product comparison discovery life and liberty lifestyle ... · discovery life has four funding...

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Product Comparison Discovery Life and Liberty Lifestyle Protector

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Description Page

Choice of LIFE PLAN 3

Funding Patterns 4

Premium Guarantees 8

Policy Structure 9

Benefits for Remaining Healthy 10

Protection for adverse economic conditions 13

PayBack vs. ADD LIBB 14

Minimum Protected Fund versus Stand Alone Benefits 16

Lump Sum Disability Benefits 18

Income Disability Benefits and the Overhead Expense Benefit 26

Dread Disease Benefits 36

Female Severe Illness Benefit and Childbirth Benefit 46

Child Severe Illness Benefit 48

Parent Severe Illness Benefit 49

Future Cover without medical underwriting 50

Investment savings component 52

Premium Waivers 53

Cover in “real” currencies 54

Indemnity Benefits 56

Funeral Benefit 58

General Exclusions 59

August 2010

In formulating the information in this document, Discovery Life has taken due care to ensure that the views and opinions are based on information which is relevant and accurate. The product

comparison serves as an illustrative tool only. The information contained herein is subject to change without notice. Where there is a conflict between provisions of this product comparison and

the provisions of the policy contract, the provisions of the policy contract will prevail. While every care has been taken before opinions and views are given, no representation, warranty or

undertaking (expressed or implied) is given and no responsibility or liability is accepted by Discovery Life as to the accuracy of the information contained herein. Any recommendations made

must take into account your clients specific needs and personal circumstances. Any legal, technical or product information contained in this document is not to be construed as advice by Discovery Life.

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Liberty Discovery’s Comments

Choice of LIFE PLAN

With Discovery there are two LIFE PLAN options available:

Classic LIFE PLAN

Essential LIFE PLAN

The following features are unique to the Classic LIFE PLAN:

Unlimited multiple claims for Capital Disability

and Severe Illness

Category C Capital Disability

Automatic child and parent Severe Illness

coverage

Global Treatment Benefit

Medical Contribution Funder benefit at age 65

Default 10% cash conversion on the Financial

Integrator

PayBack

Premium Comparison

Benefit Classic Essential % difference

Life Cover (incl Cover Integrator and Financial Integrator)

R 435.14 R 387.43 -11%

Severe Illness

R 228.21 R 173.97 -24%

Capital Disability

R 107.30 R 89.36 -17%

Total R 770.65 R 650.76 -16%

40 year old male non-smoker, Accelerator, Health Integrator 40% Cover Integrator and 20% Financial Integrator, R 2 mil Life Cover, R 1 mil Severe Illness Benefit and R 1.6 mil Capital Disability

The Discovery LIFE PLAN has been

designed to offer clients a structured

solution to meet their individual needs.

Due to the unique benefits offered by the

Classic LIFE PLAN, the Essential LIFE

PLAN should be used when comparing to

Liberty.

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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:

o Initial premium discounts on the AcceleRater rates for whole of life benefits of between 12.5% and 20%

o The same annual premium increases as the AcceleRater Plan

o An additional compulsory increase of 20% every 10 years. The increase every 10 years only applies to premiums that were discounted up front and not the total premium

(Capital disability is specifically excluded).

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

Policyholders may convert from an AcceleRater Plan to a Standard Plan at any anniversary, with a corresponding reduction in benefit if the same premium is maintained, or with an increased premium if the same benefit is maintained.

Liberty has three funding patterns: 1. The Age Rated Premium Pattern:


ACI ABI

Age based 0%

Age based 3.5%

Age based 7%

Age based R / $

Age based CPI

Policyholders qualifying as professionals have access to the Age Rated premium pattern from age 20.

Policyholders may convert to a Level Premium Pattern with a corresponding reduction in benefit if the same premium is maintained, or with an increased premium if the same benefit is maintained. However, policyholders cannot convert from a Level Premium Pattern to a Renewable premium Pattern.

Liberty’s Age Rated premium pattern should be compared to Discovery’s SupeRater, as is illustrated in the chart

below.

--- Discovery (AcceleRater) --- Discovery (SupeRater) --- Liberty (Lifestyle Protector Age Rated)

Assumptions: R1000 000 life cover; R500 000 dread disease; R800 000 capital disability; 35 year-old; non-smoker; CPI=6% p.a. ; Silver Vitality status; 40% Cover Integrator.

The chart shows the premiums, projected over 15 years, for Discovery Life‟s AcceleRater and SupeRater premium patterns as well as the Liberty Lifestyle Protector Age Rated premium pattern. From the chart it is clear that the premium acceleration is slower for both the AcceleRater and SupeRater premium pattern than that of the Liberty Lifestyle Protector Age Rated premium pattern.

The best way to compare premium increases is through present values, using a consistent discount rate.

Initial premium

Present value over 15 years

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A Lock-in option is available on the AcceleRater where the premium and benefit increases cease after 20 years or at age 65 (depending on what the policyholder selected). At that stage, the policyholder may still choose to have their benefits increase if they wish, In which case an additional premium equivalent to 15% of the premium payable at age 65 will be paid (this amount will increase at the selected ABI).

3. The Standard Plan

Under the Standard Plan, premiums remain level over the term of the contract for a level amount of cover.

Annual cover increases (ABI‟s) may be selected with corresponding annual contribution increases (ACI‟s) as follows:


ACI ABI

0% 0%

10% 6.5%

CPI + 3.5% CPI

A Paid-up option is available where all premiums cease at age 65, even though benefits continue for whole of life without ABIs. At age 65, the policyholder may still choose to have their benefits increase if they wish, in which case 85% of their premium will stop and 15% will increase by the ABI.

Liberty has no equivalent benefit

2. The Level Premium Payment Pattern

Under the level premium payment pattern, the premiums remain level over the term of the contract.


ACI ABI

0% 0%

5% 3.5%

10% 7%

145% of R/$ R/$

145% of CPI CPI

Assumptions: R1000 000 life cover; R500 000 dread disease; R800 000 capital disability; 35 year-old; non-smoker; CPI=6% p.a. ; Silver Vitality status; 40% Cover Integrator.

At Discovery you can easily move between any of the premium payment patterns, but Liberty policyholders cannot convert from a Level Premium Pattern to a Renewable premium Pattern.

The AcceleRater with the Lock-in option is ideal should you want a lower initial premium than on a level premium pattern and the peace of mind that the premiums won‟t spiral out of your reach as you get older.

Performing quotations for R1 million life cover reflect the following points:

o Discovery‟s Standard Plan is in general slightly more expensive than Liberty‟s level premium pattern. However, the Liberty Level Plan has no quantified premium guarantee after 20 years.

o The ModeRater is cheaper than the level premium pattern at all ages for non smokers and smokers.

o Both of Discovery‟s plans provide quantified guarantees for whole of life, whereas Liberty quantifies the guarantee at the end of the first 10 years only. Furthermore, with Discovery you can improve the 25% cap further by Integration and engagement in Vitality.(see „Premium Guarantees‟ section).

o Purchasing a Discovery Integrator entitles you to premium reductions at inception of your LIFE PLAN. For the Personal Integrators these are:

Discovery Life AcceleRater

R227.27 R59 116.65

Discovery Life SupeRater

R209.82 R59 715.51

Liberty Lifestyle Protector Age Rated

R235.16 R76 468.89

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4. The ModeRater Plan:

Premiums on whole life benefits are discounted by up to 15% from inception of the policy. Premiums for these discounted benefits increase at 20% every ten years. The additional increase does not apply to benefits that had no initial discount.

The ModeRater will overtake the Standard Plan‟s premiums after approximately 10 years.

3. Renewable Life Cover Benefit

Premiums remain level and are guaranteed for a 15 year period.

At the end of the period, policyholders can extend the benefit term free of underwriting.

A new premium will be calculated based on their age and sum assured at this date.

Premiums are calculated to provide cover for a further 5 years.

The process is repeated every 5 years should policyholders want to continue with their cover.

ABI/ACI combinations as per the Level Premium Pattern are available.

15% to 20% for Health Integrator

15% to 17.5% Vitality Integrator

15% for DiscoveyCard Integrator For Business Integrators these are:

7.5% to 10% for Health Integrator

7.5% to 8.75% for Vitality Integrator

7.5% for DiscoveyCard Integrator

This makes Discovery premiums cheaper at virtually every age.

The Integrator allows policyholders to

control their insurance premiums by managing their health, wellness and DiscoveryCard spend. They may obtain further discounts by progressing through the Vitality statuses to Silver, Gold or Diamond status.

The increases after the first 15 years and every 5 years thereafter on the Renewable Life Cover Benefit are based on the age of the policyholder at each date. The percentage increase in premiums on the ModeRater Plan and Liberty‟s Renewable Life Cover Benefit can be compared at each duration as follows:

Renewabl

e ModeRat

er

Initial premium R184.90* R176.94*

Increase after 10 yrs

0% 20%


68.6% 0%


39% 20%


37.5% 0%


55.6% 20%

*35 year old male non smoker R1m life cover

The premiums on the Renewable Life Cover Benefit are clearly not sustainable, as can be seen from the high premium increases reflected in the table above.

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o Discovery‟s SupeRater commences at a minimum of 24% lower than Renewable Life in every age group.

o The amount of premiums paid under the SupeRater and Renewable Life are similar after 15 years.

o Business assurance is therefore better under the SupeRater as most business policies are in force less than 15 years and the SupeRater provides best value in the first few years where it is cheaper than Renewable Life.

Integrator premium reductions and the PayBack will ensure further premium competitiveness.

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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 quantified guarantee 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 being Rand depreciation, education inflation, medical inflation and investment returns. The premiums of all other benefits are guaranteed.

Liberty‟s premiums are priced for whole of life.

The premiums are guaranteed not to increase by more than 25% at the end of the first 10 year

period. The premium is reviewed every 10 years thereafter, but there is no cap on the potential increases at the subsequent 10- year intervals.

The quantified guarantee of 25% after the first 10 years only applies to socio-economic classes 1 and 2.

In respect of the Age Rated structure, Liberty guarantees the premiums stated on the quotation. The maximum 25% increase at the first 10 year review and the 10 year rolling guarantees also apply here.

The premiums of the Renewable Life Cover Benefit are guaranteed for 15 years. It has no quantified maximum increase after this period as the increase is based on your age and sum assured at that date. Should the benefit term be extended, the new premium will be guaranteed for rolling 5 year periods, again with increases being based on age at each review date (i.e. increases are not quantified). The 15 year guarantee does not apply to the Income Disability and Overhead Expense Benefit. For these benefits, the premiums are guaranteed for 10 years, after which it will be reviewed for the next 10 years. This process is repeated every 10 years.

Discovery provides certainty via quantified guarantees for whole of life.

Liberty only quantifies potential increases at the end of the first 10 years, leaving the client significantly exposed thereafter to future premium increases. This may leave clients in a position where they require their cover, but are unable to afford the potential premium increases.

