent claims where the claim is unrelated to any previous claim. The subsequent claim will be based on the Severe Illness Benefit amount multiplied by the sum assured. You may also claim for subsequent related claims, however in this case you may only claim where the severity level of the second heart attack will not be paid. - In this case only difference in severities is paid. Therefore the payout is calculated as the difference in severities multiplied by the sum assured reduced by claims in other categories. - 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 - Claims in a different illness category: - Previous claims do not affect the payout percentage. - On the accelerated Benefit the payout is equal to the claim percentage multiplied by the sum assured reduced by any claims in other benefit categories. Standalone Critical Illness Benefit - Related claims - Related claims are only paid if the severity is worse than the total percentage paid out for previous related claims. The payment is equal to the difference in severities multiplied by the full sum assured. For example: if the policyholder has a heart attack at a 50% level followed by a heart attack at a 75%, a claim of the difference of 25% will be paid, based on the original sum assured. - Unrelated claims - Payment is equal to the claim percentage multiplied by the full sum assured When selected as an ancillary benefit, the total of the multiple claims may never exceed the more for multiple claims as: - multiple claims are paid irrespective of the severity of the subsequent claim. - Discovery does not pay subsequent claims at the difference in severity from the first claim With their stand-alone option, Myriad effectively only reinstates cover for unrelated claims, however on the Classic LIFE PLAN Discovery reinstates for related claims as well. Examples where Myriad does not reinstate cover (ie 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 a heart attack The table below shows the chance of having a recurrence of the same illness or a related claim: Incidence of Illness recurrence / related claim Heart attack 30%¹ Stroke 25%² Paraplegia leading to 20%³ kidney complications ¹Post Graduate Medicine ²National Stroke Association ³Neurology Report, Finley et al With Discovery s accelerated SIB on the Classic Life Plan, you can claim more 48

49 subsequent claim is higher than the previous claim. The payout will be based on the difference in severities multiplied by the sum assured. Simultaneous Claims On the Classic Life Plan, if more than one claim event takes place as a result of the same 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. On the Essential LIFE PLAN only the claim event resulting in the highest payment is admitted. Survival period On both the Classic and Essential LIFE PLAN there is no explicit survival benefit required to get a benefit payment. In certain cases a period is specified to establish severity. These are not survival periods, as claims would be paid should death occur within the specified period. 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. Simultaneous Claims If more than one claim event takes place as a result of the same cause, the claim event resulting in the highest payment is admitted. Survival period There is a survival period of 14 days to get any benefit payment. Momentum may, at its discretion, waive the survival period at claim stage. than the sum assured of the Severe Illness Benefit due to the fact that it is defined as a percentage of the Life Fund 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. On the non-accelerated Severe Illness Benefit on the Classic Life Plan you can claim more than the sum assured for related claims as the benefit reinstates for related claims and does not pay the difference in severity. This effectively means that a 100% MPF is automatically included. This is very powerful as you are most likely to claim again within the same benefit category. With simultaneous claims arising from the same event, Discovery s Classic LIFE PLAN will in many cases pay two claims, whereas Myriad and the Essential LIFE PLAN will always only pay one claim. Myriad s 14 day survival period is especially relevant under their standalone benefit option. Discovery has no general survival period to get a payout. There is only a 14 day survival period for the Minimum Protected Fund to reinstate cover. Should the policyholder with Discovery s Impairment Fund (stand-alone Severe Illness Benefit) or non-accelerated Severe Illness (on both Classic and Essential LIFE PLAN) die within 14 days, 49

50 Severe Illness cover for children automatically included (on the Classic Life Plan) The Severe Illness Benefit selected by the principal and/or spouse will automatically include severe illness cover for children. Discovery will pay during the first twelve months following the birth or adoption of a child. The amount of automatic cover is limited to 10% of the main Severe Illness Benefit sum assured, subject to a maximum of R per child per claim event. The claim against the automatic cover for children will not accelerate the LIFE FUND or reduce the Severe Illness Benefit of the principal and/or spouse. Multiple claims are permitted: For the same illness, For related illnesses, For unrelated illnesses, Whether the severity of the second claim is higher, lower or the same as the severity of the first claim. A subsequent claim for the same or related illness is regarded as independent of the first claim unless it is a progressive disease such as cancer. Covers all body systems covered under the main Severe Illness Benefit, including the following conditions which are more relevant to children: o Surgical correction of congenital heart disease o Acute lymphoblastic leukaemia o Congenital anomaly repair o Rheumatic fever with cardiac complications o Type 1 diabetes mellitus o Poliomyelitis with permanent paralysis o Juvenile rheumatoid arthritis, septic arthritis, osteomyelitis Critical Illness cover for children automatically included The Critical Illness Benefit selected by the principal and / or spouse will automatically include severe illness cover for children. Momentum s benefit will not pay for the first twelve months following the birth or adoption of a child. The benefit amount under the Critical Illness Cover for Children is limited to 10% of the Severe Illness Benefit sum assured, subject to a maximum of R A claim under the Critical Illness Cover for Children will not reduce the benefit amount on this benefit or any other benefit on the policy. A subsequent claim will be paid in the same category only if the claim event is more severe than previous claims in the same category. The amount that is paid will be based on the difference between the percentage payout for the new claim and the total percentage paid for that category (the additional percentage payout ) In this case, the claim amount is calculated as the additional percentage payout, multiplied by the benefit amount. he will receive both his Severe Illness Benefit and his Life Cover Benefit. With Myriad he would only receive his life cover benefit. Discovery Life was first to recognise that the illness of a child has a similar impact on the parents lifestyle as if the parents were ill. Momentums will not pay for any illnesses that affect children within their first year of life. Myriad offers no buy-up benefit as is the case with Discovery. Discovery policyholders can insure their children up to R1.2 million through the combination of the automatic cover for children and the additional Child Severe Illness Benefit (see below). 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. Myriad s Critical Illness Cover for children is the same as for the principal s benefit. Certain illnesses unique to children will therefore not be covered. 50

