OUR PRODUCTS

Redundancy Benefit POSITION


TEMPOrary enhancement to aia's redundancy benefit- employees stood down without pay:

AIA has temporarily enhanced its Redundancy Benefit in order to better respond to the unique employment measures being applied during the current economic downturn. 

The intent of our Redundancy Benefit is to provide customers with temporary financial relief in response to a permanent, involuntary, and total loss of employment.

In line with that intent and until 28 February 2021, AIA will be accepting redundancy claims from customers who are stood-down without pay or Government support* for a period exceeding four weeks.

  • To further minimise financial hardship for these customers, the Redundancy Benefit will be paid in advance from the end of the waiting period.
  • Customers must remain stood-down without pay at the end of the waiting period.
  • The Redundancy Benefit will cease after customers return to paid work.
  • Customers who return to work with the same employer and are subsequently made redundant (or are stood down again for a period exceeding four weeks), will be eligible to receive a Redundancy Benefit up to the maximum payment term only.

*Government support excludes unemployment benefits through WINZ.


How we support market messages:

  • eApp has been updated to build in pop ups around the redundancy questions to ensure we are proactive in highlighting product limitations during the on-boarding process. Quote Builder changes will take longer to implement and are currently being explored.


On-sale AIA Living – Redundancy Benefit

Mandatory requirement:
Redundancy benefit can only be issued when a current Income Protection or Mortgage & Income Protection product is held.
It is not available with:

  • Business Continuity
  • Rural Continuity
  • Start-Up Income Protection

Business rules:

  • Entry age minimum 16 years
  • Entry age maximum 60 years
  • No self-employed
  • No occupation Class 5 or Class 9
  • Up to a maximum monthly sum assured $4k
  • Maximum number of benefits allowed per life assured per product – 1

Product limitations

  • Wait period:
    • 4 weeks; or
      o the number of weeks (up to a maximum of 13 weeks) for which any redundancy payments from the life assured’s employer could reasonably provide income.
  • Payment period: Earliest of the following:
    • Six months after the date of the Redundancy
    • Life assured begins working again. Includes casual, part-time or full-time employee, contract work or self-employment.
    • Life assured turns 65 years old.
    • Life assured dies.
  • Maximum monthly sum assured $4k.

Product exclusions

No benefit is payable:

  • If the life assured is made redundant within six months following the risk commencement date.
  • If the life assured was not an earner for the six months immediately prior to the life assured’s redundancy.
  • While the life assured is completing a sentence of imprisonment or home detention.
  • If the life assured is made redundant whilst outside of New Zealand and does not return to New Zealand within 28 days of redundancy.
  • If the life assured knew or ought to have known at the risk commencement date that the life assured could be made redundant.

Underwriting

  • Customers are required to complete Section 7 – Occupation & Income details of the AIA Living Application form.
  • Customers will be deferred cover if they answer yes to question (g) “Are you aware of any pending redundancy or liquidation at your place of permanent employment or have you been advised that you may be made redundant?”
  • Redundancy remains a high risk for several industries in particular (tourism and hospitality being obvious examples).


Closed to new business – Sovereign TCM Redundancy Benefit

The same specifications as AIA Living Redundancy Benefit above.

Process:

  • Occupation and Income section of application plus a Replacement Policy Advice.
  • Currently issued as a new AIA Living policy on current rates as a replacement.


Closed to new business – AIA REAL Optional Involuntary Redundancy Benefit

Mandatory requirement:
The Optional Involuntary Redundancy benefit can only be opted into for those customers with a current AIA REAL Personal Cover Income Protection Product, AIA REAL Personal Cover Mortgage Income and Rent Cover product and AIA REAL Personal Cover Loss of Earnings Premier Benefit.

