DON’T COMPARE ONLY ON PRICE

Lenerd Louw, Frank.net’s chief executive, says there is a very small chance that Frank.net would change the premium increase after five years, but having the opportunity to do so enables the assurer to get better rates from its reinsurers.

Laurence Hillman, the managing director of 1Lifedirect, says the 1Lifedirect’s premiums are guaranteed not to increase by more than 15 percent after the first five years.

1Lifedirect also has level-premium products where the premium is guaranteed not to increase for the whole of your life, Hillman says.

1Lifedirect allows you to increase your cover by 25 percent every three years or on any significant event, such as buying a home, without the need for medical underwriting other than testing negative for HIV. A new premium would be set for the increased cover, Hillman says.

Instant Life offers you the ability to increase your cover by five percent a year if you pay an additional five percent in premiums.

Frank.net currently allows you to add to your cover at a new premium, but is planning in future to offer add-on products, including one that escalates your cover annually.

Instant Life offers a cash-back benefit equal to 20 percent of your premiums every 10 years. You will need to make an assumption on whether you will keep the policy for 10 years before factoring that benefit into the total cost of your premiums.

The direct insurers’ offerings are relatively simple. When it comes to the more established assurers, the benefits and premium patterns are more complex.

Discovery Life, for example, offers policyholders who are also members of Discovery Health Medical Scheme and Vitality an initial premium discount of between 15 and 20 percent, depending on their medical scheme option. However, future premium increases then depend on your Vitality status, and your claims through Discovery Health and can erode the upfront discount.

Vitality is Discovery’s wellness programme that rewards healthy behaviour.

To determine how your premiums will increase on a Discovery policy with this integrator relative to another policy, you will have to make some difficult assumptions about your future health status and your ability to reach a particular Vitality status.

The increases are subject to caps and you can never be worse off than you would have been had you not chosen the integrator option, but you may need to consider the worst-case scenario of what can happen to your premiums when you make comparisons.

You also have the potential to earn a payback benefit equal to, or even higher than, your increases, if you keep the policy for five years, Kenny Rabson, the deputy chief executive of Discovery Life, says. Any claims on the policy reduce this payback benefit.