Risk awards: Refining price and product for term and TPD

Money Management/Dexx&r Adviser Choice Risk Awards 2009

Term and TPD Rider Product

Gold: ING Life

Silver: Zurich Life

Bronze: Macquarie Life

ING Life has once again won first place in the term and total and permanent disablement (TPD) category of the Adviser Choice Risk awards.

ING head of marketing, retail products and reinsurance Gerard Kerr said it had improved its term and TPD product, OneCare, by removing the restrictions on the sum insured amounts, as well as disposing of the “little rules” restricting self-insured cover at certain levels, as well as age restrictions on life insurance.

Installing old rules of capping the sum insured amounts at certain levels, such as putting in a maximum that could be increased according to the consumer price index, or terminal illness benefit, was making the company’s products increasingly complex, Kerr said.

He said the challenge was to remove some of the restrictions around those products.

ING also raised the levels of insurance cover in its term and TPD product as part of the revamp, raising the insurance levels on its OneCare product to $1.5 million before automatic requirements come into force. It also changed some of the non-medical limits in the product as well, Kerr added.

“Those levels were a lot lower, and that was for people in their 40s, and we went ‘well, do we need to be requesting these automatic requirements at this stage?’ We will continue to challenge ourselves on this, and see if we can take [the insurance cover] higher.”

A revamp of the pricing of its term and TPD rider product Protection Plus was the reason Zurich took out silver in the category.

“Term insurance is a commodity, it’s a death policy, so it’s not so much the quality of the contract itself, it’s really more about the pricing affordability for that product.

“So we had a look at all of our mortality rates ... and clearly people are definitely living longer … so we did a revamp primarily on our term product for pricing,” head of Zurich Life Colin Morgan said.

Zurich significantly reduced the premium structures in the 35-55 age bracket for its term products, Morgan said.

Its TPD insurance, however, came down to its approach to the contract and how it offered the product to customers, he said.

“TPD is seen as a tough benefit to get, to be totally and permanently disabled... so we changed some of the components of the definition and basically improved the way that you could qualify for the benefits.”

Zurich introduced an income reduction definition to the product, in which the customer must prove that their income had dropped by 75 per cent as a result of the disability.

Head of Macquarie Life Justin Delaney drew attention to the company’s market research and continuing feedback from clients as the reason behind its term and TPD product, FutureWise Life, taking out bronze in the category, the second consecutive year it has made the top three.

That market research led to the launch of its TPD Superannuation Optimiser in May this year. The addition enables a client to structure their TPD cover to sit partly under their super policy and partly under a non-super policy, giving them greater security of access and better tax efficiency.

Macquarie Life also linked its super and non-super cover across self-managed super fund ownership, and introduced several small enhancements including TPD advancement benefits, Delaney said.