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July 2018 AIG Life: CI

AIG Life has updated its CI with life cover plan, adding more cover and changing and simplifying conditions too.

One significant change is that on additional payment conditions on adult lives, the benefit is now the lower of £35K or 50% of the sum insured. Typically the market figure has been up to £25K.

Four new conditions (intensive care with mechanical intubation, severe mental illness, Devic’s disease and surgical removal of an eyeball) have been added, and there are five new additional payment conditions (neuroendocrine tumour, permanent pacemaker insertion, severe sepsis, syringomelia and gastrointestinal stromal tumour (GIST) too. The definition on nine full benefit conditions and five additional payment conditions has been changed, and definitions simplified where possible. Eight new pregnancy conditions have been added.

Child cover now pays the lower of £35K or 50% of the full sum insured, and the death (also payable on terminal illness) benefit has been increased from £5K to £10K. Five new conditions have been added and one has been improved.

Other features of the product include:

46 critical illnesses are now listed as being full payment (plus TPD as an extra cost benefit), with 18 of the ABI’s 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.

Plan term can be 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.

Comment: The CI market is starting to come alive again, with insurers seemingly looking to simplify and improve not just add more and more conditions. That’s important as what really matters is whether the product meets customers (and advisers) needs, not just how many boxes can be ticked. 

It’s good to see an insurer speak of its philosophy on such matters too. As well as its ‘let’s start from yes’ approach, 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?’.

Marketing hype? Judge the results – certainly cover is now wider and there has been simplification too. Add in existing features, including valued added benefits, and the proposition looks strong. Indeed, some benefits such as total disability cover are probably under-appreciated (and help make the whole severe disability area a little softer and more valuable in practice than just having PTD alone).

CI is still too complex and there is a case to be made that if your consultant says say you’ve had a heart attack then you have (so a complex medico-legal definition is not needed), but CI looks to be progressing in an evolutionary rather than  revolutionary way and maybe that’s no bad thing.

Overall, it’s a good package and helps take CI another step forward. Premiums have gone up, but that should not be an issue as long as value is strong.

Plus points: More conditions covered; Some simplification of definitions; Higher additional benefits; Higher children’s cover; Pregnancy conditions covered; Good existing benefits carried forward.

Not so plus points: Premiums have risen by 7% on average (but none more than 10%); CI remains a complex product for consumers to understand.

Website: http://www.aiglife.co.uk.

Rating (max 10): Innovation: 8.5. Overall: 9. Platinum.

Tags: CI: AIG Life