Need help understanding Discovery's Life/Medical/Vitality/Invest system

[Electrra]

I've just sat with a Discovery Broker to discuss adding more to a retirement policy. I currently have a Liberty RA but should adjust it slightly due to change in income. So I suggested that I take out a Discovery Invest plan to cover the difference. He responded that because I am on Diamond Vitality I should take advantage of their system and not only take out an investment plan (and move my current RA to them) but a life insurance policy. The life insurance policy has these kickbacks to the investment plan and the investment plan has lower premiums because of my vitality status. And for a while I thought it sounded really good (there seemed to be a 43% increase on investment return on retirement), but I must be honest, I don't really understand the implications. And this worries me. While I understand a broker is the expert in the product, they are also a sales person. I'd like a few more perspectives on the Discovery suite.
Because everything is enmeshed it is hard to understand what exactly the pros and cons are. The addition of the life insurance, which I am not entirely sold on, means I am spending nearly R900 a month more, than I would have if I didn't get it. But I'm surely not saving R900 a month my other policies so this feels like one of those "buy two of these things to save X" marketing ploys as you don't actually need two. How are the benefits of the system so great as to be better than me taking that R900 a month and just investing it somewhere (I'm not a fan of insurance - total grudge purchase)?

 

[tRoN]

Brokers are all crooks and scam artists. Don't believe them. I had a broker friend who once converted all policies to a particular insurer as they paid higher commissions. Then the company changed the rate and he then convinced people to move to another insurer. The only motivation for the sale/move was commission.

 

[Dubes]

Discovery Broker

Tied agents worry me as they are always going to recommend their products. Discovery ones worry me more as all advice is based on best case scenarios.

not only take out an investment plan (and move my current RA to them)

Was any mention made of first checking what penalties you may suffer in cancelling your existing RA?

I don't really understand the implications. And this worries me. While I understand a broker is the expert in the product, they are also a sales person. I'd like a few more perspectives on the Discovery suite.

Discovery can work for you if you work the system but as stated above get them to discuss worst case scenarios with you too.

Unfortunately anyone who actually knows what they are talking about will not be legally allowed to discuss this with you on a forum like this, FAIS act and all...

I'd suggest an independent broker to chat to.

 

[gazzak]

Just be careful of integration - if you work the system (for the entire lives of the policies) ie stay on diamond forever, it will benefit you, however if you stop engaging or have medical aid claims, it will have negative effects on ALL the integrated products. The details will be in the integration matrix(es)/tables on each quotation. Just remember, they removed carry over points from vitality in the 2014 product enhancement thus making it more difficult to retain diamond status.

 

[Dubes]

Brokers are all crooks and scam artists. Don't believe them. I had a broker friend who once converted all policies to a particular insurer as they paid higher commissions. Then the company changed the rate and he then convinced people to move to another insurer. The only motivation for the sale/move was commission.

Commission may well have been a bonus but you may be better off moving as a result of the change in the products in the market and costs. Think of any product and the manufacturers thereof. They all need to maintain the competitive edge to get you to buy their products. They do this through product innovation or pricing. Insurance companies are also selling a product and need to remain competitive.

No insurance company that I am aware of pays a higher rate of commission. Commission does get paid on the sale though. And hence will be paid on the sale of the new product. The FAIS act requires justification of why a client's policies are being replaced though. Sadly a number of unethical advisers will make up random reasons. The client should ask for a detailed explanation of why they move would be better for them.

 

[noxibox]

Discovery intentionally make their products as convoluted and arcane as possible. Even their designated brokers are rarely able to comprehend their Byzantine products and the interactions between them.

Commission may well have been a bonus but you may be better off moving as a result of the change in the products in the market and costs. Think of any product and the manufacturers thereof. They all need to maintain the competitive edge to get you to buy their products. They do this through product innovation or pricing. Insurance companies are also selling a product and need to remain competitive.

Many of these products are risky to change, and there are invariably costs involved not taken into account.

The FAIS act requires justification of why a client's policies are being replaced though. Sadly a number of unethical advisers will make up random reasons. The client should ask for a detailed explanation of why they move would be better for them.

Unfortunately you'll find it is unevenly enforced and brokers are rarely punished for misconduct. The clients are also rarely experts, so they can easily be tricked by unscrupulous brokers.

Brokers are all crooks and scam artists.

The majority of brokers seem to be liars, simply incompetent or entirely lazy. As a rule they're a complete waste of money.

 

[Sonic2k]

Discovery intentionally make their products as convoluted and arcane as possible.

Yes a trick they learnt from the Americans. Bamboozle the customer so you can fleece him as much as possible and he might even say thank you for the privilege.

 

[dunkyd]

Buy unit trusts with every spare cent !!

 

[Gaz{M}]

I have a number of Discovery products (Life, Medical Aid, Credit Card, Miles) and yes, they are all "linked" to each other in a sense that if you are on a Blue or Bronze or Silver Vitality status then your Life premiums increase 11% or more per year and if you don't spend enough money each month on the credit card, then again, premiums go up additional % points.

I have decided that I will NOT buy any more Discovery products as it is just impossible to calculate exactly if you are ending up saving or not. I would much rather recommend you find your own providers for each individual service with the best deal (price+value both considered).

I would not touch any investment services. Rather go with a reputable unit trust provider like Alan Gray, Coronation etc. or etfsa, 10X for RA's as their fees are low and simple to understand and you can leave if you want to without affecting your other services like medical aid or credit card or payback bonuses and all that other crap.

 

[tRoN]

[Q UOTE=Koosi;12404826]Yes a trick they learnt from the Americans. Bamboozle the customer so you can fleece him as much as possible and he might even say thank you for the privilege.[/QUOTE]


In other words. ..wham, bam, thank you Ma'am

 

[Dubes]

Many of these products are risky to change, and there are invariably costs involved not taken into account.

Care to explain the risks involved and the costs felt by the client?