product comparison discovery life and...

Product comparison Discovery Life and Sanlam

July 2010

Description Page

Funding patterns 3

Premium guarantees 6

Benefits for remaining healthy 7

Death benefit 9

Protection from adverse economic conditions 10

Minimum Protected Fund versus standalone benefits 11

Lump sum disability benefits 13

Income disability benefits and the Overhead Expenses Benefit 23

Dread disease benefits 31

Female Severe Illness Benefit and Childbirth Benefit 38

Child Severe Illness Benefit 39

Family Trauma Benefit 39

Parent Severe Illness Benefit 39

Future cover without medical underwriting 40

Premium waivers 41

Cover in "real" currencies 42

Indemnity benefits 44

General exclusions 46

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Sanlam Discovery’s comments

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

Age next

ACI for ABI = 3%

ACI for ABI = CPI

< 30 6.0% CPI + 3.0%

30 6.0% CPI + 3.0%

40 7.75% CPI + 4.75%

50 9.5% CPI + 6.5%

60 10.5% CPI + 7.5%

70 11.5% CPI + 8.5%

80+ 12.0% CPI + 9.0%

ACI increases linearly within age bands. 2. The SupeRater Plan:

Provides for the following:

Discounts on the AcceleRater rates for whole-of-life benefits of between 12.5% and 20%

The same annual premium increases as the AcceleRater Plan

An additional compulsory increase of 20% every ten years. The increase every ten years only applies to premiums that were discounted upfront and not the total premium.

The SupeRater Plan will overtake the AcceleRater Plan after approximately 20 years.

Sanlam has four funding patterns: 1. Fixed compulsory growth


ACI ABI

5% 0%

10% 3.5%

7% with whole-of-life guarantee

0%

11% with whole-of-life guarantee

3.5%

2. Age-related compulsory growth:

There are two options, namely an Aggressive option and a Standard option

The Aggressive option starts with a lower initial premium but has steeper premium increases than the Standard option.


Age next

Aggressive option Standard option

ACI % ACI%

ABI 0% ABI 3.5%

ABI 0% ABI 3.5%

< 29 3% 7.5% 0% 4.5%

29 - 30 4% 8.5% 0% 4.5%

31 - 32 5% 9.5% 2% 6.5%

33 - 34 6% 10.5% 2% 6.5%

35 7% 11.5% 2% 6.5%

36 7% 11.5% 3% 7.5%

37 - 38 8% 12.5% 3% 7.5%

39 - 40 9% 13.5% 3% 7.5%

41 - 43 10% 14.5% 4% 8.5%

44 - 45 10% 14.5% 5% 9.5%

46 - 50 10% 14.5% 6% 10.5%

51 - 55 10% 14.5% 7% 11.5%

56 - 57 10% 14.5% 8% 12.5%

58 - 59 10% 14.5% 9% 13.5%

61+ 10% 14.5% 10% 14.5%

On the compulsory premium patterns, a Sanlam policyholder is unable to link the growth of his cover to inflation, the highest cover growth option being 3.5% pa. This will often be inappropriate from a financial planning point of view. It is especially problematic with buy-and-sell agreements, where a policyholder’s liability (to buy out his partner’s share) is linked to the growth of the business.

Discovery’s AcceleRater with ABI=3% is roughly comparable to the Sanlam Fixed 10% compulsory premium increase.

Discovery’s SupeRater is most comparable to the Sanlam Standard age related + 3.5%

Discovery’s increases are capped at the older ages to make them more sustainable, compared to the Sanlam Age-related compulsory growth patterns which have increases at the older ages of approximately 2.5% per annum.

Purchasing a Discovery Integrator Plan entitles the policyholder to additional premium reductions at inception of his 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 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 from Blue to Diamond status.

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3. The Standard Plan

Premiums remain level over the term for a level amount of cover.

Premium and cover increases are specified.


ACI ABI

0% 0%

10% 6.5%

CPI + 3.5% CPI

4. The ModeRater Plan:

Premiums on whole-of-life benefits are discounted by up to 15% from inception of the policy. Premiums for these discounted benefits increase at 20% every ten years.

The additional increase does not apply to benefits that had no initial discount.

The ModeRater will overtake the Standard Plan’s premiums after approximately twenty years.

3. Level: Growth optional

Premiums remain level over the term for a level amount of cover.

Premiums are guaranteed for between 5 and 15 years, not for whole of life. (See Premium Guarantee section for more information)

There are two options:

Option 1: Specified premium and cover growth ACI / ABI combinations

ACI ABI

0% 0%

5% 3.5%

10% 7%

CPI + 3% CPI (capped at 15%)

Option 2: Specified cover growth. Premium increase for additional cover based on new business rates of additional cover at age it is added.


ACI ABI

5% + age factor 5%

10% + age factor 10%

CPI + age factor CPI (capped at 15%)

R/$ + age factor R/$ (min CPI, max 35%)

R/Pound + age factor

R/Pound (min CPI, max 35%)

R/Euro + age factor

R/Euro (min CPI, max 35%)

4. Stepped: Growth optional 1. Premiums remain level over choice of 10 or 15

years for a level amount of cover. 2. Same premium and cover growth combinations as

on the Level option. 3. At the end of 10 or 15 years, policy is extended and

premium re-calculated every five years based on age at the time of increase.

The Discovery Standard Plan should be compared to the Sanlam Level premium pattern.

Integration makes Discovery’s initial premiums cheaper at virtually every age.

All Discovery’s plans provide quantified guarantees for whole of life, whereas Sanlam offers no premium guarantees that are quantified for whole of life on their Level premium patterns. This creates uncertainty for the policyholder.

Discovery’s Global Investment Linkage Option allows ABI to be linked to foreign currency movements.

It also allows linkage to global investment benchmarks, which Sanlam does not.

Discovery does not link the premiums to foreign currency exposure, thereby creating more certainty for the client. I.e. premiums are fixed in Rands and not subject to volatility of exchange rates which could make the plan unaffordable. (See § cover in ‘real’ currencies for more information)

The increases after the first 10 or 15 years and every five years thereafter on the Sanlam Stepped option are based on the age of the policyholder at each date. The percentage increase in premiums at each duration can be compared to the ModeRater Plan as follows:

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Discovery has no equivalent premium pattern.

Discovery has no equivalent premium pattern.

5. Yearly Rated Growth

Only for persons who qualify for rate groups 4 or 5.

The payment increase each year is based on the rates applicable for the planholder’s age at the time i.e. the planholder’s payments will be adjusted yearly.

Rates are not guaranteed.

6. Term cover

The term cover products offer cover for each chosen benefit, for the chosen initial guarantee term.

Stepped ModeRater

Initial premium R157 R182

Increase after 10 yrs

86% 20%


38% 0%


53% 20%


52% 0%


90% 20%

*35 year old non-smoker R1m life cover

The premiums on the Sanlam Stepped option are clearly not sustainable, as can be seen from the high premium increases reflected in the table above.

This leaves great uncertainty for policyholders as there is no guarantee on the premium increase from year to year.

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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 status year: 2.5%

Per 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 namely rand depreciation and medical inflation.

Sanlam provides the following guarantee options for Whole Life products (i.e. Matrix Topcover, Cobalt for Professionals Topcover and Glacier Topcover):

Guarantee for life

To qualify for a lifelong guarantee, compulsory premium growth of 7% or 11% must be chosen at inception of the policy.

Guaranteed term between five and 15 years

For all payment patterns except stepped

Policyholder selects an initial guarantee period between 5 and 15 years.

At the end of the first guarantee period, Sanlam guarantees that the maximum premium will not be more than the following:

Initial guarantee period

Maximum % premium increase

5 years 20%

6 years 21%

7 years 22%

8 years 23%

9 years 24%

10 years 25%

11 years 26%

12 years 27%

13 years 28%

14 years 29%

15 years 30%

After the initial guarantee period, premiums are reviewed every five years.

Increases are not quantified at these subsequent reviews

Guaranteed term 10 or 15 years

Only on the Stepped pattern, with premium reviews every five years thereafter, based on age at that point in time.

No limit to the increases after guarantee period ends including the first guarantee period .

Sanlam only has one guarantee option on Income Protector products (i.e. Matrix Income Protector, Cobalt for Professionals Income Protector, Glacier Income Protector):

Policyholder has initial guarantee period of 5 years where Sanlam guarantees premium will not increase by more than 20%.

After initial guarantee period, premiums are reviewed every 5 years where no qualified premium guarantees are offered at these subsequent reviews

Discovery provides certainty for whole of life on all funding plans, whereas Sanlam only quantifies guarantees for whole of life on their 7% and 11% Fixed compulsory growth plans.

On all plans other than the 7% and 11% Fixed Compulsory growth plans Sanlam does not quantify guarantees after the initial guarantee period. This leaves policyholders exposed to uncertainty thereafter.

On the stepped payment pattern there is no guarantee on premium increases.

You could expect to see increases as you get older that look as follows:

Age Premium Increase

40 18%

45 35%

50 42%

55 37%

Assumptions: Male non-smoker; R2 mil life cover

On Discovery’s Income Continuation Benefit you get the same premium guarantees as the rest of the LIFE FUND

This provides certainty on future premiums

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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 benefit (on the Classic Life Plan), 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.

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 engagement in Vitality.

