Give your retirement savings more bang for their BUCC
The lifespan of the average South African has increased considerably, and for Discovery clients engaged with the Vitality programme, this trend has been amplified. We see that Gold and Diamond status Vitality members are likely to outlive the average insured South African by 22 years on average.
This means that during retirement, your pockets need to be a little deeper. Your money will need to stretch a little further. So, how can you save up more sufficiently for a financially stable retirement?
"One way is through means of supplementation," says Discovery Life Deputy Chief Executive, Gareth Friedlander. "Saving for a sound financial retirement is difficult for many of us, especially when major (unexpected) events, like the COVID-19 pandemic, happen and impact the economy in ways that - for the most part - are out of our own control."
"Supplementation can take on a few forms, but in the case of a Discovery Life policyholder, the Buy-up Cash Conversion Benefit - which was introduced as a cost-effective financial planning medium for additional funding in retirement - is a really great option," he adds.
What is the Buy-up Cash Conversion Benefit (BUCC)?
"The benefit provides unmatched value for supplementation purposes, whereby, for an additional premium, clients can receive lump sum pay-outs during retirement, which can then be used to provide additional funding during that period. These payments increase when you engage with Vitality and manage your health claims," Friedlander explains.
So, how does it work?
The value of this benefit is determined as a percentage of the selected Cover Integrator and/or Financial Integrator that a client has on their Life Plan. This is effectively a proportion of the overall life cover on the policy. The options available to clients are 50%, 100% or 200% of those Funds.
From the time a client turns 65, four equal lump sum payments will be made. "So, clients receive a pay out at age 65, 69, 73 and 77 - every four years," adds Friedlander.
"It's then up to clients to maximise their returns by engaging with the Vitality programme to best manage their health and wellness. Engaged clients can boosted their annual growth rates of their Cover and Financial Integrators, which in turn increase their Buy-up Cash Conversion pay out. This affords clients an opportunity to increase the value of their retirement savings by simply living a healthy lifestyle. As a client, you can effectively achieve an up to 21% annual return on your premiums for this benefit, simply for leading a healthy lifestyle."
"This supplementation opportunity can really make a significant financial difference to a person's retirement savings," Friedlander adds. "During the next 5 years, we expect to return as much as R5.6 billion to our clients through cash conversions. Further, the largest cash conversion payment we've paid to date is just over R10 million."
The 50% Buy-Up Cash Conversion offer
For a limited time, clients can get up to a 100% discount on their Buy-up Cash Conversion premiums for the first three years.
Qualifying new business and existing clients who add any of the benefit options will receive a premium discount equal to the premium of the 50% Buy-up Cash Conversion option for the initial three years of their benefit. This provides the 50% option at no additional premium and the 100% and 200% options at a 50% and 25% discount, respectively.
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- Any qualifying new clients will automatically receive the 50% Buy-up Cash Conversion option
- Existing clients interested in the limited offer must add a new Buy-up Cash Conversion benefit to qualify
- The offer applies to all three benefit options on the Smart, Essential, Classic and Purple Life Plans
"During retirement, these four additional instalment pay-outs can really go a long way in ensuring financial security at a stage when it is needed most. It's a benefit that provides significant value that can be shared with clients and encourages them to live the very ethos we encourage," concludes Friedlander.
To learn more about how this benefit can best work for you and your life plan, contact your financial adviser today.
Please note that the Buy-up Cash Conversion benefit is not an investment product, but a risk benefit. Therefore, this benefit does not have any lapse or surrender value before the pay outs become due. Payments commence at age 65 or 10 years after benefit inception, whichever is later.
Discovery Life Limited. Registration number 1966/003901/06, is a licensed life insurer, and an authorised financial services and registered credit provider, NCR Reg No. NCRCP3555. Product rules, terms and conditions apply.
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