51 o o o o Hirschsprung s disease Surfactant therapy Cleft palate/lip repair Disorders of amino acid metabolism Parent Severe Illness automatically included (on the Classic Life Plan) The Severe Illness Benefit selected by 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 (ie total maximum of R ). Benefit payouts will not impact the LIFE FUND. Global Treatment Benefit automatically included (on the Classic Life Plan) The Global Treatment Benefit is automatically included in the Severe Illness Benefit The benefit offers the policyholder a choice of either: 1) Having the treatment performed in South Africa and receiving the normal Severe Illness Benefit amount depending on the severity of the Severe Illness2) Having the treatment performed in the USA and receiving 80% of what you 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 for the first option. No comparable benefit. No comparable benefit. 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 is also available (see below.) Rapid advances in healthcare technology and emergence of global centres of excellence focusing on super specialties have resulted in Discovery developing the Global Treatment Benefit. The benefit ensures policyholders have access to the best medical treatment for an illness. The benefit empowers policyholders at point of claim to choose whether to have illness treated locally or in the USA, through the Discovery Network. Should the policyholder elect to be treated overseas, the Global Treatment Benefit provides significant funding to make this possible. 51

52 Combining benefits Discovery s Capital Disability Benefit combines permanent and temporary disability cover (loss of income protection) in one benefit. It also includes a conversion to severe illness cover at benefit expiry, free of medical underwriting. Additional severe illness can be purchased through the Severe Illness Benefit Discovery s Capital Disability Benefit will pay: 100% upon being totally and permanently unable to perform the duties of his nominated occupation due to sickness, disease, illness or injury (up to age 65 or 70) or 50% 100% upon the medical impairment meeting objectively defined medical criteria (up to age 65 or 70) or 2.5% every 4 months if 80%-100% of income lost over previous 4 months. If this loss of income last 24 months, a 50% claim is paid. If it lasts 36 months, a 100% claim is paid (on the Classic Life Plan). Discovery s Comprehensive Severe Illness and LifeTime Severe Illness Benefits will pay 25% 100% (depending on severity) upon meeting the requirements of one of the defined severe illnesses. In addition, the LifeTime Impact Booster (ranging from 115% to 200%) is applied if the LifeTime option is selected. You can also add the Extender option which increases Severe Illness payments by 25% Myriad s Comprehensive Living Benefit is a combination of their 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. Myriad s Comprehensive Living Benefit will pay: 100% upon being totally and permanently unable to perform the duties of his own occupation due to illness or injury (up to age 65) or 25% - 100% upon meeting the requirements of one of the defined functional impairment claim events (up to age 70) or 25% - 100% upon meeting the requirements of one of the defined critical illnesses and Other automatic benefits that may be included. 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 The Comprehensive Living Benefit s maximum limit of R4.5 million R5 million is also inappropriate for high earners, who need a high amount of disability cover. While the combination of capital disability and severe illness cover in one benefit is inappropriate, Discovery s combination of permanent disability and loss of income results in unmatched objectivity with claims assessments and protection on temporary disability. The Discovery policyholder can select the appropriate amount of capital disability and severe illness cover to suit his needs and at benefit expiry, the Capital Disability Benefit dynamically converts to severe illness cover, free of medical underwriting (not available on Business Assurance cases). The policyholder s severe illness cover is thereby increased at a time when the incidence of severe illnesses is highest. In contrast, the level of cover on Myriad s Comprehensive Living Benefit stays the same throughout. The LifeTime benefits recognise that it is necessary to receive more than your selected sum assured in some cases and thus offers a unique, efficient solution that allows the payout to flex such that more than the sum assured can be paid when necessary. Benefit maximum of the Capital Disability Benefit and Severe Illness Benefit are R20 million and R5 million ( R 6 million if Cover Benefit maximums: R 4.5 million (R 5 million for professionals) 52