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 (on the Classic Life Plan) - which provides a monthly

Sanlam has no equivalent benefits.



Sanlam has no equivalent benefits

By incentivizing a healthy lifestyle and providing financial rewards for policyholders, Discovery is able to maintain a healthy risk pool, thereby reducing mortality, morbidity and lapse costs.

A policyholder thus has the ability to control future premium increases and increase their PayBack (on the Classic Life Plan) by maintaining a healthy lifestyle.

In addition to the normal premium guarantees, Discovery Life offers a further guarantee on the Health Integrator and Vitality Integrator increases through the Maximum Protected Premium.

This Integrated Cover is on average 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.

The policyholder is able to increase his Integrated Cover, 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 policyholder’s Integrated Cover will boost all benefits attached to the Life Fund.

Benefits for remaining

healthy

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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 Health Fund

Returns a portion of Discovery Health Plan contributions as follows:

Health Dividends: Returns a portion of excess health risk contributions over health risk claims every

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.



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.

This 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.

The annual adjustments to the Financial Integrator Fund work in exactly the same way as the Cover Integrator

The policyholder is able to 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.

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Death benefits

Discovery only sells whole-of-life insurance.

Policyholders can structure their policies in three different ways:

Life cover benefits on separate policies for principal and spouse: This ensures claims on one life have no impact on benefits of another life.

Life cover benefits on one policy for principal and spouse: A claim on one life will reduce the benefits on another life. Should the LIFE FUND be depleted due to the death of the principal or spouse, the surviving spouse may continue with his/her cover, free of medical underwriting.

Life cover benefits on one policy for principal and spouse with Minimum Protected Fund: This allows protection of benefits on both lives, irrespective of the number or amount of claims on either life.

No equivalent benefit, however, advances on death claims offered

Immediate advancement of R20 000 (to cover funeral costs and urgent family travel)

Payment made within 24 hours without forms, via electronic funds transfer

Available on low risk claims (natural causes and where murder is not suspected)

Terminal illness Discovery pays the full lump sum death benefit where a policyholder is diagnosed with having less than 12 months to live.

Sanlam offers whole-of-life and terms assurance.

Policyholders can structure their policies in the following ways:

Death benefits on separate policies for principal and spouse: This ensures claims on one life have no impact on benefits of another life

Death benefit on one policy for principal and spouse: Claims on one life have no impact on claims for another life.

First Death on one policy for principal and spouse: Claims on one life will impact the benefits of the other life.

If a claim under this benefit is admitted, this benefit and accelerator benefits cease. However, the remaining lives linked to this benefit have the option to take out death and accelerator benefits up to the cover amount at date of claim, without proof of health.

A claim under an accelerator benefit will reduce the First Death cover amount. Where the cover amount of an accelerator benefit exceeds the reduced First Death cover amount, the accelerator benefit will be reduced to an amount equal to the reduced First Death cover amount.

Final Expenses Benefit

Pays lump sum on death of insured within 48 hours of Sanlam’s requirements having been met.

Maximum benefit: R100 000 per life assured.

Terminal illness

Sanlam pays the full lump sum death benefit where a policyholder is diagnosed with having less than 12 months to live.

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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 is offered at a 10% premium reduction to normal rates.

Benefits available with the Financial Integrator:

The Asset Protector guarantees an inflation-related 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 installments, is replaced

The DiscoveryCard Interest Protector helps DiscoveryCard holders by refunding the interest they pay on their DiscoveryCard.

The Severe Illness Benefit Medical Booster pays if the costs for medicine after experiencing a defined severe illness is more than R250 000.

At age 65, through the Financial Integrator Cash Conversion, 10% to 100% of the Financial Integrator FUND will pay out as a cash lump-sum to help with retirement funding. No automatic 10% Cash Conversion on Essential LIFE PLAN

Sanlam has no equivalent benefits. The protector benefits and Cash Conversion can be bought up further.

Premiums paid to increase the Financial Integrator Cash Conversion will accumulate towards your 5-yearly Payback benefit.

All the Protector Buy-Ups include the Protector PayBack benefit. At the earlier of death or age 65, if the premiums that clients have paid for the Buy-ups are higher than the protection they have enjoyed, Discovery will refund any excess premiums at that time.

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Minimum Protected Fund versus stand-alone benefits

Discovery allows policyholders to select the Minimum Protected Fund benefit to ensure protection of cover for future events. This maximizes 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, as well as 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, as well as ancillaries, for 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 may select up to a 100% MPF.

Discovery further offers a non-accelerated Capital Disability Benefit for the principal life. Policyholders still need a Life Plan to take advantage of this benefit.

Discovery also 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. Can select this benefit without having a Life Fund

Sanlam allows policyholders to choose certain benefits on a non-accelerated basis. This means that claims on these benefits have no impact on other benefit amounts.

The sum assured selected on standalone lump sum disability benefits is the maximum that can be paid out over the lifetime of the insured, i.e. the benefit terminates once the full benefit amount is paid out.

On Sanlam’s standalone dread disease benefits, policyholders can claim in excess of the original sum assured, should a subsequent claim arise for an illness unrelated to a previous claim.

A non-accelerated benefit is different from the effect of the Minimum Protected Fund.

Consider this example:

If you choose any of Sanlam’s lump sum disability benefits for R1m of cover, the maximum payout will be R1m.

If you choose Discovery’s Comprehensive Plus Capital Disability Benefit on the Classic LIFE PLAN for R1m and a Minimum Protected Fund of 100%, the maximum payout for a particular disability is R1.225m (nine payments of R25 000 for Category C payouts, one payment of R500 000 for a Category B payout after 24 months, and one payment of R500 000 for an upgrade from the Category B payout to Category A payout after 36 months).

In the Discovery example, the expected claim size is considerably larger and the full R1m cover for Capital Disability is available for future claims.

Discovery’s Minimum Protected Fund reinstates all benefits linked to the LIFE FUND and not only the dread disease cover, as is the case with Sanlam.

The Minimum Protected Fund is a unique benefit offered by Discovery. It allows policyholders to choose the degree to which their benefits act as an accelerated or a non-accelerated benefit.

The effect of the Minimum Protected Fund (on the Classic Life Plan) is also well illustrated with the Severe Illness Benefit. Cover is reinstated for future claims on the same illness or on different illnesses, with potential total payouts being well in excess of the initial sum insured over the person’s lifetime. On Sanlam’s stand-alone dread disease benefits, cover is only reinstated for illnesses not related to previous claims. It is Discovery’s belief that reinstatement of cover for illnesses that the policyholder has already suffered from is more valuable than reinstatement of cover for unrelated future claims, as the likelihood of suffering a related claim is far more than an unrelated one.

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Sanlam has a 14-day survival period (without the use of life support) on its Dread Disease benefits and a 30-day survival period on its Functional Impairment and Functional Impairment plus Disability benefits.

Imposing 14-day survival period results in less claims being paid. For example 1 out of 17 heart-attack victims aged 50 will die within 14-days. For strokes this goes up to 1 in 11.

Sanlam’s survival period is especially relevant under its non-accelerated benefit options, where premiums may be paid for many years without any benefit paid on death during the survival period.

Discovery has no general survival period for 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 (standalone Severe Illness Benefit) or non-accelerated Capital Disability Benefit die within any period after submitting a claim, he will receive his Severe Illness / non-accelerated Capital Disability Benefit and his Life Cover Benefit. With Sanlam he would only receive his life cover benefit.

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Lump sum disability benefits

Discovery offers four lump sum disability options, namely 1. Core Capital Disability Benefit 2. Comprehensive PLUS Capital Disability

Benefit 3. LifeTime Capital Disability Benefit 4. LifeTime PLUS Capital Disability Benefit

All available on both the Classic and Essential LIFE PLANs

Claims are assessed based on: Objective medical criteria Activities of daily living Loss of income (under the Comprehensive

Plus option) Ability to perform nominated occupation Objectively and clinically assessed LifeTime

Impact Factors (under the LifeTime options) Future salary growth (under the LifeTime

options)

Covers total and partial permanent disability (partial disability covered at 50% through the Comprehensive Plus option)

No general waiting or survival period

Sanlam offers six lump sum disability products: Disability for regular occupation*

1. Disability for regular and reasonable alternative occupation*

2. Functional Impairment 3. Functional Impairment plus Disability

for regular occupation 4. Functional Impairment plus Disability

for regular and reasonable alternative occupation

5. Physical Impairment *Back and mental disorder exclusions apply. May also be taken without these exclusions, subject to a loading on the normal rates

Claims are assessed based on: Ability to perform regular occupation or any

reasonable alternative occupation (depending on option selected)

Functional Impairment definitions (depending on option selected) or

Physical impairment (if benefit has been selected)

Covers total and partial permanent disability. (Partial permanent disability covered at 25%,50% or 75% through the Functional Impairment definitions)

30-day survival period on the Functional Impairment, Functional Impairment plus Disability and Physical Impairment 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 Sanlam:*:

Discovery Sanlam

Core Disability for regular occupation*

Comprehensive Plus

Functional Impairment plus Disability for regular occupation*

LifeTime No equivalent

LifeTime PLUS No equivalent

* Note:

Sanlam’s occupational disability benefits taper, so for a complete like-for-like comparison select the benefit without tapering. ALSO Back and mental disorder exclusions apply on the occupational underpin, so for a complete like-for-like comparison we need to select the benefit with the exclusion removed. The unique features of the Classic LIFE PLAN are:

Category C Disability Claims Dynamic Spend Protector Unlimited multiple claims

Unlike Sanlam’s benefit, Discovery’s benefit has no back and mental disorder

exclusions covers temporary disability through a

unique loss-of-income underpin boosts the payout based on the

LifeTime Impact Factors which considers the long term impact of a loss of income

has no survival period requirement offers cover up to age 70 does not taper 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 Dynamic Spend Protector boosts DiscoveryCard cash backs by up to 50%

has nominated occupation underpin, which provides far more certainty than their occupational underpin.

