* South Africans tend to be under-insured for disability across the entire age-spectrum. Household savings have dropped to virtually zero and liquidity levels have been squeezed
* Discovery Life enhancements seek to fast-track consumer’s welfare and protection
Recent and significant changes in the life assurance industry include the responsibility for treating customers fairly (TCF) and marketing to individuals in a transparent and objective manner.
“As a result of Discovery’s continuous research into, and understanding of, our clients’ needs, Discovery Life has launched what we believe is a world-first product to give clients access to their life cover in cash if they are sick,” says Herschel Mayers, CEO, Discovery Life
A recent industry study revealed the extent to which South Africans are actually under-insured for disability cover at all ages. The deficit in disability cover in South Africa amounts to a staggering figure of over R11 trillion.
The current situation is getting worse
The current scenario is only going to get worse given the worldwide trend of increasing morbidity. The incidence of cancer as well as lifestyle related diseases such as diabetes and hypertension have increased significantly in recent times. The fact that people are becoming ill more often means that individuals will have an increased need for cover on morbidity events and this will exacerbate the current shortfall.
The global financial crisis has been the catalyst for a significant increase in market volatility in recent times. This volatility has coincided with a period where personal household debt has experienced a stepped increase, squeezing any disposable income that individuals might have had.
The result is that household savings have declined to virtually zero, meaning that there are no liquid funds available to absorb any unforeseen expenses. What is even more distressing is the fact that interest rates are currently considered to be at their trough in the cycle, meaning that they are predicted to increase in the near future. This will worsen the situation.
Another industry trend has been the distinct shift in focus towards products that are transparent and understandable to consumers. The responsibility for treating customers fairly (TCF) stretches across all aspects of the industry from the development of products to marketing material and distribution channels. This has resulted in an industry-wide shift toward more objectivity and certainty in all products and processes.
Despite the massive progress made in terms of product development in the life assurance industry, it is nevertheless impossible to predict exactly what a particular individual’s needs will be if they suffer a life-changing event and doubt will always exist around the unknown variables pertaining to their personal circumstances.
Discovery has responded to these trends by giving clients dynamic access to their life cover in the event of a life changing event. In the same way that people can “draw down” on their bond with the advent of Access Bond facilities, Discovery Life has created a much more flexible life insurance structure in form of AccessCover™. AccessCover (and the enhanced Access Cover PLUS™ benefits) enables Discovery Life clients to convert life cover into immediate cash on a list of objectively defined life-changing events.
“Discovery Life is bringing a new level of sophistication to the market that offers our policyholders effective, personalised products to meet their lifestyle needs, in balance with their own circumstances. Intuitively, if a policyholder is really sick, and they need to access funds immediately, their life cover is an “asset” that should be accessible. While it is actuarially complex, the AccessCover facility is simple to the client.”Mayers concludes.