Giving your clients the gift of predictability

20 September 2018

AIA

AIA Australia is a leading life, health, and wellbeing insurer driven by a purpose to help people live healthier, longer, better lives.

Predictability provides your clients with stability and can also support your business objectives.

Advisers know it’s not uncommon for their clients to feel stressed, unsettled or nervous ahead of major life changes. Regardless of whether they are buying a house, starting a family or expanding their business, adapting to new financial situations can be daunting.

As a financial adviser, the role you play is important. Not only do you help steer your clients in the right direction, but you also have a unique opportunity to help reduce any financial and emotional burdens your clients may be facing. For the right clients, a strategy that may help you do this is recommending Term Level as a potential premium structure. It could suit your client’s needs, while also providing them with some financial predictability during a time in their life that may be anything but predictable.

If a Term Level premium structure suits your client’s needs and is their preferred choice, it allows them to choose level[1] premiums for a term of 5, 10 or 15 years, avoiding Stepped increases.  A Term Level premium:

  • Offers some stability and predictability in times of transition and change.
  • Helps your clients manage their budget.
  • May allow for cumulative savings throughout the agreed term.

Term Level may be suitable for clients requiring either personal insurance or business protection. Here’s two examples:

1) Using Term Level when buying an investment property

Amanda and Tom (both age 40) recently purchased their first investment property. Amanda, the primary income earner, plans to use any surplus cash flow to make extra repayments on the investment loan. As a result, they expect to have repaid the loan in 13 years.

To ensure they’re protected, Amanda takes out $1M of Life and Total and Permanent Disablement cover. For further financial stability and predictability, they opt for a ten-year Term Level policy. Term Level will help Amanda and Tom to save when compared to Stepped, Optimum or Level premiums over the 10 year term.

When the ten-year term is up, Amanda can continue her policy on the default Stepped premium with a 5% loyalty discount.

2) Term Level for business protection

Jack and John (aged 45 and 55) both own 50% of their business J&J Engineering. When John retires in five years’ time however, Jack will become the sole owner of the business. As they plan for John’s upcoming retirement, their adviser recommends that they both take out $1M Life cover over a five-year term to protect their business.

A five-year Term Level premium provides Jack and John with the most stability over their cash flow needs and peace of mind. Jack can review his insurance requirements when the five years are up. Regardless of which premium option he chooses to continue his policy, he’ll enjoy a 2.5% loyalty discount.

Adviser benefits

When in the best interests of your clients, Term Level can form part of your long-term client retention and business strategies. As a result, it can help you meet your targets and achieve your broader business goals. Plus, as an extra benefit, Term Level can align with ASIC’s long-term affordability and sustainability focus.

Term Level is available with AIA’s Priority Protection (PP) and Priority Protection for Platform Investors (PPPI) policies. Learn more about Term Level, or contact your AIA CDM or Phone 1800 033 490 for further details.

This information is current at the date of publishing and may be subject to change. This article provides general information only without taking into account factors like objectives, financial situation, needs or personal circumstances of any individual and is not intended to be financial, legal, tax, medical or other advice.

[1] Excludes annual Policy Fee CPI increases

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