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Maximum expiry age of 65 or 70, and then converts to Severe Illness Benefit for whole of life, free of medical underwriting

No reduction of benefit until benefit expiry age i.e. no taper of benefit

All products can be taken out on an accelerated or non-accelerated basis

1. Core Capital Disability Benefit:

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 (i.e. only pays for events that meet the 100% severity level criteria).

Maximum expiry age 65 (except the Physical Impairment Benefit, which can be taken for whole of life as well).

Benefit tapers by 20% per annum from age 60 (for claims submitted for occupational disability.)

All products can be taken out on an accelerated or non-accelerated (standalone) basis.

1. Disability for regular occupation:

Pays 100% on the following:

Total, permanent and irrecoverable loss of:

vision in two eyes, or

use of two hands, or

use of two feet, or

use of one hand and one foot.

Functional impairment, such that insured is totally, permanently and continuously:

unable to take care of body or personal interests, or

unable to engage in the occupational demands the insured was engaged in immediately before the functional impairment.

Benefit tapers by 20% per annum from age 60. May also be taken without tapering, subject to a loading on the normal rates.

Back and mental disorder exclusions apply. May also be taken without these exclusions, subject to a loading on the normal rates.

2. Disability for regular or any reasonable alternative occupation:

Same as above, except occupational definition is as follows:

Unable to engage in the occupational demands the insured was engaged in immediately before the functional impairment, as well as an occupation Sanlam may reasonably expect him to engage in, taking into account his education, training and experience.

Benefit tapers by 20% per annum from age 60. May also be taken without tapering, subject to a loading on the normal rates.

The probability of being disabled after age 60 is much larger than for younger ages. Therefore there is a significant loss in cover due to tapering.

The probability of a claim arising from a loss of two eyes, two hands, two feet or a combination thereof is minimal, relative to all other causes of disability.

The definition of “regular occupation” is similar to an “own occupation” definition.

Products that primarily use the occupational disability definition have a subjective claims assessment, which creates uncertainty for policyholders.

As this Sanlam benefit does not cover partial disability, it must be compared to Discovery’s Core Capital Disability Benefit. Discovery’s Core benefit covers nominated occupation, but in addition uses objective medical criteria spanning all body systems in the assessment of a claim.

The definition of “reasonable” occupation on the Sanlam product is subjective, vague and creates even more uncertainty than the “regular occupation” definition.

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2. Comprehensive Plus Capital Disability Benefit:

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 & B severity level criteria respectively.

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, a 50% claim is paid. If it lasts 36 months, a 100% claim is paid. Not available on the Essential LIFE PLAN.

3. Functional Impairment Benefit

Pays

25% - 100% (depending on severity) upon meeting the requirements of one of the defined functional impairment claim events.

30-day survival period without life support

4. Functional Impairment plus Disability for regular occupation

Pays

100% upon being totally and permanently unable to engage in the occupational demands the insured was engaged in immediately before the functional impairment

or

25% - 100% (depending on severity) upon meeting the requirements of one of the defined functional impairment claim events.

Benefit tapers by 20% per annum from age 60 for claims submitted under the occupational disability underpin. May also be taken without tapering, subject to a loading on the normal rates.

30-day survival period without life support

Back and mental disorder exclusions apply on the occupational underpin.

5. Functional Impairment plus Disability for

regular and reasonable alternative occupation

Same as above, except occupational definition is as follows:

Unable to engage in the occupational demands the insured was engaged in immediately before the functional

See examples below where the payouts under the Functional Impairment Benefit are a poor proxy for the policyholder’s loss of earning ability.

The functional impairment must be permanent after the life insured has undergone optimal, reasonable treatment. This term is not well defined leaving significant subjectivity in the claims process.

Imposing a 30 day survival period results in less claims being paid. For example, over 25% of heart attack victims die within the survival period required.

This waiting period is relevant for stand-alone benefits where a substantial percentage of claims will not get paid.

Both benefits assess disability in terms of ability to perform occupation and medical criteria.

Unlike the Sanlam benefit, Discovery’s benefit

covers temporary disability through a unique loss of income underpin

has no exclusions for back and mental disorders

does not taper

offers cover up to age 70

offers reinstatement of cover through the Minimum Protected Fund

converts to severe illness cover for whole of life at benefit expiry, free of medical underwriting.

See comments below for more detail.

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3. LifeTime Capital Disability Benefit:

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 (i.e., pays for events that meet the 100% severity level criteria)

The LifeTime Impact Booster depends on the LifeTime Impact Category of the disability and the salary growth option selected – the Booster ranges from 100% to 200%

Category D claims are assessed to be LifeTime Impact Category 3.

The LifeTime Impact score, which determines the LifeTime Impact Category of the disability, is dependent on the following: - Age at disability and life expectancy

thereafter; - Invasiveness of any surgery required; - Impact of any pharmacological treatment

and its associated side-effects; - Impact of any therapy and rehabilitation

required and its associated discomfort; - Impact of any assisted care and devices

The LifeTime Impact Booster is applicable to category A and D claims.

4. LifeTime PLUS Capital Disability Benefit:

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

impairment, as well as an occupation Sanlam may reasonably expect him to engage in, taking into account his education, training and experience.

No equivalent benefit


Sanlam does not offer a 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.

With the LifeTime Capital Disability Benefit, it is possible to get paid 200% of the sum assured. Sanlam does not offer a payout greater than the sum assured.

Sanlam does not offer a 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.

With the LifeTime PLUS Capital Disability Benefit, it is possible to get paid 200% of the sum assured. Sanlam

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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, a 50% claim is paid. If it lasts 36 months, a 100% claim is paid. Not available on the Essential LIFE PLAN.

The LifeTime Impact Booster depends on the LifeTime Impact Category of the disability and the salary growth option selected – the Booster ranges from 105% to 200%

Category D claims are assessed to be LifeTime Impact Category 3.

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 life expectancy

thereafter; - Invasiveness of any surgery required; - Impact of any pharmacological treatment


required and its associated discomfort; - Impact of any assisted care and devices

Dynamic Spend Protector (Not available on the Essential LIFE PLAN.)

All disability products include the Dynamic Spend Protector at no extra charge. This benefit enhances the DiscoveryCard and DiscoveryMotor 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

Vita

lity

Sta

tus

Blue 10% 5%

Bronze 15% 7.5%

Silver 25% 15%

Gold 35% 25%

Diamond 50% 35%

Term Up to selected benefit expiry

age

10 years

Note: these payments are in addition to the DiscoveryCard cashbacks & discounts at partner stores.


does not offer a payout greater than the sum assure

Discovery is able to combine its existing Card & Vitality infrastructure to offer further cash backs and discounts at partner stores during disability.

These savings can free up substantial cash flow during disability, and will place less reliance on drawing down using your lump-sum payment.

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Discovery has no general medical exclusions

Payouts under medical criteria reflected in Appendix 2

Sanlam excludes the following as causes of claim:

Depression or dysthymia

Post-traumatic stress disorder

Fibromyalgia

Chronic Fatigue Syndrome

Back conditions, unless they qualify as:

paraplegia

quadriplegia

malignant tumors of the spinal cord and vertebral column

failed back syndrome after multiple spinal surgeries provided the extent of the functional impairment is verified by a specialist appointed by Sanlam.

An injury or illness that directly or indirectly resulted from any of the above

A complication directly or indirectly resulting from the above

A side-effect of treatment for any of the above.

Policyholders may take the Disability for regular occupation and Disability for regular or any reasonably alternative occupation benefit without the back and mental exclusions at a higher price.

A claim will be refused if the disability can be substantially removed by surgery or other reasonable medical treatment, which Sanlam can reasonably expect the policyholder to undergo, taking into account the risks involved and the chances of success of such surgery or treatment.

Payouts under functional impairment definitions reflected in Appendix 2

Exclusions

Mental and back disorders account for approximately 40% of all disability claims and are regarded as the fastest growing cause of disability claim worldwide. Sanlam’s exclusions for these conditions leave policyholders significantly exposed.

Policyholders may take the Disability for regular occupation and Disability for regular or any reasonably alternative occupation benefit without the back and mental exclusions, subject to a loading on the normal rates. Premiums can be expected to increase 40% by removing the back and mental exclusions. (Based on R1 million cover, male, non-smoker, age 45)

On the Functional Impairment plus Disability benefits, the exclusions apply on the occupational underpin with no option to take the benefit without the exclusions

Discovery Life covers pilots, unlike Sanlam.

Discovery Life pays disability claims should the policyholder satisfy the claims criteria published in the policy document. We do not make this contingent on whether the disability can be removed by surgery or other reasonable treatment as is the case with Sanlam.

