Goodreturns: level life cover

Matthew Martin reviews Partners Life's decision to increase level rates. We had a great talk through the drivers of level life rates. Interest rates is a dominating factor, but the context for level life cover has always been a backdrop of continuing improvements in mortality risk. That's been put into reverse in most rich countries by COVID-19. Here is Matthew Martin's article. Here are the links to the data investigations that show the impact on life expectancy and the examination of excess deaths through the pandemic


QPR: group life and health product research

Many advisers come across clients who have cover with a major employer group scheme and would like to be able to access research to support recommendations to either retain, replace, or dispose of this cover. "Wrap-around cover" with very high excess levels so that benefits such as good non-Pharmac drugs coverage can be offered is a common component of advice - but understanding what is actually covered already is a key part of making any effective recommendation. As many of these groups have terms and conditions specific to them, or are at least based on a different 'foundation' product to current retail offers, it is not simply a matter of looking at current retail policies. Therefore, we are often asked if we compare group life and health insurance on Quotemonster as part of the quality product research service. QPR does not, although at times Chatswood does, offer bespoke comparison to larger adviser groups and insurers - this is not an economic solution for most advisers. However, we are now defining the scope of work to add group life and health comparison to the site. If you would like a say in how the new service works we would be delighted to hear from you. In particular we would like to know what the most common group schemes you come across are and which you would most like us to provide research on. Please send your comments to either Treena Jordan, Doreen Dutt, or me.


Closing the protection gap and more daily news

Swiss Re yesterday published the results of a survey undertaken this year to understand New Zealanders' attitudes and behaviours towards life insurance:

The inaugural report, Closing New Zealand's mortality protection gap, estimates that the mortality protection gap for New Zealand households – the gap between households' financial resources and the protection they need to maintain their living standard in the event of the death of a primary earner – at USD 435 billion (NZD 670 billion) as of 2020. 

The findings show that this gap is projected to widen to more than USD 500 billion (>NZD 750 billion) within the next 10 years, in part due to rising consumption and household debt levels. As an industry, there is a need to act now.

The current COVID-19 crisis has increased the sense of risk and insecurity. More than 80% of those surveyed in New Zealand believe that losing the income of the primary earner will affect their family significantly. This is slightly higher than the 72% of all advanced Asia Pacific markets Swiss Re surveyed prior to COVID-19.

Swiss Re's findings show almost two thirds of households in New Zealand have some form of mortality protection gap. About a fifth of households have just 10% or less of the financial resources required to cover their protection needs; in other words, a protection gap of 90%.

The report also examines how to close the gap in New Zealand. Swiss Re estimates that in the decade to 2030, this could be achieved with an additional USD 1.5 billion (NZD 2.3 billion) of life premiums every year. Yet only 39% of consumers reported owning a life insurance policy, and survey responses find that buying life cover is not their default option for increasing security.

You can download the report here:  Closing the mortality protection gap in New Zealand | Swiss Re

Other daily news:

AIA Vitality is offering 1,000 points for members to get their Covid-19 vaccine

Montoux, sellers of decision science software, is running a seminar on engaging long-term care insurance clients

nib: are joining Protecht, sellers of risk management software, for a seminar on culture and conduct risk management.

Partners Life: an interview with Life Kris Ballantyne and Mark Leishman discussing financial literacy can be found here:


Quality Product Research: How do we model the package weightings and why?

A package should reflect the relative value of different types of insurance protection to the person buying that cover. We put weightings on packages because, for example, a package of just life and trauma is less comprehensive than a package of life, trauma, mortgage protection, and medical.

A summary of the weightings is shown below:

Prdouct new

Zoom in on the income and mortgage elements for a moment. That was raised by several advisers recently who feel that mortgage cover is the first element of temporary disability protection put in force. Market practice backs this up - quoting by advisers in Quotemonster shows that more mortgage protection is now quoted than income protection. So how were we to revise the package breakdown? We took the view that of the 45% of the package value assigned to MP and IP combined, the scores should reflect the relative weights when MP and IP are typically included in a plan together. MP often covers the first 40% of income insured and IP tops that up to about 75%. Clearly it can vary according to rules specific to each company and products used, but broadly this gives a new weighting as follows:

MP         25%

IP           20%

Total      45% of package value

We value and appreciate all the feedback coming through! If you have any questions or comments please email them through to info@quotemonster.co.nz


Quality Product Research: QPR database update V145

Quality Product Research works continually to update our product ratings. We have just distributed the QPR Database V145 to subscribers which includes the following changes:

 

* Medical Exclusions Major Review - all insurers

* Partners Life - new policy document effective 12/07/2021

> Income & Expenses Cover and Moderate Trauma rated

> Enhancements effective 12/07/2021

 

* AIA enhancements to Trauma & IP/MP effective 23/07/2021

* Pinnacle Life - new policy document loaded

> Life: no rating changes

> IP: no rating changes

> TPD Any Occ Accelerated rated

> Trauma: minor rating changes

* Reviews:

> Trauma

- Osteoporosis re-rate for all companies

- Asteron - Trauma Reinstatement replaces continuous Trauma in TBB

> IP/MP

- Total Disability Class 1&2 5yr for PL

> Life

- Financial Planning & Legal - re-rate for all companies

- Grief and Funeral Support - re-rate for all companies

- Business Future Insurability (optional) added to PL


Legal and regulatory update for the life and health insurance sector

9 June 2021 – Privacy News from the Office of the Privacy Commissioner referred to a consultation released by the Department of Internal Affairs on 19 April 2021, with submissions closing on 11 June 2021, on a proposed Death Approved Information Sharing Agreement designed to make things a little easier for families when someone dies. This sets out the legal basis that makes it simpler to safely share personal death information that the Department of Internal Affairs holds on behalf of New Zealanders. This development would be very helpful for insurers who wish to monitor for the death of a life assured. That could help meet conduct obligations associated with offering a product that operates around the end of a life. Also, looking ahead, it could even enable automating the claim approval process. More information:  https://www.dia.govt.nz/proposal-to-share-death-information

