Mod 3 Part 2 Life Plan Range as at Oct2014

PRESENTATION TITLEPRESENTATION TITLE
GOAL CATEGORIES & THE RMM SOLUTION
1
Category Description RMM solution
Invest Saving for a future goal 2-IN-ONE Savings 4 my Goal
Retire Saving to be able to maintain a lifestyle
after retirement
Retirement Plan
Death & Disability Leaving sufficient funds behind to settle
outstanding debt and take care of
dependants
• Pure Life Plan
• Life & Disability Plan
• Accidental Death & Disability
Plan
Paying for a dignified funeral • Funeral Care Plan
• Standard Funeral Plan
• Comprehensive + Funeral Plan
Education Saving for a child's education to ensure a
brighter future
2-IN-ONE Savings 4 Education
Debt Free Settling all debt or consolidating debt to
ensure greater disposable income
Old Mutual Finance
Household & Car Ensuring your personal belongings against
theft or damage
iWYZE

FINANCIAL GOAL: LEAVING SUFFICIENT FUNDS BEHIND TO
SETTLE OUTSTANDING DEBT AND TAKE CARE OF DEPENDENTS
2
Why would your customers need life & disability cover?
• Settling outstanding debt in the event of death or disability.
• Taking care of dependents financially in the event where the main
breadwinner should die or become disabled.
• Settling outstanding debt in the event of death or disability.
• Taking care of dependents financially in the event where the main
breadwinner should die or become disabled.

LIFE PLAN RANGE
3
Theory table
Pure Life Plan Life & Disability Plan Accidental Death &
Disability Plan
Eligibility Policyholder only Policyholder only Policyholder only
Minimum entry age 16 16 16
Maximum entry age 60 60 60
Minimum premium Determined by age and cover selected
Maximum premium
Minimum term N/A N/A N/A
Maximum term Whole life Whole life Whole life
Minimum cover/benefit R50 000 R50 000 R50 000
Maximum cover/benefit R500 000 R500 000 R250 000
Maximum cover/benefit
Combined
R750 000

LIFE PLAN RANGE
4
Pure Life Plan Life & Disability Plan Accidental Death &
Disability Plan
Premium increase To be determined by Old Mutual but expected to also be 5%
Cover/benefit increase 5% 5% 5%
Paid-up benefit
Terminal Illness Benefit
Income Assistance
Benefit
Cessions Allowed
Cash Back Benefit
Premium Holiday
Family Support Services
Yes No Yes No Yes No

LIFE PLAN RANGE
5
Covered events
Pure Life PlanPure Life Plan Life & Disability PlanLife & Disability Plan
Accidental Death & Disability PlanAccidental Death & Disability Plan
Natural
Causes
Accidental
Causes
Death
Disability
Natural
Causes
Accidental
Causes
Death
Disability
Natural
Causes
Accidental
Causes
Death
Disability

LIFE PLAN RANGE: EXCLUSIONS
6
•Claims will not be paid if the benefit is not valid or if there is
evidence of fraud
•There will be claims underwriting to investigate fraud and non-
disclosure
•Claims will not be paid if the benefit is not valid or if there is
evidence of fraud
•There will be claims underwriting to investigate fraud and non-
disclosure
Death Exclusions
•Deliberate exposure to exceptional danger, attempted
suicide, self inflicted injury or the insured’s own criminal act.
•War, terrorist activities, riots, civil commotion, rebellion or
insurrection.
•Injury or sickness in respect of which the insured received
treatment of any kind during the three year period
immediately prior to the date he/she became covered for
disability benefits
•Deliberate exposure to exceptional danger, attempted
suicide, self inflicted injury or the insured’s own criminal act.
•War, terrorist activities, riots, civil commotion, rebellion or
insurrection.
•Injury or sickness in respect of which the insured received
treatment of any kind during the three year period
immediately prior to the date he/she became covered for
disability benefits
Disability
Exclusions

LIFE PLAN RANGE: FEATURES EXPLAINED
What is the Terminal Illness Benefit? (N/A for ADDP)
50% of the benefit will be available after the policy has been in force for at least 5
years if:
Old Mutual’s Chief Medical officer confirms that a covered life is expected to die
within 12 months.
The benefit is in a active status.
No previous terminal illness payments was made from the policy.
The claim of this benefit is prior to the death of the life assured.
Please take note: The remaining 50% of the cover will remain active for as long as
the customer continues to pay premiums and it will pay out on the death of the
covered life.
7

