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  • LIF Rules and your AIA Australia experience from 1 January 2018 - update No.2

    08 November 2017


    From 1 January 2018, the new Life Insurance Framework (LIF) remuneration rules will be implemented across the industry.

    Below is the second in our series of updates on the new LIF rules and how it relates to your experience with AIA Australia and Priority Protection and Priority Protection for Platform Investors.

    Commission dial up and down

    From 1 January 2018, AIA Australia’s commission rates will be adjusted in line with the LIF rules. AIA Australia has taken this opportunity to improve our commission rates where premiums are dialled down. We have also increased the premium discount when full commission is dialled down from 25% to 30%. This means an extra 5% discount for your clients if you choose to dial your commission down to $0 and opt for fee for service.

    The table below shows the new remuneration rates for the Priority Protection range of products from 1 January 2018 (inclusive of GST). Please note that these rates will be adjusted in January 2019 in line with the LIF rules.

    Premium Discount Upfront 2018 Level
    +5% Year 1 N/A 31.13%
    Year 2 N/A 31.13%
    Year 3+ N/A

    31.13%

    Standard Year 1 88.00% 30.00%
    Year 2+ 22.00% 30.00%
    -5% Year 1 65.00% 23.10%
    Year 2+ 20.00% 23.10%
    -10% Year 1 55.00% 18.37%
    Year 2+ 15.00% 18.37%
    -15% Year 1 40.00% 12.87%
    Year 2+ 12.00% 12.87%
    -20% Year 1 20.00% 9.13%
    Year 2+ 8.00% 9.13%
    -30% Year 1 0.00% 0.00%
    Year 2+ 0.00% 0.00%



    Upfront 2018 Level
    Term Cover (10-year) Year 1 55.0% 27.5%
    Year 2+ 22.0% 27.5%
    Term Cover (5-year) Year 1 44.0% 22.0%
    Year 2+ 14.3% 22.0%



    Alterations

    Increases to Policy Cost

    AIA Australia will continue to pay commission on an increase to policy cost resulting from an increase to the sum insured.

    Decreases to Policy Cost

    If there is a decrease to the policy cost, commission will be clawed back proportionally, if the decrease occurs within the clawback period. 

    A reminder of our clawback and grandfathering rules

    Grandfathering Rules

     The following policies will be grandfathered under the LIF rules.

    1. Policies issued prior to 1 January 2018
    2. Policies issued after 1 January 2018:


    Policies issued on or after 1 January 2018 will be grandfathered for LIF purposes if the:

    • electronic application for the Policy is submitted to AIA Australia before 1 January 2018; or
    • paper application for the Policy is signed and dated before 1 January 2018 AND received by AIA Australia before 1 February 2018;


    AND

    • Policy is issued by 31 March 2018


    Where a Policy is grandfathered for LIF purposes, any additions to the same policy will also be grandfathered.

    Any grandfathered policy which is cancelled and replaced on or after 1 January 2018 will no longer be grandfathered for LIF purposes.

    Clawback Rules

    Grandfathered Policies:

    Our existing 12 month clawback rules will continue to apply to grandfathered policies (and additions to grandfathered policies).

    Policies not Grandfathered:

    There will be a two year clawback period for all policies not grandfathered. This clawback period applies to any commission paid on the original sum insured and any additions made in the first two years. 

    Any commission paid on additions to a policy after the two year clawback period has ended will be subject to our existing 12 month clawback rules.

    Upfront commission clawbacks:

    Cancellation or reduction during clawback period and within the first 12 months following payment 100%
    Cancellation or reduction during clawback period and after the first 12 months following payment 60%




    Read more Adviser News articles

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    Who ever thinks they will be making a claim on their Life insurance policy? The people on our list didn’t; luckily, they made the decision to apply for a life insurance policy.

    21 June 2022

    Changes to cancellation process


    AIA Australia June 2022 changes to the cancellation process for life insurance policies.

    21 June 2022

    Inside All or Something campaign


    AIA Australia recently launched the All or Something campaign which encourages Australians to move away from an ‘All or Nothing’ approach when it comes to their physical and mental health.

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    Copyright © 2021. AIA Group Limited and its subsidiaries or affiliates. All rights reserved. Priority Protection and Priority Protection for Platform Investors products are issued by AIA Australia Limited (ABN 79 004 837 861, AFSL 230043). AIA Vitality, a personalised, science-backed program that supports members every day to make healthier choices, is available with eligible products issued by AIA Australia. AIA Health with AIA Vitality is issued by AIA Health Insurance Pty Ltd ABN 32 611 323 034, a registered private health insurer governed by the Private Health Insurance Act 2007, Private Health Insurance Rules 2007 and the AIA Health Insurance Pty Ltd Fund Rules. The information on this website is current as at 1 April 2021 and may be subject to change. It is general information only and is not intended in any way to be financial, legal, tax, health, medical, nutritional or other advice. You should consider your own personal circumstances and needs and view the relevant product documents, fact sheets, fund rules and terms and conditions before making a decision to acquire such products. If necessary you should obtain professional advice from a financial, tax, medical or health professional. Unless expressly stated, any views or expressions of opinion (including any video content) do not represent the opinion of AIA.
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