It is Discovery‟s philosophy that potential increases must be quantified for whole of life in a policy document to give certainty to clients and intermediaries.

Discovery provides additional premium certainty by giving clients the opportunity to reduce any potential increases at review dates by managing their health (through Vitality).

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Policy structure

Discovery Life allows policyholders to structure their policies in three different ways:

Separate policies for principal and spouse: This ensures claims on one life have

no impact on benefits of another life. Both lives can integrate their separate policies with reduced initial premiums as long as they are members of Vitality and / or Discovery Health.

One policy for principal and spouse: This ensures the correct payout where joint financial planning is done. A claim on one life will reduce the benefits on another life. This is appropriate in cases where the payout is needed irrespective of which life dies. For example, a family may need an amount of money for children‟s education should one of the parents die. Therefore they do not need the sum of cover on a principal and spouse but rather the payout on the first life to die. The surviving spouse can continue with his/her cover free of underwriting if required. Also, should the LIFE FUND be depleted due to the death of the spouse, the principal life, children and parents may elect to continue with their cover, without underwriting

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

Note: the payouts from the Minimum Protected Fund differ between the Classic LIFE PLAN and the Essential LIFE PLAN

Liberty allows policyholders to structure their policies in two different ways:

Separate policies for principal and spouse:

This ensures claims on one life have no impact on benefits of another life.

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

Under the Liberty structure, it is difficult to do joint financial planning for principal and spouse. For example, a family may need an amount of money for children‟s education should one of the parents die. Therefore they do not need the sum of cover on a principal and spouse but rather the payout on the first life to die.

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Benefits for remaining healthy

The Health Integrator:

offers initial premium reductions of up to 20% and uses Health claims and Vitality status to determine future premium increases or decreases.

includes the Health Integrator PayBack benefit (only on the Classic Life Plan), which provides a return of up to 60% of the policyholder‟s Life PLAN 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 Vitality Integrator PayBack benefit (only on the Classic Life Plan), which provides a return of up to 25% of the policyholder‟s Life PLAN premiums every five years, depending on their LIFE PLAN claims and Vitality status.

The DiscoveryCard Integrator

offers initial premium reductions of up to 15% (7.5% for Business Integrator) 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 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

Liberty has no equivalent benefits




By providing incentives for a healthy lifestyle and providing financial rewards for policyholders, Discovery Life is able to maintain a healthy risk pool with reduced mortality, morbidity and lapse rates.

A policyholder thus has the ability to control future premium increases and increase their PayBack (only on the Classic Life Plan) by maintaining a healthy lifestyle.In addition to the normal premium guarantees, Discovery Life offers further enhanced guarantees on the Health Integrator and Vitality Integrator through the Maximum Protected Premium

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.

On average, this Integrated Cover can be bought at 50% of the normal rates.

This premium efficiency has been generated through Discovery‟s Integrator

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Cover Benefit – allowing the remaining Integrated Cover to continue with no future Integrated Cover Adjustments, or

Medical Contribution Funder (only on the Classic LIFE PLAN) - which provides a monthly benefit, designed to fund the policyholder‟s Discovery Health contributions. The benefit that the policyholder will receive is defined by the Discovery Health Contribution Funder matrices as follows:

Premiums for the Cover Integrator are payable for whole of life and will be included in the Integrator PayBack benefit (if applicable)

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 year

Health Fund: Returns a portion of excess health risk contributions every five years with the balance at the earlier of age 65 or a life-changing event through.

The Financial Integrator

Described in detail in Protection against adverse Economic Conditions section.



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 35% of his LIFE FUND on the 20% option and up to 70% of his LIFE FUND on the 40% option. The policyholder‟s Integrated Cover will boost all benefits attached to the LIFE FUND.

The Medical Contribution Funder Benefit expressed as a percentage of the current Health Plan contributions (excluding MSA), are as follows:

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, by leading a healthy Lifestyle.

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Discovery‟s case management services and Vitality are comparable benefits.

Discovery Life provides a case management service, which includes trauma counselling and assistance with rehabilitation after a life-changing event.

Policyholders may join Vitality, a wellness programme offering rewards for leading a healthy lifestyle.

Vitality is available to Discovery Health and/or Discovery Life policyholders

Some of the incentives through Vitality include

Discounts on membership at Virgin Active or Planet Fitness, Run / Walk for Life, Smokenders, Weighless etc for a once off activation fee

Points for preventative measures (to earn awards)

Online stress management etc

Up to 75% discount on healthy foods at Pick „n Pay

Some of the rewards include:

Significant discounts at British Airways, Kulula.com, Southern Sun, Eurocar, Sony, Ster Kinekor, Clicks, healthstyle magazines and many more

Vitality also enables Discovery policyholders to receive significant premium reductions and PayBacks of premiums, as discussed above.


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Protection for 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 provides an inflation-

related return on your insured assets.

The Currency Protector provides that your

assets maintain their value in hard-currencies (US$ or EURO).

The Debt Instalment Protector helps

replace decreases in savings, due to increased debt instalments.

The DiscoveryCard Interest Protector

helps Discovery Card holders by refunding interest paid on the DiscoveryCard.

The Severe Illness Benefit Medical Booster protects you from the financial

impact that expensive medicine treatments (greater than R250,000) may have on your savings. 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 is available on the Essential LIFE PLAN

When purchasing the Financial Integrator, a

client will receive a certain amount of

protection, through the benefits listed above,

for free. They will also be able to purchase

extra benefits for an additional premium.

Liberty has no equivalent benefits. The Financial Integrator was designed in response to the Financial Crisis beginning in 2008. The affect of this event was that individuals who were looking to retire experienced a large fall in the value of their retirement savings. This meant that they had not accumulated sufficient wealth to live the lifestyle that they had planned for themselves.

The Financial Integrator is designed to ensure that when a client reaches age 65, they will have the retirement savings that they anticipated through their Financial Needs Analysis (FNA) The Financial Integrator can do this by providing clients with a dynamic financial needs analysis. The client‟s benefits actively respond to changes in the economic environment to ensure that they are always appropriately covered.

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PayBack™ vs. ADDLIB

Discovery‟s PayBack benefit pays a percentage of a policyholder‟s Life Plan premiums back every 5 years (only on the Classic LIFE PLAN).

This benefit is available to policyholders who have Vitality Integrator and Health Integrator on their LIFE PLANS and is automatically included in the policy.

For the Personal Health Integrator, the size of the PayBack depends on the size of the policyholder‟s Life Plan premiums, Vitality status and claims on the Discovery Health Plan and Life Plan. The percentage PayBack for the Personal Health Integrator is set out in the table below:

Vitality Status

Families

annual Health Claims

(R)

Blue

Bronze

Silver

Gold

Diamond

0 to 3060

20%

25% 35%

50%

60%

3061 to 5070

15%

20% 30%

45%

52.5%

5071 to 10280

10%

15% 25%

40%

47.5%

10281 to

15280

7.5%

12.5%

22.5%

37.5%

42.5%

15281 to

25410

2.5%

7.5% 17.5%

32.5%

35%

25411 to

35685 0% 5%

15%

30%

30%

35686 +

-2.5%

2.5% 12.5%

27.5%

27.5%

PayBack for a policyholder on Comprehensive or Priority Discovery Health Plan with Family

The Investment Integrator

The Investment Integrator from Discovery

Invest offers unparalleled benefits to your

ADD LIB pays percentage of the Lifestyle Protector premiums back every 5 years.

Policyholders are required to own both a Lifestyle Protection policy (risk policy) and also an investment policy with Liberty Life of at least R50,000 (and R20,000 for professionals) of surrender value/ paid-up value (after penalties).

Benefit scale below guaranteed for first 5-year period. For each 5-year period thereafter new benefit scale will be quoted.

Total Asset Value of the Owner (R)

ADD LIB Sum Assured Band

June 2005 R 1 m - R 4.99

m

R 5 m - R

9.99m

R 10m - R

14.99m

>= R 15m

0.000 - 49,999 0.00% 0.00% 0.00% 0.00%

50,000 - 499,999

5.00% 5.00% 5.00% 5.00%

500,000 - 999,999

6.00% 6.00% 6.25% 6.25%

1,000,000 - 2,499,999

7.50% 7.75% 8.00% 8.00%

2,500,000 - 4,999,999

8.75% 9.25% 9.75% 10.25%

5,000,000 - 7,499,999

10.00% 11.50

% 13.50

% 15.00%

7,500,000 - 9,999,999

11.25% 13.25

% 17.50

% 20.00%

10,000,000 - 12,500,000

12.50% 15.50

% 20.00

% 25.00%

>12,500,000 15.00% 22.50

% 27.50

% 40.00%

Only core risk (stand-alone) benefits qualify

Total asset value is the aggregated value of client‟s investment policies with Liberty.

Paid-up value in case of retirement annuity and surrender value in case of endowment used in determining asset value.

With ADD LIB, clients must meet the following requirements before qualifying for 40% of premiums back:

Risk cover of over R15 million and

Over R12.5 million of assets under management with Liberty. This is based on the paid-up or surrender value. Which could be up to 15% lower than the actual asset value.

Only clients with substantial lump sum investments (R500 000 or greater) are able to get more than 5% of premiums back in first 5 years.

To illustrate what is required for clients with recurring premium investments to get back more than 5% of their premiums, consider the following scenario: A client needs to have R500,000 invested with Liberty (after the paid-up or surrender penalty has been applied) to get back 6% of his premiums (see table above). It will take him more than 10 years to grow an investment of R2 400 per month to R500, 000 (assuming growth of 7% and a premium escalation of 4 % per annum.) The most this client could expect in the first 10 years from ADD LIB is therefore 5%.

A Discovery policyholder is able to determine his PayBack through managing his health and wellness, whereby he can get as much as 60% of all his Life Plan premiums back every 5 years.

The value created from the Investment

Integrator means that the effective

premium that a client pays for their Life

Plan is significantly reduced.

This is because the benefits of the Investment Integrator can be offset against the Life Plan premiums that a policyholder pays. This is can be illustrated using the Integrators in Action tool.

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Endowment Plan by capitalising on the tax

and health assets created by the Discovery

LIFE PLAN and Discovery Vitality.

There are two Investment Integrators

available for you to choose from:

Upfront Investment Integrator: Provides

a boost of up to 26% on your lump sum

contribution to your Endowment Plan.

As and When Investment Integrator: Refunds

up to 100% of all fees on your Endowment Plan.

Claims on risk benefits deducted from payout

Professionals qualify for ADD LIB from asset value of R20 000, instead of R50 000. Percentage of premiums back with asset value between R20 000 and R50 000 is 2.5%. Above R50 000 it is 5%, like with other policyholders.

The owner must be a natural person

There cannot be joint ownership of the life policy.

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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 for all future related and unrelated claims independent of their severity.

If you have chosen the Essential LIFE PLAN, the Minimum Protected FUND will reinstate the LIFE FUND for all 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 this benefit.