Medical criteria

There are several scenarios where the payouts under the Functional Impairment Benefit are unrelated to the financial liability that the policyholder has. For example: There is no payout for severe cognitive

impairment Only 50% is paid for severe dementia, Only 50% is paid for malignant tumours

in the spinal cord permanent assistance with all Activities

of Daily Living would only qualify for 50% under the nervous system,

permanent confinement to bed would only qualify for 75% under the nervous system.

Inability to swallow without choking and suctioning only qualifies for 75%

Inability to control eyelid closure only qualifies for 50%

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Consider how back and mental disorders, which account for approximately half of all disability claims, are covered by Discovery and Sanlam.

Sanlam’s Functional Impairment Benefit provides a maximum of 25% payouts per region of the spine (cervical, thoracic and lumbosacral). Discovery covers each region at 50% to 100%.

Sanlam does not cover partial mental disorders and in fact only covers certifiable mental conditions that result in permanent institutionalisation. Discovery covers mental disorders at 50% and 100%.

Discovery’s assessment includes a loss of income underpin to assess claims where it is difficult to establish permanence, such as back and mental disorders.

Discovery has a sophisticated Activities of Daily Living (ADL) assessment to cater for subjective claims. ADLs such as communication, sensory functions, social interaction and stress adaptation are particularly suitable in assessing mental disorders.

On the Functional Impairment plus Disability benefit, back and mental disorder exclusions apply on the occupational underpin with no option to take the benefit without the exclusions. The policyholder therefore has to rely on the Functional Impairment definitions, which may lead to inadequate or no payouts, as indicated above.

It is unclear how Functional Impairment would deal with cancer. Essentially cancer would only be admitted for a claim once “maximal medical improvement” has been reached. This definition may exclude many Stage IV cancer claims.

For example, stage IV breast cancer where a mastectomy is performed and chemotherapy or radiotherapy is undertaken. This would not fall under any of the body systems detailed by Sanlam, and it is unclear whether maximal medical improvement has been reached.

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No general waiting or survival period

Discovery’s assessment includes a loss-of-income underpin (Category C) which pays as follows:

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, a 50% claim is paid. If it lasts 36 months, a 100% claim is paid.

Maximum expiry age of 65 or 70.

After expiry age, cover converts to Severe Illness Benefit for whole of life, free of medical underwriting

No reduction of benefit until benefit expiry age i.e. no taper of benefit

30-day survival period on the Functional Impairment, Functional Impairment plus Disability and Physical Impairment benefits


Maximum expiry age 65 (except the Physical Impairment Benefit, which can be taken for whole of life as well)

The following taper applies to the Disability for regular occupation and Disability for regular or any reasonable alternative benefits:

If a claim is admitted during any of the four

How soon can a payout be expected?

Choosing Sanlam’s top-of-the-range benefit (Functional Impairment plus Disability) results in a 30-day survival period (without life support) being imposed on the policyholder. The Disability for regular occupation and Disability for regular or any reasonable alternative occupation does not have a survival period.

By including a loss-of-income underpin in the assessment, Discovery can pay out claims long before Sanlam in cases where permanence is not yet established.

This underpin is objectively defined as a proxy for occupation and combines short-term and long-term disability under one product.

The loss-of-income underpin also caters for illnesses which cause a low level of impairment yet a 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 qualifying under any capital disability benefit.

One in 10 of our Capital Disability claims have qualified under Category C. Examples 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 permanence was established.

Duration of cover

Discovery allows people to be covered until age 70, as it is evident that self-employed people are finding it more difficult to retire at age 65.

At benefit expiry, Discovery’s benefit converts to severe illness cover for whole of life, free of medical underwriting.

Benefit tapering

Selecting a non-tapering benefit with Sanlam is available, but increases the premium by approximately 5.5%. (Based on 1 million cover, male, non-

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Lump sum disability benefits are not aggregated at claims stage.

policy years before the policy anniversary before the life insured’s 65th birthday, Sanlam will pay only a percentage of the cover amount as set out below.

After payment is made, the benefit will end.

Policy year that begins on the policy anniversary before or on the life

assureds’…

% of cover amount

61st birthday 80%

62nd birthday 60%

63rd birthday 40%

64th birthday 20%

For the Functional Impairment plus Disability benefits, the benefits taper as above for a claim under the occupational definition.

There is no taper on the Functional Impairment Benefit

Future cover increases continue once the taper commences.

A no taper option is available for business insurance at a higher premium.

Sanlam may reduce the payout if the life is over-insured; taking all the insured’s disability benefits with Sanlam and other life companies into account.

The sum total of all the following benefits are taken into account when the permissible maximum amount for disability benefits is determined;

Functional impairment plus disability benefits (Sanlam and all other insurers)

Physical impairment (Sanlam)

Functional impairment (Sanlam) and

Disability benefits (lump sum, income benefits and waiver of payment) Sanlam and all other insurers

Sickness benefits (Sanlam and all other insurers)

The cover amount will not be reduced if the claim is as a result of any of the following:

Total, permanent and irrecoverable loss of:

vision in two eyes, or

use of two hands, or

smoker, age 45)

The Sanlam benefits taper at a time when the incidence of disability is highest: a 60-year old is 15.5 times more likely to become disabled in the next five years than a 35-year old. Because the benefit tapers, policyholders will on average only get half their sum assured after age 60.

The philosophy behind a tapered benefit is that as an individual gets older, he needs less cover as there are fewer future years’ income to replace should he become disabled.

Discovery believes that when taking out a policy, individuals may be unsure of their future liabilities close to retirement and that they need adequate cover for all possible future contingencies. In addition, many people are under-funded for retirement and, with decreased earnings as a result of a disability, it becomes even more difficult to maintain your retirement funding programme.

Tapered benefits are particularly inappropriate for buy-and-sell agreements where it is uncertain whether the tapered sum assured will be sufficient to buy out the partner’s equity.

Aggregation

Unlike Sanlam, Discovery does not aggregate lump sum disability payouts.

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use of two feet, or

use of one hand and one foot.

Functional impairment, so that insured is totally, permanently and continuously unable to take care of bodily or personal interests.

6. Physical Impairment Benefit:

Pays

10% - 100% (depending on severity) upon meeting the requirements of one of the defined physical impairment claim events.

This benefit covers loss of function of limb(s), amputations of limb(s), loss of hearing, vision or speech, confinement to a bed or wheelchair and third degree burns.

Benefit term can be to age 65 or whole of life.

The maximum cover is R 2.5 million and forms part of the maximum disability cover of R12 million allowed by Sanlam at new business stage.

There is a 30-day survival period without life support required to receive a payment.

There is a six-month survival period if confined to a bed or wheelchair due to cancer.

This benefit covers a very small subset of causes of disability and does not cover the chronic illnesses at all.

The payouts do not match the financial need covered by disability benefits. For example, a surgeon losing three fingers plus thumb would qualify for a maximum payout of 30% of R2.5 million, whereas a full disability product would have paid 100%.

It is difficult to see how it is in the policyholder’s best interests that a longer survival period applies for cancer as opposed to all other disease processes.

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Income disability benefits and overhead expenses benefits

Discovery’s Income Continuation Benefit protects a policyholder’s personal income and is unique in the market.

There are two options available under this Income Continuation Benefit, namely o Core o Comprehensive

Definition

The definition is based on “nominated occupation” throughout.

Waiting periods

Waiting periods of seven days, one month, three months, six months, and 12 months.

Seven-day waiting period pays retrospectively from day one. (Common colds and gastroenteritis are excluded from retrospective payout.)

For certain professionals in private practice, Discovery offers a one-month waiting period with benefits paid retrospectively from day one.

Sanlam has two disability income benefits, namely:

Income Protector

Temporary Income Protector

The definition remains “regular occupation” throughout.

Waiting periods of seven days, one month, three months, six months, 12 months and 24 months.

In the case of the 7 day waiting period the life insured can qualify for a claim from the day of the claim event

Discovery’s Income Continuation Benefit is unique in that it offers:

An immediate upgrade to 100% of income on permanent disability as defined by the Capital Disability Category A & D definitions.

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 income definition which is not based on personal taxable income

Cover up to age 70 whereas Sanlam only offers to age 65

Premiums waived when in claim

A one-month waiting period paying retrospectively from day one (for professionals in private practice)

The Discovery Comprehensive option has the following unique features:

o An additional payment of up to 100% of all Discovery Life , Discovery Health and retirement Optimiser contributions for up to two years (six months on the Core option) through the Contribution Protector;

o The Guaranteed Insurability Benefit is automatically included;

o Protection against interest rate movements through the Interest Rate Protector

o Enhanced DiscoveryCard cashbacks through the Dynamic Spend Protector

Details of these unique benefits are provided below.

Sanlam does not offer the facility of a 1-month waiting period with benefits paid retrospectively from day one.

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Income definition

Income is 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 three months from the date of the disability event to prove earnings prior to disability.

Maximum benefit

Maximum benefit amount of R150 000 pm.

Maximum sum assured of 75% of personal income.

Income is defined as follows: o Cost-to-company for salaried employees o For professionals in practice: Gross

professional income for professionals who charge a fee for services is equal to the sum of professional fees and net income from trading activities, after deducting business overhead expenses.

o Other self employed individuals: Income or benefits receivable on account of the life insured's employment, or any services rendered by the life insured, plus the life insured's share of profit in the business over the last 12 months

The maximum benefit amount is the smallest of steps 2 and 3 below.

