With more payouts made in living benefits than death claims, Discovery Life’s 2024 claims data reveals a powerful truth: life insurance is not just about death – it’s about living well.
In an era of medical advances and healthier lifestyles, the prospect of a longer life necessitates a re-evaluation of how we maintain our lifestyles in the face of potential disabilities or severe illnesses.
Traditionally, life insurance has been perceived as a safety net that activates only upon death. However, forward-thinking insurers are reshaping this narrative by ensuring that life cover supports clients in living healthy lives, regardless of the challenges they face. Moreover, they are financially rewarding clients for maintaining their health and well-being.
A new era for life insurance
The recently published Discovery Life Claims Experience data for 2024 highlights a significant shift in the life insurance landscape. From January to December 2024, Discovery Life paid out a combined R5.5 billion in living benefits, which include severe illness, disability and income protection claims, as well as shared-value rewards, like cash back and retirement funding boosts. In contrast, Discovery Life paid out R3.4 billion in life cover claims due to death.
“Discovery Life is changing the way traditional life insurance operates, as more Discovery Life clients receive payouts while they’re still alive – not only when they pass away,” says Gareth Friedlander, Discovery Life’s Deputy CEO.
Of the R2.4 billion in shared-value benefits, which are financial rewards based on how well clients managed their health and finances, R1.4 billion was paid in PayBacks and R1 billion in Cash Conversions.
“Combined with our living benefits, this flips the life insurance script. With people living longer, life insurance isn’t only about protecting one’s legacy, it’s also about ensuring that life cover considers a broad range of risks while rewarding clients for a life well-lived.”
Shared value
Shared value plays a key role in promoting healthy behaviours and better risk for the insurer. We’ve seen this play out through Discovery Life’s integration with Vitality, the Discovery’s behaviour-change programme that encourages and rewards healthier choices.
In 2024, clients with a Gold or Diamond Vitality status had a 57% lower risk of death, and 47% lower disability risk compared to those who did not participate in the programme.
These health improvements translate into reduced risk for Discovery Life, and the savings are passed on to clients as shared-value rewards. The PayBack benefit allows policyholders who engage with Vitality to accrue 50% of their life premiums back, paid in cash every five years. This payment can be doubled when clients choose to delay it by five years.
Meanwhile, the Cash Conversion benefit helps clients supplement their retirement funding by paying out up to 100% of the value of their life cover through payments made every year for 10 years from age 65. Clients can grow the value of their life cover, and hence these payments, simply by managing their health and wellness before they turn 65.
“To date, Discovery Life has paid out R13.2 billion in PayBacks, and we expect to pay R7 billion in Cash Conversions in the next five years – in fact, we reached the R1 billion mark for the first time in 2024,” says Friedlander.
Impact of health screening on claims
The 2024 Discovery Life claims data revealed that while cancer remains a leading cause of death claims for women, and for severe illness and disability claims for both sexes, early diagnosis rates have improved significantly due to increased cancer screening.
“Thanks to the increase in screening rates, there has been a 62% increase in early-stage cancer claims compared to 2020’s claims on illness cover, which is a great outcome because it will reduce future later-stage cancers,” notes Friedlander. “It’s also undeniable that early detection remains key to better health outcomes. Studies show that on average, someone diagnosed with early-stage breast cancer can expect a 96% five-year survival rate, and men who are diagnosed with localised prostate cancer (it hasn’t spread) have a 99% five-year survival rate.”
Proactive protection planning
With people living longer, in part due to regular health screening, the need for comprehensive risk protection is critical. The 2024 Discovery Life data shows a growing trend in multiple illness claims, especially among those over 60, with 28% of severe illness claims now coming from this age group – a figure that has more than doubled in the past 10 years.
To emphasise the need for illness cover at later ages, Discovery Life paid out R128 million in converted severe illness claims. In these claims, a client’s Capital Disability Benefit cover automatically converts to severe illness cover at a chosen benefit expiry age (either 65 or 70).
In 2024, Discovery Life paid out R1.54 billion for 2 900 severe illness claims. Of this, R275 million was paid out in second or subsequent claims, with nearly one in three making their third or subsequent illness claim, and some having claimed over 10 times. These subsequent claims are most often related to the previous claim and therefore having severe illness cover that fully protects against this risk is crucial.
Offshore cover: added protection in a changing world
Diversifying risk cover, much like diversifying investments, was another standout insight from the 2024 Discovery Life Claims Experience. Discovery Life’s Dollar Life Plan pays claims in US dollars, offering protection from exchange rate volatility and global economic shocks.
Since 2014, this plan has paid out over $34 million, and due to the dollar-denominated nature of the payouts, they were worth 19% more on average than the equivalent payouts would have been on Rand denominated policies.
“Life insurance is no longer only about what happens once you pass away – it’s about helping you protect, and live, your best life,” concludes Friedlander. Underpinned by shared value that incentivises healthy behaviour, this innovative approach enables people to live longer and healthier, while at the same time protecting their future, no matter where they find themselves living, or their stage of life.