AIG Life Widens Access To Income Protection

LONDON – 29th January 2024 – UK life insurer AIG Life Limited has redesigned its YourLife Plan Income Protection insurance, and made it easier to understand, to help even more people get access to affordable income protection (IP).

AIG has simplified its IP while adding new features, and still offers two income replacement options to match customers’ budget and income protection needs.

It’s done away with suited occupation to underwrite all new customers in in full-time paid work under their own occupation, plus covers even more jobs including teachers, dentists and surgeons.

It now pays up to 60% of the first £60,000 of the customer’s salary plus 50% of anything after as a tax-free fixed monthly sum if the individual is too ill to work. Whether the customer chooses full IP (paying monthly benefits up to retirement) or the shorter two-year claim option.

If a customer returns to work following a claim then finds they’ve not fully recovered from that condition, AIG will waive the deferred period and pay the monthly benefit, provided it’s within 12 months of them returning to work. If they chose the shorter-term payment option, the linked claim is paid provided they haven’t exhausted the 24 months of benefit on that condition.

An income replacement guarantee means customers can claim up to £1,500 every month if their income has decreased since they bought insurance and no longer supports their chosen monthly benefit when they claim.

Plus, keen to improve customers’ understanding of income protection, AIG tested its key facts literature on consumers ahead of launch. Research found the majority of testers understood the document they were reading and the benefits that AIG’s income protection provides but highlighted where minor improvements could be made so customers better understand how it will help them.

Neil Davies, Chief Operating Officer for AIG Life, said: “We’ve redesigned our income protection to be more accessible in price and understanding because we want to help customers take action for the future and see the value of income protection. The number of working adults who are off work due to long-term sickness is rising, from two million people in 2019 to around 2.5 million people in 20221. Yet it’s income that fuels people’s lifestyles and allows them to do what they love. By revamping our financial and rehabilitation support, we make it easier for financial advisers to recommend AIG’s IP and help people return to a life they can enjoy.”

Fair value features

AIG has introduced reviewable exclusions to give customers the flexibility to have their case looked at again later on if an improvement or change in their health means the exclusion’s no longer needed.

They can make changes to the value of their insurance at key moments in life too, for example when they get married or become a parent, and increase the sum assured when their careers progress or when their mortgage or rent goes up.

It also comes with a proportionate payment income top-up if, after falling ill, the individual is earning less when they go back to work  for example if they then work reduced hours or in a lower paid role.

Customers can still claim £100 per night in hospitalisation benefit if they spend between seven and 90 nights in hospital during their deferred period.
And whatever payment option customers choose, AIG’s income protection still comes as standard with access to preventative health and wellbeing service Smart Health, and with rehabilitation support that people can access in the very early days of their illness – even when they’re still in the deferred period. So they can get better and get back to work.

Helping many more people

AIG’s changes make IP more accessible in particular to dentists, doctors and surgeons who are employed by the NHS or with the same sick pay arrangements, and to teachers employed in the state sector, so they align to the terms of their employer’s sickness benefits.

For doctors, dentists and surgeons, the minimum income replacement guarantee is £3,000, to reflect the higher average income of these professions.

They also get sabbatical break cover, which means they’re still insured for up to two years on an own occupation basis if it’s agreed with their employer.

People who take care of the home instead of earning a paid income can still choose full or short-term IP to insure themselves for up £20,000 – because there’s a big knock-on financial impact for the household if they’re too ill to do their role.

Anyone on a career break and no longer working is assessed on their ability to complete work tasks when they come to claim.

And if someone is made redundant, AIG will pay their premiums for up to six months, so they remain insured and have breathing space to get back on their feet.

Whatever insurance options they choose to suit their needs, it’s now available to:

• employed, self-employed and house person customers who are
• aged 17 to 59 (up from age 54)
• as level and increasing insurance
• with waiver of premium
• up to maximum £250,000 sum assured
• for a minimum of five years up, to their 70th birthday.

Consumer understanding tested

AIG did before and after testing of its Key Facts Document (KFD) ahead of launch to learn how to help customers easily understand if the insurance they’re considering meets their needs. Conscious that adviser feedback is IP tends to be seen as more complex than other protection products and of Consumer Duty’s good customer outcomes principles.

Quantitative testing of the KFD via a survey with 200 consumers found the majority understood the document they were reading and the benefits AIG’s income protection provides, though useful feedback from contributors suggested improvements could be made.

Feedback in the first test found flow of the KFD was good, with little evidence of language being problematic or unnecessarily technical, and document was rated a solid ‘7 out of 10’.

Summing it up, testers said “what we’re seeking is a balance between simple and simplistic; thorough and engaging, everyday language.”

Qualitative testers, who were given a KFD to mark up with comments, recommended terms like deferred period and work tasks, as well as how the benefits are paid, were simplified into everyday language to improve clarity and ease of understanding.

As a result:

• Sentences are now shorter, making it easier to understand more complex information
• The opening page of the Key Facts Document now quickly and simply explains what income protection is, highlights key terms, and signposts customers to where they can get more detailed information in the Cover Details.

AIG then retested its KFD document and found these small improvements increased customers’ understanding of income protection, as:

• Those who agreed with “how easy is the document to read” increased from 60% to 71%
• “Clear about the circumstances when you could/could not claim” climbed from 52% to 62%
• “Language is clear and straightforward” rose from 60% to 67%
• “Fully understand what the product does and does not cover” went up from 55% to 61%
• “Document is unnecessary technical” fell from 25% to 15%.

Commenting on the research findings, Davies added: “It’s pleasing to see the small changes we made to our key facts really do improve people’s understanding of how income protection works. It’s generally accepted to be a more complex protection product, which is why it’s best bought on the recommendation of financial advisers. Anything we can do to support financial advisers in this process should also ensure a good customer outcome when they need to claim.”

ENDS

Notes To Editors

AIG Life is the UK life insurance arm of Corebridge Financial, formerly AIG Life and Retirement.

¹Source: ONS; Rising ill-health and economic inactivity because of long-term sickness, UK: 2019 – 2023 data published 26th July 2023.

About Corebridge Financial

Corebridge Financial, Inc. (NYSE: CRBG) makes it possible for more people to take action in their financial lives. With more than $370 billion in assets under management and administration as of September 30, 2023, Corebridge Financial is one of the largest providers of retirement solutions and insurance products in the United States. We proudly partner with financial professionals and institutions to help individuals plan, save for and achieve secure financial futures. For more information, visit corebridgefinancial.com and follow us on LinkedIn and YouTube.

About AIG Life

Additional information about AIG can be found at www.aiglife.co.uk | YouTube: www.youtube.com/aiglifeUK | Twitter: @AIGLifeUK www.twitter.com/AIGLifeUK | LinkedIn: www.linkedin.com/company/aiglifelimited. These references with additional information about AIG Life have been provided as a convenience, and the information contained on such websites is not incorporated by reference into this press release.