Discovery also offers a non-accelerated Severe Illness Benefit for both the principal and spouse. Policyholders still need a LIFE PLAN to take this benefit. The Severe Illness Benefit sum assured may be up to 5 times the LIFE FUND. The non-accelerated Severe Illness Benefit 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 and a policyholder can select this benefit without having a Life Fund.

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

Liberty‟s Living Lifestyle Plus benefit has an automatic reinstatement of illness categories not claimed on, allowing multiple claims in different Benefit categories.

Once the client has claimed the maximum for a particular severe illness category, that illness category expires, except the Trauma category, which reinstates prior to age 70. Claiming under one severe illness benefit category will not affect the client‟s benefits under any of the other severe illness benefit categories.

A standalone benefit from Liberty should always be compared to the corresponding non-accelerated benefit offered by Discovery.

The Minimum Protected Fund provides superior value compared to the standalone benefits offered by Liberty. To show this we use a client who has R 1 million Severe Illness cover:

Classic

Plan with a 100% MPF

Essential Plan

with a 100% MPF

Standalone

Severe Illness with Liberty

Maximum total Payout that you can received

Unlimited

You can receive up to R 2 million

within each body system

You can receive up to R 1 for related claims

Payment for subsequent related claims (after 14 day reinstatement)

Pay for all severities.

Payment equal to the full claim percentage

multiplied by R 1 million

Only pays for higher

severities. Payment equal to the full claim percentage

multiplied by R 1 million (subject to R 2 million cap within each body system

Only pays for higher

severities. Payment equals to the difference in claim payouts

multiplied by R 1 million

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Payment for subsequent unrelated claims (after 14 day reinstatement)

Equal to the full claim percentage multiplied by R 1 million



The above table shows that both the Classic and Essential LIFE PLAN‟s with a MPF of 100%, have a higher maximum total payout and pay more for subsequent related claims, then the equivalent Liberty standalone benefit.

The other reason why the MPF is superior on both the Classic and Essential LIFE PLANs is that the MPF reinstates all benefits linked to the Life Fund. With Liberty‟s standalone Critical Illness, only cover for unrelated critical illnesses is reinstated.

For a full comparison of the standalone Severe Illness Benefits see the Dread Disease Benefit

section

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Lump Sum disability benefits

Discovery offers four lump sum disability products, namely

Core Capital Disability Benefit

Comprehensive PLUS Capital Disability Benefit

LifeTime Capital Disability Benefit

LifeTime PLUS Capital Disability Benefit

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

All available on both the Classic and Essential LIFE PLAN‟s

Claims are assessed based on:

Objective medical criteria

Activities of daily living

Loss of income (under the Comprehensive PLUS and LifeTime PLUS options)

Ability to perform nominated occupation

Objectively and clinically assessed LifeTime Impact Factors (under the LifeTime options)

Future salary growth (under the LifeTime options)

The advantages of these benefits are as follows:

Objectively defined

Payments are based on Category of claim: o Category A: 100% o Category B: 50% o Category C: 2.5% every 4 months if

80%-100% of income lost over previous 4 months. If this loss of income last 24 months, a Category B claim is paid. If it lasts 36 months, the balance of the benefit is paid. Not available on the Essential LIFE PLAN.

o Category D: 100% if permanently unable to perform nominated occupation due to sickness, injury, disease or surgery.

Claims on the Core Capital Disability

Liberty offers 8 lump sum products (from which you may select one), namely::

Capital Disability Benefit

Capital Disability Plus Benefit

Impairment Benefit

Impairment Plus Benefit

Absolute Protector Benefit

Absolute Protector Plus Benefit

Absolute Impairment

Absolute Impairment Plus

Liberty‟s “PLUS” benefits indicate that they are stand-alone and are comparable to Discovery‟s non-accelerated benefit version. This should not be confused with Discovery‟s “PLUS” benefits which indicate a wider category benefit definition.

1. The Capital Disability Benefit:

Available as “own occupation” or “own or reasonable occupation” benefit.

Accelerates life cover. Other accelerated benefits will be reduced should these benefits be greater than the reduced life cover.

Expiry at policy anniversary prior to age 65

No waiting period. Claim paid as soon as permanence of disability is established.

Professionals receive a discount of approximately 20% on Own Occupation Capital Disability Benefit

2. The Capital Disability Plus Benefit

Same as 1 except does not accelerate other benefits

The following table sets out the products on the most like-for-like basis:

Liberty Discovery

Impairment & Absolute Impairment*

Core

Absolute Protector** Comprehensive PLUS

No comparable benefit***

LifeTime

No comparable benefit****

LifeTime PLUS

Capital Disability Included in Comprehensive PLUS and Lifetime PLUS

* However Liberty‟s Absolute impairment benefit has no occupational underpin. ** Liberty‟s absolute Protector has no category C equivalent. *** Discovery‟s LifeTime covers Liberty‟s Capital Disability & Absolute Impairment underpins together with Lifestyle impact boosts **** Discovery‟s LifeTime PLUS covers Liberty‟s Capital Disability & Absolute Impairment & Absolute Protector underpins together with Lifestyle impact boosts The following categories are covered by each of the lump sum disability products:

A B C D

Discovery Core

Comprehensive PLUS

Liberty Capital Disability

Absolute Protector

Absolute Impairment

Occupational disability

Liberty‟s Capital Disability is occupation based.

Claims with occupational disability (only) products are based on a subjective assessment of how a medical impairment affects the client‟s ability to perform his occupation. Subjective assessment

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and LifeTime Capital Disability options are assessed based on Category A and D criteria.

Claims on the Comprehensive PLUS and LifeTime PLUS options are assessed based on Category A, B, C and D criteria.

Payout at 50% (Category B) should a permanent partial loss of income occur

Choice of benefit expiry age of 65 or 70

No medical exclusions

No waiting period. Claim is paid as soon as permanence of disability is established, or on temporary disability, where criteria for Category C payment are met (see above). Not available on the Essential LIFE PLAN.

Covers disability arising from all body systems.

Benefit converts to a Severe Illness Benefit for whole of life at benefit expiry age of the Capital Disability Benefit without medical underwriting. Client can cancel premium and benefit at this point in time with no implications to the premiums and guarantees on the remainder of the plan.

creates uncertainty for clients and inconsistent claims assessment.

Liberty‟s “own or any reasonable” definition is particularly subjective and is even more vague than the more traditional “own or similar” definition still used by some companies.

The shortcomings of occupational disability are easily illustrated with sedentary (desk-bound) occupations where the client may not qualify for a claim for impairments such as loss of limb, hearing, speech, chronic condition etc, despite financial loss and impact on their career. For example, an accountant who is paralysed in a car accident will not necessarily qualify for a claim, as Liberty may deem him still able to work.

With manual occupations a client often does not qualify for the “own occupation” benefit and is forced to take the “own or reasonable occupation” benefit. In such case, the clients runs the risk that he may be deemed able to perform administrative or supervisory work (for instance after becoming a paraplegic) and hence not qualify for a claim, as he is in Liberty‟s option still able to perform a “reasonable occupation”.

Discovery does not rely on its “own occupation” underpin, as there are clear, objective assessment protocols based on medical criteria, Activities of Daily Living and loss of income (Category C).Discovery‟s category D explicitly caters for “occupation” (nominated) and category C is an objective proxy to “occupation” and caters for loss of income for claims which are difficult to prove or where it‟s difficult to determine permanency of the condition. Discovery always has at least some medical definitions as an underpin in our lump-sum disability benefits.

Category C also addresses temporary and permanent disability within the same product.

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The LifeTime option is also offered, which provides extra protection taking into account the long-term impact of the disability as follows: o The LifeTime Impact Booster is

applied (to the payout) depending on the LifeTime Impact category of the disability and the salary growth option selected at inception – the Booster ranges from 105% to 200%

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

o The LifeTime Impact Booster is only applicable to categories A, B and D

o The LifeTime Impact score, which determines the LifeTime Impact category of the disability, is dependant on the following: - Age at disability and expected

survival period thereafter; - Invasiveness of any surgery

required; - Impact of any pharmacological

treatment and its associated side-effects;

- Impact of any therapy and rehabilitation required and its associated discomfort;;

- Impact of any assisted care and devices.

The LifeTime Impact Booster is applicable to categories A, B and D claims.

All disability products include the Dynamic Spend Protector (Not available

on the Essential LIFE PLAN.) at no extra charge. This benefit enhances the DiscoveryCard and Discovery Motor Card cashbacks (depending on the policyholder‟s Vitality status at the time of the claim event) by multiplying the total DiscoveryCard partner spend and DiscoveryMotor card spend by a Booster percentage taken from the following table:



Liberty offers no benefit which considers the long-term impact of a disability on a person‟s ability to generate an income.

Discovery‟s LifeTime benefits consider the long-term impact of a disability as well as the future expected salary growth of the claimant and boosts the Capital Disability payout accordingly.

Cover can be bought more efficiently with the LifeTime option:

Without it, to be fully insured against the lifestyle impact of all disability conditions, a sum assured must be selected consistent with the maximum impact disability condition.

This would be inefficient since the policyholder will not need this full amount for lower impact disability conditions.

With the LifeTime PLUS Capital Disability Benefit, it is possible to get paid 100% more than the sum assured. Liberty does not offer a payout greater than the sum assured.

The Dynamic Spend Protector‟s extra cashbacks provide additional protection against the higher cost of living which accompanies disability. Liberty offers no such benefit.

The following table shows the present values of the Dynamic Spend Protector Benefit as a percentage of the Capital Disability lump sum for various Vitality statuses and inflation levels:

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Claim category: A & D B

Vit

ali

ty

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 usual cashbacks.

3. Impairment Benefit

Benefit paid based on severity of permanent impairment


Claim is paid once Liberty has established permanence.

4. Impairment Plus Benefit


Inflation

Vitality Status

Blue

Bronze

Silver

Gold

Diamond

Low 10%

18% 29%

41%

58%

High 18%

27% 45%

63%

89%

Assumptions: Client aged 40 next suffers paraplegia; average DiscoveryCard partner spend at partners before disability = R4,000p.m.; Capital disability benefit = R750,000; Discount rate = 9% p.a.; Low inflation = 6% p.a.; High inflation = 10% p.a.

With Liberty‟s Impairment Benefit there are many examples where the impairment definitions are a poor proxy to determine the impact on earning ability. The following table shows some examples of maximum payouts under Liberty and Discovery:

Impairment Liberty

Discovery

Loss of hearing 75% 100%

Loss of speech 75% 100%

Faecal incontinence 25% 100%

The impact on the ability to do one‟s job is far more severe than Liberty suggests.

Liberty also does not provide 100% payouts for mental and musculoskeletal disorders (except quadriplegia), as can be seen in the table below. These are the fastest rising causes of claims worldwide, already accounting for approximately half of all disability claims.

Back disorders Liberty Discovery

Lumbar spine:

• Very severe impairment class

25% 100%

• Severe impairment class

0% 50%

Thoracic spine 25% 50%

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5. Absolute Impairment Benefit

Same as the Impairment Benefit, but the benefit pays the full sum assured rather than being proportional to the severity of the condition.

