AIG Life’s redesign of its YourLife Plan Income Protection insurance includes a move to own occupation, reviewable exclusions, targeted terms for certain professions including doctors, dentists, surgeons and teachers and a more competitive price point.
Speaking to Health & Protection ahead of today’s relaunch Neil Davies, chief operating officer at AIG Life (pictured) explained new product features include doing away with suited occupations to underwrite all new customers in full-time paid work under their own occupation to align the proposition with much of the rest of the market.
Davies told Health & Protection the insurer has also been able to “really challenge” the price point of the cover.
“We believe we’ve improved that significantly and we’ve been road testing over the past month to make sure that price positioning is right,” Davies said. “So we should now be more competitive in the market, offering more value to customers and hopefully gaining attention from advisers.
“Every model point it will be different, but typically we had been in sixth, seventh, eighth position by price. With this modernisation and the work that we’ve done, we‘ll more frequently be in the top three.”
The proposition also now pays up to 60% of the first £60,000 of the customer’s salary plus 50% of anything after as a tax-free fixed monthly sum if the individual is too ill to work. The payment structure applies whether the customer chooses full IP (paying monthly benefits up to retirement) or the shorter two-year claim option
Should a customer return to work following a claim and then finds they have not fully recovered from that condition, AIG will waive the deferred period and pay the monthly benefit, provided it is within 12 months of them returning to work. If they chose the shorter-term payment option, the linked claim is paid provided they have not exhausted the 24 months of benefit on that condition.
The proposition also includes an income replacement guarantee, meaning customers can claim up to £1,500 every month if their income has decreased since they bought insurance and no longer supports their chosen monthly benefit when they claim.
AIG has also introduced reviewable exclusions to give customers the flexibility to have their case looked at again later on if an improvement or change in their health means the exclusion is no longer required.
Customers can also make changes to the value of their insurance at key moments in life such as when they get married or become a parent, and increase the sum assured when their careers progress or when their mortgage or rent goes up.
This comes with a proportionate payment income top-up if, after falling ill, the individual is earning less when they go back to work − for example if they then work reduced hours or in a lower paid role.
Customers can still claim £100 per night in hospitalisation benefit if they spend between seven and 90 nights in hospital during their deferred period.
Regardless of payment option chosen, AIG’s income protection still comes as standard with access to preventative health and wellbeing service Smart Health, and with rehabilitation support that people can access in the very early days of their illness – even when they are still in the deferred period.
Making IP more accessible
But the revamp also extends to changes aimed at making IP more accessible in particular to dentists, doctors and surgeons who are employed by the NHS or with the same sick pay arrangements, and to teachers employed in the state sector, so they align to the terms of their employer’s sickness benefits.
For doctors, dentists and surgeons, the minimum income replacement guarantee is £3,000, to reflect the higher average income of these professions.
They also benefit from sabbatical break cover, which means they are still insured for up to two years on an own occupation basis if it is agreed with their employer.
The proposition now ensures people who take care of the home instead of earning a paid income can still choose full or short-term IP to insure themselves for up to £20,000.
Customers on a career break and no longer working are assessed on their ability to complete work tasks when they come to claim.
And if a customer is made redundant, AIG will pay their premiums for up to six months, so they remain insured and have breathing space to get back on their feet.
Whatever insurance options customers choose, the proposition is now available to employed, self-employed and house person customers who are aged 17 to 59 (up from age 54) as level and increasing insurance with a waiver of premiums up to maximum £250,000 sum assured for a minimum of five years up to their 70th birthday.
A key part of the process ahead of the relaunch was conducting before and after testing of the insurer’s Key Facts Document (KFD) and quantitative testing of the KFD via a survey of 200 consumers.
The before and after testing of its KFD ahead of launch was aimed at learning how to help customers easily understand if the insurance they were considering meets their needs – ever conscious of adviser feedback that IP tends to be seen as more complex than other protection products and of Consumer Duty’s good customer outcomes principles.
Consumer quantitative testing of the KFD via the survey found the majority understood the document they were reading and the benefits AIG’s income protection provides, though useful feedback from contributors suggested improvements could be made.
This feedback informed changes to the proposition which ensured sentences are now shorter, making it easier to understand more complex information.
Further, the opening page of the Key Facts Document now quickly and simply explains what income protection is, highlights key terms, and signposts customers to where they can get more detailed information in the Cover Details.
AIG then retested its KFD document and found these small improvements increased customers’ understanding of income protection.
A really good conversation
Davies told Health & Protection the insurer really challenged itself in internal conversations to look at how customers understand the proposition, and how they are helping them to understand it through its literature.
“We’ve run a number of customer research sessions where we’ve gone through the various pieces of the documentation, got their feedback and then gone back again to see how we have improved,” Davies explained.
“I’m really pleased with how the team is helping consumers understand the income protection market more and what it can do for them.
“At the heart of this is getting it right for the customers – both in terms of the understanding and support we then offer but then also making sure it’s a product that meets the need.”
“Having brought all that together, we’re really proud of what we’ve brought to market,” he added.