The Graduate Backpack The case for income & lump sum benefits THIS IS AN OPTION FOR THE OPENING TITLE SLIDE Insurance Financial Planning Retirement Investments Wealth The Graduate Backpack Why an income and a lump sum is a better disability combination 2015

The Graduate Backpack The case for income & lump sum benefits … you have to protect your income! To pay the bills … Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits The new opportunity … Graduate Opportunity Source: BMR 2014 Growth Market: R10k – R40k personal income p.m. Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits Every financial plan needs a solid foundation Income Protection is the foundation Proper Financial Planning for all life stages Sickness Benefit Extended Disability Income Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits When income protection is the foundation … i.e. Sickness Benefit & Extended Disability Income The financial plan comes together Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits We however have a bit of a challenge Source: True South Actuaries & Consultants March 2013 Disability Cover Report update Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits The report also says … … only 38% of the true permanent disability need actually covered Source: True South Actuaries & Consultants March 2013 Disability Cover Report … 7% to 25% of the true need for temporary disability cover is actually covered “Sales is overly skewed to lump sum cover” “It is questionable whether the average consumer understands the extent to which they exposing themselves to risk” Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits What is the purpose of disability cover? Post-disability financial lifestyle Pre-disability financial lifestyle ~ ~ Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits How is this need addressed? Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits Do these benefits comprehensively address the need? Certainty of payment The GAP Lump sum ? Definition Waiting period Potential under-insurance NO Income YES Debt Lifestyle adjustmentPartially Combination YES Income needs matched Debt settled Lifestyle adjustment possible Absolutely YES ~ ~ Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits Disability: Lump sum vs income Characteristics Permanence must be established More difficult to claim Longer waiting periods Less claimable events No possibility of multiple claims Permanence must be established More difficult to claim Longer waiting periods Less claimable events No possibility of multiple claims Permanent & temporary disability Easier to claim Shorter waiting periods More claimable events Multiple claims Permanent & temporary disability Easier to claim Shorter waiting periods More claimable events Multiple claims Lump Sum Income Adjust lifestyle Once-off expenditures e.g. debt Specific needs e.g. education Cover until date of retirement Adjust lifestyle Once-off expenditures e.g. debt Specific needs e.g. education Cover until date of retirement Replace income Service debt / monthly obligations Cover until date of retirement Replace income Service debt / monthly obligations Cover until date of retirement Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits Lump sum benefits - The challenges No benefit while permanence is being established Difficulty of managing the lump sum Expose dependents Expertise needed Ongoing management & fees Indirect tax implications Longevity of the lump sum The “Lotto” effect Future income not guaranteed Under insurance Managing client expectations No benefit while permanence is being established Difficulty of managing the lump sum Expose dependents Expertise needed Ongoing management & fees Indirect tax implications Longevity of the lump sum The “Lotto” effect Future income not guaranteed Under insurance Managing client expectations Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits Income protection – The benefits Credit rating protected Insurance portfolio protected (risk, investment, retirement, medical aid, short term) Standard of living maintained Income inflation-proofed Debt obligations serviced Better match to client’s need Peace of mind Credit rating protected Insurance portfolio protected (risk, investment, retirement, medical aid, short term) Standard of living maintained Income inflation-proofed Debt obligations serviced Better match to client’s need Peace of mind Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits The bottom line … … a LUMP SUM should never be used to replace an INCOME! Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits The case for … A combination of income & lump sum disability benefits Let’s look at the numbers! Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits The lump sum disability story Client details Gender: Male Age: 35 anb Smoker status: Non-smoker Income p.m.: R Qualification: Graduate Occupation: Accountant Disability benefit: Regular occ. Taper benefit?: No Benefit cease age: 65 anb Guarantee period: 5 years Premium pattern: Std age-rated Cover growth: 5% Client details Gender: Male Age: 35 anb Smoker status: Non-smoker Income p.m.: R Qualification: Graduate Occupation: Accountant Disability benefit: Regular occ. Taper benefit?: No Benefit cease age: 65 anb Guarantee period: 5 years Premium pattern: Std age-rated Cover growth: 5% Lump sum based on Age R x 240 = R Lump sum based on Income 75% of pre-tax income (R26 250), 5%, 8% = R Lump sum based on “Reality” R x 40% = R The client is under-insured! Lump sum based on Age R x 240 = R Lump sum based on Income 75% of pre-tax income (R26 250), 5%, 8% = R Lump sum based on “Reality” R x 40% = R The client is under-insured! R944 p.m. R721 p.m. R300 p.m. Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits The income protection story Sickness Benefit R x 75% = R p.m. Extended Disability Income R x 75% = R p.m. No under-insurance Sickness Benefit R x 75% = R p.m. Extended Disability Income R x 75% = R p.m. No under-insurance R219 R75 p.m. R144 p.m. Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits The comprehensive disability protection story Sickness Benefit R x 75% = R p.m. Extended Disability Income R x 75% = R p.m. 2 x Annual Income R x 12 x 2 = R No under-insurance Sickness Benefit R x 75% = R p.m. Extended Disability Income R x 75% = R p.m. 2 x Annual Income R x 12 x 2 = R No under-insurance R75 p.m.R144 p.m. R112 p.m. R R331 Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits The comprehensive disability protection story With extra added protection Sickness Benefit R x 75% = R p.m. Extended Disability Income Adjusted to R p.m. 4 x Annual Income R x 12 x 4 = R No under-insurance Sickness Benefit R x 75% = R p.m. Extended Disability Income Adjusted to R p.m. 4 x Annual Income R x 12 x 4 = R No under-insurance R75 p.m. R130 p.m. R410 R205 p.m. R Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits The future benefit story PV at claim stage assuming permanent disability Lump sum based on reality R x 40% = R The client is under-insured! SB / EDI R x 75% = R p.m. SB / EDI / 2x annual income R / R / R SB / EDIP / 4x annual income R / R / R Lump sum based on reality R x 40% = R The client is under-insured! SB / EDI R x 75% = R p.m. SB / EDI / 2x annual income R / R / R SB / EDIP / 4x annual income R / R / R Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits Premiums paid for that future benefit PV at claim stage assuming permanent disability Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits The story at claim stage Sickness Benefit A dedicated address Sickness Benefit A dedicated address Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits The story at claim stage Sanlam Pays! Sanlam pays what you sell! Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits The story at claim stage Number of claims paid Sanlam Pays! Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits  Graduates and professionals  Smokers and non-smokers  All premium patterns  Automatic via SanQuote  Discount available via Autonub  Special quote request  Combination product  Alterations  Matrix term cover The discount story The good news! We now offering graduates a 10% discount on lump sum disability benefits! The good news! We now offering graduates a 10% discount on lump sum disability benefits! Let’s make the most of this fantastic opportunity! Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits Our story … it’s all about proper financial planning, that gives your client certainty and a financially secured lifestyle post-disability! Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits It’s a win, win, win situation! Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits That’s why we are Wealthsmiths Because we care about your client’s wellbeing! Protecting the earning ability of the Graduate SILSS Distribution Support

The Graduate Backpack The case for income & lump sum benefits thank you

The Graduate Backpack The case for income & lump sum benefits