6. Absolute Impairment Plus Benefit


7. Absolute Protector Benefit

Benefit paid if you are permanently impaired or unable to perform occupational duties.

May be selected as “own occupation” or “own or any reasonable” occupation.


No waiting period. Claim paid as soon as permanence of disability is established.

Maximum lifetime payout under this benefit is 100% of the sum assured.

Professionals receive discount of approximately

Cervical spine:

• Very severe Impairment class

50% 100%

• Severe impairment Class

25% 50%

Paraplegia 100% 100%

Quadriplegia 100% 100%

Mental disorders

Moderate impairment

0% 50%

Marked impairment 50% 100%

Extreme impairment

75% 100%

Liberty does not specifically address Cancer. It is assumed that Cancer claims will have an effect on one of the defined body systems and would thus generate a claim. This may not always be the case. Example where stage 4 Cancer would not result in payout on diagnosis: Breast Cancer Stage 4 is diagnosed. The insured has a mastectomy as well as chemo/radiotherapy. The cancer may have spread to the lung, but lung function tests are normal. On the basis of AMA guidelines, no benefit would be paid out on diagnosis of Stage 4 Cancer, whereas Discovery will pay 100% of the disability benefit on diagnosis.

The Absolute Impairment Benefit still has weaker benefit definitions than Discovery‟s Core Capital Disability benefit, since there is no occupational underpin with the Liberty product.

Absolute Protector

The Absolute Protector Benefit is an impairment product underpinned by an “own occupation” or “own or any reasonable occupation” definition.

This does not remove the subjectivity of their occupation based definitions from the product, nor the problems associated with Liberty‟s functional impairment definitions as a basis to assess disability. There are

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20% on Absolute Protector with “own occupation” definition.

8. The Absolute Protector Plus Benefit


many examples of severe life changing events where the maximum payouts based on Liberty‟s functional impairment definitions are less than a 100% and where it would depend on the subjective occupational definition whether the policyholder would get a 100% payout. For instance a person who loses the use of his hand (or use thereof) may only get a 25% payout.

Discovery will pay out a 100% in these cases, reflecting the impact on the client‟s earning ability and lifestyle.

Age Rated premium increases on Liberty’s lump sum disability benefits

While Liberty‟s Age Rated premiums for life cover in most cases increase at a steeper rate than Discovery‟s SupeRater Plan (see page 3), the premiums on their lump sum disability benefits increase at an even steeper rate. In some years, premiums on Liberty‟s Absolute Protector exceed their life cover premium increases by as much as 6%. Discovery‟s premiums on the capital disability benefit increase at the same rate as the life cover premiums and don‟t get the20% SupeRater increases.

The tables below reflects the average ACI rate on the Liberty Age-Rated structure and Discovery‟s AcceleRater Plan with no annual benefit increase based on age at entry for a 10 and 20 year term:

Average annual premium increases: Liberty’s Age Rated Plan

Policy term

Entry Age 10 20

35 4.0% 5.6%

40 6.2% 6.3%

45 6.9% 7.0%

50 6.9% n/a1

55 8.0% n/a1

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Average annual premium increases: Discovery’s AcceleRater Plan

Policy term

Entry Age 10 20

35 4.0% 4.5%

40 4.5% 4.9%

45 4.9% 5.3%

50 5.3% 5.6%

55 5.6% 6.0% 1Benefit expiry age is 65.

Due to Liberty‟s high increases, any cost saving on a lower initial premium is quickly eroded, as their premiums overtake Discovery‟s premium fairly quickly.

Reinstatement

Both companies offer lump sum disability benefits on an accelerated and non-accelerated basis.

Discovery offers lump sum disability benefits on a non-accelerated basis with reinstatement (by using the Minimum Protected Fund) or without reinstatement (by using the non-accelerated option.)

Liberty offers their lump sum disability benefits on a non-accelerated (stand-alone) basis, but does not offer a reinstatement option. Claims at severities below 100% will permanently reduce the sum assured and once the client has claimed 100% of the sum assured, the benefit ceases.

Their non-accelerated benefit is different to the effect of the Minimum Protected Fund. A combination of Category A, B, C and D claims can result in the payout being more than the sum assured (see page 16).

Unique benefits offered by Discovery

Discovery‟s Capital Disability Benefit covers everything offered by the Liberty Absolute Protector, but with the following advantages:

Reinstatement of cover with multiple claim coverage in excess of 100% of the sum assured (for non-accelerated

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Capital Disability Benefit on Classic or where Minimum Protected Fund is selected.)

No aggregation

Option to purchase cover to age 70

Automatic conversion to Severe Illness Cover at benefit expiry age.

Cover for short term and long term loss of income via Category C (Classic LIFE PLAN only)

Ability to purchase the LifeTime option for extra protection against the long-term impact of a disability

Included Dynamic Spend Protector benefit to address the risk that living expenses will be higher than expected. (Classic LIFE PLAN only)

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Income Disability Benefits and the Overhead Expenses Benefit

Discovery‟s Income Continuation Benefit protects a policyholder‟s earnings and is unique in the market.

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

Core

Comprehensive The main features are as follows: Definition

Definition based on nominated occupation throughout (and experiencing loss of income)

Liberty has two disability income benefits, namely:

Income Disability

Temporary Income Disability Liberty‟s Income Disability Benefit‟s main features are as follows:

Definition based on nominated occupation

Discovery‟s Income Continuation Benefit is most comparable to Liberty‟s income Disability benefit including the top-up option plus Liberty‟s Temporary Income Disability benefits.

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

An immediate upgrade to 100% of income on permanent disability

3 month non-aggregation period* and 2 year non-aggregation period* for professionals in private practice. *except earnings from other disability income/sickness benefits

Protection of business owners‟ earning ability through a robust income definition which is not based on personal taxable income

Cover up to age 70

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

The Comprehensive option which has the following unique features: • An additional payment of up to

100% of all Discovery Life, Discovery Health, Discovery retirement Optimiser and Vitality contributions for up to two years through the automatic Contribution Protector;

• The Guaranteed Insurability Benefit is automatically included;

• Protection against interest rate movements through the Interest Rate Protector;

• Enhanced DiscoveryCard cashbacks through the Dynamic Spend Protector.

The Contribution Protector is also automatically included on the Core Option, and (in addition to the Income Continuation Benefit payments) pays 100% of Income Continuation Benefit premiums and up to 25% of Discovery Life, Discovery Health, Discovery retirement Optimiser and Vitality contributions for up to one year.

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Income definition

Income are defined as follows:

Cost-to-company for salaried employees

Gross fees for services rendered less business overhead expenses for business owners (including professionals)

Maximum benefit

Maximum benefit amount of R150 000 per month

Maximum sum assured of 75% of personal income

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 per month

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

The Income Continuation Benefit will upgrade on meeting the Category A or D criteria on the Capital Disability Benefit. Category A defines conditions covered at a 100% while Category D contains the “nominated occupation” definition.

Note on upgrade: The upgrade is not based

on the sum assured, but on the full earnings which the policyholder indicated to Discovery at policy inception, increased from date of inception to date of claim with the benefit escalation rate applicable to this benefit.

Cost to company or gross taxable income for salaried employees.

Gross professional fees and income from trading activities less business overhead expenses.

Maximum benefit amount of R110 000 per month (R150,000 for professionals)

Maximum payment of 75% of income as at claim event date

No upgrade in case of permanent disability

Discovery‟s Category C payments under the Capital Disability Benefit can supplement the payout of the Income Continuation Benefit on temporary disability.

To minimise any potential additional expenses on temporary disability, Discovery provides a case management service, which includes assistance with rehabilitation and will cover the cost thereof if a policyholder is not a member of a medical scheme.

Details are provided below.

Consider the upgrade to 100% of earnings under the Discovery product in the case of permanent disability. Example: A 35 year-old policyholder earning R30 000 per month who has purchased a disability income benefit of R22 500 per month. If permanently disabled, the present value (at 9%) of the benefit would be as follows:

Duration of permanent Disability

Discovery Life (100%)

Liberty (75%)

5 years 1 457 137 1 092 853

10 years 2 404 176 1 803 132

20 years 3 419 726 2 564 795

The upgrade by Discovery results in an

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Waiting periods

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

Seven day waiting period pays retrospectively from day one

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

Waiting periods of seven days, seven days backdated to day one, one month, three months, six months, 12 months and 24 months. Waiting periods of 7 days and 7 days backdated to day 1 are only available to self-employed or fee-based individuals)

additional 33% payout for these permanently disabled lives.

Policyholders who will continue to receive an income should they on a temporary basis be unable to work, but want to protect their income on permanent disability, could achieve a massive saving through Discovery by using the upgrade.

Example: A policyholder earns R30,000 p.m. but takes out a sum assured of only R15,000 p.m., as he will earn other income on temporary disability. On permanent disability( a claim that qualifies for category A/D with Discovery), Discovery will pay him R30,000 p.m. should he earn no other non-investment income when he becomes permanently disabled. With Liberty, should he need to cover the maximum income on permanent disability, he will have to take out the maximum sum assured on temporary disability. While he is paying for cover on temporary disability that he does not need, his payout will also not upgrade on permanent disability.

Payments on the Discovery seven-day waiting period are retrospective from day one. This applies to professionals and non-professionals.

Liberty‟s seven-day and backdated seven-day waiting periods are only available to self employed & fee-based individuals.

Liberty‟s backdated waiting period (available to professionals only) applies only to the 7 day waiting period. Discovery‟s waiting period that pays retrospectively from day 1 applies to both the 7 day and the 1 month waiting period. While the 7 day retrospective waiting period applies to both professionals and non-professionals, the one month waiting period applies to certain professionals in private practice.

Professionals in private practice can often afford to insure themselves for one month before requiring the benefit to kick in. Discovery‟s one month waiting period would save them approximately 22% on their premium for this benefit, relative to

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No exclusions for seven day waiting period. Conditions that need to be met for retrospective payment on the seven day and one month waiting periods (only for professionals in private practice or partnership) are as follows:

• Hospitalisation for at least one full day and one full night, or

• An infectious disease such as chicken pox or measles (common colds, influenza and gastro-enteritis are excluded), or

• In the case of back disorders, if there is identifiable pathology on an MRI scan, or

• In the case of anxiety, stress or depression, if there is specialist confirmation of the inability to work, or

• If there is a complication of pregnancy (routine pregnancy is excluded), or

• Chemotherapy or radiotherapy, or

• Any outpatient treatment that renders the policyholder unable to work.