53 Integrator is added) respectively (subject to underwriting approval). The Capital Disability Benefit can be selected to age 65 or 70 The Severe Illness Benefit can be selected to age 65 or for whole of life The Capital Disability Benefit and Severe Illness Benefit can both be selected on an accelerated or non-accelerated basis. The Minimum Protected Fund is available to reinstate cover on multiple claims on the accelerated Capital Disability Benefit, the Severe Illness Benefit and the Impairment Fund (See Minimum Protected Fund versus stand-alone benefits section for full explanation). The Capital Disability Benefit and Severe Illness Benefit payments are covered in their relevant sections. Term: Whole of life, 65 or 5 20 years. Own occupation ceases at 65. Functional Impairment ceases at 70. The Comprehensive Living Benefit can be selected on an accelerated or stand-alone basis. Cover will only be reinstated following a claim on the standalone benefit (cover not reinstated for the body system on which the claim was submitted). For the stand-benefit it only pays for related multiple claims where the severity is higher, and then only the difference in severities. If the client claims on one ancillary benefit, the benefit amount on any remaining ancillary benefits will remain unchanged, unless the benefit amount for a particular ancillary benefit is more than the remaining benefit amount on the main benefit. Discovery s nominated occupation underpin does not fall away at age 65. The premium on Myriad s benefit stays the same even though the Capital Disability Benefit component falls away after age 70. Discovery s Minimum Protected Fund reinstates cover, across all body systems (including the body system that was claimed on) on multiple claims (resulting in the policyholder being able to claim in excess of the sum assured) on both the Classic and Essential LIFE PLAN. Myriad s Comprehensive Living Benefit offers no reinstatement on multiple claims. Cover ceases once a 100% of the sum assured has been claimed on the accelerated version. Qualifying for multiple claims on the Classic Life Plan is easier with Discovery, as subsequent related claims (or in the same benefit category) are paid irrespective of the severity of the subsequent claim. On many of the major illnesses such as heart attacks, bypasses and strokes, Discovery will also pay more for subsequent related claims as we do not pay the difference in severitythe difference in severity. The Minimum Protected Fund offers protection to all benefits that accelerate the LIFE FUND or IMPAIRMENT FUND following a claim, which includes: o Other ancillary benefits linked to the LIFE FUND or IMPAIRMENT FUND o The ancillary benefit that was claimed on (Not available on the Myriad feature) o The main benefit (not available on the Myriad feature) o Unlimited number of 53

54 reinstatements on the Classic Life Plan (not available on the Myriad feature). See the Minimum Protected Fund versus stand-alone benefits section for the reinstatement limits on the Essential LIFE PLAN. Waiting and survival periods The Capital Disability Benefit and Severe Illness Benefit have no specific waiting period or survival period. The Severe Illness Benefit automatically provides (only on Classic Life Plan): Severe illness cover for children. (see details under the Severe Illness Benefit section) Severe illness cover for parents. (see details under the Severe Illness Benefit section) Waiting and survival periods6 -month waiting period on Own Occupation underpin, 14-day survival period of Functional Impairment and Critical Illness Benefit. Momentum may, in its discretion, choose not to enforce the waiting period. Premiums are payable during the waiting periods Critical Illness Cover for children automatically included. (see details under the Critical Illness Benefit section) No comparable benefit. The 6-month waiting period on Myriad 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 has no general waiting or survival period. There is only a 14-day survival period for the Minimum Protected Fund to reinstate cover. Should the policyholder with Discovery s Impairment Fund (stand-alone Severe Illness Benefit) or non-accelerated Capital Disability Benefit die within 14 days, he will receive both his Severe Illness Benefit and his Life Cover Benefit. With Myriad he would only receive his life cover benefit. Discovery Life was first to recognise that the illness of a child has a similar impact on the parent s lifestyle as if the parent was ill. Discovery has recognised that the severe illness of a parent can place a significant financial burden on the policyholder. Access to the best medical treatment in the world, with unique funding of up to 180% of the Severe Illness Benefit sum assured (and up to 260% in the case of the LifeTime benefits) for medical No comparable benefit. Rapid advances in healthcare technology and emergence of global centres of excellence focusing on super specialties have resulted in Discovery developing the 54

55 treatment at a network of top US medical facilities. (see details under the Severe Illness Benefit section) Global Treatment Benefit. The benefit ensures policyholders have access to the best medical treatment for an illness. 55

56 Discovery covers illnesses that females are most exposed to with the Female Severe Illness Benefit and the Childbirth Benefit. No comparable benefit Women face risks of certain cancers that only affect them, as well as all the potential complications of pregnancy and osteoporosis. Female Severe Illness Benefit and Childbirth Benefit There is no waiting period for claims. Available as both an accelerated and nonaccelerated benefit. Female Severe Illness Benefit may be selected to age 65 or whole of life. Childbirth benefit expires at age 40 next. No survival period for claim. Discovery s benefits cover: Female Severe Illness Benefit: Cancers specific to females Pregnancy complications Complications of osteoporosis Childbirth Benefit: Congenital birth defects Multiple births Child Severe Illness Benefit The Discovery benefit covers: All body systems (covered under the main Severe Illness Benefit), including the following conditions which are more relevant to children: o Surgical correction of congenital heart disease o Acute lymphoblastic leukaemia o Congenital anomaly repair o Rheumatic fever with cardiac complications o Type 1 diabetes mellitus o Poliomyelitis with permanent paralysis o Juvenile rheumatoid arthritis, septic arthritis, osteomyelitis o Hirschsprung s disease o Surfactant therapy o Cleft palate/lip repair o Disorders of amino acid metabolism No comparable benefit, however there is a limited amount of child severe illness cover automatically included under the main severe illness product (See Dread Disease Benefits section). In keeping with the philosophy of covering the entire family for any major life-changing events, we have developed a benefit that covers severe illness that affects children. If your child becomes ill, instead of having to focus on financial problems, you can care for your child Note: An amount of cover for children is automatically included in the Severe Illness Benefit selected by the principal and/or spouse, without medical underwriting (preexisting conditions excluded). Additional 56

57 cover for children may be purchased with medical underwriting. Benefit payout varies by severity of illness. Multiple claims allowed. No survival period. Can select without other severe illness benefits on plan. Maximum benefit of R per child plus R under the main Severe Illness Benefit. Global Treatment Benefit automatically included. Minimum age at entry: birth. Cease age

