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17 april 2020

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17 april 2020

Premium Suspension Cover – further improvements

We are pleased to announce some further enhancements to our temporary suspension of cover options. These enhancements are designed to provide customers with greater flexibility to manage their cover during this period:

  • Customers holding AIA Real risk products will now receive the same favourable treatment of medical conditions which develop during the suspension period as customers holding other products;
  • Employed customers whose income is reduced to 80% or less are now eligible to suspend their cover; and
  • Eligible customers can now suspend some of their cover level (sum assured).

Supporting you through financial hardship

We recognise that the current situation is creating financial hardship for some of our customers and we have put together the following premium relief options, summarised in the table below, to support you.

These temporary enhancements apply to all legacy AIA, ex-Sovereign and AIA Living risk and health policies, including ASB Easy Life and Living, ASB Flexilife, ASB MyLife and all ASB health policies.

The terms which apply to the premium relief form part of the wordings for the eligible policies are as follows:

If a life assured goes on parental leave, leave without pay for any reason, becomes redundant, experiences at least a 20% reduction in pay (comparing the most recent payslip against a previous payslip from the same year), or being self-employed experiences a 30% reduction in revenue (by comparing one month’s revenue against the same month for the previous year), you may suspend cover for up to 12 months for the life assured provided that:

  • You notify AIA within three months from the commencement of leave or redundancy or reduced pay and provide evidence to AIA; and
  •  AIA acknowledges receipt of that notification and accepts the evidence provided, in writing.

    Cover for the life assured will be suspended from the date set out in AIA’s written acknowledgment and acceptance.

    No premium will be payable during the period that the cover is suspended.

    No claim under any of your suspended policies will be payable for any claim event that occurs during the period that the cover is suspended. A claim event is any event (death, illness, injury, condition, redundancy, or medical treatment) that gives rise to a claim under your policy.

    Cover will be automatically reinstated after the nominated suspension period without the need to provide further medical evidence.

    You cannot reinstate your cover prior to the end of the suspension period.

    The premium payable for the reinstated benefit will be based on AIA’s premium rates at the time of the reinstatement.

Temporary Enhancements to Premium Suspension Benefits

Maximum Suspension Period
Leave Without Pay:  12 months
Redundancy (employed customers):  12 months
20% reduction in income (employed customers):  12 months
30% reduction in revenue (self-employed customers):  12 months

Full / Partial Benefit Suspension Options
Ability to suspend all cover: Yes
Ability to suspend some cover (reduce sum assured):  Yes

Coverage during Suspension (see below for further detail)
Cover for claim events during the suspension period:  No
Cover for claim events which first arise after the cover is reinstated:  Yes

Reinstatement rules
Underwriting to reinstate:  No
Ability to reinstate at any time:  No

Arrears management
Maximum months in arrears:  3 months (AIA Living and ex-Sovereign) 2 months (legacy AIA products)
Coverage during arrears (any outstanding arrears will be deducted from any claim payable):  Yes
Repayment plan required to retain cover:  Yes

Coverage during suspension

No claim will be payable for any claim event (i.e. the death, illness, injury, condition, or redundancy that you are claiming for under your policy) that occurs during the suspension period.

However, you are covered for any claim events that first occur after your cover is re-instated if you meet the criteria for a claim payment under your policy.

 

 Life Cover Trauma IP Health

EXAMPLE – a customer is diagnosed with cancer during the suspension period
During suspension

No claim if the customer dies or becomes terminally ill during suspension period.

No claim for any Trauma conditions that are met during the suspension period.

No claim if customer satisfies the conditions for an IP claim during the suspension period.

No claim for medical treatment received during the suspension period.

After reinstatement

Cover if customer subsequently dies or first meets the terminal illness definition due to the cancer after reinstatement. 

Cover for any other Trauma conditions that are first met after reinstatement (cancer-related or otherwise).

Cover if the customer first becomes eligible for an IP claim (cancer-related or otherwise) after cover is reinstated.

Cover for any medical treatments (cancer-related or otherwise) received after cover is reinstated.

