Synchron and AIA to create level insurance product
Independently-owned licensee, Synchron, has partnered with life insurance company, AIA Australia, to create a fixed term level product ahead of the implementation of the Life Insurance Framework (LIF) later this year.
The product, which was in the development stage at this point, came about in a bid to make available a product with more level premium pricing to meet the changing needs of financial adviser and their clients.
Synchron director, Don Trapnell, told a media briefing the idea for the product was born out of the visit to the UK last year with independent chair, Michael Harrison.
"We looked at what we learnt over there and we decided that we needed to design a product based around a level premium concept and put it to market," he said.
"In Australia all product design actually comes from insurance companies. Product design doesn't normally come from innovation; it doesn't normally come from distribution."
He said that while level premiums were available in Australia, it was roughly a 200 per cent jump to switch from a yearly renewable premium to a level premium.
Trapnell said the firm approached six life insurance companies before partnering with AIA, who agreed to design a level premium life and total and permanent disability (TPD) product that could handle the 200 per cent jump from yearly renewable premiums to level premiums.
"The client will enjoy guaranteed renewability — meaning they can continue after a fixed term and no additional underwriting would be required," Trapnell said, adding that the product would offer fixed level premiums that could change to reflect clients' life stage and situation.
AIA Australia retail product manager, Steve Baxter, said the fixed term level premiums would complement stepped and level options.
It would be available to all advisers and was not exclusive to Synchron.
While the product was expected to be ready later this year, Trapnell could not comment on whether it would be ready before the LIF implementation on 1 July.
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