AIG Life Product Innovations

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AIG Life continues its national roadshow presentations this week for its Priority Protection update, effective from 1 December 2008.

While there are a number of key features enhancements, the two major highlights of this launch are:

  • Introduction of the Forward Underwriting Benefit
  • Introduction of the Optimum Premium Option

Forward Underwriting Benefit

First reported by riskinfo in late October 2008, the concept behind the Forward Underwriting Benefit is to enable clients to ‘lock in’ their future insurance needs with their present health status today.  Under this extra cost option, clients are able to take out only the cover they require today, but lock in future lump sum cover increases (up to $10 million) based on their current health.

Clients can tailor their cover as required in future.  For example, if a client only takes out Life cover initially, the Forward Underwriting Benefit will also allow them to take out Trauma and/or TPD cover at a future date.

Trigger events will allow new or increased cover to be taken, without medical underwriting.  But irrespective of whether a trigger event occurs, the client may still increase cover (by up to 25% of the Forward Underwriting Benefit) every three years.

Optimum Premium

Introduced by AIG Life as a new premium payment concept, Optimum Premium allows a client to commence on a stepped premium basis and then convert to a level premium structure at a future date.  This is achieved by marginally loading AIG Life’s standard stepped and level premium rates.

Available for Death, TPD, Crisis and Income Protection cover, and sitting between stepped and level premium, this option will appeal to clients who may favour a level premium concept but are not able to afford the higher cost at commencement when compared with the cost of the same cover under a stepped premium scenario.

Under Optimum Premium, a typical 45 year-old client may pay around 45% less to age 65 than they would if they maintained stepped premium payments.

AIG Life’s Head of Adviser Services, David Mounsey, outlines the three key benefits of Optimum Premium for advisers and clients:

Advisers

  • Client retention
  • Enhancing adviser cashflow (by up to 35%)
  • More opportunities to engage prospective clients and re-engage with existing clients

Clients

  • Affordability
  • Retention of cover, particularly at times when cover is needed the most
  • Ability to run Optimum Premium either inside or outside the Superannuation environment

Advisers wanting to access webcasts outlining further details of these two initiatives, along with AIG Life’s SuperPlus offer (where all cover can be placed under a single policy with a single policy fee) and Australia’s first electronic Product Disclosure Statement for risk products, can take the following link: AIG Innovations.

Other Priority Protection Enhancements

Other key enhancements applying from 1 December 2008 include:

  • New benefit – Partial Permanent Disablement – up to $250,000 benefit for permanent loss of use of one arm or one leg or sight in one eye
  • New benefit – Disability Income – clients can now be assessed for disability against a duties-based as well as a time-based definition at claim time (AAA, AA and A category occupations, PLUS option only)
  • Introduction of Accidental Life Cover to $1 million – no underwriting – all clients considered as non-smokers for premium purposes
  • Cap on Terminal Illness Benefits removed
  • TPD Own Occupation clients will only be considered under an Any Occupation definition if they have been unemployed for longer than 12 months
  • TPD definition enhanced to pay a full benefit if client is able to return to work but is earning less than 25% of income earned prior to disablement (applies to Any Occupation definition)
  • Enhancements to various Crisis event benefits, including Coronary Artery Angioplasty, Heart Attack, Heart Valve Surgery
  • Enhanced Female Crisis Assistance Benefit – AIG Life advises “All female cancers are now covered”
  • Partial Disability benefits now available from Day One, ie requirement for seven consecutive days of Total Disablement removed (AAA, AA and A occupation categories)

Premium Rates

  • AIG Life advises there have been both increases and reductions in rates, but that its main focus is to be as competitive as possible within its target age range of 35 – 60
  • Income Protection PLUS option rates have increased by 1% due to the dual definitions now available under the Total Disability definition
  • One Policy fee only is to be charged per life insured for policies issued after 1 December 2008
  • AIG Life also advises a 30% discount now applies to lump sum cases where the sum insured is in excess of $1 million

Summary

At the launch attended by riskinfo, Managing Director AIG Life, Stuart Harrison, focussed on the issue of ‘Simplicity’ as a way of characterising the nature of this update as well as on further initiatives planned by AIG Life for 2009, such as Straight Through Processing and offline electronic applications and underwriting.  Within this context, Mr Harrison spoke of attempting to position his company as the ‘iPod of life insurance’ in Australia.



13 COMMENTS

  1. Mark is clearly a switched-on adviser and what he says make a lot of sense. It’s no surprise that he’s successful.

  2. Mark, you are perpetrating a perception that does not exist.

    Please pull me up if I am wrong, though you appear to provide a holistic full Financial Planning advice service for your clients, which of course creates the opportunity to build in fees, as it is a total package that every person strives for and has an interest in.

    What you are missing with your statement, is the truth around what clients are “Actually” prepared to pay for, with regard to the provision of Life and disability advice and products to meet their needs and you will need to clarify how clients are willing to pay for all the work involved around this Best Interest duties work, which is thousands of dollars upfront for a practice to break even.

    We have heard nothing from anyone to date that properly answers this, as after all, it is the client that pays and it appears they seem to have been left out of this debate from the YES crowd.

    • Ken, a height percentage of my client’s are risk only and they pay a fee. We have also completed risk only business with nil commission. Client’s do pay.

    • Jeremy, Not sure what you are getting at here…I certainly do have clients that have asked for a nil commission business….life/ tpd/ trauma and ip.
      While I do offer full
      planning a high percentage of my client’s are risk only. It does work.

  3. There seems to be a lot of consideration on options ideas thought processes etc which leads me to think that Marks business is a process of numerous options and products not just risk ?
    If not and you have found the “silver bullit ” to this age old problem congratulations the risk world is at your feet
    However if the fee is an overall charge for retirement planning ,Super investment , cash flow projections etc etc with a bit of life and IP thrown in then it’s still congratulations but it’s not fixing that old age issue that people will not pay for life insurance advice on its own.
    I recently tried a new strategy with a client who was told by a bank they could do an SOA for him for $4000 I would assume that included a fair bit of holistic planning for that cost ? However it was only life cover he was interested in and some income protection options for his personal needs
    I advised I could do an SOA based on his requests for $1500 he told me for $1500 he would research it himself
    40 years I’ve been trying this and I just do not see how people can say they have found the answer without “colouring” the reason a bit ??

      • Hi Mark ! These clients that pay a fee for your service and are advised in the SOA that it is a fee not a commission are they paying the same fee every year ? We know that we can charge a fee say through one path that drops the premium considerably if there is no commission enabling you to add a reasonable fee for all that hard work That’s fine ! But again do they pay that same fee every year or do they get a reduction until more work is due to be undertaken because of a change ?
        Agree the fee side could be very valuable and far in excess of. 20% renewal ?
        If ongoing ??

          • Ken, I appreciate your interest. I’m more than happy for you to call me directly because honestly it works…..I was I massive doubter but now have to say I was wrong.

          • Love your enthusiasm ! and I’m sure you have a great system in place that works for you
            Nothing quite like a good ” banter” late at night
            One thing you have done is make me think a little further into the commissions vs fees setup and in the next month or so with s good calculater and some well invested time I will try and work out a plan that works for us ! Like you seem to have arrived at
            Good luck with it all and hope to “banter” again soon

            Regards
            Ken

          • No banter Ken…I’m always happy to share and my solution works for me but seems to have been accepted as food for thought. As I said, I’m happy to discuss as over email context can be lost but I do believe I can help advisers how to improve our businesses and industry….happy for you to ring me….glad I have prompted you to consider my opinion….all the best mate and at least you are open to change.

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