Step 1: Maximum 1:

Age next Multiple of monthly taxable income

< 30 225

31 - 35 210

36 - 40 160

41 - 45 135

46 - 50 120

51 - 55 75

56 ANB 67.5

57 ANB 60

58 ANB 52.5

59 ANB 45

60 ANB 37.5

61 ANB 30

62 ANB 22.5

63 ANB 15

64 ANB 7.5

65 ANB 0

Calculate sum total of all disability benefits on the life of the life insured with Sanlam Life and other companies, and deduct this amount from the result.

All lump sum, waiver of premium and other disability benefits must be taken into account. Dread disease, physical impairment and functional impairment benefits are excluded.

An income protector benefit amounts are converted to lump sum benefit amounts by multiplying it by 120.

The fact that the Discovery policyholder has three months to prove his earnings means that his cash flow is not interrupted, which is particularly valuable for business owners.

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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 R170 000 pm.

Permanent disability is assessed based on objective medical criteria and ability to perform nominated occupation.

Note on upgrade: the upgrade is not based on the sum assured, but the full personal income the policyholder stated to Discovery at policy inception, increased from the date of inception to the date of claim with, the benefit escalation rate applicable to this benefit.

Step 2: Maximum 2: Total may not exceed R150 000 pm

Income protector benefits and sickness benefits from Sanlam and other companies must also be taken into account.

Step 3: Maximum 3: Permanent Income Protection may not exceed 75% of monthly income

Income protector benefits from other companies must also be taken into account.

Lump sum disability benefits are excluded.

No upgrade upon permanent disability.

With Discovery the selected waiting period is waived and the income is upgraded as soon as permanency has been established

The upgrade to 100% of earnings is an automatic feature of Discovery’s Income Continuation Benefit. Sanlam’s maximum payout is 75% of earnings on permanent disability.

The upgrade by Discovery results in at least an additional 33% payout. Because of the 100% upgrade, significantly more is paid to the claimant as compared to Sanlam. When combined with the CPI + 3% claims escalation on the Comprehensive option, this leads to a much larger payout on permanent disability. Example: a policyholder, age 35, earns R30 000 pm with a disability income benefit of R22 500 pm. If permanently disabled, the present value (at 9%) of the benefit would be as follows

Duration of permanent disability

Discovery Life (100%) –

claims escalation =

CPI + 3%

Sanlam (75%) – claims

escalation = CPI

5 R1 718 436 R1 219 808

10 R3 436 871 R2 280 742

20 R6 873 742 R4 006 062

Policyholders, who will continue to receive an income, should they be unable to work, on a temporary basis but want to protect their income on permanent disability, could achieve a massive saving through Discovery by using the upgrade. Example: A policyholder earns R30 000 pm but takes out a sum assured of only R15 000 pm, as he will earn other income on

26

Contribution Protector

Policyholders get an additional payment of 25% (with Core option) or 100% (with Comprehensive option) of their Discovery Life, Discovery Health and 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.

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:

Claim category: A & D

Vita

lity

Sta

tus

Blue 10%

Bronze 15%

Silver 25%

Gold 35%

Diamond 50%

Term Up to selected ICB expiry age

Note: these payments are in addition to the DiscoveryCard cashbacks.

The Dynamic Spend Protector benefit is paid out tax-free.

Interest Rate Protector

Included 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%

No equivalent benefit.


No equivalent Benefit

temporary disability. On permanent disability, Discovery will pay him R30 000 pm. With Sanlam, should he want maximum cover on permanent disability, he will have to take out the maximum sum assured on temporary disability.

Through Discovery’s Comprehensive Benefit, the benefit received on temporary disability can be increased by up to 48% through the Contribution Protector and Interest Rate Protector for up to 2 years. This could result in you receiving up to 123% (75% + 48%) on temporary disability. The Dynamic Spend Protector means that the claimant can receive up to 50% off DiscoveryCard partner spend and DiscoveryMotor Card spend on permanent disability.

27

depending on the extent of the interest rate increase.

Expiry age

Choice of expiry age of 60, 65 or 70. Premium waiver

Premium is waived during claim payment. Claim escalation

Core option: can choose o 0% o CPI (capped at 10% p.a.)

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.

Aggregation

No aggregation for professionals in private practice or partnership for the first two years, except from other disability income/sickness benefits.

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 benefit payments will only be reduced such that benefit payments plus income still earned in excess of 30% of pre-disability income do not exceed the maximum benefit amount (75% for temporary disability and 100% for permanent disability)..

After two years the benefit payment will be reduced such that benefit amount plus income still earned do not exceed the maximum benefit amount 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

Choice of expiry age of 55, 60 or 65 next.

Premium is waived during claim payment.

If a claim is in payment, the benefits will grow at the selected growth rate of 0%, 5% or CPI.

For the first two years Sanlam will limit the benefit payment such that the benefit payment plus any other income earned in spite of the disability does not exceed 100% of the live assureds’ average monthly income. Lump sum disability benefits taken into account.

After two years Sanlam will limit the benefit payment such that the benefit payment plus any other income earned in spite of the disability does not exceed 75% of the life assureds’ average monthly income. Lump sum disability benefits taken into account

A monthly payment will only be made if the amount Sanlam has to pay is at least equal to the smaller of:*

20% of the cover amount

The minimum cover amount allowed for new business (*this rule will not be applied once a claim has been admitted and Sanlam has started to make the monthly payment.)

A lump sum amount is divided by 120 to convert it to a monthly amount to use in the aggregation.

Discovery allows people to be covered until age 70, as it is evident that self-employed people are finding it more difficult to retire at age 65.

Expiry age 55 should not be selected as a majority of illnesses occur after age 55.

With Discovery there is no aggregation for the first three months (apart from other income disability benefits), which is particularly valuable for business owners who often find it difficult to prove loss of income shortly after becoming disabled. Sanlam aggregates from day one.

For temporary disability in the first two years a policyholder can receive in total105% (75% + 30%) of pre-disability income with Discovery but only 100%with Sanlam. For permanent disability it is 130% for Discovery and 100% for Sanlam

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 Sanlam

With the formula applied by Sanlam, where the policyholder takes out a sum assured

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Premium guarantee

Premiums are priced for the full term.

Should an increase in premium be required, the premium is guaranteed not to increase by more than 25% at the end of ten years, and every ten-year period thereafter.

Can be reduced by engaging in Vitality as explained in the Premium Guarantee section

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 financial underwriting

Maximum number of options: six

Must be exercised prior to age 50


Premiums are priced for the full term.

Premiums are guaranteed for five years, with new premium guarantees every five years thereafter.

At the end of the first five-year guarantee, the premium is guaranteed not to increase by more than 20%.

If a claim has been submitted and will continue to be active after the end of the guarantee period, Sanlam may reduce the cover amount instead of increasing the premium, and may also reduce the monthly payments.

The Income Protector allows the policyholder to request in writing each year to increase the cover amount by more than the chosen growth rate, without additional underwriting.

The total increase will be capped at the lower of:

The actual increase in the policyholder’s income over that year

Twice the inflation rate

20%.

The following requirements must be met:

The policyholder must not be disabled on the date of the cover increase.

A claim must not have been admitted or submitted during the 12 months preceding the date of the cover increase.

The life assured must be younger than 50 years.

Sanlam must receive a written request at least seven days before policy anniversary.

Temporary Income Protector

Benefit features are the same as the Income Protector, except that the monthly payments are limited to a maximum of 24 months.

smaller than 75%, his monthly payment will still be reduced on partial disability, even where the income he still earns during disability, plus the sum assured, is smaller than 75% of his pre-disability earnings.

Payouts from the Dynamic Spend Protector, Interest Rate Protector and Contribution Protector are not aggregated with any other benefit payouts

Discovery does not aggregate lump sum disability payouts, whereas Sanlam does.

Discovery’s Income Continuation Benefit has quantified premium guarantees until benefit expiry age. Sanlam offers no quantified premium guarantees from year ten onwards.

Should Sanlam increase its rates at any premium review while the policyholder is in claim, the sum assured will be reduced, and Sanlam may also reduce the monthly payments. Discovery will not reduce the sum assured or monthly payments of a policyholder who is in claim, even if premium increases should ever be required.

Guaranteed insurability is particularly valuable for policyholders on a steep income curve that outstrips inflation, which is typical with young professionals.

Policyholders can never get more than 100% of their income on temporary or permanent disability.

Discovery’s Income continuation benefit

29


It can be combined with the Income Protector, but subject to the two benefits not exceeding 75% of income and R100 000 pm.

Seven-days, one-month and three-month waiting periods are available.

Sickness Benefit Pays when the policyholder is totally and continuously unable to attend to his or her usual professional duties.

Benefit paid for a Maximum of 24 months

There is a seven day waiting period, however if the period between consecutive periods of sick leave for the same caused is shorter than seven days, Sanlam will consider the consecutive periods of sick leave to be continuous.

Payments are made retrospectively from the start date of the sick leave

Maximum benefit amount of R200 000

No aggregation with other disability income benefits.

