AXA has announced it will release a new blended premium option for its term life, total and permanent disablement (TPD) and trauma insurance customers in April.
AXA is the second to offer this hybrid option, which fills the gap between stepped and level premiums, following in the steps of AIG Life.
AXA head of individual life Stephen Rosengren said that by adding another choice to the sales process, AXA hoped to boost customer retention levels in older age categories.
“If you want cheaper premiums to begin with you take out stepped premiums, but there is a higher risk the client is going to drop off when they get to 50 or 55 just because of the cost. That’s probably the time … they actually should really to have their insurance,” he said.
“On the other side, you’ve got level premiums that are quite expensive early on, but at your older ages you are starting to see the benefits of that. But you’ve got to hold the policy for quite a while to get the real value add.”
Blended premiums will be priced between stepped and level at the outset, will rise during the first stage of cover and then level out to a fixed rate for the rest of the policy.
“We think this will be another choice in the sales process and it might help not only in terms of blended premium sales but also level premium sales to retain exiting policyholders. So it’s a bit of a dual strategy,” Rosengren said.