58 Parent Severe Illness 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 main Severe Illness Benefit. Global Treatment Benefit automatically included. The benefit is available for whole of life. No comparable benefit. Discovery has recognised that you could incur a significant financial burden should any of your parents become severely ill. For this reason Discovery Life enables the principal life and spouse who have purchased the Severe Illness Benefit to purchase a Severe Illness Benefit for each of their parents. Accidental HIV Benefit Future cover without medical underwriting No stand-alone benefit. Accidental HIV is automatically covered under Discovery s Severe Illness Benefit. Discovery offers the Future Fund Benefit which allows policyholders to increase all benefits linked to their Life Fund without evidence of health (except for negative HIV test) or insurability on each policy anniversary before expiry age. Discovery allows policyholders to select between 7.5% and 15% of their Nominated The Accidental HIV Benefit pays a lump sum if the policyholder accidentally contracts HIV. Also covered automatically under Myriad s Critical Illness Benefit. Can only be taken as a stand-alone benefit. Benefit term is whole of life. Only level premium pattern available. Maximum benefit amount is R ; R2 million for medical occupations and R for students. Premium guarantee term 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 above proof must be provided that a course of antiretroviral drugs has been completed. Myriad 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 insurability. The premium for this benefit is only available on a level funding plan. Discovery s Future Fund benefit allows a policyholder to increase all benefits linked to his LIFE FUND. This includes Severe Illness Benefits as well as Child Severe Illness, Family Trauma and Capital Disability. Discovery also has a Guaranteed Insurability Option on the Income Continuation Benefit which allows policyholders to increase their insured 58

59 Future Fund every year. Exercising an option allows them to purchase additional cover of each benefit attached to the LIFE FUND in the same percentages that they bear relative to the LIFE FUND. Policyholders must exercise an option at least once every three years to retain the benefit The amount that can be exercised is increased automatically each year. A policyholder may not exercise an option for severe illness or disability if the insured have had any claim on these benefits in the past at severities A-D but he may continue to exercise options for severe illness and disability cover in cases where previous claims have been at severities E-G. The policyholder may add the option amount onto the same policy or a separate policy. The minimum premium rules do not apply to the premium for the exercised option. Maximum benefit: R6 million. The Future Fund Benefit is only available to lives who have health loadings less than or equal to 25%. No comparable benefit. Guaranteed insurability allows young professionals to buy extra life cover up to the non-accelerated capital disability amount without medical underwriting on the following events: o On the registration of a bond o Marriage o Birth or adoption of a child o Professionals who establish a new practice o Refer to Future Fund in this document. Depending on the pre-defined event, clients can take up to 100% of the selected benefit amount per event. On a benefit anniversary you can exercise 10%. Policyholders can retain their full future cover for up to 15 years. Disability options may be exercised on the Comprehensive Disability, Classic Comprehensive Disability, Own Occupation Disability, ADW Disability, Functional Impairment or the Physical Impairment Benefit. Negative HIV tests are required to exercise each option Policyholders may not exercise options for disability or impairment cover if there has been a previous disability or impairment claim with any insurer. Maximum benefit: R5 million. Homeloan Future Cover Only available on the Homeloan Package This benefit offers the option to increase death cover without underwriting on registering a new bond or increasing an existing bond. Additional cover is restricted to the bond amount up to R5 million. Take up of this cover must be at the same time. Subject to negative HIV test. 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 Benefit and Functional Protector. Students can convert Functional Impairment Benefit to: o Comprehensive Disability Benefit, o Own Occupation Disability Benefit, o Income Protector, o Temporary Income Protector (subject to the normal qualification criteria) income by up to 20% every 3 years without underwriting (see Income Disability Benefits and the Overhead Expenses Benefit section for comparison with Myriad) Discovery can address the need for future cover in the context of a bigger home loan with our Future Fund. 59

60 Business Future Fund Discovery life will allow the remaining parties to buy-and-sell agreement to take up an amount equal to the amount that was claimed on the life of the deceased or disabled party, for the purposes of the agreement, without evidence of health or insurability. without proof of insurability or health except for a negative HIV test result) Students have option to: o Convert Functional Protector to the Income Protector or Temporary Income Protector with benefit amount of up to three times benefit amount under this o benefit, or Purchase the Income Protector or Temporary Income Protector in addition to this benefit with a benefit amount of up to twice the benefit amount under this benefit (subject to the normal qualification criteria) without giving Momentum proof of insurability or health (except for a negative HIV test result). 60

