AIG Life has adapted its Over Fifties Life Plan to make it an attractive product for brokers to sell. The insurer says it is the first provider to offer an over 50s plan to all advisers, and a key focus has been to make protection easier to buy for their clients. The main elements of the new plan include:
* Protected Benefit – premiums cease at age 90, but if premiums have been paid for more than half of the specified term then a pro-rata amount of the sum insured is paid on death if the customer stops paying premiums early. AIG Life says this (what is, in effect, a paid-up policy option) is a big improvement on all other products of this type.
* Inflation Option – benefits can increase by RPI up to 10% a year.
* In death in the first two years, the policy pays three times the sum insured if the customer dies in an accident. If they die from another cause, one and a half times the payments already paid will be refunded.
* Funeral Pledge up to £10,000. This follows an initiative by the Protection Distributors Group (PDG) to help bereaved families meet the funeral costs of their loved ones. AIG Life will pay the family’s funeral director or home up to £10,000 (or the claim value if less), in advance on all valid life insurance claims without waiting for probate. AIG Life’s pledge goes beyond the £5,000 payment the PDG agreed as a minimum.
* Easy to write in trust – online, signature free and unique.
* The plan is available for clients aged 50-85 (or 80 if they smoke).
As with all AIG Life products, customers also get access to Best Doctors.
A 70 year old non-smoker paying £20 a month would get £2,900 of cover.
What They Say
Intermediary director Vicky Churcher said: “We spoke with lots of advisers and have created a new revenue stream for them in an increasingly important market sector. By turning our Over Fifties Life Plan into a standard adviser product, we’re offering them the opportunity to write more protection business and are enabling them to advise their customers on this product area. Our rates are very competitive and the benefits are ones they’ll feel confident recommending to their customers.”
What We Say
"Funeral plans have largely been sold direct until now, but have proved very popular, massively outnumbering the number of whole life plans sold by brokers and IFAs. AIG Life has recognised that this type of plan could appeal to brokers too, and has usefully tweaked the product to make it an arguably better product than those typically sold through daytime TV ads.
"One major advantage is that premiums stop at age 90, whereas many direct plans are payable until death and, if you stop paying, you get nothing back. Even so, the 70 year old in our example would have paid £4,800 in premiums by age 90 (£20 x 240 months) to get back just £2,900. That means a traditional fully underwritten whole life plan is still likely to offer better value if you live long, although it may also have a higher minimum premium and a risk of being rated too for many.
"The death in the first two years situation is a little unusual. If the customer dies as a result of an accident, the sum insured is trebled. Why? – the customer’s need hasn’t trebled, so this is a bit of a gimmick. If, as more likely, illness is the cause, AIG Life pays out a still very generous one and a half times premiums paid (after two years the full sum insured is payable regardless of the cause of death).
"That does create a small end of life planning opportunity in that if a client is terminally ill, it may be worth them paying the maximum premium each month if they can afford to do so, as the return if they do die within 24 months would beat pretty much any other type of investment. As the maximum premium is £50 a month, the opportunity is limited and, if they survive longer than two years they may not be able to afford to carry on paying at that level, so that strategy is not without risk to the customer.
"The benefits of simplicity, instant guaranteed acceptance and guaranteed standard rates also make this plan an option to set up while a larger traditional whole of life plan is being underwritten.
"Overall, the plan is a welcome addition, with some unusual design choices having been made by AIG Life."