9 June 2021 - The Commission for Financial Capability released a report and recommendations following public consultation on a discussion paper studying the effects of the complex legal framework governing the retirement village sector. https://cffc.govt.nz/news-and-media/news/urgent-review-recommended-for-retirement-village-legal-framework/


Life price comparison database update

We have updated the life price comparison database, version 113, to reflect the changes to Cigna's pricing, which were extensive. Corporate subscribers should examine the update notes that have been sent with the database and the change report function. Advisers should check out comparisons on Quotemonster to see the effect of the changes which involved some increases - but also some notable decreases - which tended to favour larger cover amounts and the 90 day wait period for IP / MP. 


Westpac Withdraws Gold Term and Gold Disability Income Cover

As of 15 March 2021, Westpac no longer offers Gold Term Cover (death, critical trauma, TPD) and Gold Disability Income Cover (Indemnity Income Protection). Existing policy holders, however, can continue to make amendments (i.e. increase and decrease cover amounts). Westpac Life continues to offer term life, TPD, critical illness and Agreed Value income protection in other products. For further information please click here


Cigna premiums to increase, and more daily news

Cigna has announced that from 15 April 2021 there will be changes to underlying premium rates on Life, Trauma and Disability covers across Assurance Extra, Business Assurance, Business Extra and Agribusiness Extra. Changes to Life, Trauma and Disability cover are a response to feedback and market developments. The price changes represent the changes. The price changes will be applied for new customers but current customers will have the new rates applied on their next premium review date after 15 April 2021. Applications that are submitted  before 15 April 2021 and issued before 15 May 2021 will not be immediately affected by the price changes. All changes are listed below:

 

·     Life cover rates on Assurance Extra, Business Assurance, Business Extra and Agribusiness Extra are increasing by 3% for yearly renewable, 5-year level and 10-year level premium structures.

·     Alongside this we’ve increased our large sum assured discounts for customers with over $500,000 of life cover.

·    Trauma cover on Assurance Extra, Business Assurance, Business Extra and Agribusiness Extra are increasing by 3% for yearly renewable premium structures.

·    Accelerated Complete Disablement Cover on Assurance Extra, Business Assurance and Agribusiness Extra are increasing by 3% for yearly renewable premium structures.

·    Disability covers including Income Cover, Mortgage Repayment Cover and Premium Cover are increasing dependent on factors including age, gender, wait period and benefit period. The increase will generally vary between 1-10%, however in some cases customers will experience a decrease.

 

“We wanted to give you a heads up about upcoming increases to the underlying premium rates on our current Life, Trauma and Disability Cover pricing across Assurance Extra, Business Assurance, Business Extra and Agribusiness Extra.

 

The new underlying rates will come into effect on 15 April 2021.

 

Over the past year in response to feedback, and in line with market developments, we’ve made a number of enhancements to our core Life, Trauma and Disability cover to make it easier for customers to access support when the unexpected happens.

 

These new competitive rates reflect the recent enhancements and will contribute to the long-term sustainability of our products while remaining good value for your customers.

 

For new customers: The refreshed rates come into effect on 15 April 2021 for all new policies.

 

For existing customers: The new rates will be applied to existing customers at their next premium review date from 15 April 2021. Customers will receive notification of their new premiums via the renewal letter which is sent prior to their premium review.

 

Any applications submitted before 15 April 2021 and issued before 15 May 2021 will be honoured at the old rates and will not be subject to the new rates until the first premium review.” Click here to read more 

In other news

FMA: the FMA has issued a public warning to Roger David Gannon of Gannon Insurance

Cigna: Simon Prentice to join Cigna as Business Partnership Manager based in lower South Island

Cigna: Sharon Duffell new Christchurch Senior Underwriter in the New Business & Underwriting Team

Cigna: Multi-Benefit Discount extended until 30 June 2021

 


Cigna: multi-benefit discount campaign details

Cigna has announced a multi-benefit discount campaign for customers over 30. The discounts applies to all new Assurance Extra policies issued on or after 9 September 2020. Depending on a customer’s age and the number of qualifying benefits they choose to take up alongside their Life or Life Income Cover, the discount amount will vary. As a result, policies with multiple people may have different levels of discounts applied. Alternatively, a single policy may only have discounts applied to certain covers.

The discounts available are:

  • 3% for customers aged 30-39 who take out LIFE + one or more other qualifying benefit
  • 5% for customers aged 40+ who take out LIFE + one other qualifying benefit
  • 7% for customers aged 40+ who take out LIFE + two or more other qualifying benefits

To be eligible customers must have a Life Cover in place and have a minimum sum insured amount of $200,000 and have a minimum of one qualifying cover.  Covers selected from the same group will be considered as one qualifying benefit in the discount calculations. Please refer to the table below for more details.

Selection

Benefit Group

Minimum Sum Insured

Covers that qualifies under the benefit group

Mandatory

LIFE

$200,000

Life Cover

Life Income Cover*

Optional

TRAUMA

$100,000

Trauma Cover - accelerated

Trauma Cover - standalone

COMPLETEDISABLE

$200,000

Complete Disablement Cover - accelerated

Complete Disablement Cover - standalone

MONTHLY DISABILITY

$2,000 per month

Income Cover - Agreed Value

Income Cover - Indemnity

Income Cover - Loss of Earnings

Income Cover - Loss of Earnings Ultra

Mortgage Repayment Cover