61 Premium Waivers Discovery has three premium waiver benefits: Premium waiver on Death: Expiry age 75 Premium waiver on Disability: Expiry age 65 Premium waiver on Severe Illness: Expiry age 65 Waivers cover annual contribution increases up to 20% per year. The disability waiver is triggered on a Category A definition or Category D ( nominated occupation ) definition. The Severe Illness waiver is triggered on meeting any of the defined severe illnesses at a 100% level 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 waivers. The premium waiver is only available to the principle life Myriad has three premium waiver benefits: 1. Premium waiver on Death: Expiry age 75 next. Pays premiums for the stand-alone benefit and attached ancillary benefits on the death of the premium waiver insured life. Where the waiver is attached to a benefit that does not have a fixed term, it does not cover any additional premium required at guarantee review date to maintain benefits, if Momentum is already paying a waiver claim. For level premium cases, any voluntary increases will end in the event of a claim. 2. Premium waiver Comprehensive Disability: Pays premiums of stand-alone and attached ancillary benefits if permanently and totally unable to perform own occupation OR meets criteria of one of the functional impairment events with 100% payout. Expiry age 70 next (may have been selected for a shorter term). Own occupation component has a 6-month waiting period. ie policyholders must pay premiums during the waiting period There is a 14-day survival period for a claim on the functional impairment component. As with death waiver, increases at guarantee review dates would not be covered. Nor would voluntary increases on level premium cases. 3. Premium waiver Functional Impairment: Pays premiums of stand-alone and attached ancillary benefits if the insured meets the criteria of one of the functional impairment events with 100% payout. Expiry age 70 next Claim is only admitted if the claim event is a permanent condition There is a 14-day survival period for a claim. As with death waiver, increases at guarantee review dates would not be covered. Nor would voluntary increases on level premium cases. The insured life must undergo reasonable optimal treatment and his functional impairment will be determined after he has Discovery s premium waiver benefits cover the annual contribution increases on the policy up to 20% per year, whereas Myriad only covers these increases up to CPI (max of 15%) per year Myriad s waiver does not cover increases required at guarantee review dates, whereas Discovery does cover these increases. Discovery s waivers cover all premiums on the Life Plan whether they accelerate the life fund or not. Myriad only waives premiums for benefits that accelerate the main benefit that the waiver is attached to. Thus policyholders need to be careful to attach it to all the correct benefits to ensure correct waiving of premiums. There is no explicit waiting period on Discovery s disability and severe illness waivers, whereas Myriad has a 6-month waiting period on their disability waiver. On the Discovery plans, waivers continue paying premiums without the policyholder having to have their health reassessed from time to time. On Myriad s disability waiver, premiums are payable during the waiting period. This is precisely the time that the policyholder needs the waiver to be paying the premiums. Discovery has a premium waiver on Severe Illness. Unlike the Myriad waiver on Functional Impairment, the Discovery waiver covers any potential increases at review date as well as any voluntary increases subject to stated caps. The Discovery waiver on severe illness is triggered by a severity A level claim. 61

62 reached (reasonable) Maximal Medical Improvement Myriad only waives premiums for benefits that accelerate the main benefit that the waiver is attached to and not the other stand-alone benefits. 62

63 Cover in real currencies Discovery Offers the Global Investment Linkage Benefit, which provides the policyholder the better of a rand policy and a foreign currency policy at time of claim. The policy is underpinned by the South African CPI rate. Thus irrespective of market performance (as well as the annual management fee of 1.5%), cover is guaranteed to at least increase at CPI per annum. The policyholder pays a premium of an additional 10% 15% for this benefit, depending on selecting a pure currency linkage or a linkage including any stock market participation The premium for this benefit is not affected by the movement in currencies or markets. Cover may be linked to the dollar, pound, Euro and various stock market indices such as the S&P 500, FTSE 100 and the ALSI 40. You are allowed to switch the underpinning benchmark during the policy term. You can stop the Global Investment Linkage Benefit (i.e. de-link) at any time, thereby locking in the investment performance achieved to date. The premiums for the Global Investment Linkage Benefit will no longer be payable. Myriad does not have a global linkage. However they do offer 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, he can decline this increase. If declined for two consecutive years, future increases are cancelled. Under the Myriad product, the premiums required to take up the additional cover depends on the rand/dollar level. The premiums payable are therefore volatile. If the policyholder cannot afford the increases to pay for the increased cover, which are age based, he is essentially returned to a rand policy. This would not meet the policyholder s expectations of a dollar policy. On the Discovery Global Linkage, premiums payable are smooth and not dependent on volatile exchange rates or age. Scenario 1: Rand depreciates to the dollar: Momentum s Myriad will provide an annual benefit increase in line with rand depreciation. The premium increase to take up this cover will be in excess of the percentage increase in cover and will be volatile from year to year. The premium increase depends on amount of cover added. Discovery s Global Linkage will provide a benefit of 100% of the rand/dollar depreciation (capped over five years) without any premium volatility to the policyholder. Policyholders premiums are protected from currency volatility. Even if benefits appreciate strongly, premiums will remain unchanged. Scenario 2: Rand appreciates to the dollar Both companies effectively provide a rand policy increasing annually at CPI. Discovery continues to charge a premium for the linkage to fund the cost of cover increases in years of rand depreciation. Cover increases vest annually at each policy anniversary. On the Myriad product, no growth accrues during the year. Growth accrues monthly on the Discovery product. This could prejudice policyholders depending on when they claim. Consider this example: Assume a policy selected with R1 million life cover. 63

64 Date 4 Oct Oct 2010 R/$ rate 6.45 Depreciatio n % Over this period, the Rand depreciated 18.89%. If the policyholder died during September 2010, the Discovery policy would have paid out in excess of 18% more than the Myriad policy as Discovery accrues the growth monthly, whereas the policyholder would have died before the Myriad increase in cover due on 4 October

