Discovery Life’s Dollar Research Paper shows huge shift to offshore life insurance policies

Discovery Life has published its Dollar Research Paper, which provides valuable insight into the growing demand for dollar-based life insurance products.

The paper uses data from Discovery Life’s Dollar Life Plan, which was launched in 2014.

• Click here to learn more about the Dollar Life Plan.

The Dollar Life Plan allows South Africans to sign up for offshore life insurance that pays out in US dollars, and has been a huge success locally.

Discovery Life said its premium income from the Dollar Life Plan has averaged 20% growth per year over the past five years – showing a massive trend towards customers taking on this form of cover.

“Our financial advisors have been driving awareness about the opportunities available in offshore life insurance, and clients who have accepted this advice have benefited massively,” said Discovery Life Deputy CEO Gareth Friedlander.

Protecting against currency volatility

Friedlander said a key reason for the growth of its Dollar Life Plan is the fact the US dollar has strengthened by 68% against the rand over the past 10 years.

“If a client invested equally in local life insurance and Dollar Life Plan cover 10 years ago, they would now effectively have 35% more cover under their Dollar Life Plan,” said Friedlander.

However, he cautioned South Africans against switching to only using dollar-based life insurance.

“It just so happened that over the past 10 years, the rand has suffered relative to the dollar,” said Friedlander.

“It is possible that this trend reverses in the future, which is why diversification is the best strategy.”

Thankfully, most Dollar Life Plan clients heed this advice – as 63% of them have a combination of rand-based and dollar-based life insurance.

Access to global opportunities

Friedlander added that their clients don’t only invest in the Dollar Life Plan to diversify their risk cover.

They also give themselves and their families access to many global services and opportunities.

This includes:

• Severe illness – Many life-changing medical procedures are only available in countries like the US, and having dollar-based coverage makes it easier to afford them.
• Education – Over 12,000 South Africans study overseas every year. Overseas life cover will help your children continue their studies if something happens to you.
• Business, assets, and liabilities – If you operate a business or own properties overseas, your Dollar Life Plan can be used to pay off your liabilities.

“When you buy life insurance, you’re protecting the needs of your family for decades to come – and these loved ones may end up studying or living overseas in the future,” said Friedlander.

Offshore life insurance is accessible

The Dollar Life Plan is affordable to a wide range of people, stated Friedlander, as the minimum monthly payment is $50 (approximately R900).

“Our average premium is about R1,750, which shows that most of our clients are everyday South Africans,” said Friedlander.

He also promoted the Exchange Rate Protector feature they offer, which allows clients to lock in their payment at a rand rate rather than a dollar rate. This makes it easier for clients to plan their monthly budgets.

“Affordable and accessible life insurance, that pays out in dollars, helps to future-proof whatever responsibilities, liabilities, or aspirations our clients have,” concluded Friedlander.

Click here to learn more about the Dollar Life Plan.