TOWER Australia has upgraded its TOWER Protection Policy (TPP) range in a new PDS, issued on 30 April 2008. This is the latest in a series of product updates from the life companies, with autumn being one of the preferred periods during the year to release product and service initiatives.
This upgrade sees changes to both lump sum and income protection products, with the focus more so on lump sum product enhancements. Pricing changes and a raft of underwriting enhancements have also been made.
A summary of the key changes, based on TOWER’s April 2008 update document, include:
Lump Sum Products
Life Protection Plan (LPP)
Terminal Illness Benefit
The entire insured benefit amount may now be paid out within the Terminal Illness Benefit (previously a $2.5 million cap was applied).
Guaranteed Personal Insurability Benefit
TOWER has added two new trigger or ‘life’ events for this benefit:
- Divorce of the life insured
- Completion of a post graduate degree
This enhancement applies to both the LPP and Crisis Protection Plan (CPP).
Increased Maximum Entry Age
TOWER has increased its maximum entry age for the Life Protection Plan to 75 next birthday (previous maximum entry age was 70 next birthday).
Total and Permanent Disability
TOWER has addressed various elements of its TPD definition as follows:
- Reducing the six month waiting period to three months
- Removal of unemployment provisions from the ‘own occupation’ definition
- Allowing the life insured to earn up to 25% of pre-disability earnings under the ‘any occupation’ definition
- Adding loss of limbs and blindness to the definition of TPD for over 65’s
In addition to these enhancements, TOWER has also introduced a new partial TPD payment facility.
The company will pay 25% of the sum insured to a maximum of $500,000 if the life insured suffers either of the following events:
- Loss of a Single Limb
- Loss of Sight in One Eye
Crisis Protection Plan
TOWER has removed the requirement for the life insured to be unable to perform their own occupation for the following crisis events:
- Cardiomyopathy
- Primary Pulmonary Hypertension
The company has also included Heart Attack as an eligible event under the Child’s Crisis Option.
Income Protection Products
Pre-disability Earnings
TOWER has improved the calculation terms for Pre-disability earnings for Agreed Value policies with a more generous definition.
The new definition takes account of highest average monthly earnings from two years prior to policy commencement.
Offsets
TPP no longer has a workers’ compensation offset if the occupation class of the life insured is AAA or AA+.
In addition, TPP no longer has a sick leave offset for white and blue collar occupations.
Day One Accident Option
The waiting period for the Day One Accident Option has now been reduced to three consecutive days (previously 14 consecutive days was required).
Business Expense Plan (BEP) - Recurrent Disability
TOWER has improved its definition for Recurrent Disability within their BEP contract:
If a client has claimed the total (maximum) 12 monthly benefits due to an injury or illness, and returns to full time work for at least 12 consecutive months performing all of their full time duties, and they suffer from the same or related injury or illness after this time, a new waiting period and benefit period will now apply (previously a new claim could not be submitted for the same or related condition and the most TOWER would pay for an injury or illness during the life of the plan was a total of 12 monthly benefits).
Business Expense Plan - Payment Extension Benefit
The Payment Extension Benefit under business expenses has been enhanced by increasing the time in which the client can claim to 12 months (previously had to claim within six months).
Pricing Changes and Initiatives
TOWER has effected a number of pricing and discount changes across the TPP. But to fully appreciate the nature of the changes, they must be considered within the broader context of TOWER’s other product offerings, namely the Partner Insurance Portfolio (PIP) and the Accelerate Protection Policy.
In TOWER’s recent 2008 product briefing, the company released a flyer that showed very neatly the relationship between these three product lines.
Accelerate (see Risk Minder 114) is the new product range designed specifically as an online solution for the under 45’s (lower sums insured, medically and financially simpler) and some of the main market segments represented by the under 45’s:
- Young singles
- Young couples
- Young families
The solution for the over 45’s, which caters more so to higher sums insured and more sophisticated medical and financial underwriting requirements, is a combination of either TPP or PIP. These products are intended to cater more to segments such as:
- Mature singles
- Established families
- Empty nesters
With this broader context in mind, the following rates adjustments have been made for the TPP range:
Lump Sum Products
Life cover rates have reduced for most clients between the ages of 40 and 60. According to TOWER, this follows rate changes made in December 2006, which saw its life cover rates reduce for non smoking males aged 35+ for sums insured greater than $500,000.
TPD rates have also been improved, with reductions to the TPD rider rates and without the Death buy back option for males and females aged 40 and over.
TOWER notes it has also significantly reduced the price for its Death buy back option, making TOWER very competitive for clients aged 40 to 60.
Income Protection
TOWER has made some adjustments to its income protection premium rate factors, which have resulted in premium reductions across most ages and occupations.
Large Sum Discounts
Also in keeping with the positioning of TPP, TOWER has introduced more attractive large sum discounts for insured levels from $1 million.
Underwriting Initiatives
Rounding out the TPP upgrade is a substantial set of underwriting initiatives:
Life Protection Plan
- A completed personal statement is the only mandatory medical requirement for clients less than 45 next birthday with cover up to $2,500,000. Blood tests, medical exams or MBA20s are no longer required.
- The limits have increased for clients aged 46 to 55 next birthday for cover between $2,000,001 and $2,500,000. The mandatory medical requirements are now FastCheck, blood tests and a Resting ECG (previously a medical by a GP and PMAR were also requested).
- All medical limits have improved for ages 61 to 70 next birthday up to $2,500,000.
- A new age band for ages 71 to 75 next birthday has been introduced. FastCheck is the only requirement up to $500,000.
Crisis Protection Plan
- A completed personal statement is the only mandatory medical requirement for clients less than age 55 next birthday with cover up to $1,000,000 (previously blood tests, a medical by a GP and Resting ECGs were also requested).
- A completed personal statement and FastCheck are the only mandatory medical requirements for clients aged 56 to 60 next birthday with cover up to $500,000. For cover up to $1,000,000 TOWER will also require blood tests (previously a medical by a GP, Resting ECG and PMAR were also requested for cover up to $1,000,000).
Income Protection Plan and Business Expense Plan
- Blood tests are no longer required for clients who are less than 45 next birthday with a monthly benefit up to $15,000 per month.
- PMARs are no longer required for clients whose sum insured is less than $15,000 per month.
- Medical and financial requirements are now based on the highest benefit applied for. Previously, if the client applied for IPP and BEP, the benefit amounts would have been added together.
- Financial requirement limits have increased from $5,000 to $6,000 for occupations A and BBB, and from $4,000 to $5,000 for occupations BB and B.
In summarising this update at TOWER’s 2008 product briefing, the company said that its product strategy is one of choice which is driven by adviser market opportunities and needs. In the TPP, PIP and APP products TOWER has developed products that are intended to meet the needs of clients, whatever their life-stage and subsequent needs.