AIA Vitality memberships

If you have an AIA Vitality membership and request the Suspension of Premium Benefit your AIA Vitality membership and any applicable fees will be automatically suspended until your policy is re-instated.

Please note that your AIA Vitality membership is reset to Bronze status after 30 days and your points will be reset to zero.

AIA’s arrears management process

In addition to our premium suspension options, you can retain your cover for up to three months without paying premiums by following AIA’s standard arrears management process.

If you wish to retain your cover but are unable to afford your insurance premiums, you can miss up to two months on AIA Real and older AIA products and up to three months on AIA Living, ex-Sovereign and ASB products without your policy lapsing.

At the end of the period (two months on AIA Real and older AIA products and up to three months on AIA Living, Sovereign and ASB products), you can either pay all outstanding arrears and your policy will continue or you can contact AIA and we will work with you on a flexible repayment plan. Alternatively, at the end of the period, you can suspend your cover for up to twelve months in line with our Premium Suspension Benefit and organise a repayment plan for the missed premiums at the end of the premium suspension period.

If you do not contact AIA at the end of the period to arrange either a repayment plan or the Premium Suspension Benefit, your policy will lapse.

If your policy lapses due to non-payment of premiums and you wish to reinstate it, the following requirements apply:

  • 0-30 days
    • Full payment of arrears
  • 31-90 days
    • Full payment of arrears
    • Declaration of Continued Good Health form for each life assured. This could result in Terms or Loadings being placed onto the policy after underwriting has been completed.
  • 91 days to 1 year - a new policy will be issued with new rates and be subject to terms and conditions
    • AIA Living Application form required and benefits will be fully underwritten. This could result in terms and loadings being placed onto the policy after underwriting has been completed
    • Replacement Policy Advice Form
    • Quote using current rates

FOR EXAMPLE:
James has recently been made redundant and phones AIA to say he is unable to afford premiums and is going to miss two payments. During this period, James does not pay any premiums and retains his cover.

After two months, James contacts AIA and he asks to suspend his cover for twelve months under AIA’s Suspension of Premium benefits.
After twelve months, James’ cover is reinstated and, in addition to his usual premium payments, he makes repayments in respect of his two months’ missed premiums in accordance with the repayment plan he has agreed with AIA.

AIA LIVING, SOVEREIGN TOTALCARE MAX, ASB LIFESTYLE SECURITY PLAN

Until further notice, customers holding these products who are made redundant or are on leave without pay, will be eligible to suspend their cover for a nominated fixed suspension period of less than 12 months after which their cover will re-activate, under the temporary enhancements to the Suspension of Premium Benefit. Customers will be able to extend their nominated suspension period up to 12 months (in total) by phoning us before the end of the suspension period. This also includes self-employed customers experiencing financial hardship.

Please note that customers who suspend their cover due to redundancy or leave without pay will not be able to re-activate their cover before their nominated suspension term. This measure is required to enable us to manage increased selection risk – e.g. customers reinstating their cover once they develop a medical condition.

Please note no claims will be payable during the suspension period.

FOR EXAMPLE:
Andrew has recently been made redundant and phones AIA to suspend his policy for three months. After two months, Andrew phones AIA to extend his suspension period up to 12 months (in total). After ten months, Andrew phones AIA to re-activate his cover; however, he is unable to do so until the end of his 12 month nominated suspension period.

Please refer to the applicable policy wording for further terms and conditions.

AIA REAL AND OTHER AIA RISK POLICIES ISSUED SINCE 2001 (EXCLUDING AIA REAL HEALTH AND AIA SUPERIOR HEALTH)

The existing Suspension of Premium Benefit under the AIA Real product range allows customers who are made redundant or are on leave without pay to suspend their cover for up to six months.

Until further notice, we have extended the maximum suspension term to 12 months (in total), including for self-employed customers experiencing financial hardship.

Customers who suspend their policy can re-activate their cover at any time by contacting AIA. Customers can also extend the suspension period up to 12 months (in total). In line with the existing terms and conditions of the Suspension of Premium Benefit, no claim will be paid in respect of any events, symptom or condition which first manifested itself during the period of premium suspension.

