What life insurers are offering your customers under Covid 19

Strategy Financial has provided a checklist, and comment, on the support offered by the various LIFE insurers for customers experiencing financial hardship due to Covid 19.

Wednesday, April 15th 2020, 3:00PM

by Graeme Lindsay

This guide is provided by Graeme Lindsay at Strategy Financial Services. The provisions quoted are either contained in the policy wordings or are special relief packages announced in response to the Covid 19 pandemic.

Premium Holiday: No

Policy Suspension: Policy may be suspended, no premium, no cover - for up to 12 months. Constraint: If a period of suspension (eg 2 months) is selected, it cannot be shortened thereafter.

Comment: Compared to others, this is not generous

Premium Holiday: Lump Sum Covers and Disability Income Covers: One month premium holiday, - full cover, no premium - may be applied for. Possible extension after the first month.

Policy Suspension:

Lump Sum Covers: No provision

Disability Income Covers: The policy allows you to suspend your premiums and cover for up to 12 months if you are on long-term leave from work (or are unemployed for some products). Cover can be reinstated at any point within the 12 months without further medical underwriting. Any conditions which first occur while you are on a premium and cover suspension will not be claimable, either during the suspension period or once cover is reinstated

Premium Holiday

Lump Sum Covers: You can apply for a premium holiday and, if we accept, we will waive premiums for a maximum of six months from the time you tell us in writing.

Disability Income Covers: No provision

Policy Suspension

Lump Sum Covers: No provision

Disability Income Covers: You can suspend cover and premiums for the various Income Protection Covers. We will suspend cover and premiums for a minimum of three months and a maximum of 12 months from the time you tell us in writing.

Premium Holiday
Lump Sum Covers may be eligible to take a premium holiday period of one month. Customers will continue to be covered for the duration of the premium holiday. The premium holiday is available on all policies regardless of sum assured, however the following limits will apply for any claimable event which happens during the premium holiday period:

The maximum Life Cover sum insured payable will be limited up to $500,000 per life assured.
The maximum Trauma Cover, TPD and CDC sum insured payable will be limited up to $350,000 per life assured.
After completing the one-month premium holiday period, eligible customers can then suspend their premiums and cover for up to three months.

Disability Income Covers: No provision

Policy Suspension
Lump Sum Covers: Policy may be suspended, no premium, no cover - for up to 3 months.

Disability Income Covers: Customers may be able to suspend their premiums and cover for up to three months. Customers won’t be covered for the duration the premiums are suspended. Their relevant cover will resume once they start paying premiums again. Any illness, injury or condition (or any signs, symptoms or diagnosis of the illness, injury or condition), that occurs while the cover and premiums are suspended will not be covered.

Special Covid 19 Premium Relief
Premium relief
Premium relief is a simple, accessible solution to help customers facing financial hardship keep their policies in place while they get back on their feet.

Key points:

90 days’ premium relief
No premiums paid during this time
Cover remains in place during this time

Prior to the end of the premium relief period we’ll contact the customer to discuss next steps based on their individual circumstances. These include paying off the premiums from the 90 day relief period in full or over 12 months (in addition to the regular premium), or other options such as temporary hold
NOTE: The Premium Relief is not a Waiver of Premiums. Instead, it is a deferral of premiums which must be paid over the next 12 months.

Premium Holiday
Other than the special Covid 19 Premium Relief package, there is no provision for a Premium Holiday where the cover continues.

Policy Suspension
Fidelity provides what they call a "Premium Holiday" but no cover is provided during the period so it is what other insurers call a "Policy Suspension", ie no premium no cover but right to reinstate without evidence.

Premium Holiday: No provision in the policy but there is apparently an overarching member benefit that allows a member to apply for a possible premium holiday in the event of financial hardship.

Policy Suspension
Disability Income Covers: Policy may be suspended for a minimum of 3 months and a maximum of 12 months. There are some constraints on cover recommencing. Refer the policy wording.

Premium Holiday: Premium Holiday for up to 6 months, retaining full coverage, in the event of redundancy; bankruptcy; leaving employment to become a full-time carer for a seriously ill family member; death of a spouse or partner; natural disaster preventing work and lasting more than 30 days; and any other event at Partners Life sole discretion.

Policy Suspension: Policy Suspension for up to 12 months with no coverage during suspension period, but the ability to re-start coverage without underwriting in the event of any of the above triggers, plus for approved leave without pay; parental leave; and leaving work for full-time tertiary education.
A Policy Suspension can commence immediately after a Premium Holiday meaning a client can achieve 18 months of premium relief, albeit coverage is only retained for the first 6 months.
Only 6 months of accumulated Premium Holiday and 12 months of accumulated Policy Suspension are available during the life-time of each policy.

In addition to the contractual provisions set out above, Partners announced the following on 17 March:

Partners Life COVID-19 Affordability Response

We understand that the economic impacts of global and NZ Government imposed restrictions may have unexpected and significant financial impacts for some of our loyal clients and we want to respond to their loyalty in these unprecedented times, by offering premium relief support to those who need it the most.We will therefore, treat COVID-19 as a Partners Life discretionary circumstance under the Premium Holiday and Policy Suspension definitions and we will define it as ‘’an impact on work which has resulted in net loss of more than 20% of family or business income, after including entitlements to governmental or bank subsidies, and which has arisen as a direct result of COVID-19 governmental imposed restrictions; andWe will allow COVID-19 Premium Holidays and/or Policy Suspensions to be one-off additions to the contractual accumulated limits detailed above.

Partners has also confirmed that these provisions apply to Business policies that don't have the contractual provisions and apply to all covers, including Medical.

So, advisers need to be very careful when discussing the options with clients. The various options can be quite different in the detail! Certain terms mean different things to different insurers. Advisers certainly add value in difficult times as we are currently experiencing, but need to be very careful when considering advice about clients' difficulty in paying premiums and the options offered.

Graeme Lindsay runs Strategy Financial which provides research to advisers on insurance products. The comments in "Strategy Thoughts" outlines his view on recent product and policy changes.

Tags: AIA AMP Life Asteron Cigna Covid-19 Fidelity Life health insurance MAS Partners Life Strategy Financial