We believed that Bounty 1.0 was terrific. And with it, we did something impossible by industry standards. We gave clients a once-off single investment that was baked into every Indie policy. The biggest downside though, is that it was actually quite complicated, which led to some misunderstandings, and often genuine disbelief and skepticism. So we made it better. Now we match up to 100% of every premium you pay into an investment, which grows with you. Simple. And we’ve sweetened the deal at the same time, without changing our price.
What was Bounty?
For those of you who will never get to know and love Bounty 1.0, here’s a brief summary of what it was: whenever anyone bought an Indie policy, we created a big once-off investment with the policy. And when I say big, I mean big. For example, a 30-year-old paying a R500 premium each month would get an investment in the region of R50,000. This would grow over time with investment returns. Every 5 years, we would release a portion of the investment which could be withdrawn by our clients. And whatever was in the investment pot when the client turned 70, would become fully available to the client.
Why did we create Bounty 1.0 in the first place?
We believe it is patently unfair to have to pay life insurance premiums for most of your life, and have nothing to show for it if you manage to survive long enough. There is a reason that the life insurance category is universally considered a grudge purchase. And this is because, as a client, your best-case scenario is you will outlive your need for the cover, cancel the cover, and never see a cent. And the worst-case scenario is that you die or become disabled, and claim your cover. That’s a pretty awful best-case scenario, obviously, because it means you will throw your money into a hole for many, many years in the hope you’ll never need to claim.
At Indie, we want clients to Plan to Live, not to Die.
We don’t want our insurance to be a grudge purchase. And we believe we can build wealth for you at the same time as having high-quality insurance cover. Bounty delivers just that.
So what is new Bounty?
We match a percentage of every premium you pay into an investment. And this investment grows, like any other, to generate wealth.
Hold on. How am I winning if you’re taking a huge investment away from me?
If you’re skeptical, you’re right to be so. The 30-year old we used in the example above is no longer going to get her R50,000 lump sum Bounty investment, but will rather be getting R500 a month premium match into her Bounty. And R500 a month sounds a lot less than R50,000 today.
Let’s break it down.
Bounty 1.0 would have started her with R50,000 which would have increased with investment growth over time. Every year she also would have received a small additional allocation if her premium increased. Bounty 2.0 gives her allocations every month that she pays a premium. So although the starting value of R500 is much smaller than the R50,000 , it’s amazing how quickly it catches up.
For example, after 5 years she would have received a CashDrop of R2,400 with Bounty 1.0 and her total Bounty at that stage is likely to have been R91,000. With Bounty 2.0 though, her first Cash drop is R3,900 and her Bounty value at that stage is likely to be R39,000.
On her 50th birthday, she would have looked forward to a Cash drop of R15, 300 had she been on Bounty 1.0 and her Bounty value would likely have been about R485,000. With Bounty 2.0, she can enjoy her 50th birthday a bit more as she's getting a Cash drop of R39,000 and her Bounty value which has been increasing monthly is already estimated to be worth R386,000.
If we fast forward to her 70th birthday, we can see how Bounty 2.0 is much better for her, because it is likely to be worth R3,5 million at that stage if she decided to leave her CashDrops invested. Bounty 1.0 would have been worth R3 million at that stage. So moving to Bounty 2.0 has given her an extra R500,000 to spoil those grandkids with.
What if I already have Bounty 1.0, and want to keep it? After all, isn’t it a contractual benefit?
That’s a very good question. And yes, Bounty is a contractual benefit. However, we are allowed to, by law, amend the terms of an original contract if the new contractual terms leave the client better off. So, because our clients who had Bounty 1.0 will now be getting bigger CashDrops with Bounty 2.0, and a bigger final payout at age 70 assuming equal cash withdrawals over time, there are no circumstances where our clients will be worse off.
And we’re actually pleased that we are able to make all our original clients better off. There are softer benefits too of upgraded Bounty, such as not being able to lose any Bounty if there are premium or cover reductions.
There’s no free lunch here. So who loses if the clients win?
The increase in benefits as a result of upgraded Bounty is being funded by Indie. So our estimated profitability is lower when we make the change. But we will offset this with a more compelling, and easy-to-understand story.
So why did Indie decide to change the way Bounty worked?
When crunching the actual numbers, Bounty 1.0 was an incredible deal. We didn’t increase the price of our insurance to give it to our clients, and if you were a client with us for long enough, you would get back multiples of what you paid in premiums when you turned 70.
The Achilles’ Heel of Bounty 1.0, however, was that is was quite difficult for people to understand. And because we pulled off the seemingly impossible, it was also difficult for people to believe. I’m willing to bet that, despite my brief description explaining it above, you probably still have many questions about how it works, how it’s possible, and if there are any catches (there aren’t).
In a book I read recently, the author suggested that there are three questions potential customers must answer if we expect them to engage with our business. And they should be able to answer these questions within a few seconds of looking at our website:
- What do you offer?
- How will it make my life better?
- What do I need to do to buy it?
With Bounty 1.0, we had a proposition which could help our clients succeed, and was certainly better than the industry alternatives out there. But it was quite difficult to understand and appreciate it after a few glances at our site. And the last thing we want is for our potential clients to have to break a mental sweat just to figure out what we offer. While going through the effort to find better ways to help our clients and potential clients understand Bounty 1.0, we stumbled on an explanation which really resonated well when we tested it.
We did some sums and equated the value of Bounty 1.0 to a regular monthly investment contribution.
For example, with the 30-year-old paying a R500 monthly insurance premium (and a R50,000 Bounty 1.0), we calculated that to get the same Bounty amount at age 70, he or she would have to save the equivalent of R391 per month, every month, until they reached the age of 70.
The R50,000 Bounty was worth the same as a R391 monthly investment contribution. And this investment was included, free of charge, in your R500 monthly insurance premium. When we shared this way of explaining Bounty 1.0 to the Indie team, the reaction was surprisingly good. Most people couldn’t actually believe that Bounty was that generous. And not only did they appreciate the size and significance of Bounty, but they actually understood it better. When we checked it with decidedly more ordinary and less nerdy folk, the response was overwhelmingly positive too.
Inspired by the feedback, a few of us gathered around a table and started discussing how we could incorporate this way of talking about Bounty. And then came the spark from left field:
Instead of changing the way we help people understand Bounty, why doesn’t Bounty just work like this?
As soon as that thought was uttered out loud, it was obvious to all of us that, yeah, Bounty would be much better and simpler if we just matched your premiums as you paid them.
Better Bounty is here
The good news for all existing clients is that we’ll automatically upgrade you to Bounty 2.0, including all of the benefits that come with it. One of Bounty 2.0’s biggest benefits is that your projected investment value when you turn 70 is higher than it was with Bounty 1.0. In addition, unlike with Bounty 1.0, lowering your premiums or dropping cover you no longer need, will have no impact on your accumulated Bounty, unless you cancel your policy outright.
We’re really excited about this improved proposition, and are always thrilled when we can create more value for our clients.