Global Education ProtectorFrom Discovery Life
2
Agenda
Key trendsin education
Education inthe context of shared value
Education planning
considerations
3
Agenda
Key trendsin education
Education inthe context of shared value
Education planning
considerations
4
Total cost ofprivate education
could exceed
for the average family
*https://www.cia.gov/library/publications/the-world-factbook/fields/2127.html
5
Key trends in education
01 Starting school earlier
Education inflation outstrips salary inflation03
02 Increasing cost of supplementary expenses
Insufficient savings for education04
Parents having children at older ages05
6
Key trends in education
01 Starting school earlier
Education inflation outstrips salary inflation03
02 Increasing cost of supplementary expenses
Insufficient savings for education04
Parents having children at older ages05
7
R -1,003,165 R -1,200,000
R -1,000,000
R -800,000
R -600,000
R -400,000
R -200,000
R -
R 200,000
R 400,000
R 600,000
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18
Savings deficit/surplus at different ages
Required to fund from primary level Required to fully fund education
Starting school earlier
R200 000+ spent on school fees prior to primary school
Funding shortfall at older ages
Phase of school Number of yearsEstimated cost per
annum
Crèche 3 R30 000
Pre-primary 2 R60 000
Primary 7 R90 000
High 5 R100 000
Tertiary 4 R45 000
Children start primary school on average than a decade ago* putting further pressure
R5 722 must be saved monthly to fund education for
one child from primary level
Assumptions: R40 000 net of tax household income. 1 child. 10% savings growth rate and investment return. Average private school fees plus allowance for supplementary expenses. *https://data.worldbank.org/indicator/SE.PRM.AGES
Additional cost of education from crèche means
R6 880 is required to fully fund education
Shortfall
8
Key trends in education
01 Starting school earlier
Education inflation outstrips salary inflation03
02 Increasing cost of supplementary expenses
Insufficient savings for education04
Parents having children at older ages05
9
Increased cost of supplementary expenses
Typical ancillary education costs It all adds up…
Additional expenses could the total cost of
education by
10
Key trends in education
01 Starting school earlier
Education inflation outstrips salary inflation03
02 Increasing cost of supplementary expenses
Insufficient savings for education04
Parents having children at older ages05
11
Education inflation is outpacing salary growth Proportion of salary towards education
Education inflation outstrips salary inflation
18%
72%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Compounded by school fees growing by on average 60% between each phase of education
Continuing this trend, the proportion of income spent on education will increase by 4 times in 18 years
Assumptions: R40 000 net salary increasing at CPI, cost of education increasing at 10%, 2.29 children.
12
Key trends in education
01 Starting school earlier
Education inflation outstrips salary inflation03
02 Increasing cost of supplementary expenses
Insufficient savings for education04
Parents having children at older ages05
13
Proportion of people whose spend exceeded their income at least once in the last year
Proportion of people saving for education or that have an education policy in place
25%
40%
46%
58%
78%
0% 50% 100%
R40,000+
R20,000-R39,999
R14,000-R19,999
R6,000-R13,999
<R6,000
44%
40%
40%
46%
44%
36% 38% 40% 42% 44% 46% 48%
2013
2014
2015
2016
2017
Insufficient savings for education
South Africa’s household savings ratio was -0.3% in the first quarter of 2017
Less than half of parents are currently providing for their children’s future education
*Source: Industry savings and investment survey, July 2017
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Key trends in education
01 Starting school earlier
Education inflation outstrips salary inflation03
02 Increasing cost of supplementary expenses
Insufficient savings for education04
Parents having children at older ages05
15
Parents having children at older ages
Parents have to retire at older ages
OR
*Sources: Office for National Statistics UK and National Centre for Health Statistics US
The average age offirst time mothers has
to 26, over the last15 years alone.*
are now born to
than under the age of 25.*
A
Consume retirement savings topay for education
B
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Agenda
Key trendsin education
Education planning
considerations
Education inthe context of shared value
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Chances are higher than you think Deaths after birth are a reality
A life changing event could place significant strainon funding ability
Chances of a life changingevent happening to one of the
parents while the child is in school is around
On average
within the first month after birth each year on Discovery Health
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Saving for tertiary education Protecting education through a life plan
The education funding/protection conundrum
The present value of one child’s private education fees is
approximately
For a husband and wife to protect this using a traditional lump sum risk
policy would cost on average
Families need to save on average
From birth to fund one child’s
fees
Education needs to be both protected and saved for simultaneously
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Agenda
Key trendsin education
Education planning
considerations
Education inthe context of shared value
20
Discovery Life’s Shared Value Insurance model
MembersImproved health, better value through
improved price and benefits
SocietyHealthier society
Improved productivityReduced healthcare burden
InsurerLower claimsHigher marginsPositive selection and lower lapses
Behaviourchange
Dynamic pricing
Risk savings
Blue/Bronze Silver Gold/ Diamond
51% lower mortality & morbidity risk
Non-Vitality
63
81
87
South
Africa
Vitality Gold and
Diamond
Members
Increased longevity
R - R 1,000 R 2,000 R 3,000
2012
2013
2014
2015
2016
R2.9 Billion in PayBacks to date
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Education creates Shared Value
Members
Society Insurer
*Sources: http://paa2013.princeton.edu/papers/132015 and Discovery internal data
On a macro level, improved education outcomes lead to a healthier and more productive society
Each additional year of education
an individual’s
by
Individuals with a tertiary educationshow a
Each additional year of education
a country’s
by
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Core DollarPrivate
Comprehensive private school benefits
International education
R 10 000 – R 60 000 p.a. R 40 000 – R 125 000 p.a. $ 5 000– $ 25 000 p.a.
Public school benchmark
Cover from crèche to tertiary education
PRINCIPAL PRINCIPAL AND SPOUSE DEATH, SEVERE ILLNESS DISABILITYOR OR DEATH
Discovery Life’s Global Education Protector
Funds up to 100% of tertiary education by simply
leading a healthy lifestyle
For approximately R300 per month parents can fully protect their child’s education and get up
to 100% of their tertiary education funded
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Immediately fund 10% of your child’s tuition fees Fund up to 100% through leading ahealthy lifestyle
The University Funder benefit
Diamond 5%
Gold 4%
Silver 3%
Bronze 1,5%
Blue 0,5%
Automatic 10%
Private and Dollar
Child’s birth
18th
birthday
Automatic funding provided upfront for tertiary education and you can increase the amount we fund to up to 100% of your child’s tuition cost by leading a healthy lifestyle
100%
19%
64%
82%
37%
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Saving for tertiary education Protecting education through a life plan
Discovery Life’s Global Education Protector
Efficiency through Shared Value
Tailored Shared Value creates unparalleled efficiencies that can be channelled to helpfund tertiary education
Required to save around
just for tertiary education
Required to pay a premium of
for protection
and up to of
tertiary education
Global Education ProtectorFrom Discovery Life