What is a staggered waiting period? (N/A for ADDP)
Earlier in this module you learned what a waiting period is and why it is necessary.
Let’s take a look at how waiting periods work when dealing with the Pure Life Plan
and the Life & Disability Plan.
On death/disability due to natural causes:
8
Money Back
Guarantee
50% of Cover
100% of Cover
6 months
12 months

On death due to suicide
9
24 months
Money Back Guarantee
100% of Cover
On disability due to attempted suicide
Money Back Guarantee

10
100% of Cover
On death/disability due to accident

The Income Assistance Benefit? (N/A for ADDP)
11
Waiting period Death due to natural causes Death due to an accident
Income
assistance
portion
Remainder of the
benefit
Income
assistance
portion
Remainder of the
benefit
Less than 6
months No Income
Assistance Benefit
Money Back
Guarantee
10% of Cover up to
a maximum of R50
000
90% of cover
More than 6
months but less
than 12 months
10% of Cover up to
a maximum of R50
000
40% of cover
10% of Cover up to
a maximum of R50
000
90% of cover
Equal to or more
than 12 months
10% of Cover up to
a maximum of R50
000
90% of cover
10% of Cover up to
a maximum of R50
000
90% of cover

12
Income Assistance activity.
Waiting period Death due to natural causes Death due to an accident
Income
assistance
portion
Remainder of
the benefit
Income
assistance
portion
Remainder of
the benefit
Less than 6
months No Income
Assistance Benefit
Money Back
Guarantee
R10 000 R90 000
More than 6
months but less
than 12 months
R10 000 R40 000 R10 000 R90 000
Equal to or
more than 12
months
R10 000 R90 000 R10 000 R90 000

What is a cession? (N/A for ADDP)
In an earlier module you learned that when a customer cedes a policy to a
financial institution as security he/she becomes the cedent and the financial
institution becomes the cessionary.
Below is an illustration of how a cession works.
13
Customer
Financial institution
Life and/or disability coverR500 000
Life and/or disability cover
Bond or loan
R500 000
When a Pure Life Plan or a Life & Disability Plan is ceded to a financial institution,
the waiting period will be waived if:
•The financial institution is willing to accept it as security.
•It is taken out with a new home loan.
•The cession is done within 6 months of taking the new home loan.

When will the benefit cease?
The Pure Life Plan, Life & Disability Plan and Accidental Death & Disability Plan will
cease under the following conditions:
Death of the policyholder
Disability of policyholder, if policyholder claims or stop paying premiums because
of the disability.
If premiums cease, the Premium Holiday Benefit is exhausted and the grace
period used.
If stop order has not started operating 6 months after application
If debit order has not started operating 2 months after signing.
14

15
How does the annual premium and cover increases work?
Cover increases annually on 1 July by 5% provided the policy has been in force for more
than 6 months.
The premium increase can vary annually but it is expected to be the same as the cover
increase. A customer has the option to not pay the increased premium. This would lead to
a situation where Old Mutual must amend the cover .
Following below is an example of how the cover will be amended if a customer chooses
not to pay the increased premium.
A customer purchases a Life &Disability Plan for a R100 000. At July the cover will increase
by 5% and the premium by 3%. The customer does not want to pay the increased
premium.
The cover will be amended as follows:
New cover = R100 000 × (1+5%) ÷ (1+3%)
=R100 000 × 1.05 ÷ 1.03
=R101 942

Who can be the premium payer for the Life Plan Range?
Premiums are payable by stop order from the customer’s pay slip or by debit order
from the bank account of:
The customer
The customer’s spouse
The employer of the customer
What is the Cash Back Benefit? (N/A for Pure Life Plan and Life & Disability Plan)
After every 60 premiums received by Old Mutual, a customer will get a cash back
amount equal to 5 current premiums.
16

LIFE PLAN RANGE: UNDERWRITING PROCESS
17
Call Centre
The Call centre will call the customer and
ask the relevant medical questions. The
Call Centre could reject application for
the following reasons:
1. Customer could not ne reached after 9
attempts.
2. Customer’s contact details is incorrect.
3. A loading is applied to a stop order
application
Underwriting Department
The Underwriting Department can do one
of three things with the application:
1. Accept
2. Decline
3. Load
Call Centre
The Call Centre will contact the customer
again and give him/her 2 loading
options:
1. Lower cover for the same premium
2. The same cover for a higher premium
(Premium loading)
The Adviser
You have to contact the customer again
to arrange a follow up meeting during
which a new premium must be calculated
should the customer choose to keep the
same cover amount.