• In the case of fibromyalgia, there is a rheumatologist‟s confirmation of the diagnosis and inability to work

Payments are made once the waiting period has expired and the policyholder has three

Where the seven day or seven day (backdated to day one) waiting period is selected, a one month waiting period will apply for the conditions listed below:

Influenza or bronchitis (except for chronic bronchitis requiring hospitalisation)

Mental or psychiatric disorders (unless chronic and requiring hospitalisation)

Gastric Influenza, gastritis, constipation or diarrhoea (unless chronic and requiring hospitalisation)

Headaches or migraines (unless chronic and requiring hospitalisation)

Laryngitis, sinusitis or pharyngitis

Surgical procedures for infertility conditions

Stress related disorders and chronic fatigue syndrome

Participation in any form of sport as a professional player

Pregnancy, abortion, childbirth and complications thereof

The following specific exclusions apply

Post-natal depression

Cosmetic surgery other than procedures necessitated by illness or injury.

Payments are made once the waiting period has

the premium for the 7 day waiting period. What makes this option even more compelling is that the payout will be made retrospectively from day 1.

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.

Liberty‟s waiting period of 1 month imposed on certain conditions exclusions for the seven day waiting period is concerning as hospitalisation will not occur in many cases for a considerable period of time. The client will meanwhile be losing significant income.

30

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

Sabbaticals aren‟t taken into account when calculating average earnings (subject to a maximum sabbatical term of six months every three years).

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, benefits may only be reduced with income earned during disability to the extent that it exceeds 30% of pre-disability earnings. Since the maximum benefit amount is 75%, it follows that the policyholder can still earn up to 105% in total after disability (75% + 30%). This applies for two years in claim.

Income from other income disability benefits will be apportioned to ensure that these benefits plus Discovery‟s benefit does not exceed 75% of what the policyholder was earning prior to disability.

Dividends, rental income and interest are not taken into account when aggregating with other sources of income.

Lump sum disability benefits, including Category C payments are not aggregated

Note: Payments made through the Contribution Protector, Dynamic Spend Protector and Interest Rate Protector are not aggregated with any other income.

Expiry age

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

Premium is waived during claim payment

expired

The following aggregation calculation percentage is applied to the sum assured: [Monthly taxable earnings – Remaining earnings)/(Monthly taxable earnings)]*(maximum allowable income benefit/Maximum incapacity income)

o The maximum allowable income benefit is 75% of the assured life‟s monthly income

o The maximum incapacity income is any insured benefit payable from whatever source (with certain exclusions)

o Remaining earnings is the total amount that the policyholder receives for work done in any occupation (or, after 3 years in claim, is capable of earning in his own occupation)

Choice of expiry age of 60 or 65

Premium is waived during claim payment.

Discovery will not aggregate income still earned up to the first 30% of earnings prior to disability in determining claim payments for the first two years in claim. Liberty aggregates all earnings from other sources.

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.

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Claim payments have no impact on other benefits

Available premium patterns

Available on the Standard and AcceleRater funding structures

Claim escalation

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

Comprehensive option: can choose • 0% • CPI (capped at 10% p.a.) • CPI+3% (capped at 13% p.a.)

On permanent disability, the escalation would be the higher of:

• The selected escalation in claim rate • The R/$ depreciation up to 20% per

annum if the Global Investment Linkage Benefit is selected.

Guaranteed Insurability Benefit

Additional benefit received at no extra charge (with Comprehensive option) which allows policyholder to increase income by up to 20% every three years, without evidence of health or insurability.

Maximum number of options: six

Claim payments have no impact on other benefits

Available on the level, renewable and age rated premium patterns.

The following escalation in claim options are available:

• 0% • 5% • CPI (capped at 10.5%)

A top-up option can be selected for waiting period of 6 months or less. This increases the monthly income disability benefit payable by 33.33%, paid for a maximum of 2 years.

Policyholders are given the option to increase the Income Disability sum assured after each policy anniversary. This does not require underwriting – but is subject to a declaration of health. A maximum increase of 9.5% above usual ABI increases.

With Discovery, policyholders can receive 105% of their income on temporary disability, as we don‟t aggregate the equivalent of 30% of income earned prior to disability for the first two years in claim.

Discovery‟s Comprehensive option makes a payout of more than 100% possible on temporary and permanent disability as follows:

o The benefit received on temporary disability can be increased by up to 48% through the Contribution Protector and Interest Rate Protector.

o The Dynamic Spend Protector means that the claimant can receive up to 50% off his/her DiscoveryCard partner spend and Discovery Motor Card spend on permanent disability.

Discovery‟s Guaranteed Insurability Benefit is an invaluable financial planning tool that allows clients with a steep income curve to protect their income without the concern of becoming uninsurable.

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Must be exercised prior to age 50

You can also apply to Discovery Life to have your ICB benefit increased at any point in time. This is subject to medical & financial underwriting.

Can only be exercised if no ICB claims have been made in the 3 years prior to each option date and Discovery reserves the right of an HIV test to determine eligibility.

Contribution Protector

Policyholders get an additional payment of 25% (with Core option) or 100% (with Comprehensive option) of their Discovery Life Discovery Health, Discovery retirement Optimiser and Vitality contributions (with 100% of Income Continuation Benefit premiums waived even if on Core option), 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

Included with Comprehensive option

No comparable benefit

This benefit is automatically at no additional premium and its value is illustrated in the below case study of a typical Discovery Life client with a monthly salary of R 50 000 who has the following monthly premiums:

A client on the Comprehensive Option will receive 100% of the above contributions on temporary disability, in addition to the monthly payment that they receive from Discovery Life. This means that the client will receive R 45 547 ( R 37 500+R 8 047) from Discovery as opposed to R 37 500 (75% of earnings) from a traditional insurer like Liberty. This represents an additional payment of 21%.

Product Premium

Discovery Life Plan R 1 000

Discovery Retirement Optimizer

R 1 500

Discovery Health Plan R 5 011

Health Plan Protector R 260

DiscoveryCard Protector

R 148

Vitality R 128

Total R 8 047

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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 V

ita

lity

Sta

tus

Blue 10%

Bronze 15%

Silver 25%

Gold 35%

Diamond 50%

Term Up to expiry age

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

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

Interest Rate Protector

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% depending on the extent of the interest rate increase.



No comparable benefit Long Term Protector Plus

Provides a monthly benefit if you suffer an impairment after age 65

Payments dependent on severity of impairment (50% or 100% of sum assured).

Non accelerated benefit

Maximum benefit: 100% of monthly salary/turnover up to R30 000 per month

Contribution is payable for whole of life but is waived during claim

The Dynamic Spend Protector means that the claimant can receive up to 50% off DiscoveryCard partner spend and DiscoveryMotor Card spend on permanent disability. These extra cashbacks provide additional protection against the higher cost of living as a result of potential inflationary movements.

If a policyholder has financial obligations, his income during disability will be significantly impacted by interest rate movements. The Interest Rate Protector provides valuable protection against such interest rate movements. For example, the prime interest rate at 1 July 2007 was 13% and at 1 July 2008 it was 15.5%. This 2.5% increase in interest rates would imply an additional 7.5% payout.

Discovery covers this need by converting their Capital Disability Benefit to Severe Illness cover at age 65 or 70. This not only covers claims as a result of not being able to do Activities of Daily Living, but all other Severe Illnesses as well.

Lump sum cover at these ages is often more advantageous to sick clients who may not be expected to survive many

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The Overhead Expenses Benefit

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


On individually owned policies, this benefit may only be selected if the Income Continuation Benefit is selected.

Payable for a maximum of 24 months for a specific cause

Maximum benefit of 90% of actual overhead expenses up to R80 000 if taken on the same policy as the Income Continuation Benefit

Maximum benefit up to R150 000 per month on a business owned policy.

Overall maximum: R1.8 million.

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.

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.

3 month waiting period applies from date you meet assessment criteria for claim

1 month waiting period applies if transferring from a moderate benefit to an advanced benefit severity

The Overhead Expenses Benefit

Provides a monthly amount to assist in covering business overhead expenses in the event of temporary or permanent disability


May only be selected if another disability benefit is selected on the plan.

Payable for a maximum of 24 months

Maximum benefit of 90% of actual overhead expenses, up to R110 000 per month

Fixed one month waiting period

May not be selected on business owned policies

years and may therefore receive very few payments from the Long Term Protector Plus.

Lump sum payments are often more attractive from a tax point of view as well.

With the Long Term Protector Plus, the policyholder is paying for a benefit that he can only claim on after age 65. This is not the case with Discovery‟s approach, where the policyholder pays for capital disability cover he can claim on immediately and has the option to continue with severe illness cover when his capital disability benefit expires, free of medical underwriting.

The fact that this benefit may not be selected on a business owned policy with Liberty has the following disadvantages:

If the insured is operating his business through a private company or close corporation, it is highly unlikely that SARS will allow the premiums for this benefit as a deduction. However, the payout will in all likelihood still be taxable. With Discovery, the business can be the owner of the policy and

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Expiry age 60, 65 or 70

Expiry age 60 or 65

accordingly get a Section 11(a) tax deduction. In such case, the Discovery premium can be discounted with 28% (the company‟s tax rate) when a premium comparison is done.

Where the insured is the owner of the policy, the other shareholders / members have no guarantee that the insured will pay over the proceeds in the event of a claim to the business to cover overheads. A separate agreement will have to be set up in this regard. With Discovery, the proceeds can be paid directly to the business, ensuring that it is utilised for its intended purpose.

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 substantial business overheads.

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Dread Disease Benefits

Discovery offers four Severe Illness benefits, namely:

Comprehensive Severe Illness Benefit

Comprehensive PLUS Severe Illness Benefit

LifeTime Severe Illness Benefit

LifeTime PLUS Severe Illness Benefit

All benefits may be taken out on an accelerated, non-accelerated and standalone (Impairment Fund) basis

Available on both the Classic and Essential LIFE PLAN.

The benefit covers all body systems.

The policyholder may select cover for an individual illness in cases where entire benefit is declined due to ill health.

Expiry age 65 or whole of life.

Benefit payments depend on severity of impairment

If more than one claim event takes place as a result of the same cause, the claim event resulting in the highest payment is admitted first. The second claim is admitted if the second condition is still present after six months.

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

Liberty offers one severe illness benefit called Living Lifestyle. Onto this benefit you can add the following options:

To have it as an accelerator or standalone “Plus” (non-acclerated benefit)

Include lower severity severe illnesses through the “Extended” option

Increase the payment of certain 50% and 75% claims to 100% through the “Top-up” option

Expiry age 65 or whole of life

Benefit payments depend on severity of impairment

Only the highest payment will be made. No further claims will be paid due to this event.

Top Up option

Allows 100% payouts on 50% and 75% severity levels for certain conditions. In respect of two conditions occurring at 25% severity levels, 100% payouts will be made, namely Cancer Stage I and diagnosis of Leukaemia.

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 the Classic Plan which are not offered by Liberty:*

Discovery Liberty

Comprehensive Living Lifestyle

Comprehensive Plus

Living Lifestyle with Extended Option

Comprehensive (with extender)

Living Lifestyle with Top-up Option

Comprehensive Plus (with extender)

Living Lifestyle with Top-up and Extended

Option

LifeTime Severe Illness Benefit (with or without

extender)

No comparison

LifeTime PLUS Severe Illness Benefit (with or

without extender)

No comparison

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

Unlimited multiple claims

Automatic child and parent cover

Global Treatment Benefit

Discovery‟s Comprehensive Plus option must not be compared to Living Lifestyle Plus. The “Plus” in our product indicates extension of cover to lower severities whereas in Liberty‟s case, it indicates a non-accelerated (stand-alone) benefit.

