Product comparison Discovery Life and Sanlam

1 Product comparison Discovery Life and Sanlam July 2010 Description Page Funding patterns 3 Premium guarantees 6 Benefits for remaining healthy 7 Death benefit 9 Protection from adverse economic conditions 10 Minimum Protected Fund versus standalone benefits 11 Lump sum disability benefits 13 Income disability benefits and the Overhead Expenses Benefit 23 Dread disease benefits 31 Female Severe Illness Benefit and Childbirth Benefit 38 Child Severe Illness Benefit 39 Family Trauma Benefit 39 Parent Severe Illness Benefit 39 Future cover without medical underwriting 40 Premium waivers 41 Cover in "real" currencies 42 Indemnity benefits 44 General exclusions 46 3 Sanlam Discovery s comments Funding patterns Discovery Life has four funding patterns: 1.

2 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 CPI + 30 CPI + 40 CPI + 50 CPI + 60 CPI + 70 CPI + 80+ CPI + ACI increases linearly within age bands. 2. The SupeRater Plan: Provides for the following: Discounts on the AcceleRater rates for whole-of-life benefits of between and 20% The same annual premium increases as the AcceleRater Plan An additional compulsory increase of 20% every ten years.

3 The increase every ten years only applies to premiums that were discounted upfront and not the total premium. The SupeRater Plan will overtake the AcceleRater Plan after approximately 20 years. Sanlam has four funding patterns: 1. Fixed compulsory growth ACI / ABI combinations ACI ABI 5% 0% 10% 7% with whole-of-life guarantee 0% 11% with whole-of-life guarantee 2. Age-related compulsory growth: There are two options, namely an Aggressive option and a Standard option The Aggressive option starts with a lower initial premium but has steeper premium increases than the Standard option.

4 ACI / ABI combinations Age next Aggressive option Standard option ACI % ACI% ABI 0% ABI ABI 0% ABI < 29 3% 0% 29 - 30 4% 0% 31 - 32 5% 2% 33 - 34 6% 2% 35 7% 2% 36 7% 3% 37 - 38 8% 3% 39 - 40 9% 3% 41 - 43 10% 4% 44 - 45 10% 5% 46 - 50 10% 6% 51 - 55 10% 7% 56 - 57 10% 8% 58 - 59 10% 9% 61+ 10% 10% On the compulsory premium patterns, a Sanlam policyholder is unable to link the growth of his cover to inflation, the highest cover growth option being pa. This will often be inappropriate from a financial planning point of view.

5 It is especially problematic with buy-and-sell agreements, where a policyholder s liability (to buy out his partner s share) is linked to the growth of the business. Discovery s AcceleRater with ABI=3% is roughly comparable to the Sanlam Fixed 10% compulsory premium increase. Discovery s SupeRater is most comparable to the Sanlam Standard age related + Discovery s increases are capped at the older ages to make them more sustainable, compared to the Sanlam Age-related compulsory growth patterns which have increases at the older ages of approximately per annum.

6 Purchasing a Discovery Integrator Plan entitles the policyholder to additional premium reductions at inception of his LIFE PLAN. These are: 15% to 20% on the Health Integrator 15% to on the Vitality Integrator 15% on the DiscoveryCard Integrator 29% to 32% on a combination of the Vitality or Health Integrator and DiscoveryCard Integrator The Integrator allows policyholders to control their premiums through their health, wellness and DiscoveryCard spend. They may obtain further premium reductions by progressing through the Vitality statuses from Blue to Diamond status.

7 4 Sanlam Discovery s comments 3. The Standard Plan Premiums remain level over the term for a level amount of cover. Premium and cover increases are specified. ACI / ABI combinations ACI ABI 0% 0% 10% CPI + CPI 4. The ModeRater Plan: Premiums on whole-of-life benefits are discounted by up to 15% from inception of the policy. Premiums for these discounted benefits increase at 20% every ten years. The additional increase does not apply to benefits that had no initial discount. The ModeRater will overtake the Standard Plan s premiums after approximately twenty years.

8 3. Level: Growth optional Premiums remain level over the term for a level amount of cover. Premiums are guaranteed for between 5 and 15 years, not for whole of life. (See Premium Guarantee section for more information) There are two options: Option 1: Specified premium and cover growth ACI / ABI combinations ACI ABI 0% 0% 5% 10% 7% CPI + 3% CPI (capped at 15%) Option 2: Specified cover growth. Premium increase for additional cover based on new business rates of additional cover at age it is added. ACI / ABI combinations ACI ABI 5% + age factor 5% 10% + age factor 10% CPI + age factor CPI (capped at 15%) R/$ + age factor R/$ (min CPI, max 35%) R/Pound + age factor R/Pound (min CPI, max 35%) R/Euro + age factor R/Euro (min CPI, max 35%) 4.

9 Stepped: Growth optional 1. Premiums remain level over choice of 10 or 15 years for a level amount of cover. 2. Same premium and cover growth combinations as on the Level option. 3. At the end of 10 or 15 years, policy is extended and premium re-calculated every five years based on age at the time of increase. The Discovery Standard Plan should be compared to the Sanlam Level premium pattern. Integration makes Discovery s initial premiums cheaper at virtually every age. All Discovery s plans provide quantified guarantees for whole of life, whereas Sanlam offers no premium guarantees that are quantified for whole of life on their Level premium patterns.

10 This creates uncertainty for the policyholder. Discovery s Global Investment Linkage Option allows ABI to be linked to foreign currency movements. It also allows linkage to global investment benchmarks, which Sanlam does not. Discovery does not link the premiums to foreign currency exposure, thereby creating more certainty for the client. premiums are fixed in Rands and not subject to volatility of exchange rates which could make the plan unaffordable. (See cover in real currencies for more information) The increases after the first 10 or 15 years and every five years thereafter on the Sanlam Stepped option are based on the age of the policyholder at each date.