Ageas Protect Low Start
Ageas Protect is the new name for what, until the start of this year, was Fortis Life. Low Start is a new variant on Ageas’ existing products.
The low start concept was popular back in the 1980s with mortgage endowment products and enables customers to buy the same cover at a lower initial monthly premium. Annually, that premium increases and will eventually be higher than that on a regular premium plan. Over time, it is a more expensive way to buy cover, but has the significant advantage of lower premiums at outset.
The low start route was popular as it helped customers’ cashflow in the all-important early days of their mortgage. High inflation rates then meant that mortgage costs tended to remain broadly the same (unless interest rates changed), while income could be expected to rise rapidly. The idea fell out of favour, partly because many customers did not fully understand what they had bought.
Cover itself can be term assurance (which includes terminal illness benefit and optional waiver of premium) or that can be combined with critical illness cover.
The initial premium can be up to 30% cheaper than for a level premium plan, with the exact figure and rate of annual increase depending on age and policy term. A similar result could be achieved through an annually renewable policy, but that would not guarantee future premiums.
If the customer chooses not to increase their low start premium in future, the plan can continue, but with a lower sum insured. Ageas says its low start system is suitable for customers in their mid 30s and above but not for younger customers, where the price saving in the early years is likely to be too low to justify the low start route.
Plus points: Most customers are used to household and motor insurance premiums rising every year, so low start life insurance that does the same can appeal to people on tight budgets. Built on a proven product at a lower initial cost, where premiums and premium increases are guaranteed and can fit with a customer’s expectation of rising income in future; If future premium increases cannot be afforded, the sum assured can be cut accordingly.
Not so plus points: Ageas’ low start route is not suitable for customers whose net spendable income is unlikely to rise in real terms in future; The plan cannot be used for younger clients (often, those who would most value having lower initial costs) and can end up costing considerably more overall than an equivalent level premium plan; One issue for Ageas will be whether intermediaries look to move clients to another provider once premiums start to rise in future years.
Website: http://www.ageasprotect.co.uk.
Rating (max 10): Innovation: 8. Overall: 7.5. Silver.