Discovery Life’s annual claims experience reaffirms the need for comprehensive life, severe illness and disability cover

Discovery Life paid out close to R2 billion in claims to South Africans or their estates in 2013, and more than R10.3 billion to date since Discovery Life was established in 2000.

More than half of the payouts in 2013 were for Life Cover Benefits, at R1,1 billion. Of these death claims, 72% related to men, which is exceptionally higher than the life cover client base which comprises 56% men and 44% women.

Analysing the cause of death claims for the year; 25% related to unnatural deaths, 25% to cancer, and 24% to heart and artery conditions.  Around half of unnatural deaths were due to motor accidents, most evident in younger clients, with suicide and crime related deaths also making up a notable percentage of unnatural deaths. “The high percentage of unnatural deaths clearly underlines the need for life cover, irrespective of health or age” says the Head of Research and Development for Discovery Life Gareth Friedlander.

The Severe Illness Benefit was the second highest claim category, with R358 million paid out in 2013. These lump sum payouts are usually used to cover costs associated with a severe illness, such as home care and lifestyle modifications. The two leading causes of severe illness claims were cancer, and heart and artery disease, together accounting for over 65% of claims.

 “A comprehensive severe illness benefit policy should extend to the entire family” says Friedlander. “We had a mother who was at home cooking with her daughter. Both suffered third degree burns when the cooking oil on the stove caught alight and the severe illness payout covered the mother as well as injuries suffered by her daughter. In 2013, over R8,4 million was paid out under the Automatic Child Severe Illness and ParentCare benefits that are included automatically within our product.”  

Capital Disability Benefit payments amounted to R 345 million in 2013. These lump sum payments can be used to make modifications to the home, cover expenses and pay off debts, in cases of partial or permanent disability. In men, a significant number of disability claims related to musculoskeletal conditions, followed by nervous conditions, and then cancer. Most claims from women were for nervous conditions, followed by cancer, and then mental and behavioural conditions. 

Important to highlight is that 23% of Capital Disability claimants fell under Discovery Life’s unique loss of income (Category C) claims criteria. A Category C claim allows a policyholder to receive a payout of 2.5% of their sum assured at the end of every four months on suffering a loss of between 80% and 100% of income while permanence of their condition is being established. “This means that one in four claimants would not have received a disability claim at another insurer” says Friedlander.

Friedlander also notes the importance of value added features that accompany core benefits. “For example, the Capital Disability Benefit automatically converts to the Severe Illness Benefit at benefit expiry age (either 65 or 70), without medical underwriting. In 2013, R265 million of Capital Disability Benefit cover was converted to the Severe Illness Benefit in this regard, providing invaluable whole of life cover for future illnesses such as heart and artery, nervous conditions and cancer.”

Income Continuation Benefit payments of R103 million were paid out to claimants who were unable to work due to injury, illness or disability. The top five occupations for claimants were business owners (12%), doctors (6%), directors (4%), medical practitioners (4%) and physiotherapists (4%).

Male claimants had a greater chance of being unable to work due to musculoskeletal, trauma or nervous disorders. Female claimants had a greater chance of being unable to work due to mental and behavioural, urogenital tract and kidney conditions.

“Also evident in our 2013 claims experience is that multiple claims are becoming more and more prevalent” says Friedlander.  “Consumers should ensure they have a comprehensive facility that allows them to claim for subsequent related conditions regardless of severity. To illustrate this, for our multiple claimants on our severe illness benefits, if clients have had an initial claim related to the cardiovascular system, there is a 77% chance that their next claim is also a cardiovascular condition. And under our capital disability benefits, a first claim due to musculoskeletal conditions means a 78% chance of the second claim occurring due to the same condition.”

Friedlander also points to the benefits of the Discovery integrated operating model. “We leverage the Vitality wellness programme and encourage policyholders to manage and improve their health status. This enables consumers to lower their mortality and morbidity risk and in turn their future claims, over time. In 2013 our Payback Benefit returned R239 million in cash to clients who actively managed their wellbeing.”