Premiums are not waived whilst in claim

7 day waiting period is available, no choice of a longer waiting period

Contributions are not tax deductible, benefit paid out tax free

must be compared to combination of Sanlam’s Temporary Income Protector and Income Protector

The Sickness Benefit should be taken in combination with the Income Protector (with a 24 month waiting period) on the Cobalt series to compare with the Discovery Income Continuation Benefit.

All existing disability and income /sickness benefits are taken into account when determining the maximum permissible Sickness Benefit at application stage.

Premiums still need to be paid which will reduce the maximum payout.

Professionals in private practice or partnership can often sustain themselves for one month, and by selecting the Discovery Life one month retrospective waiting period, they can enjoy significant premium savings of 22% on average.

The likelihood that you will claim on income disability benefits is on average 1% per annum. In addition, with Discovery the policyholder enjoys the tax deductibility of premiums every month whereas with Sanlam they may only get the tax free benefit at some time in the future. Hence this tax advantage needs to be discounted. Therefore the value of having tax

30

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.

On business owned policies (including sole proprietors), this benefit may be selected without the Income Continuation Benefit, subject to a minimum LIFE FUND of R100 000.

Expiry age 60, 65 or 70.

Maximum benefit of 90% of actual overhead expenses up to R80 000 pm if taken on the same policy as the Income Continuation Benefit, and up to R150 000 per month on a business owned policy.

Fixed one-month waiting period. For professionals in private practice or partnership, who selected a 7 day waiting period for the Income Continuation Benefit and selected the Overhead Expenses Benefit, the waiting period on the Overhead Expenses Benefit will automatically be upgraded to a 7 day waiting period.

Payable for a maximum of 24 months for a specific cause.

Expiry age 65

Only available to professionals (rate group 5) Overhead Expenses Protector

Provides a monthly amount to assist in covering business overhead expenses on temporary or permanent disability.

Definition based on “regular” occupation.

May be selected on individual or business owned policies.

Available on the lives of business owners or key persons, subject to certain requirements.

Expiry age 55, 60 or 65.

Maximum benefit of 100% of actual overhead expenses up to R150 000 pm.

One-month or three-month waiting periods available.

Payable for a maximum of 24 months.

deductibility of premiums far outweighs the value of receiving the benefit tax free.

Cover up to age 70 is particularly relevant for self employed policyholders who often work beyond age 65.

Other unique benefits to consider which are not offered by the Sanlam Sickness Benefit:

An immediate upgrade to 100% on permanent disability.

The Contribution Protector.

The Interest Rate 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 seven day waiting period grade is valuable for professionals in private practice or partnership as it allows them to meet any overhead expenses when disabled for only a week.

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Dread disease benefits

Discovery offers four severe illness products, namely

Comprehensive Severe Illness Benefit, and

Comprehensive Plus Severe Illness Benefit

LifeTime Severe Illness Benefit

LifeTime PLUS Severe Illness Benefit

Expiry age 65 or whole of life.

All products can be taken out on an accelerated, non-accelerated or standalone (Impairment Fund) basis.

Available on both the Classic and Essential LIFE PLAN.

Benefit payments are based on the severity of the illness.

Sanlam offers two severe illness products, namely:

Core Dread Disease

Comprehensive Dread Disease

Expiry age 65 next or whole of life.

All products can be taken out on an accelerated or standalone basis.

Benefit payments do not always depend on the severity of the illness.

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 Sanlam:*:

Discovery Sanlam

No equivalent Core

Comprehensive Comprehensive

Comprehensive Plus No equivalent

LifeTime No equivalent

LifeTime PLUS No equivalent

Note*: The unique features of the Classic LIFE PLAN are:

Unlimited multiple claims

Automatic child and parent cover

Global Treatment Benefit

Unlike Sanlam’s benefit, Discovery’s benefit

is commensurate with the financial impact that an illness has on a policyholder’s lifestyle

considers the long-term impact of an illness on the policyholder’s lifestyle

considers the family composition of the claimant thereby dynamically adjusting to meet the policyholder’s needs

reinstates cover for same, related and unrelated illnesses through the Minimum Protected Fund

provides additional funding for overseas medical treatment

provides automatic cover for children and parents.

Tiered severities

Discovery and Sanlam have fundamentally different approaches to dread disease cover.

For certain illnesses, Sanlam pays 100% irrespective of the severity. However, to ensure an affordable price, this does not always allow the product to commence payment from time of diagnosis. It will often only pay out when the severity of the illness is high. Although the payout may be higher than Discovery’s in some cases, the benefit does not provide certainty of cover, as there are significant numbers of cases where no payment will be made, but where the

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Severe Illness Extender Benefit: to each of these Severe Illness products you can add the Severe Illness Extender benefit:

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

The Extender Benefit does not reduce the LIFE FUND or IMPAIRMENT FUND

The same multiple claims definitions apply

Note that 25% increase is not boosted further by any LifeTime Impact boosters

The payouts are as follows

Severity Without extender

With Extender

% increase

A 100% 125% 25%

B 75% 100% 33%

C 50% 75% 50%

D 25% 50% 100%

No equivalent Benefit Core Dread Disease

Pays out:

50% -100% upon meeting the requirements of one of the defined severe illnesses, namely:

o cancer (100%) o myocardial infarction (100%) o stroke (100%)

policyholder’s lifestyle has been severely impacted. This is illustrated in the following examples:Discovery philosophy centres around the following:

Benefit payments should be commensurate with the financial effect that an illness has on your life. For example, a major heart attack warrants a higher payout than a minor one.

The entire body should be covered. The lifestyle impact of having your bowel removed and having to wear an external bag is as bad as having a heart attack – these types of illnesses are often not covered by Sanlam.

By paying lower amounts for less severe events, Discovery is able to have wider definitions for each illness, and still ensure an affordable price.

Discovery is able to start payments from diagnosis of the event, rather than waiting for the event to be very severe.

This benefit provides the highest payout in the market for Severity A claims, and the same or more than the market for Severity B claims

Because it 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, this benefit is very powerful e.g. If you have two severity B heart attacks (75% payout) you will receive 125% of the Severe Illness Benefit compared to 93.75% without the Extender Benefit. This is because the 25% boost does not reduce the LIFE FUND

A Core benefit covering cancer, heart attack, stroke and bypass only, would only be bought where a policyholder is unable to afford full lifestyle protection because there are many disease processes which would

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Comprehensive Severe Illness Benefit

Pays out:

25% - 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.

o bypass: up to three arteries (50%) o bypass: more than three arteries (75%).

Comprehensive Dread Disease

Pays out:

25% -100% upon meeting the requirements of one of the defined severe illnesses, namely:

o cancer o myocardial infarction o heart valve surgery o valvotomy by endoscopic procedures o aortic artery surgery o arrhythmia o cardiomyopathy o stroke o vision loss o organ transplant o renal failure o liver failure o end-stage lung disease o coronary artery surgery o sero-positive rheumatoid arthritis o multiple sclerosis o Parkinson’s disease o loss of limb function o paraplegia o quadruplegia o benign brain tumour o pulmonary embolism o hearing loss o Burns o Coma o accidental HIV infection o Alzheimer’s disease o motor neuron disease o muscular dystrophy o aplastic anaemia.

Sanlam will not admit a claim for:

Cancer if it is: o Any cancer in situ and any premalignant

condition o any skin cancer, other than malignant

melanoma that has been histologically classified as having caused invasion beyond the epidermic, or Clark level 2 or more depth invasion

o any tumour of the prostate unless histologically classified as having a Gleason score greater than 6 or having progressed to at least clinical TNM classification T2N0M0

have at least the same lifestyle impact as these four diseases, for which the policyholder would not be covered.

Sanlam’s payouts do not always match the financial impact of an illness, for example:

Skin cancer at an early stage (<Clark level II) is excluded. This is the stage that about 70% of all malignant melanoma sufferers present with.

Parkinson’s and muscular dystrophy are only covered once the disease has progressed to an advanced stage. This often only occurs after many years and the impact on lifestyle in the earlier stages of these diseases are thus ignored. Discovery pays 50% on diagnosis and 75% when lifestyle is severely impacted but the condition is not yet completely debilitating.

The following are examples of conditions not covered under any of Sanlam’s severe illness benefits:

cardiac failure unless related to Cardiomyopathy or Ischemic Heart Disease

dementia (apart from Alzheimer’s)

all connective tissue diseases, except rheumatoid arthritis

the entire gastro-intestinal tract, except for liver failure

the entire respiratory system except end-stage lung disease and pulmonary embolism

uro-genital tract and kidney (except for end-stage renal failure and peritoneal dialysis)

endocrine and metabolic diseases

loss of speech due to other reasons than stroke

AIDS is only covered by Sanlam if contracted through accidental means i.e. blood transfusion, rape, needle stick injury.

All traumatic causes of strokes are excluded. A separate accident benefit has to be purchased to cover this.

Please see Appendix 1 for a comparison of severe illness events covered.

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Comprehensive Plus Severe Illness Benefit

Pays

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.

LifeTime Severe Illness Benefit

Pays


The LifeTime Impact Booster depends 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


required and its associated discomfort; - Impact of any assisted care and devices;

Aortic surgery if done on branches of the aorta

Acute coronary syndromes, including but not limited to angina

Stroke if it is : o a transient ischaemic attack (TIA), or o a vascular disease affecting the eye

or optic nerve, or o migraine and vestibular disorders, or o a traumatic injury to brain tissue or

blood vessels

Liver failure if cirrhosis is due to alcohol or substance abuse

Alzheimer’s disease if dementia is induced by other conditions and substances.



