Priority Protection

Crisis Extension is a carefully designed product that complements our highly rated Crisis Recovery product. Through Crisis Extension, your clients will have the choice of flexible cover which offers them and their family additional cover for longer.

With Crisis Recovery, your clients are paid a lump sum if they are diagnosed with or undergo a Crisis Event. Crisis Events are medically defined as part of our Product Disclosure Statement (PDS) and include cancer, heart attack and stroke; medical procedures such as coronary artery angioplasty; and many other serious illnesses and injuries. This Crisis Recovery lump sum payment helps with the financial burden of the medical condition and provides your clients with peace of mind while they recover from an illness or injury.

However, it is important to note that this is a once-off payment, and if your clients’ condition progresses or worsens, they will no longer have access to the same level of cover. What this means is that a full Crisis Recovery payment as a once-off pay-out may leave them exposed and vulnerable to future risks of not being well enough to obtain insurance cover if a more serious event occurs or if their medical condition deteriorates further.

Crisis Extension addresses this by offering your clients a more personalised and flexible long-term cover solution. Depending on the circumstances, having Crisis Extension in addition to Crisis Recovery and Crisis Reinstatement could allow for multiple claims, and keep your clients covered even after the Crisis Recovery claim payment has been made.

IP CORE is AIA Australia’s (AIAA) newest income protection product. From October 2021 it is our only product available for new business as the industry adapts to the new guidelines from the Australian Prudential Regulation Authority (APRA) and the Actuaries Institute. The product was designed to deliver more stable premiums.

With IP CORE, your clients are paid a monthly benefit if they are Totally or Partially Disabled solely due to sickness or injury, as defined by the Product Disclosure Statement (PDS). The IP CORE monthly benefit payment helps with the financial burden while your clients recover.

The Income Replacement Ratio is lower than the income products available in market until October 2021. IP CORE offers up to 70% of Pre-disablement Income for the first 24 months, then 60% for the remainder of the benefit period. The definition of disability also switches from an Own Occupation to Suited Occupation after the first 24 months.

The intention of the both these features is to provide more stable premiums

Currently IP CORE policies are guaranteed renewable like traditional IP contracts. By October 2022 however, all new policies will need to be compliant with the APRA five-year policy term construct. The specifics around this design feature are still under industry discussion. Once confirmed, AIA will announce the IP CORE position.

We are offering a five year rate guarantee on 5 Year Term Level lump sum insurance contracts entered prior to 31 December 2021. Please note the rate is still subject to CPI and a client’s AIA Vitality status if these options are included.

After the initial five-year term, clients will receive a loyalty discount of 2.5%, in addition to any discounts that they may be entitled to if they wish to continue to be protected.

Five Year Term Level Premium Guarantee provides you and your clients within another premium structuring option, even if the need for cover is for greater than five years in duration. It enables client budgetary expectations to be set over the first five years of the policy and eliminates any ad-hoc rate rises after the policy has gone into force. Above all, it provides you and your clients with certainty against a backdrop of persisting pricing pressures permeating within the Australian life insurance industry.

Meet AIA Priority Protection client Jed, Jed age 45 works in the IT consulting space and has been with his firm for 15 years.

His adviser identified that he required income protection to protect his salary as a Director of the consulting firm. With non-deductible debt on the family balance sheet and his two children still in high school, his current levels of $1,000,000 Life and TPD cover.

His adviser has just recommended AIA Australia Income Protection CORE policy together with $150,000 of Priority Protection Standalone Crisis Recovery.

Having identified that his existing Life and TPD cover does not meet his stated goals, needs and objective, his adviser is also looking to replace his existing lump sum cover with AIA Priority Protection.

While IP CORE has a comparatively lower income replacement ratio, it does meet Jed’s objectives given he has significant liquidity and emergency funds that can be accessed to top up an IP CORE monthly insured benefit; should he become temporarily ill or injured.

The $150,000 of Crisis Recovery will counter the risk of chronic disease and illness which are prevalent at his age. This is particularly important to Jed after witnessing first-hand the devasting effects, both mentally and financially, that cancer has on a close friend.

Being standalone Crisis Recovery, it provides Jed with a comprehensive level of cover relative to what would have been available had the Crisis cover been built into a standard IP contract.

Crucially, and unlike AIA Australia’s Income Protection PLUS Optional, if he met the qualifying claim criteria under both policies, he would be paid the $150,000 sum insured on top of the monthly insured benefit payable on IP CORE.

Because Crisis Recovery must be self-owned outside of the superannuation environment, Jed was very receptive to the idea of a Five-Year Term Level Rate Guarantee structure; especially in light of persisting pricing pressures in the life insurance industry. At his age, the option of a standard Level premium structure wasn’t palatable given the large disparity between Stepped and Level premiums, and the fact that it would take an extremely long time to breakeven.

He takes comfort knowing that the annual premiums on his cover, especially the Crisis Recovery component, are absolutely fixed and guaranteed for the first five years of the policy with no surprise rate rises for the first five years.