Synchron has revealed progress on a term level life insurance offer being developed by AIA Australia (AIAA) which Synchron Director, Don Trapnell said will help end the industry’s love affair with yearly renewable premium rates.
Speaking at Synchron’s recent Sydney Professional Development Day, Mr Trapnell said, “Australia is the only country in the world that has this fixation with yearly renewable premium rating structures and yet, this kind of insurance is by its very nature designed not to be in force when a claim is most likely to happen. That is unacceptable to us.”
Following a fact-finding mission to the United Kingdom two years ago, Synchron set out to design a term level premium concept and invited life insurers to create a solution with level premium pricing and timing options. After engaging with several life insurers, it was clear AIAA was aligned with the same sentiments and is now in the process of developing an offer which contains many of Synchron’s original concept design elements.
“Once launched, advisers will be able to offer their clients policies with an extended term, for example, five, 10 or 15 years; which is affordable, suits their immediate needs and which has the capacity to meet their future needs in the sense that it will have guaranteed renewability, meaning no additional underwriting will be required to continue the policy,” Mr Trapnell said.
At the end of the term, advisers can offer their clients the option to renew the policy for a further term or move to either a stepped or level premium, with the default being stepped.
Speaking at the Synchron Sydney PD Day, AIAA, National Manager Retail Products, John Ashton said the offer will not be a new product as such, but an alternative approach to policy structure and pricing. While still under development, he said it represents a real collaboration between Synchron and AIAA.
He also said AIAA road tested development ideas with some of Synchron’s advisers. “We asked advisers which clients would value the offer,” he said. “One market is business clients. There’s a very obvious correlation with business loans over a five to 10-year period. Advisers will be able to offer these clients options – it won’t just be a case of putting an older client on stepped premiums and a younger client on level. They will really be able to match up a business client’s exit strategy with a particular term of five, 10 or 15 years, with premiums priced in line with that term.”
The new development is expected to be officially launched later this year.