LIFE PLAN RANGE: UNDERWRITING PROCESS
Why do we make use of a call centre in underwriting process?
Benefits for you
Time constraints at point of sale is reduced.
Removes the responsibility from you to ask sensitive medical questions.
Underwriting questions are recorded, this can be used as proof at claim stage.
Benefits for the customer
It is easier for customers to answer sensitive questions coming from someone that they do
not know and probably will never meet.
Customers can choose when they want to be called and this creates a convenient time for
them.
18

LIFE PLAN RANGE: UNDERWRITING PROCESS FOR HIV+ LIVES
Background
The industry has traditionally shied away from covering the HIV positive customers
on an emotional level.
South Africa’s focus on making anti-retroviral medication available to all and the
fact that the industry now has sufficient statistics to price realistically led to a
scenario where we can offer benefits to HIV + customers.
It is regarded to be a controllable chronic disease like diabetes and rated
accordingly.
At a previous ASISA conference a suggestion was made that smokers may be a
worse risk than certain HIV + risk profiles.
Life expectancy of HIV+ people are now estimated to be around 80-85% that of
an HIV- person.
19

LIFE PLAN RANGE: UNDERWRITING PROCESS FOR HIV+ LIVES
The following HIV+ customers will be accepted:
Well controlled customers with acceptable CD4 counts and who have been on
anti-retroviral treatment for 12 months or more.
Healthy customers not yet on anti-retroviral treatment but with good CD4 counts.
There is a further requirement for those not on anti-retroviral treatment however:
They need to commence with treatment when recommended and they must
continue with treatment for at least 12 months.
20

LIFE PLAN RANGE: CALCULATIONS
21
How do you calculate cover?
Premium
- R15
× R1000
÷ Rate
= Cover
How do you calculate premium?
Cover
× Rate
÷ R1000
+ R15
= Premium
Important note: The R15 is known as the base rate and must always be subtracted from the
premium when a customer tells you what premium he/she wants to pay . The R15 base rate
must always be added to the premium when a customer tells you how much cover he/she
wants.

22
How do you calculate cover?
Premium R255
- R15 R240
× R1000 R240 000
÷ Rate 1.20
= Cover R200 000
Practical example for cover calculations
Premium: R 255
Rate: 1.20

23
How do you calculate premium?
Cover R300 000
× Rate 1.50
÷ R1000 R450 000
+ R15 R450
= Premium R465
Practical example for premium calculations
Cover: R300 000
Rate: 1.50

24
COVER RATE PREMIUM
R280 000 1.20 R351
R412 000 1.40 R591.80
PREMIUM RATE COVER
R400 1.70 R226 470.59
R111 1.60 R60 000
COVER RATE PREMIUM
R240 000 1.20 R303
R130 000 1.50 R210
PREMIUM RATE COVER
R200 1.70 R108 823.53
R400 2.20 R175 000
COVER RATE PREMIUM
R130 000 0.80 R119
R230 000 1.00 R245
PREMIUM RATE COVER
R140 0.80 R156 250
R85 0.90 R77 777.78
COVER RATE PREMIUM
R110 000 1.80 R213
R200 000 2.00 R415
PREMIUM RATE COVER
R145 3.10 R41 935.48
R170 1.90 R81 578.95
Cover & premium calculations.

IMPORTANT STEPS TO FOLLOW WHEN CALCULATING COVER
AND PREMIUM FOR THE LIFE PLAN RANGE
25
STEP 1
Make sure that you are using the correct plan’s rates. (It is a very common error to use the Life and disability
plan’s rates when a client is actually interested in Pure life plan or visa versa.)
STEP 2
Make sure that you are using the correct age band. (Another common error is to use the age band above
or below the one that you are supposed to use.)
STEP 3
Remember to include the base rate in your calculation when dealing with Pure Life and Life and Disability
Plan.
STEP 4
Do all your calculations more than once. (Your calculator can not make a mistake but you can still input
the incorrect information.)

Income Assistance Portion Remainder of the benefit
R22 500 (10% of R225 000) R90 000 (40% of R225 000)
QUESTION 1
26
Cover & premium calculations.
Samuel is 38 years old
Rate = 1.70
R225 000 × 1.70 ÷ 1000 + R15 = R397.50
R22 500 (10% of R225 000) R202 500 (90% of R225 000)
R0 Money Back Guarantee

QUESTION 2
27
Maria is 30 years old
Rate = 1.70
(R300-R15) × 1000 ÷ 1.70 = R167 647.06
R16 764.71 (10% of R167 647.06) R150 882.35 (90% of R167 647.06)
R0 R167 647.06

QUESTION 3
28
Petso is 43 years old
Rate = 0.90
R100 000 × 0.90 ÷ R1000 = R90
R0 R100 000
R0 R100 000

Mod 3 Part 2 Life Plan Range as at Oct2014

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