65 Discovery provides three indemnity benefits: The Global Health Protector: This 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 $ may be claimed over the lifetime of the insured The benefit covers the costs of transporting the insured and, if medically necessary, a family member and/or organ donor and/or doctor and/or nurse to the US, as well as accommodation and other daily costs. No comparable benefit. With the rapid advance in medical technology, this benefit provides cover at top medical facilities in the USA, for procedures that cannot be performed in South Africa or where the prospect of survival is significantly higher if performed in the USA. Indemnity Benefits The 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 Discovery Health Plan contributions as follows: Returns a portion of excess health risk contributions over health risk claims every year through the Health Dividend option, or A portion every 5-years with the balance at the earlier of age 65 or a life changing event through the Health Fund option. May be selected as part of the LIFE PLAN or on a stand-alone basis. The 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 term on the death, functional impairment or critical illness of the principal member and/or spouse. (Functional impairment and critical illness claims are defined according to Myriad definitions.) No comparable benefit. The Health Plan Protector offers unique indemnity protection for the whole family ensuring that the 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 Health Plan contributions determined by Vitality status and health risk claims. Momentum s Health Waiver offers no similar benefits. The Health Plan Protector converts at expiry to provide additional life, disability and severe illness benefits depending on the contingencies covered on the Medical Premium Waiver. The Health Waiver benefit term expires at age 65. The Global Education Protector: The Global Education Benefit is an indemnity benefit that covers pays the education costs for the children of the principal life on defined The Education Protector: The Education Protector is a lump sum risk benefit that is intended to cover the education Myriad s Education Protector is essentially decreasing term assurance, with premiums back at the end of the term. 65

66 life-changing events: Death Severe illness and disability (own occupation and objective medical criteria Category A and D) Death, disability and severe illness (Severity A. Pays education for five years on Severity B) Benefit covers the following years of education: Pre-school :1year Primary : 7years High Tertiary : 5years : duration of undergraduate degree/diploma/certificate The benefit ceases when the child reaches 24 years of age 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 annual lump sum amounts: Up to 30% of actual fees for university residences Up to 10% of actual fees for books Amount paid is subject to the limits set by Discovery Life. The benefit pays the education costs directly to the institution. Benefit automatically increases in line with increase in education costs, as this benefit indemnifies the policyholder to the cost of education. The benefit may be selected to cover the first of the principal life or spouse to undergo the life-changing event. The Global Education Benefit converts, at expiry, to provide additional life, disability and severe illness benefits depending on the contingencies covered on the Global Education Benefit. cost of children on: Death Death and Disability (own occupation and functional impairment) Death and impairment The policyholder must choose an annual benefit amount of R2 000 to R The child s education cease age is selected by the client to be between ages 19 and 25. The term of the benefit is calculated as difference between education cease age and the child s current age subject to a minimum term of 10 years and maximum term of 24 years. The claim amount is calculated as the annual benefit amount multiplied by the outstanding term of benefit. Example: Annual benefit amount: R Term: 20 years If insured life dies in year 11, Momentum will pay R (10 X R20 000) If insured life dies in year 16, Momentum will pay R (5 X R20 000) The payout can be for any purpose. Benefit increase amount: 0% 3 10% CPI RDI Future Cover Option: can increase benefit amount by up to 20% every 5 years. Policyholder gets premiums back at benefit expiry without interest if they have not claimed or lapsed their policy. Despite careful planning, the Myriad s benefit could leave policyholders exposed to a number of uncertainties. The correct level of is cover based on a number of assumptions: What term should be selected? Will the child attend public or private school? Will the child attend university? Will the child attend overseas university? The annual benefit amount selected on quotes package is very different to the actual benefit that the client will be able to use. The actual benefit will depend on how the lump sum is invested. To determine amount of cover, assumptions will therefore have to be made in terms of: 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. An indemnity benefit such as Discovery s 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 to the principal or spouse. 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. The benefit provides indemnity cover while the child is being educated and lump sum cover thereafter (through the conversion). 66

67 Myriad policyholders will only get their premiums back at the end of the term if they did not lapse their benefit. Discovery policyholders who have Integrator Plans get a PayBack on their total risk premiums every 5 years. 67

68 Homeloan Protector No comparable benefit. Homeloan Protector Only available as an ancillary to the Death benefit on the Homeloan Package. Maximum cover, equals R (R for professionals). Benefit covers Critical Illness, Occupational Disability, Functional impairment and retrenchment. o To qualify for a benefit payout under the Functional impairment or Critical Illness, the policyholder must meet 100% severity level (see appendix 1& 2). o To qualify for a benefit payment from the retrenchment cover, the insured life has to be unemployed for 3 consecutive months. o The claim amount will be 4% of the benefit amount every 4 months Expiry ages: o Occupational disability: 65 o Retrenchment cover: 70 o Critical illness cover: Whole of Life The Discovery Life Policy enables policyholders to cover their home loan in the event of death, disability, and severe illness. 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 policy holder will be able to maintain the home loan repayments during this 6- months waiting period on being disabled to perform his/her occupation. The same can be said for the 3-months waiting period applicable to the retrenchment cover benefit. 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. Waiting Periods o Retrenchment cover 6 -month waiting period from policy inception and a 3- month general waiting period. o Occupation Disability Cover 6-month waiting period. o Premiums are payable during the waiting period. 68