Unlike Discovery’s Comprehensive Plus option, Sanlam has no option covering the lower severities between 5% and 15%.

Sanlam does not offer a benefit that considers the long-term impact of an illness on a person’s lifestyle

Combined with the Severe Illness Extender Benefit it can result in a payout of 225% of the claim amount Discovery’s LifeTime benefits consider the long-term lifestyle impact of an illness as well the policyholder’s family composition at the time of claim – this allows for a more appropriate payout to match the financial impact of a severe illness on a person’s lifestyle. The adjustment for the family composition also ensures that cover is dynamically adjusted to meet the policyholder’s needs over time.

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- 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.

LifeTime PLUS Severe Illness Benefit

Pays


The LifeTime Impact Booster depends 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


required and its 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.


The LifeTime benefits offer the potential to receive double the sum assured – Sanlam does not pay more than the sum assured.

The LifeTime benefits offer an efficient solution to severe illness cover as the charge for this benefit is only 25% more than the Comprehensive option and the expected boost is 130%.

Sanlam does not offer a benefit that considers the long-term impact of an illness on a person’s lifestyle. Combined with the Severe Illness Extender Benefit it can result in a payout of 225% of the claim amount

Discovery’s LifeTime benefits consider the long-term lifestyle impact of an illness as well the policyholder’s family composition at the time of claim – this allows for a more appropriate payout to match the financial impact of a severe illness on a person’s lifestyle. The adjustment for the family composition also ensures that cover is dynamically adjusted to meet the policyholder’s needs over time.

The LifeTime benefits offer the potential to receive double the sum assured – Sanlam does not pay more than the sum assured.

The LifeTime benefits offer an efficient solution to severe illness cover as the charge for this benefit is only 25% more than the Comprehensive PLUS option and the expected boost is 130%.

Discovery’s LifeTime benefits provide more appropriate payouts by considering:

o The long-term lifestyle impact of an illness

o The policyholder’s family composition at the time of claim. This also ensures that cover is dynamically adjusted

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Multiple claims are permitted for the Classic and Essential LIFE PLANs as follows

Classic LIFE PLAN (No MPF, MPF and non-accelerated):

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.

o For instance, if the policyholder has R1 million life cover with a 50% Severe Illness Benefit and claims at a 100% severity, R500 000 would pay out and he will still have R250 000 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, i.e. the policyholder may claim more than the sum assured within the same disease category.

Essential LIFE PLAN: o 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. In the case of non-accelerated Severe Illness Benefit, the subsequent claim will be based on the full

Where the Dread Disease benefit is selected as an accelerator benefit, a policyholder cannot claim again for the same claim event, except for the following:

arrhythmia

angioplasty, which is limited to two claims per life assured.

For the standalone benefit, Sanlam will not reduce the cover amount following a claim, except if the claim has been for accidental HIV infection. However, Sanlam will not allow claims involving any one organ, or related group of organs, to exceed 100% of the cover amount, except if the causes for the claims are totally unrelated, according to the opinion of Sanlam’s chief medical officer.

For example, if you claim for a stroke, then claims involving the cardiovascular system may be disallowed for future claims.

This means for the Comprehensive Dread Disease you will not be able to claim for the following different events:

1) Myocardial infarction 2) Heart valve surgery 3) Valvotomy by endoscopic

procedures 4) Aortic artery surgery 5) Arrhythmia 6) Cardiomyopathy

o This means for Core Dread Disease the only thing you could claim for is cancer

to meet the policyholder’s changing needs.

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.

Multiple claims

With Sanlam, if the benefit is selected as an accelerator, the policyholder can only claim once for any specific illness apart from: arrhythmia, and angioplasty. You also cannot claim more than the sum assured which is the same as the Essential LIFE PLAN.

If chosen as a standalone benefit, claims involving any one organ, system or body part or related group of organs, systems or body parts cannot exceed 100% of the cover amount, except of the causes are totally unrelated

E.g. should there be a claim for a heart attack, any further problems to the heart as well as stroke are excluded as potential claims. This is similar to the “silo” effect of the Essential LIFE PLAN. However, with the Classic LIFE PLAN you are able to claim an unlimited amount for claims in the same body system.

The table below shows the chance of a recurrence of the same or related illness:

Illness Incidence of recurrence

/ related claim

Heart attack 30%¹

Stroke 25%²

Paraplegia leading to kidney complications

20%³

¹Post Graduate Medicine ²National Stroke Association ³Neurology Report, Finley et al

Due to the multiple claims definitions outlined above, Sanlam should be compared to the Essential LIFE PLAN.

Discovery’s Minimum Protected Fund

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benefit amount. In the case of the accelerated Severe Illness Benefit, the subsequent claim will be based on the Severe Illness Benefit percentage multiplied by the reduced LIFE FUND.

o 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. If you have chosen the non-accelerated Severe Illness Benefit, the payout will be based on the difference in severities multiplied by the sum assured. In the case of the accelerated Severe Illness Benefit, the subsequent claim will be based on the Severe Illness Benefit percentage multiplied by the reduced LIFE FUND.

o The maximum payouts are as follows: No MPF = sum assured With MPF = 2 times sum

assured for each body system Non-accelerated = sum

assured for each body system

There is no explicit survival benefit required to get a benefit payment.

Automatic severe illness cover for children (only available on the Classic LIFE PLAN)

The Severe Illness Benefit selected by the principal and/or spouse will automatically include severe illness cover for children.

The amount of automatic cover is limited to 10% of the parents aggregate sum assured for the Severe Illness Benefit, subject to a maximum of R110 000 per child per claim event.

The claim against the automatic cover for

There is a 14-day survival period

Sanlam has no equivalent benefit.

reinstates cover for the same, related and unrelated illnesses(on the Classic LIFE PLAN), allowing the policyholder to claim more than the sum and even the LIFE FUND assured for any illness.

Survival period

The 14-day survival period results in many instances where claims would not be paid. Sanlam’s 14-day survival period is relevant under standalone options.

Discovery has no general survival period for a policyholder to receive a payout. There is only a 14-day survival period for the Minimum Protected Fund to reinstate cover.

Should a policyholder of Discovery’s Impairment Fund (standalone Severe Illness Benefit) die within 14 days, he will receive both his Severe Illness Benefit and his Life Cover Benefit. With Sanlam he would only receive his life cover benefit.

Discovery has recognised that the illness of a child has a similar impact on the parents’ lifestyle as if the parents were ill.

Discovery policyholders can insure their children up to R1.21 million through the combination of the automatic cover for children and the additional Child Severe Illness Benefit (see below).

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Female Severe Illness Benefit and Childbirth Benefit

Discovery covers illnesses that women are most exposed to through the Female Severe Illness Benefit and the Childbirth Benefit.

There is no waiting period for claims.

This is an accelerated benefit.

The Female Severe Illness Benefit may be selected to age 65 or for whole of life.

The Childbirth Benefit expires at age 40 next.

There is no survival period for a claim.

Discovery’s benefits cover: Female Severe Illness Benefit:

Cancers specific to women

Pregnancy complications

Complications of osteoporosis. Childbirth Benefit:

Congenital birth defects

Multiple births.

Sanlam has no equivalent benefit

Women face risks of certain cancers that only affect them, as well as all the potential complications of pregnancy and osteoporosis.

children will not accelerate the LIFE FUND or reduce the Severe Illness Benefit of the principal and / or spouse.

Automatic severe illness cover for parents (only available 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 R100 000 per parent (i.e. total maximum of R400 000).

Benefit payouts will not impact the LIFE FUND. Global Treatment Benefit (only available on the Classic LIFE PLAN)

The Global Treatment Benefit is automatically included in the Severe Illness Benefit.

The benefit offers you a choice of either:

a lump sum cash benefit of up to 100% of the Severe Illness Benefit, or

up to 180% of the cash benefit, consisting of the payment of the actual cost of treatment at an overseas medical facility, up to a maximum of the sum assured, PLUS up to 80% of the lump sum Severe Illness Benefit (in the case of the LifeTime benefits, this could be up to 260%)



Discovery has recognised 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 health care technology and the emergence of global centres of excellence focusing on super specialties have resulted in Discovery developing the Global Treatment Benefit.

The benefit empowers policyholders at the 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 benefit provides significant funding to make this possible.

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Child Severe Illness Benefit

The Discovery benefit covers:

All body systems (covered under the main Severe Illness Benefit), including conditions which are more relevant to children.

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 (pre-existing conditions excluded). Additional cover for children may be purchased with medical underwriting.

The benefit payout varies by severity of illness.

Multiple claims are allowed.

There is no survival period.

Can select without other severe illness benefits on plan.

Maximum benefit of R1100 000 per child plus R110 000 under the main Severe Illness Benefit.

Minimum age at entry: birth

Expiry age 18.

Sanlam has no equivalent benefit

In keeping with the philosophy of covering the entire family for any major life-changing events, we have developed a benefit that covers severe illness that affects children. If your child becomes ill, instead of having to focus on financial problems, you can care for your child.

Family Trauma Benefit

The benefit covers each family member involved in a traumatic event.

