Financial brokers, inform clients of frightening revelations discovered on Discovery Paid-up product premium anniversaries increases

Extreme worrisome revelations were made regarding premium increases during discussions with an actuary from Discovery.

Discovery made it abundantly clear that they are not willing to reconsider premium increase reviews made on the existing paid-up products, and acknowledged that the premium reviews were purely done to make it "less affordable to the client, and less loss making for Discovery"

They conveniently reminded the fact that the premiums were never guaranteed. The principle that I'm struggling with was those used to apply and affect increases, and most of all how they failed to explain explicitly how they've done it, and purposely confused facts so it deviates to what was really done. It resulted in a detrimental increase of an over-and-above product cost in my case (R400 000 npv) providing the client, me, with nothing to show from it.

Discovery shamelessly acknowledge that the assumptions used to define a premium in its inception, turned out to be incorrect. I.e. Discovery made an error. For that mistake Discovery felt the risk need to be shifted to the client in the form of premium increases, and a big dose of it. The risk therefor have now conveniently been shifted to the client having to brunt it all.

What irks me the most is that they camouflage the root being the “paid-up benefit” portion of the policy, but applying the increases based on the full policy value and plonked the increase value with the paid-up benefit portion, (i.e. they did not apply the increase based on the paid-up premium portion as they make you believe) and shamelessly proud themselves that they managed not to have impacted premium increases on the rest of the policy. How little do you think of the client not to see this? With this little scheme you managed to apply premium increases beyond the 25% curb, and blamed it on the paid-up benefit portion which was excluded from the mentioned curb. Shame on you.

The affect, and compounded effect it will have in the long run, is HUGE. Making it a HUGE affordability risk in future. Note: If you lapse or cancel, you lose the million’s R’ you already invested. It will be as bad as if some-one stole your promised retirement benefit legally. This shows they have the means, and surely are using it.

It should be an obligation for financial brokers to do your homework to confirm the above, and if you find the same, to warn any and all potential Discovery clients in your portfolio against this product, and to advise the impact imp**** to the existing Discovery clients.

With an interest in your existing Discovery client portfolio, it is my intention to submit a complaint to the Ombudsman to try balance the fairness of it all and not let the client bear the brunt of it. It must be a win-win for both parties, or compromises distributed fairly . Who in your portfolio feels the same so we can combine efforts in the Ombudsman submission, and maybe other forums as a critical mass? Regards