69 Retirement Funding & Investment Discovery retirement Optimiser The Discovery retirement Optimiser is a retirement funding vehicle available as an ancillary benefit on the Life Plan. Clients can select to structure it as a retirement annuity or endowment policy. If it is structured as an endowment policy, the policyholder could qualify for absolutely no fees through the Investment Integrator. The retirement Optimiser uses the Life Fund to create additional funding in retirement. At the selected retirement date, Discovery reduces the Life Fund in line with the policyholder s reducing risk cover needs. Risk cover needs typically reduce due to: Children becoming financially selfsufficient Reducing future life expectancy Large part of debt being extinguished This acceleration of the Life Fund reduces the cost of risk cover. Discovery uses the surplus risk premiums created by the Life Fund s reduction to boost the policyholder s retirement capital through 3 benefits, namely: the LIFE PLAN Optimiser, Longevity Booster and Ill-Health Income Booster (see below for detail.) As a proxy for reducing risk cover needs, Discovery matches the draw-down of the LIFE FUND with the income the policyholder receives from his retirement fund and the additional benefits. It works as follows: The 1/3rd lump sum from his retirement fund is drawn down over 60 months. Income from 2/3rd s of his retirement fund is drawn down monthly over his lifetime. The LIFE PLAN Optimiser payouts are drawn down as it is received over ten annual lump sums from date of retirement. Payouts from Longevity Booster (an income enhancement vesting every ten years in retirement) are drawn down annually as it is received. The income enhancements from the Ill- Health Income Booster (an income enhancement triggered by ill-health) have no effect on the LIFE FUND. Maximum draw-down limits of the LIFE FUND: Myriad Retirement Provider and Savings Benefit Myriad has two savings vehicles namely the Retirement Provider and the Savings Benefit. These products can only be accessed if a client already has a qualifying risk product with Myriad. The Retirement Provider is a retirement annuity (RA) available on the Myriad platform (Momentum s main investment product range is called Investo). The Retirement Provider allows for either lump sum contributions or recurring contributions The Savings Benefit is an endowment-type vehicle also on the Myriad platform. Only recurring contributions can be made to this product. Both products provide bonuses if kept to maturity and will then form part of the fund value. Momentum will pay 75% of the accumulated fund administration fees as a loyalty bonus on maturity of a policy or on death of the policyholder. 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 net rate as the fund (i.e. net of tax, management and performance fees). Single premium benefits do not qualify for a loyalty bonus. The Discovery retirement Optimiser is unique in that it views retirement as a lifechanging 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. The Discovery retirement Optimiser gives investors access to the Investment Integrator which can reduce not just the administration fees, but all fees to give a 0% RIY. Discovery gives investors access to a wide range of funds such as Target Retirement Date Funds, Escalator Funds etc. Discovery does not charge investors additional administration fees when they select external fund managers. Momentum charges performance fees on many of the available funds, this fee is not reflected in the RIY and can understate the cost of the product. Momentum s LifeCycle Philosophy portfolios do not cater for the investor that has retired. Discovery provides Target Retirement Date Funds that manages investor s funds to and into retirement. 69

70 In first five years: 8% per year Thereafter: 4% per year Overall: 50% of the LIFE FUND as at retirement The additional funding created by the LIFE FUND s draw-down, namely the LIFE PLAN Optimiser, Longevity Booster and Ill-Health Income Booster, is discussed below. LIFE PLAN Optimiser The LIFE PLAN Optimiser is a tax free boost to retirement funding that pays out in 10 annual instalments increasing at CPI from the selected retirement date. The size of the boost as reflected in Quotelink depends on: Size of risk benefits Retirement benefits relative to LIFE FUND amount Term to selected retirement age Benefit expiry age of ancillaries Longevity Booster Accrues every 10 years in retirement. Amount of enhancement: 10% of retirement fund at selected retirement age after deduction of the 1/3rd lump sum Increased at CPI to ten yearly vesting dates Payable at 10% per year for the 10-year period Both the LPO and Longevity Booster pay out tax free. Balance payable on death. Ill-Health Income Booster Enhances retirement income on suffering a severe illness in retirement. The amount and duration of the enhancement depends on the severity of the illness, as shown in the table below. SIB severity Capital Disability Category Tax-free Income enhanceme nt Duration of enhancemen t No comparable benefit. No comparable benefit. The effect of the Longevity Booster is illustrated in the table below, by showing the relative income difference of a Myriad and a Discovery policyholder, all else being equal: Income, net of tax Myriad client R1 000 pm Discovery client R1 210 pm + outstanding balance of Longevity Booster on death Assumptions: Policyholder retires at 65 Guaranteed Life annuity 40% marginal tax rate The effect of the Ill-Health Income Booster is illustrated in the table below, by showing the relative income difference of a Myriad and a Discovery policyholder, all else being equal: 70