FOR EXAMPLE:
Jessica has recently been made redundant and phones AIA to suspend her policy. After three months, Jessica phones AIA to re-activate her cover. Two months later, Jessica decides to suspend her policy again for a further nine months.

Please refer to the applicable policy wording for further terms and conditions.

ALL OTHER AIA, SOVEREIGN, AND ASB RISK AND HEALTH POLICIES INCLUDING AIA REAL HEALTH AND AIA SUPERIOR HEALTH

Until further notice, the following Suspension of Premium provision based on the AIA Living product range will apply to all other AIA, Sovereign, and ASB risk and health policies. This provision applies in addition to any other provisions that may appear in the customer’s policy:

If a life assured goes on parental leave, leave without pay for any reason, becomes redundant, or experiences financial hardship whilst self-employed, you may suspend cover under this Benefit for up to 12 months for the life assured provided that:

  • You notify AIA within three months from the commencement of leave and provide evidence to AIA; and
  • AIA acknowledges in writing receipt of that notification.


Cover for the life assured will be suspended from the date set out in AIA’s written acknowledgment.

No premium will be payable during the period that the cover is suspended.

No claim under this Benefit will be payable for any claim event that occurs during the period that the cover is suspended.

Cover under this Benefit may be reinstated after the nominated suspension period without the need to provide further medical evidence, provided that you notify AIA to reinstate this benefit.

If AIA does not receive notification to reinstate the suspended benefit before the end of your nominated suspension term, the benefit will be automatically reinstated for the life assured.

Cover for the life assured will be reinstated from the date set out in AIA’s written acknowledgement.

The premium payable for the reinstated benefit will be based on AIA’s premium rates at the time of the reinstatement.

AIA VITALITY MEMBERSHIPS

Any AIA Vitality memberships attached to suspended insurance policies will be automatically suspended until an eligible insurance policy is re-activated.

Please note that a customer’s AIA Vitality membership is reset to Bronze status after 30 days and points will be reset.

IMPACT ON COMMISSIONS

In line with existing business rules, no renewal commissions are payable whilst cover is suspended.

The following rules apply in respect of initial commissions on policies issued within the two year commission responsibility period:

  • There is no claw-back of initial commission at the point of policy suspension;
  • If a customer lapses their cover at the end of the suspension period, we will claw-back the commission in line with our standard recovery rules based on how long the policy was in force prior to suspension; and
  • If a customer re-activates their cover at the end of suspension period, standard claw-back rules will apply based on how long the policy was in force prior to suspension.

FOR EXAMPLE:
If a policy is suspended after being in force for 5 months and then lapses after a twelve month premium suspension period, we would claw back the full 100% of commission based on the policy only having paid 5 months’ premium.

AIA’S ARREARS MANAGEMENT PROCESS

In addition to our premium suspension options, customers can retain their cover up to three months without paying premiums by following AIA’s standard arrears management process.

Customers who wish to retain their cover but are unable to afford their insurance premiums can miss up to two months on AIA Real and older AIA products and up to three months on AIA Living, Sovereign and ASB products without their policy lapsing.

At the end of the period (two months on AIA Real and older AIA products and up to three months on AIA Living, Sovereign and ASB products), customers can pay all outstanding arrears and their policy will continue or they can contact AIA and we will work with them to agree a flexible repayment plan. Alternatively, at the end of the period, customers can suspend their cover for up to twelve months in line with the Premium Suspension Benefit and organise a repayment plan for the missed premiums at the end of the suspension period. If customers do not contact AIA to arrange either a repayment plan or the Premium Suspension Benefit, the policy will lapse.

FOR EXAMPLE:
James has recently been made redundant and phones AIA to say he is unable to afford premiums and is going to miss two months of his premiums. During this period, James does not pay any premiums and retains his cover.

After two months, James contacts AIA and he asks to suspend his cover for twelve months under his AIA Real Suspension of Premium benefits.

After ten months, James contacts AIA asking to re-activate his cover and agrees on a repayment plan in respect of his two months’ missed premiums.

Questions? Comments?

Please contact your BDM or email art@sovereign.co.nz.

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