Also covers major burns, paraplegia, quadriplegia, reconstructive surgery, snakebites and emergency cardiac pacing.

A unique feature is cover for trauma resulting from participation in a hazardous activity.

Sanlam has no equivalent benefit The Family Trauma Benefit provides you and your family with cover for any major or severe trauma that requires intensive care treatment and ventilation or emergency medical treatment that is life saving.

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: R900 000 per parent plus R100 000 under the main Severe Illness Benefit.

Global Treatment Benefit automatically included.

The benefit is available for whole of life.

Sanlam has no equivalent 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.

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Future cover without medical underwriting

Discovery offers the Future Fund Benefit which allows policyholders to increase all benefits linked to the LIFE FUND without evidence of health or insurability on each policy anniversary before expiry age. .

Discovery allows policyholders to select between 7.5% and 15% of the Nominated Future Fund every year.

A policyholder must exercise an option at least once every three years to retain the benefit.

The option amount may be added onto the same policy or a separate policy. The minimum premium rules do not apply to the premium for the exercised option.

The Future Fund Benefit is only available to lives who have health loadings less than or equal to 25%.

A policyholder may not exercise an option for severe illness or disability if he has 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 where previous claims have been at severities E-G.

Business Future Fund

Discovery Life will allow the remaining parties to a 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.

Sanlam offers Future Cover to give policyholders the option to purchase additional cover without evidence of health, but subject to financial underwriting, occupational underwriting and underwriting for dangerous part-time activities.

Two benefits available:

Death

Death

First death

Final expenses

Comprehensive

Death (above three options)

Functional Impairment

Physical Impairment

Whole life Physical Impairment

Disability for regular occupation

Disability for regular and reasonable alternative occupation

Waiver of payment benefit

Matrix Income Protector

Policyholders can select up to 25% of the Future Cover amount on the following events;

Marriage

Birth or adoption of a child

Mortgage bond (the smaller of 50% or bond amount)

Employment after successful completion of tertiary education

Child’s tertiary education

Increase in personal liability as a result of business (smaller of 50% and increase in monetary liability)

Increase in interest in a partnership (smaller of 50% and increase in interest in partnership)

Increase in value to company i.e. Keyman (smaller of 50% and value to the company)

Plan anniversary at benefit expiry (remaining percentage of cover, subject to minimum requirements at that time)

Every third benefit anniversary

The option may be added to the same policy or to purchase a new policy.

Discovery performs financial underwriting only when the Future Fund Benefit is initially purchased. Sanlam applies financial underwriting each time an option is exercised, which may result in instances where the policyholder will not be able to use the available exercise amount.

Restricting the future cover options to specific events and only every third policy anniversary, significantly limits the value of Sanlam’s Future Cover benefit.

Discovery can address the need for future cover in the context of buy-and-sell agreements with our Future Fund and Business Future Fund.

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Premium waivers

Discovery has three premium waiver benefits:

Premium waiver on death o expiry age 75

Premium waiver on disability o expiry age 65

Premium waiver on severe illness o expiry age 65

Waivers cover annual contribution increases up to 20% per annum.

Benefit is not aggregated.

There is no waiting period for the waiver benefits.

The disability waiver is triggered on a Category A definition (objective medical criteria) or Category D (“nominated occupation”) definition.

Vitality premiums are waived too.

There are no general exclusions.

Sanlam has two premium waiver benefits:

Premium waiver on death o expiry age 80 next

Premium waiver on disability o expiry age 65 next

Policyholders may elect whether the waivers cover future annual benefit and premium increases or not.

If a waiver claim is admitted and the policyholder has cover increases linked to a foreign currency, future cover increases will be limited to CPI.

Waiver of premium at disability is taken into account for aggregation of lump sum disability payouts.

The disability waiver has a six-month waiting period.

It covers own occupation for the first 24 months and own or any reasonable occupation thereafter.

A claim will be refused if the disability can be substantially removed or improved by surgery, or other reasonable medical treatment, which Sanlam can reasonably expect the policyholder to undergo, taking into account the risks involved and the chances of success of such surgery or treatment.

During the first three years after cover for the benefit has started, Sanlam will not admit a claim in the case of the following: depression or dysthymia post-traumatic stress disorder fibromyalgia chronic fatigue syndrome back conditions, unless they qualify as: paraplegia quadriplegia malignant tumors of the spinal cord and

vertebral column failed back syndrome after multiple spinal

surgeries provided the extent of the functional impairment is verified by a specialist appointed by Sanlam.

an injury or illness that directly or indirectly resulted from any of the above

a complication directly or indirectly resulting from the above

a side effect of treatment for any of the above.

Unlike Discovery, Sanlam does not offer a premium waiver on severe illness.

Discovery’s waivers cover the cost of having a dollar policy, whereas the waiver under Sanlam forces you back to rand cover, resulting in a policyholder’s expectations of a “real” currency policy not being met.

Sanlam includes the waiver of premium benefits in determining its aggregation of disability benefit amounts. Discovery does not.

Sanlam has a six-month waiting period for the waiver. Discovery has no waiting period.

The Sanlam disability waiver essentially converts into an “own or similar” waiver after 24 months, which means the likelihood of payment on permanent disability is largely reduced.

The Sanlam waiver on death includes the normal suicide exclusion in the first 24 months, but also excludes death caused during insanity within the first 24 months.

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Cover in “real” currencies

Discovery offers the Global Investment Linkage Benefit, which provides the client the better of a rand policy and a foreign currency policy at the time of claim.

The policy is underpinned by the South African Core 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% or 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.

Sanlam does not have a global linkage benefit. However, an ACI / ABI combination based on Dollar/Rand, Pound/Rand or Euro/Rand depreciation is offered.

The minimum increase is CPI, and the maximum is capped at 35% in RSA monetary terms.

No additional upfront premium is payable but the increase in premium on policy anniversary is based on the increase in cover amount and rate per age.

Under the Sanlam product, the premiums required to take up the additional cover depend on the rand / hard currency level. The premiums payable are therefore volatile. If the policyholder cannot afford the increases to pay for the increased cover, 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 Benefit, premiums payable are smoothed, and not dependent on volatile exchange rates or age.

Scenario 1: The rand depreciates to the dollar:

Sanlam will provide an annual benefit increase in line with rand depreciation, up to 35%.

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 the amount of cover added.

Discovery’s Global Linkage will provide a benefit of 100% of the Dollar/Rand 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: The 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.

Growth accrues monthly on the Discovery product, but only annually on the Sanlam product. This could prejudice the policyholder, depending on when he claims.

Consider this example: Assume a policy has been selected with R1 million life cover.

Date R/$ rate Depreciation

4 Oct 2005 6.43

4 Oct 2006 7.95 18.89%

Over this period, the rand depreciated by 18.89%. If the policyholder died during September 2006, the Discovery policy would

43

have paid out in excess of 18% more than the Sanlam policy as Discovery accrues the growth monthly, whereas the policyholder would have died before the Sanlam increase in cover due on 4 October 2006.

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Indemnity benefits

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 US.

A maximum of $1 000 000 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.

The Health Plan Protector

This is available to policyholders who are members of Discovery Health and Vitality

Waives Discovery Health Plan contributions for five or 10 years on defined life-changing events.

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 five 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 standalone basis.

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.

Benefits have no impact on the value of the LIFE FUND.

The Global Education Benefit

Pays the education costs for children on defined life-changing events, including the following years of education:

Pre-school :1yr

Primary : 7yrs

High : 5yrs

Tertiary : duration of undergraduate degree / diploma / certificate

The child has the option to upgrade to private education and to study at one of several top overseas universities.

Benefit provides education at all registered education institutions (Public and private schools,




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.

The Health Plan Protector offers unique indemnity protection for the whole family ensuring that medical expenses are covered in the event of death, disability or severe illness.

In addition, it 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.

The Global Education Protector offers unique indemnity protection, ensuring that the education costs of a policyholder’s children are covered in the event of death, disability or severe illness.

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schools for learners with special educational needs and home schooling) as set out in the South African Schools Act, 1996.

It pays the following additional annual lump sum amounts:

Up to 30% of actual fees for university residence

Up to 10% of actual fees for books. 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.

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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 fulfill 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.)

Consumption of alcohol above the legal limit.

Sanlam may refuse claims:

If caused by suicide, also during insanity, committed within 24 months after the cover start date, or after the policy has been re-instated after an earlier lapse.

The person or entity who claims must prove that the life insured did not commit suicide. Except in the case of the Death Benefit, First Death and Final expenses, Sanlam Life will not admit a claim if it resulted directly or indirectly from any of the following:

the life insured’s participation in riot, insurrection, civil commotion, military or hostile action or an act of terrorism

a deliberate, unlawful act by the life insured

an injury the insured deliberately inflicts on himself or herself

drugs or medicine the life insured takes which are not in accordance with a medical prescription, or any act or omission by the life insured while he or she is under the influence of alcohol or drugs

nuclear explosion or radio activity

cave diving, commercial diving or the exploration of underwater wrecks for financial gain

the life insured’s participation in motorized racing or speed contests

acrobatic flights, micro-light flights, hang-gliding, paragliding, parasailing, sky-diving, parachuting or sky-surfing

professional boxing, professional kick-boxing or professional wrestling.

These exclusions have been taken directly from the companies’ technical guides.

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