71 A A & D 25% Whole of life B B 18.75% 10 years C 12.5% 5 years D 6.25% 2 years PayBack (only on the Classic Life Plan) Discovery s Health and Vitality Integrator plans offer policyholders initial premium reductions of up to 20% and the ability to control future premium increases through their health and wellness. In addition, the Health and Vitality Integrator include the PayBack Benefit, which provides a return of up to 60% and 25% respectively of the policyholders risk premiums every 5 years depending on their health claims, LIFE PLAN claims and Vitality status. It is the policyholder s choice what he wants to do with the PayBack, but if he invests it for retirement, it becomes a powerful additional boost to his retirement funding. Retirement Booster The Retirement Provider is enhanced by the Retirement Booster if: risk benefits are held to maturity & any of the following qualifying increases are met: Premium increases of 10% or more. Premium increases in line with CPI. Benefit amount increases of 5% or more. Benefit amount increases below 5% in combination with any compulsory premium increase. Benefit amount increases in line with CPI or the rand depreciation index (RDI). Booster calculated as 1.5% x risk premium x outstanding duration until retirement. Example: Allocation with 20 years remaining: 30%. Allocation with 1 year remaining: 1.5%. All allocations are cancelled if risk benefits are cancelled before retirement date. Allocations cease when RA is made paid up and 10% penalty imposed for every remaining year to maturity. No interest is earned on allocations. Pays out tax free. The 1.5% can be reviewed by Momentum The Retirement Booster is not available on the Savings Benefit. Income, net of tax Severity Myriad Discovery Duration A R1 000 R1 420 Life B R1 000 R years C R1 000 R years D R1 000 R years Assumptions: 40% marginal tax rate The Retirement Booster can be compared with Discovery s PayBack benefit, as both companies return a portion of the policyholder s risk premiums. However, the PayBack Benefit holds the following advantages: It s payable every 5 years, while the Retirement Booster only vests at retirement. Unlike Myriad s benefit, cancelling the risk benefits has no impact on past PayBacks. Also, making the RA paid up has no impact on PayBacks, while the Myriad policyholder will receive no further allocations in such case and incur a penalty on past allocations. The annual allocation can be up to 50% of risk premiums significantly more than Myriad s allocation. The average health claimer on Blue Vitality status gets approximately 11% of premiums back. The PayBacks can be invested for growth, while Myriad s allocation earns no interest. Both benefits pay out tax free. The percentage PayBack (given the policyholder s health claims and Vitality status) is guaranteed. With Myriad s Retirement Booster, the 1.5% allocation can be reviewed at any stage. The health claim bands on the PayBack benefit are also reviewed each year, but this is to ensure that it keeps pace with health inflation. 71

72 DiscoveryCard Discovery Life policyholders can get access to the benefits of the DiscoveryCard. By spending at DiscoveryCard partners, including Pick and Pay and Altech Autopage, policyholders can get between 10% and 20% of their spend back every month. This effectively reduces the policyholder s monthly expenses, which means he can save more for retirement. Save Thru Spend The Retirement Provider provides access to Momentum s Save Thru Spend benefit By shopping at selected partners, a portion of a policyholder s expenditure is channelled to his savings. For example, by shopping at Spar, a policyholder gets 0.65% of his expenditure channelled into his savings. If he also has Multiply (Momentum s loyalty program), he can get 1% 2% channelled into his savings. Example: the following table compares the value at retirement of Discovery s PayBack and Myriad s Retirement Booster: Retireme PayBack nt Booster Blue Vitality status R throughout R Gold Vitality R status throughout Assumptions: Premium: R1 000 pm, increasing at 10% per year Term: 20 years Claim in middle claim band 10% per year investment growth on PayBacks Save Thru Spend is no longer available on endowment policies. 72

73 General Exclusions Discovery Life may refuse claims when: 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 to the claimant. Discovery Life is unable to obtain sufficient medical or financial (if applicable) evidence from the assured lives, your dependants or treating medical practitioner to fulfil our criteria for making a benefit payment. The disability, severe illness or family illness claim was a result of: Wilful and deliberate breaking of any law or wilful 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). Alcohol consumption above the legal limit. Myriad may refuse claims in the following circumstances: Death Benefit; Modified Death Benefit (natural death) Last Survivor Death Benefit; Funeral Benefit; Premium Waiver - Death; Education Protector - Death; Education Protector - Death and Disability; Education Protector - Death and Impairment: Momentum will not pay the claim amount if the insured life commits suicide within two years of the starting date of the benefit. When restarting the benefit, a new 2-year period will apply. If you increase the benefit amount, a new 2-year period will apply to the increased portion from the date of increase. Modified Death Benefit (unnatural death) Unnatural Death Benefit; Education Protector - Death and Disability; Education Protector - Death and Impairment; Disability/ Impairment benefits; Income disability/ impairment benefits; Critical illness benefits; Living Benefits; Premium Waiver - Comprehensive Disability; Premium Waiver - Functional Impairment The claim will not be admitted if the claim event is brought about or accelerated directly or indirectly by any of the following: War (whether declared or not). Participation in any terrorist activity, riots, civil commotion and / or rebellion. Radioactivity and nuclear explosion. Wilful breaking of any law by the insured life. The insured life fails to disclose information before the cover starts. Intentional and gross negligent self inflicted injury. The insured life being under the influence of alcohol, intentional inhalation of fumes, intentional and negligent consumption of poisons, drugs, narcotics or medication unless prescribed by an independent medical practitioner and used as prescribed. Income Protector, Temporary Income Protector, Business Protector and Business Overheads Protector: Same exclusions as for Unnatural Death Benefit, Disability/Impairment Benefits and Critical Illness Benefits. Maternity leave is excluded. The exclusions have been taken directly from the policy documents of the relevant companies. 73

74 Future cover benefits There could be specific exclusions relating to the insured applicable to the benefit issued under the Future Cover Benefits. Accidental HIV Benefit The claim will not be admitted if the claim event is brought about or accelerated directly or indirectly by any of the following: wilful breaking of any law by the insured life the insured life fails to disclose information before the cover starts intentional and grossly negligent selfinflicted injury The excessive consumption of alcohol; intentional and negligent consumption of poisons, drugs, narcotics or medication 74