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