Comparison of payouts is shown in the

below table:

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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

(non-accelerat

ed)

A 100% 125% 25%

B 75% 100% 33%

C 50% 75% 50%

D 25% 50% 100%

1. Comprehensive Severe Illness Benefit

Pays out:

25% - 100% (depending on severity) upon meeting the requirements of one of the defined severe illnesses.


Enhancer option

This is a rider benefit to the temporary income disability benefit that will pay a lump sum up to 24 months income on diagnosis of a specified critical illness based on criteria specified in each benefit category.

1. Living Lifestyle

Pays out for 25-100% severities as well as one 5% condition and seven 10% conditions

The benefit covers the following benefit categories:

• Cancer and Leukaemia

• Cardiac and cardiovascular system

Without Extender or Top up

Liberty‟s Top up Option

Discovery‟s Extender Option

25% 25% 50%

50% 100% or 50%*

75%

75% 100% or 75%**

100%

100% 100% 125%

* E.g. Keyhole valvular surgery or visual loss > 6/24 or loss of 2 hands. ** E.g. muscular dystrophy (moderate).

Discovery pays more for 25% and 100% claims. Furthermore, there are a number of instances when the 50% to 75% severities do not pay out at a 100% with Liberty‟s Top Up option.

Discovery‟s 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 payments from the Extender benefit do not reduce the LIFE FUND, it does not reduce the cover of other benefits attached to the Life Plan.

Combined with Discovery‟s multiple claims definitions, this benefit is very powerful e.g. If you have two severity B heart attacks (75% payouts) on the Classic Life Plan with the accelerated Severe Illness Benefit with Extender, you will receive 125% of the Severe Illness Benefit amount. This is compared to 93.75% if the client did not select the Extender Benefit. This is because the additional 25% payout of the Extender Benefit does not reduce the LIFE FUND

This is also enhanced by the „gearing‟ effect of the LIFE FUND structure. E.g. A policyholder taked a LIFE FUND of R1 million with an accelerated Severe Illness Benefit of 40% and suffers two severity B heart attacks (75% payouts). His total Severe Illness benefit paid will be R680 000 (170% of the initial severe illness sum assured) and will have R490 000 life cover remaining.

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The policyholder may select cover for an individual illness in cases where the entire benefit is declined due to ill-health.

2. Comprehensive Plus Severe Illness Benefit

Pays out:

5% – 100% (depending on severity) upon meeting the requirements of one of the defined severe illnesses.


The policyholder may select cover for an individual illness in cases where the entire benefit is declined due to ill health.

• Stroke

• Multiple Sclerosis

• Motor Neuron Disease

• Parkinson‟s Disease

• Myasthenia Gravis

• Alzheimer‟s Disease and Progressive Dementia

• Other Central Nervous System Disorders

• Renal Disorders

• Urogenital Disorders

• Respiratory Disorders

• Chronic Liver Disorders

• Endocrine Conditions

• Aplastic Anaemia and other Blood Disorders

• Gastrointestinal Disease

• Pancreatic Disorders

• Muscular Dystrophy

• Paralysis

• Rheumatoid Arthritis

• Other Autoimmune Disorders

• Ear, Nose and Throat Disorders

• Eye Disorders

• Speech Disorders

• Traumatic injuries including Traumatic Brain Injuries, Head and Neck Injuries, Spinal Injuries and Comas

• Coma

• Loss of and loss of use of limbs

• Major burns

• Accidental HIV

• Advanced AIDS

• Living Lifestyle Catch-All

Discovery‟s Severe Illness Benefit not only covers all the benefit categories in the Living Lifestyle benefit, it also covers a wider range of illnesses within these categories than what Liberty does.

Strokes are much easier to claim for under Discovery‟s definitions, this can be seen through the SCIDEP grids published for the two products:

Liberty‟s Living Lifestyle

Discovery‟s Comprehensive Severe Illness

Level A: Most severe

100% 100%

Level B: Moderate Impairment

75% 100%

Level C Mild impairment

50% 100%

Level D: Almost full recovery

25% 50%

This table indicates how Discovery pays a much larger amount for the less severe strokes

Discovery also pays more on the loss of and loss of use of limbs, the payoffs can be compared as follows:

Condition Liberty‟s Living Lifestyle

Discovery‟s Comprehensive Severe Illness

Loss of use of one hand

25% 50%

Loss of use of one limb

50% 75%

Loss of use of two limbs

100% 100%

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3. LifeTime Severe Illness Benefit

Pays

25% - 100% (depending on severity) upon meeting the requirements of one of the defined severe illnesses

The LifeTime Impact Booster is applied depending on the LifeTime Impact Category of the illness – the Booster ranges from 115% to 200%

The LifeTime Impact score, which determines the LifeTime Impact Category of

With the “Catch-all” benefit the policyholder must be assessed as suffering a serious physical condition that would qualify for a 100% payout under another benefit category and the severity must result in a Whole Person Impairment of at least 35%. Proof of this must be to the satisfaction of Liberty‟s Chief Medical Officer. The impairment must be permanent.

2. Living Lifestyle with Extended option

o This adds additional benefits covered at a 10% severity level. It also adds one condition covered at a 5% level.

Liberty has no comparable benefit

Liberty‟s Catch-all benefit requires that the policyholder‟s condition must result in at least 35% Whole Person Impairment, which is equivalent to a Severity A Discovery payout (100%).

The Catch-all benefit‟s definition leaves much to the discretion of Liberty‟s Chief Medical Officer, which results in subjectivity and hence uncertainty.

The Extended option must be added to Liberty‟s Living Lifestyle benefit before comparing it with Discovery‟s Comprehensive Plus Severe Illness Benefit, which includes severities 5% - 15%. However, Discovery‟s illness definition coverage at the lower severities is far broader than Liberty‟s Extended Option. Living Lifestyle with Extended Option only quantifies 23 conditions below a 25% payment whereas Discovery‟s Comprehensive plus Severe Illness states 95.

Discovery‟s Severe Illness Benefit not only covers all the benefit categories in the Living Lifestyle benefit, it also covers a wider range of illnesses within these categories than what Liberty does.

Liberty 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 sum assured.

Discovery‟s LifeTime benefits consider the long-term lifestyle impact of an illness as well the policyholder‟s family composition at

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the illness, is dependent on the following:

Expected duration of the illness;

Invasiveness of any surgery required;

Impact of any pharmacological treatment and its associated side-effects;

Impact of any therapy and rehabilitation required and their associated discomfort;

Impact of any assisted care and devices;

Number of financial dependants assessed at time of claim

The benefit covers all body systems

The LifeTime Impact Booster is applicable to severities A - D.

4. LifeTime PLUS Severe Illness Benefit

Pays

5% - 100% (depending on severity) upon meeting the requirements of one of the defined severe illnesses

The LifeTime Impact Booster is applied depending on the LifeTime Impact category of the illness – the Booster ranges from 115% to 200%

The LifeTime Impact score, which determines the LifeTime Impact category of the illness, is dependent on the following:

Expected duration of the illness;

Invasiveness of any surgery required;

Impact of any pharmacological treatment and its associated side-effects;

Impact of any therapy and rehabilitation required and their associated discomfort;

Impact of any assisted care and devices;

Number of financial dependants assessed at time of claim

Liberty has no comparable benefit

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 – Liberty 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 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.

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The benefit covers all body systems

The LifeTime Impact Booster is applicable to severities A - D.

Multiple claims

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

Classic LIFE PLAN (accelerated with or without MPF, and accelerated):

o Multiple claims are permitted for the same, related or unrelated illnesses

o They are also permitted whether the severity of the subsequent claim is higher, lower or the same as the severity of any previous claim(s). A subsequent claim for the same or related illness that is regarded as independent of the first claim unless it is a progressive disease such as cancer.

o 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.

• For instance, if the policyholder has R1 million life cover with a 50% Severe Illness Benefit and claims at a 100% severity level, 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 of the LIFE FUND irrespective of the body system claimed on, ie the policyholder may claim more than the sum assured within the same disease category.

Multiple Claims

Multiple claims are permitted as follows: 1. Living Lifestyle:

This is an accelerated benefit.

A multiple claim within a benefit category is not paid unless the severity of the second event is higher than that of the first event. Where the severity is higher, Liberty will pay the difference in severities. The same applies for related conditions, whether in the same benefit category or not.

Claims across all illnesses may not exceed the sum assured of the benefit, i.e. the benefit ceases once 100% of the sum assured is paid out.

The Trauma benefit does not reinstate under this benefit.

Multiple Claims Because of Liberty‟s multiple claims definition, Liberty (both Living Lifestyle and Living Lifestyle Plus) should be compared to the Essential Life Plan as the Classic Life Plan will pay far more for multiple claims.

With Discovery‟s accelerated SIB on the

Classic Life Plan, you can claim more

than the sum assured of the Severe

Illness Benefit due to the fact that it is

defined as a percentage of the Life Fund

Although we compare Liberty to the Essential Plan for conditions which would result in the same severity payout percentages as per the medical definitions (Appendix 1), the Essential Plan will always make payments that are the same or larger than those from the Living Lifestyle benefit. The reason for this is that although both companies only pay for related claims of a higher severity, Discovery will pay the full severity and not the difference in severity as is the case with Liberty: e.g. a client with R 1 million Severe Illness cover suffers two heart attacks, one at a 50% level and the second at a 100% level. The payouts from Discovery and Liberty are as follows;

Severe Illness Benefit on Essential Life Plan

Living Lifestyle

1st claim

(50% level) R 500 000 R 500 000

2nd

claim (100% level)

R 500 000 R 250 000*

Total R 1 000 000 R 750 000

The above table assumes 100% Severe

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Essential LIFE PLAN: o Accelerated Severe Illness:

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. 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. 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: Accelerated without

Minimum Protected Fund = sum assured

Accelerated with Minimum Protected Fund MPF = 2 times sum assured for each body system

o Non-accelerated Severe Illness

o You may claim for subsequent claims where the claim is unrelated to any previous claim. The subsequent claim will be based on the Severe Illness Benefit amount multiplied by the sum assured.

o You may also claim for subsequent related claims, however in this case you may only claim where the severity level of the subsequent claim is higher than the previous claim. The payout will be based on the difference in severities multiplied by the sum assured.

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

assured for each body

2. Living Lifestyle Plus:

This is a non-accelerated benefit.

Claims do not accelerate other benefits on the plan. A claim under one benefit category (body system group) reduces the amount that can be claimed in that benefit category but not the amount that can be claimed in other benefit categories.

The total claims paid may therefore exceed the sum assured should you claim under different benefit categories.