This optional benefit is not available in:

  • Business Cover Professional Business Continuation Cover
  • Business Cover Professional Farmers Revenue Protection Cover
  • Business Cover Professional New to Business Cover

Product limitations

  • Benefit will commence after the first 30 days of any period of total unemployment. Monthly benefit paid in arrears.
  • Benefit payments will be made upon receipt of proof that the life assured remains unemployed and is registered with Work and Income New Zealand, or any subsequent Government Employment Agency and is actively seeking employment.
  • Payment period: Earliest of the following:
    • Six months after the date of the involuntary redundancy.
    • The date the Life assured commenced alternative employment.
  • Maximum monthly sum assured $2,500.

Product exclusions
No benefit will be paid where;

  • The Life Assured is made redundant within six (6) months following the Policy Commencement Date; or
  • The redundancy or possible redundancy was known to the Life Assured prior to the Policy Commencement Date; or
  • The Life Assured was on a fixed term contract of employment or an interim contract; or
  • The Life Assured is made redundant as a direct or indirect result of a strike or labour dispute; or
  • The Life Assured was self-employed, in part-time, seasonal or casual employment; or
  • The Life Assured is employed by and made involuntarily redundant by a close or lineal relation.

Underwriting

  • Customers are required to complete Section 7 – Occupation & Income details of the AIA Living Application form.
  • Customers will be deferred cover if they answer yes to question (g) “Are you aware of any pending redundancy or liquidation at your place of permanent employment or have you been advised that you may be made redundant?”
  • Redundancy remains a high risk for several industries in particular (tourism and hospitality being obvious examples).

Process

  • A signed quote from Insight and the occupation and income sections of an AIA Living .Application form completed.
  • Application form goes to underwriting.
  • Optional Involuntary Benefit endorsed onto existing OLAS policy.

Redundancy cover scenarios

POLICY COVERAGE clarity

The policy wording contains full details on what is and isn’t covered. It outlines:

  • Claimable conditions under your policy
  • The criteria that must be met for a claim to be payable
  • Any limitations and exclusions to the policy
  • Obligations on the customer and AIA

Our insurance products do not contain exclusions for pandemics. If a customer needs to make a claim related to COVID-19, as with any other claim, they will need to meet the ordinary eligibility requirements for their cover.

The table below provides a high level overview of policy coverage:

Product type:

Cover provided:

Life

Lump sum payment if the Life Assured dies, becomes terminally ill, or is diagnosed with a medical condition specified in the policy wording. 

Trauma

Lump sum payment if the Life Assured suffers one of the specified critical conditions specified in the policy wording. 

Income Protection

Provides a monthly benefit payment if the Life Assured is unable to work due to illness or injury. 

Total Permanent Disablement

Provides a lump sum payment if the Life Assured is so incapacitated that it is unlikely that they'll ever be able to work in their own or any occupation. 

Health

Cover for private surgery, medical hospitalisation, cancer treatment, specialist consultations, diagnostic testing, and other specified medical treatments. 

Redundancy

Provides a monthly benefit payment if the Life Assured is made redundant. 

How to check policy coverage

Policy wordings are issued to all customers when cover has been accepted. Hard copies are sent with a policy schedule. The schedule outlines your cover levels along with any specific terms and conditions relevant to your policy.

The policy wording contains full details on what is and isn’t covered. It outlines:

  • Claimable conditions under your policy
  • The criteria that must be met for a claim to be payable
  • Any limitations and exclusions to your policy
  • Obligations on the customer and AIA

Check the policy wording you were issued with to understand the cover provided or contact your adviser.

AIA’s on-sale product range is AIA Living (on market from 5 August 2019). There are a number of past products that are no longer available for sale but continue for existing customers.

AIA Living policy wordings can be located online:

Some older past products (Sovereign TCM and AIA Real) can be located online:

To ensure that cover for customers holding past products remains up to date with on-sale products, we regularly review and enhance these products from time-to-time. This means that at claim time, AIA will compare the policy wordings issued to the customer with any enhancements applicable to that product and we will apply the most favourable terms to the claim.

Please note that any enhancements will only apply if the claimable event date occurs after the effective date of the enhancement.

Questions? Comments?

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

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