AIG Life creates new premium choice

AIG Life has created a new hybrid insurance premium option that sits in the previously uncharted space between stepped and level premiums.

AIG Life yesterday announced a range of improvements to its Priority Protection product suite, of which the new Optimum Premium option is one. Optimum Premium offers policyholders an insurance premium that is significantly cheaper than a stepped premium and not much more expensive than a level premium.

AIG Life head of adviser services David Mounsey said while it’s not the cheapest option, it’s an alternative that combines the upfront cost effectiveness of a stepped premium with the consistency of a level premium.

AIG said while this was for now a unique offering in the market, it wouldn’t be for long, with competitors likely to copy the offer.

Other upgrades include accident only life cover with no underwriting which can be held within super. AIG said this includes a “universally accepted definition of ‘accident’” and covers all occupations, except pilots and sports people who are injured while at work.

The group said this is a good option for BMI clients, those who have already had a trauma benefit paid out, homemakers or uninsurable lives.

Other upgrades include the ability for those insured within the group’s total and permanent disablement (TPD) product to earn up to 25 per cent of their income and still receive a TPD payment.

The group has also introduced a forward underwriting option with no expiry date, which allows clients to lock in today’s underwriting and then choose a policy at the time of the trigger event. Clients can be insured up to $10 million, with only financial underwriting required when the policy is activated.

The group will abolish its multiple policy fee of $60 on December 1 and introduce a single policy fee of $72 per annum, the first increase in five years.

Meanwhile, the group has removed the Child’s Guarantee Insurable Benefit and Home Expenses Benefit from its offering due to poor sales.

The Sydney session of the launch was well attended, but at least one AIG writer voiced concerns about a potential sale of the AIG Life business by its embattled parent company. AIG Life’s Mounsey reinforced that the Australian business is well capitalised and due to strict local regulation, client policies would be safe in any eventuality.

Speaking hypothetically, Mounsey said if there were to be an acquisition, one by a group such as Westpac would be more attractive than one by CommInsure or ING.

AIG Life already has strong ties with BT Wrap and Asgard, and the existing AIG Life business could be more easily absorbed. An acquisition by groups such as CommInsure or ING, which already have strong offerings in this space, could see changes to the AIG product offering.

But Mounsey said he didn’t expect a sale of the Australian operations because the information flow coming out of the business was valuable, especially when compared with other AIG Asian businesses.