A multiple claim within the same benefit category is not paid unless the severity of the second event is higher than that of the first event. Where the severity is higher, Liberty will pay the difference in severities multiplied by the original sum assured. The same applies for related conditions, whether in the same benefit category or not.

The cover for a benefit category expires once you have claimed the maximum stipulated cover for that category.

The Trauma benefit category is the only category that reinstates prior to age 70 next.

Illness Benefit and no MPF, if either of these did not hold then Discovery‟s payoffs would look more favourable.

* (100% - 50%) x (R1 000 000 – R500 000)

This clearly illustrates how even the Essential Life Plan offers a superior multiple claims definition than Liberty‟s Living Lifestyle product

On Living Lifestyle Plus the client will never be able to claim more than 100% for any benefit category (except the Trauma Benefit) or for related conditions, whether in the same benefit category or not. For this reason it should be compared to the Essential Life Plan..

On the non-accelerated Severe Illness

Benefit on the Classic Life Plan you can

claim more than the sum assured in

each benefit category as the benefit

reinstates for related claims, and it does

not pay the difference in severity. This

effectively means that a 100% MPF is

automatically included. This is very

powerful as you are most likely to claim

again within the same benefit category.

For example a policyholder who suffers a

severity C heart attack (50%) followed by

a severity A heart attack (100%) will be

paid 150% of the Severe Illness Benefit

sum assured and will still have the full

sum assured available for any

subsequent related or unrelated

illnesses. The Classic Plan provides

more extensive cover because

medically, a person is far more likely to

claim again under the same body system

(benefit category) as opposed to a

different body system. Should you, for

example, have a 100% claim for a heart

43

system Non-accelerated = sum

assured for each body system

There is no survival period required to get a benefit payment. In certain cases a period is specified to establish severity. These are not survival periods, as claims would be paid should death occur within the specified period.

Child Severe Illness automatically included (only 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 Child Severe Illness Benefit included in the main Severe Illness Benefit is limited 10% of the Severe Illness Benefit sum assured, subject to a maximum of R110 000 per child per claim event.

The claim against the Child Severe Illness Benefit included in the main Severe Illness Benefit will not accelerate the Life Fund or reduce the Severe Illness Benefit of the Principal and / or Spouse.

Covers all body systems covered under the

There is a survival period of 14 days to get any benefit payment.

No equivalent benefit

attack with Liberty, you will never be able

to claim for a heart attack again. The

same applies to strokes, where there‟s a

25% chance of recurrence. These are

the most likely areas to have a

subsequent claim.

Related claims, i.e. where one illness leads to another, are also common. Examples where Liberty would only pay the difference in severity (or pay out nothing at all, if the first claim already presented at a 100% severity level) whereas the Classic Plan would pay include the following: o Kidney failure as a result of

paraplegia o Blindness as a result of Multiple

Sclerosis o Stenosis of a vessel as a result of a

heart attack.

Liberty will not pay should death occur within 14 days after the event. Discovery has no survival period for a Severe Illness payout. The Minimum Protected Fund, however, only reinstates cover after a 14 day survival period.

The survival period is especially relevant to Liberty‟s stand alone benefits. Should the policyholder with Discovery‟s non-accelerated Severe Illness benefit die within 14 days after qualifying for a claim, he will receive both his Severe Illness Benefit and his Life Cover Benefit. With Liberty he would only receive his life cover benefit.

According to the British Heart Foundation, 25-30% of deaths occur prior to hospital admission. The Oxford Stroke project found that 10% of all strokes lead to death on day 1. As a result of the 14 day survival period Liberty would not pay the Living Lifestyle Plus benefit in any of these situations.

Discovery Life recognises that the impact of your child‟s illness is similar to an illness affecting yourself. Discovery

44

main Severe Illness Benefit, plus the following conditions which are especially relevant to children:

o Surgical correction of congenital heart disease

o Acute lymphoblastic leukaemia o Congenital anomaly repair o Rheumatic fever with cardiac

complications o Type 1 diabetes mellitus o Poliomyelitis with permanent

paralysis o Juvenile rheumatoid arthritis, septic

arthritis, osteomyelitis o Hirschsprung‟s disease o Surfactant therapy o Cleft palate/lip repair o Disorders of amino acid metabolism

Parent Severe Illness automatically included (only on the Classic Life Plan)

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

The benefit payout will be based on objectively defined Activities of Daily Living.

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 on the Classic Life Plan)

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

The benefit is available to the life assured as well as to any parents and children automatically insured (see above).

The benefit offers the policyholder a choice of either

A lump sum benefit up to 100% of the available Severe Illness Benefit or

Up to 180% of the lump sum benefit, consisting of:

the payment of the actual cost of treatment at an overseas medical



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

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 healthcare technology and emergence of global centres of excellence focusing on super specialties have resulted in Discovery

45

facility, up to a maximum of the available Severe Illness benefit,

PLUS up to 80% of the lump sum Severe Illness Benefit (in the case of the LifeTime benefits, this could be up to 260%).

developing the Global Treatment Benefit.

The benefit ensures policyholders have access to the best medical treatment for an illness.

The benefit empowers policyholders at point of claim to choose whether to have illness treated locally or in the USA, through the Discovery Network.

Should the policyholder elect to be treated overseas, the Global Treatment Benefit provides significant funding to make this possible.

Age Rated increases on Liberty’s Living Lifestyle benefit

As noted above, Liberty‟s Age Rated premiums for life cover in most cases increase at a steeper rate than Discovery‟s SupeRater Plan. Liberty‟s premiums on their severe illness benefit increase at an even steeper rate than their life cover. In some years, premiums on Liberty‟s Living Lifestyle Benefit exceed their life cover premium increases by as much as 7%. Discovery‟s premiums on the severe illness benefit increase at the same rate as the life cover premiums.

46

Female Severe Illness Benefit and Childbirth Benefit

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

There is no waiting period for claims

This is an accelerated benefit

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

Childbirth benefit expires at age 40 next.

No survival period for claim Female Severe Illness Benefit covers:

Cancers specific to females

Pregnancy complications

Complications of osteoporosis

Childbirth Benefit:

Congenital birth defects

Multiple Births

Congenital birth defects that are covered under the Childbirth Benefit include the following conditions:

Biliary artresia

Infantile polycystic disease

Cystic fybrosis

Down‟s syndrome

Haemophilia

Cerebral palsy

Severe mental retardation

Duchenne‟s muscular dystrophy

Tay Sach‟s disease

Gaucer‟s disease

Glycogen storage disease

Achondroplasia

Turner‟s syndrome

Klinefelter‟s syndrome

Choanal artresia

Tracheo-oesophageal fistula atresia

Congenital hip dislocation

Congenital cardiac abnormalities excluding septal defects

Liberty‟s Female Living Lifestyle benefit covers lifestyle changing events specific to females.

Waiting period of 12 months applies from policy inception.

This is a non-accelerated benefit

Expires on policy anniversary prior to age 40 next

Survival period of 30 days where condition applies to adult and 7 days for child under the congenital births defect benefit.

The Female Living Lifestyle benefit covers:

Systemic Lupus Erythematosis (excluding Discoid Lupus)

Pregnancy complications

Congenital birth defects

Congenital birth defects that are covered under the Female Living Lifestyle Benefit include the following conditions:

Down‟s syndrome

Cystic fibrosis

Haemophilia

Cerebral palsy

Tracheo-oesophageal fistula and oesophageal atresia

Congenital hip dislocation

Clubbed feet (Talipes)

Congenital heart disease

Cleft palate

Spina Bifida

Hypospadias

Biliary Atresia

The Liberty Benefit does not cover any cancers that women may suffer from, if it is not taken with the Living Lifestyle (/Plus) benefit

47

Cleft palate

Spina Bifida

Birth weight below 1000g

Hyaline membrane disease/respiratory distress syndrome

Necrotising enterocolitis

48

Child Severe Illness Benefit

The Discovery benefit covers:

All body systems and conditions covered under the main Severe Illness Benefit.

Also includes the following conditions which are more relevant to children:

Benign Brain Tumour

Cancer

Major Organ transplant

Corrective cardiac surgery with consequence

Severe brain damage following trauma

Diabetes

Bacterial Meningitis

Juvenile Rheumatoid Arthritis

Septic Arthritis

Osteomyelitis

Paralytic poliomyelitis

Status epilepticus

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.

Benefit payout varies by severity of illness

Multiple claims allowed

No survival period

Can select without other severe illness benefits on plan

Max benefit of R1 100 000 per child plus R110 000 under the main Severe Illness Benefit

Minimum age at entry: birth

Cease age 18

The Liberty benefit covers the following list of conditions only:

Benign brain tumor

Cancer

Cerebro-vascular incident

Chronic liver failure

Chronic lung failure

Renal failure

Meningococcal Meningitis

Major Organ transplant

Paralysis

Epilepsy

Blindness

Diabetes

The benefit pays out 100% for all of above (200% for organ transplant)

One claim is allowed. Benefit ceases thereafter

30 day survival period required for payment

Can only select if Living Lifestyle or Living Lifestyle Plus selected on plan

Max benefit of R250 000 per child

Minimum entry age is 3 next

Ceases at anniversary preceding 18th birthday

Liberty‟s benefit does not cover corrective cardiac surgery, which has a higher incidence rate than most of the other illnesses represented.

The Liberty benefit has a minimum entry age of 3 next. The highest incidence of illness in children is in fact in their first 2 years of life, where Liberty does not cover them.

There is no survival period required under the Discovery Life Benefit to receive payout. This is significant in children, where mortality rates for procedures such as heart surgery and organ transplant are high.

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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.

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 you to increase benefits linked to your Life Fund without evidence of health (except for negative HIV test) or insurability on each policy anniversary before expiry age

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

The amount of the Nominated Future Fund that can be exercised, is increased every year by 15%

Exercising an option allows them to purchase additional cover of each benefit attached to the LIFE FUND in the same percentages that they bear relative to the LIFE FUND.

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

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

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

The policyholder may not exercise an option for severe illness or disability if the insured has had any claim on these benefits in the past at severities A-D but he/she may continue to exercise options for severe illness and disability cover in cases where previous claims have been at severities E-G. Business Future Fund

Discovery life will allow the remaining parties to buy-and-sell agreement to take up an amount equal to the amount that was

Liberty offers the Future Protector Benefit which allows you to increase your life cover, disability and dread disease benefits (except Female Living Lifestyle and Child Living Lifestyle) without evidence of insurability.

Liberty allows policyholders to select up to 30% of their Nominated Portfolio in the first policy year.

Amount that can be exercised is increased automatically each year by 20%.In the second year, you can exercise 36% of the Initial Nominated Portfolio (30% * 1.2).

In the third year, you can exercise 43.2% (30%*1.2*1.2) etc.

You may select to take up a combination of life cover, lump sum disability and severe illness cover with each option. The aggregate sum of cover for each benefit may not exceed the Nominated Portfolio.

The minimum option that may be exercised is R100 000.

