For a while now I have rattled on about protection simplification.
Why? Because at a time where the protection gap seems to remain unchanged, some new ‘innovations and enhancement’ appear to complicate the protection conversation further.
A buck to this trend, however, is the AIG Instant Life Insurance product for advisers. With the mantra of “simple, quick and easy”, AIG seeks to offer simplified life cover.
A customer-friendly application that should take less than eight minutes and (possibly most importantly) an immediate decision (standard, rated or decline) with no further medical evidence required.
When the sceptic in me hears the words “simplified and cheap”, I automatically assume limited features.I am pleased to say it maintains key options such as level, indexed and decreasing cover.
Terminal illness cover is also included, as is the ability to place the policy into trust (paper-based only).
I like that AIG has allowed indexation for the Instant Life Insurance product to be linked to the retail price index (maximum 10 per cent) rather than the set 5 per cent on their YourLife Plan.
With the maximum term of 40 years or to 70th birthday, the cover provides financial security for most clients to their chosen retirement age.
There does, however, appear to be some compromise on guaranteed insurability options and also no option to include waiver.
There are also cover limits in place for applicants between the age of 17 and 45, the maximum cover available is £600,000 and between age 46 to 55, it is £350,000 sum assured.
The marketing from AIG states they can provide the client with a life policy with around 5 per cent cheaper premiums.
Of course, there are two ways to look at this. One is to promote the savings to the client for the same cover. The other perspective is that for the same premium, the client could obtain a higher sum assured.
Jiten Varsani is mortgage and protection adviser at London Money