The product, Key 3, provides a lump sum payout if the policy holder suffers a heart attack, a stroke or contracts cancer.
The policy was designed to be simpler for advisers, who don’t specialise in protection sales, to discuss with their clients and to offer consumers a policy which is 20% cheaper than the average cost of a full AIG policy.
Its target audience are consumers aged between 25 and 45; single people who rent rather than owning their own homes; those who may not choose to seek full face-to-face financial advice and people on a tight budget.
Speaking to Mortgage Solutions about the design of Key 3, Nick Erskine (pictured), intermediated sales manager at AIG, said after analysing its own claim statistics it found 80% were for one of the conditions covered by Key 3.
“Our existing CIC policies are comprehensive in that they cover 80 conditions, but for this reason they can be costly,” he said. “The other consideration is that advisers have to do a whole-of-market analysis, comparing products with such vast features, which for non-specialists can be daunting. We wanted to offer an alternative which would appeal to consumers who do want some cover but cannot afford the mainstream products.”
Erskine said the simplicity of the product meant that mortgage brokers could sell the policy over the phone. He added that given the extension of the mortgage interview process due to the Mortgage Market Review, which meant in some cases mortgage advisers or clients do not have time for a full protection review, the product would be quicker to explain.
Emma Thomson, head of customer care, LifeSearch: said “It’s great to see AIG launching something new and it will be interesting to see how consumers respond. The critical illness market has become complex over recent years as more and more conditions have been added.
“Focussing on the core three conditions that people claim on the most, in order to simplify the decision making process, will hopefully help engage consumers and indeed some distributors who have been put off critical illness cover in the past.”
Thomson said she expects this product to be of particular help to consumers who are buying on a non-advised basis and may be overwhelmed with complicated documentation covering in excess of 50 illnesses and who stick with life cover only as a result.
She added: “I believe it will have less appeal to advisers who are already regularly discussing critical illness with their clients, because it is unlikely to offer the best value cover and I expect most advisers will continue to recommend traditional CIC policies to provide greater peace of mind. But even in this space, there are likely to be some clients for whom this could be a useful alternative; those on a tight budget who don’t want to reduce the sum assured to bring down cost.”
Key 3 comes with many of the added features which AIG offers with its comprehensive policies and can be taken with or without life cover.