You must exercise at least R100 000 of cover every 3 years for the benefit to remain in force.

If you take up less than this calculated percentage, you may not carry the shortfall forward to be exercised in future years in addition to the option value available in that year.

At option date, if your occupation does not qualify you for “own occupation” disability cover, you will only be offered “own or any reasonable” occupation disability cover.

You may not exercise an option for dread disease or disability if you have claimed for this particular benefit. E.g. if you have claimed for dread disease you can still exercise option for disability, but not for dread disease.


Discovery allows you to exercise cover in excess of the maximum benefit amounts on severe illness and disability that apply at inception of the policy. Liberty requires that the sum of the exercised options and existing cover do not exceed the benefit maximums. This means that Discovery offers higher benefit coverage.

Options may be exercised on all benefits linked to the Life Fund on the Discovery policy, whereas Liberty does not allow you to exercise options in respect of the female and child dread disease benefits.

Discovery has recognised the importance for parties to a buy-and-sell

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claimed on the life of the deceased or disabled party, for the purposes of the agreement, without evidence of health or insurability.

agreement to be able to adjust their cover following the death or disability of a party to the agreement.

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Investment savings component

Discovery does not offer a savings component.

Liberty offers the Financial Protector Benefit which is a savings component that operates as follows:

You may select a term of 5, 10 or 15 years.

Various premium increase options are available independent of premium increases selected on other risk benefits).

There are 5 investment portfolios to choose from.

Two guarantees apply depending on the investment portfolio selected:

o Return of allocated amounts (Premium less initial charges)

o Return of 3% p/a on allocated amounts

These guarantees apply at the end of the selected term and every 5 years thereafter.

The charges are as follows:

Initial: 6%-8.5% of each premium (including guarantee charge). This changes to 7%-9.5% for the Global Managed portfolio.

Annual management fee of 1.5%.

A shareholder‟s participation charge of 10% on bonuses declared.

Surrender charges are applicable in the event of surrender. No surrender charges are charged for Automatic Policy Loans.

Switching fee depending on the size of the investment account

Normal surrender rules apply in terms of 5-year restriction period.

In the event of financial difficulty the Financial Protector will automatically cover the premiums payable on the Lifestyle Protector that prevents the contract from lapsing.

Where the aim of the policy is to provide protection when you are unable to manage your risk premiums, this would be replicated in money market accounts at a fraction of the cost.

Where the aim is to use it as an investment policy, it is questionable whether the 5 portfolios offered give the client the ultimate flexibility and performance.

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Premium waivers

Discovery has three premium waiver benefits:

Premium waiver on Death

Expiry age 75

Premium waiver on Disability

Expiry age 65

Premium waiver on Severe Illness

Expiry age 65

Premium waiver only available to principal life

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

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

The Severe Illness waiver is triggered on meeting any of the defined severe illnesses at a 100% level

There are no waiting periods for the waiver benefits.

All premiums on the LIFE PLAN are waived including Vitality premiums.

Liberty has 3 premium waiver benefits:

Premium waiver on Death

Expiry at policy anniversary preceding age 80

Premium waiver on Disability


Premium waiver on Retrenchment


Benefit only covers premiums for 12 months from date of retrenchment

Both the principal life and the spouse can select the premium waiver

All automatic benefit and contribution increases cease when the waiver on death commences.

The waiver on disability is triggered by the “own or any reasonable occupation” definition.

There are no waiting periods for the waiver benefits

Liberty offers no waiver on severe illness.

Discovery‟s premium waiver benefits cover the annual premium and benefit increases whereas annual premium and benefit increases cease under the Liberty waivers. This means that the Liberty waiver benefits prevent the risk benefits increasing in line with inflation, which gradually diminishes the suitability of the cover for the spouse and children.

The Liberty disability waiver is triggered by the “own or any reasonable occupation” definition. This is very subjective. If the client is able to do another “reasonable” occupation, the waiver will not kick in.

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Cover in “real” currencies

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

The policy is underpinned by the LIFE FUND grown at the selected benefit escalation rate. Thus irrespective of market performance (as well as the annual management fee of 1.5%), cover is guaranteed to no to fall below the cover grown at the selected Automatic Benefit Increases.

The policyholder pays a premium of an additional 10% – 15% for this benefit, depending on selecting a pure currency linkage or a linkage including any stock market participation

The premium for this benefit is not affected by the movement in currencies or markets.

Cover may be linked to the dollar, pound, Euro and various stock market indices such as the S&P 500, FTSE 100 and the ALSI 40.

You are allowed to switch the underpinning benchmark during the policy term. You can stop the Global Investment Linkage Benefit (i.e. de-link) at any time, thereby locking in the investment performance achieved to date. The premiums for the Global Investment Linkage Benefit will no longer be payable.

Liberty does not have a global linkage benefit.

However they do offer an ACI /ABI combination based on Rand / Dollar depreciation (linkages to other markets and currencies are not offered).

Under the Level Contribution Payment pattern:

o Benefit increases = R/$ depreciation with a minimum of 5% p.a. and maximum of 40% p.a.

o Contribution increases = 145% of R/$ depreciation with a minimum of 7.25% p.a. and a maximum of 58% p.a.

Under the Age Rated Contribution Payment pattern: o The contribution increase required to meet

a benefit increase of R/$ depreciation is based on age at the time.

o The minimum benefit increase is 5% p.a. and the maximum is 40% p.a.

Therefore the premium for this ACI /ABI combination is fluctuates annually based on R/$ depreciation and age at time of increase.

Under Liberty‟s product, the premiums required to take up the additional cover depends on the Rand Dollar level. The premiums payable are therefore volatile. If the policyholder cannot afford the increases to pay for the increased cover, which are age based, he is essentially returned to a Rand policy. This would not meet the client‟s expectations of a Dollar policy. On the Discovery Global Linkage, premiums payable are smooth and not dependent on volatile exchange rates or age.

Scenario 1: Rand depreciates to the Dollar:

Liberty will provide an annual benefit increase in line with Rand depreciation.

The premium increase to take up this cover will be in excess of the percentage increase in cover and will be volatile from year to year.

The premium increase depends on amount of cover added.

Discovery‟s Global Linkage will provide a benefit of 100% of the Rand-Dollar depreciation (capped over 5 years) without any premium volatility to the policyholder. Policyholders‟ premiums are protected from currency volatility. Even if benefits appreciate strongly, premiums will remain unchanged.

Scenario 2: Rand appreciates to the Dollar

Both companies effectively provide a Rand policy increasing annually at CPI.

Discovery continues to charge a premium for the linkage to prefund the cost of cover increases in years of Rand depreciation.

On Liberty‟s product, no growth accrues during the year. Growth accrues monthly on the Discovery product. This could prejudice the insured depending on when they claim.

Consider the following examples: Assume a policy with R1m life cover

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Date R/$ rate Depreciation

4 Oct 2009

6.45

4 Oct 2010

7.95 18.89%

Over this period, the Rand depreciated 18.89%. If the policyholder died during September 2010, the Discovery policy would have paid out in excess of 18% more than the Liberty policy as Discovery accrues the growth monthly, whereas the policyholder would have died before the Liberty increase in cover due on 4 October 2010.

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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 USA.

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:

Available to policyholders who are members of Discovery Health and Vitality (or KeyClub in the case of KeyCare members)

Waives Discovery Health Plan contributions for 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 stand-alone 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.

Liberty has no equivalent benefits.

Liberty has no equivalent benefits.

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.

This benefit cannot be replicated with the Liberty product by calculating the lump sum death, disability or severe illness cover required to waive the client‟s medical scheme contributions. The reason for this is two-fold: Firstly, you will have to make an assumption as to what medical inflation is likely to be in future. Should this assumption be too conservative, the client may experience a shortfall when he claims. The second problem occurs even before claim stage: The client‟s cover on a normal policy can grow by a maximum of CPI each year (unless he takes out more cover.) Medical inflation is likely to outstrip normal inflation. The client‟s growth in cover will therefore not keep pace with his needs and the gap will become progressively wider.

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The Global Education Protector:

Pays the education costs for children on defined life-changing events (death, disability and/or severe illness) on the life of the principal and/or spouse, for the following years of education:

Pre-school: one year

Primary: seven years

High: five years

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, 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 residences

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.

The EduCator Benefit:

Pays the education costs for children on defined life changing events (death and disability) which can be triggered on the event occurring to the First Life Assured or on the first of the First Life Assured and Second Life Assured. Pays for the following years of education:

Pre-school: one year

Primary: seven years

High: five years

Tertiary: duration of undergraduate degree/ diploma/certificate

The policyholder must select at the outset whether the child attends a public or independent (private) school.

Child may attend local universities, National Qualifications Framework recognized institutions of higher learning and certain approved overseas universities.

Supplementary allowance – a percentage of the tuition allowance is paid as a lump sum to assist with expenses associated with schooling.

Achievement allowance – allowance (subject to a non-guaranteed maximum) is paid as a lump sum where child is awarded provincial or national colours in an SA sport or extra mural activity.

Guaranteed Insurability Benefit:

Newborn child – Life Assured can take out a new EduCator for newborn children free of underwriting as long as the newborn children are born within 5 years of the Life Assured having been underwritten,

Death of parent – If Life Assured dies (or becomes disabled) while they or their spouse is expecting another child, the unborn child will become eligible for the EduCator provided another child is covered under the EduCator

Child beneficiary – when child completes their education, Liberty offers the child life cover of up to R1 million without health underwriting.

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.

Liberty‟s EduCator will continue to pay public school rates if the child moves to a private school whereas Discovery Life would upgrade to private rates.

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Funeral Benefit

Discovery does not offer a funeral 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)

Liberty offers a Funeral Benefit with cover of up to R30 000.

Claims under this benefit will not reduce the cover under the other benefits.

A waiting period of 1 year applies for family members that are not lives assured on the policy. On accidental death the waiting period is waived.

Only the principle life is allowed to select the funeral benefit.

When the principle life dies, the surviving spouse (and children) will continue to be covered under this benefit, provided that the spouse is also covered under the same Lifestyle Protector contract and has a core risk benefit

Up to 5 family members are covered under this 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.

In addition to any Specific Exclusions applicable to the Benefit Terms and Conditions, no benefit (all benefits except Life Cover, Renewable Life Cover and Funeral Benefits) will be paid if a claim arose directly or indirectly from the following:

Any act of wilful and material violation of any criminal law

Exposure to atomic energy, nuclear fission or reaction, terrorism, biological or chemical warfare;

refusal to seek or follow medical advice

Attempted suicide or deliberate self inflicted injury

Regular participation (more than once a year) by the Life assured in any hazardous or risky sports or activities unless Liberty Life has agreed expressly in writing that the risk will be covered;

No exclusions are applicable to the funeral benefit.

For Life Cover and Renewable Life Cover claims will be excluded if, within two years of the Issue Date or date of any revival, the Life Assured dies by his or her own act, the contract will be void in respect of this Life Assured and no benefits will be payable.

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

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