AIG Life has updated its CI with life cover plan. One of the main changes is that on additional payment conditions on adult lives, it has increased the benefit to the lower of £35,000 (the market figure has been up to £25K) or 50% of the sum insured.
It has added four new conditions (intensive care with mechanical intubation, severe mental illness, Devic’s disease and surgical removal of an eyeball), added five new additional payment conditions (neuroendocrine tumour, permanent pacemaker insertion, severe sepsis, syringomelia and gastrointestinal stromal tumour (GIST) and changed the definition on nine full benefit conditions and five additional payment conditions. Eight new pregnancy conditions have been added. AIG Life says many definitions have been simplified too.
Child cover now pays the lower of £35K or 50% of the full sum insured, the death (or terminal illness) payment has been raised from £5K to £10K, five new conditions have been added and one improved.
Other features of the product include:
* The plan term is from 3 to 50 years, with a maximum expiry age of 85.
* Age range is 17 to 75 at outset.
* Cover can be single life or joint life (first event) with waiver of premium on either one or both lives.
* Cover can be level, index linked, increasing at 5% a year (with premiums rising at 7% pa) or decreasing cover (based on one of eight interest rates between 5% and 15%).
* Those younger than 55 can add waiver of premium cover, with a deferred period of 26 weeks. WOP ceases at age 70.
* Total disability benefit (TDB) also has a 26 week deferred period and is available up to age 50. This benefit pays 1% of the sum insured up to £1,667 a month (the amount paid out effectively reducing the plan’s sum insured).
* Total permanent disability (TPD).
* WOP, TDB and TPD benefits use different disability definitions depending on cover.
* Value added benefits include Best Doctors, Winston’s Wish, Claims Support Fund (up to £300 for services) and Funeral Pledge (up to £10K paid direct to the funeral provider).
* Signature free and paper trusts are available.
* Guaranteed insurance options are included, including the option to increase the term to match a new mortgage.
* 46 critical illnesses are listed as being full payment (plus TPD as an extra cost benefit), with 18 of the Association of British Insurer’s (ABI) 22 defined conditions being ABI+. There are ten child payment definitions and eight pregnancy complication conditions covered. In total, some benefit is now paid in 102 listed circumstances.
What They Say
Head of Marketing, Sue Helmont, said: “We know critical illness insurance is an awkward customer conversation for financial advisers. We’ve designed the cover with everyone in mind so all the elements work together to deliver protection you can trust and so that clients trust advisers in return.”
What We Say"AIG says it has made over 40 enhancement to its plan and senior propositions manager Nicki Plews said its philosophy was to ask ‘if I or a member of my family were buying this today, does it offer everything we would want it to have?’. That’s a great approach to take and AIG Life’s ‘start from yes’ philosophy should help too.
"Cynics will says that’s just marketing hype but there is a growing feeling now that a number of CI insurers are looking to make genuine improvements to their products and to go beyond simply adding more conditions.
"The changes are on top of a strong package of other benefits, including good value added benefits and the optional Total Disability Benefit, which pays out (monthly) and offers a useful benefit if someone is totally disabled but does not meet the TPD definition.
"Has AIG Life done enough? Against today’s competition, possibly yes. The result is still more things covered, but also some simplification of definitions and widening of cover. That has led to price rises, but better cover should always be worth paying for.
"Certainly the new plan is better than the existing one in a number of areas. However, we would expect others to go down this route too and the elephant in the room is still that understanding exactly what is covered is still complex for advisers as well as clients. One additional point worth commenting on is that the plan now pays out on serious mental illness. That’s commendable, but the criteria to be able to claim are very strict and, in practice relatively few people are likely to claim under this condition. Even so, what is actually a small increase in cover is probably better than no increase in cover."