Post on 22-Jan-2018
Compare advised and non-advised Life Products in New Zealand
Presented by Alan Rafe, CEO of Quality Product Research, at the IFA-PAA Continuing Professional Development Roadshow
September 2016
Learning objectives
• Understand the differences between the main direct and advised life products
• Understand the different expected future premiums for these groups of products
• Understand the main feature differences
• Understand the premium / convenience / feature trade-offs available to clients
• Understand the value of these different offers to client groups
Life Product Review
Bank Direct Advised
ANZ AA Life AIA
BNZ Cigna AMP (RPP)
Co-op SX Asteron Life
KiwiBank Pinnacle Fidelity Life
Westpac OnePath
ASB Partners Life
Sovereign
Data Set
0
5
10
15
20
25
20 25 30 35 40 45 50 55
% D
iffe
ren
ce
Age
Monthly Premium Rates Male Non-Smoker $200,000 Life InsuranceNon Advised vs Advised Percentage Difference
0
10
20
30
40
50
60
70
80
90
100
20 25 30 35 40 45 50 55
$ M
on
thy
Pre
miu
m
Age
Monthly Premium Rates Male Non-Smoker $200,000 Life InsuranceDirect
AA Life
Cigna
Southern Cross
Pinnacle
-3
-2
-1
0
1
2
3
4
5
6
7
20 25 30 35 40 45 50 55
% D
iffe
ren
ce
Age
Monthly Premium Rates Male Non-Smoker $200,000 Life InsuranceAdvised vs Banks Percentage Difference
Quality Rating
Provided by: Quality Product Research Limited
Head to Head
(insert head to head between Asteron and Co-op)
- Life Cover Product Review- Funeral Product Review
Non-underwritten life product review
Non-underwritten Life Products
Product
• Provide cover with no underwriting questions from ages 16 To 64
• Has a number of exclusions based on pre-existing cover, occupation and hazardous pursuits
• Three main providers • BNZ
• Sovereign (for ASB and State Insurance)
• Greenwich Life
Comparison of ProductsCompany Entry Age Sum Insured Additional Exclusions –Pre
Existing ConditionsHazardous Activities Coverage
BNZ 16 to 64 $100,000 • 3 years• If you have ever had a
loading or been declined not eligible
Yes
ASB 16 and 55 $500,000 5 years and for any pre-existing condition for which you are taking medication for
No
Greenwich 21 to 60 $50,000-$200,000
• 3 years Yes
Placement - Distribution
• Direct from Web sites or over the phone.
• Sovereign has distribution agreements with State Insurance and ASB
• ASB actually offer a fully underwritten product (my Life) which is cheaper than the public version but only when login into your account.
• BNZ offers over the phone and both product types online.
• Greenwich offers web site and via direct mail and telemarketing
Price
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
Mo
nth
ley
Co
st $
10
0,0
00
Age
BNZ Options Avg 46% more expensive
BNZ Easy Life
BNZ Comprehensive
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
Mo
nth
ly C
ost
$1
00
,00
0
Age
Sovereign Options Avg 68% more expensive
Sovereign Simple Life
Sovereign TotalCare Max
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
Pri
ce $
10
0,0
00
Age
Price Comparison Non-Underwritten
BNZ Easy Life
Sovereign Simple Life
Greenwich Life Quick Cover
Future PremiumsMale $100,000 Non Smoker Age 30
BNZ ASB
30 year Old Easy Life Underwritten Difference Simple Life Underwritten Difference
3 Years $ 761.28 $ 505.08 $ 256.20 $ 800.52 $ 502.56 $ 297.96
5 Years $ 1,261.92 $ 853.80 $ 408.12 $1,322.64 $ 832.08 $ 490.56
10 years $ 2,574.24 $ 1,821.00 $ 753.24 $2,746.68 $ 1,713.72 $ 1,032.96
20 Years $ 6,714.35 $ 4,752.84 $ 1,961.51 $7,397.28 $ 4,359.72 $ 3,037.56
Promotion
ASB
BNZ
State Insurance
Example of a direct insurance declaration is at right
Note the reference to the exclusions brochure
Note the customer acceptance of a no advice sale
Issues• It would be difficult for people to understand what they are actually
covered for.
• Spending a bit more time at the beginning of the process to ensure at claim time you do not have an issue
• Easier for the provider to make sales utilising this type of product as the sales people can spend less time on the phone asking in-depth questions and a 100% issue rate (compared to 50%-60%)
• Could have an impact of the public perception of life insurance if companies do not pay claims
• Underinsurance in NZ is an issue and the more we can do to increase this the better
• Opportunities to upsell cover at a later date
Exercise• Three advantages of buying direct
• Three advantages of buying from an adviser
• Three reasons a why a client would buy a non-underwritten product
Provider Product Min. Age Max. Age Min. Sum Insured
Max. Sum Insured
AA Life Funeral cover 50 79 $3,000 $30,000
AMI Insurance Funeral Plus Policy 50 75 $3,000 $15,000
Cigna Funeral Plan 55 85 $5,000 $15,000
Dorchester Life Funeral Plan 50 79 $5,000 $15,000
Fidelity Life Funeral Fund 16 64 $2,000 $12,000
Greenwich Life Funeral Plan 30 70 $5,000 $20,000
Legacy Life Funeral Plan 50 79 $4,000 $15,000
Partners Life Funeral Plan 55 85 $5,000 $20,000
Pinnacle Life Funeral Cover 30 75 $2,000 $25,000
Southsure Funeral Cover 55 85 $5,000 $15,000
State Insurance Value Plus Funeral 50 75 $3,000 $15,000
Research Ratings – Funeral Plans
AA Life AMI Cigna Dorchester Life
Fidelity Life
GreenwichLife
Legacy Life
Partners Life
Pinnacle Life
Southsure
State
Percentage of Highest
88.8% 94.9% 91.0% 87.4% 96.3% 100.0% 92.5% 96.2% 98.5% 90.7% 95.2%
Comparison to Underwritten Life Insurance
• Average cost for to age 80 level cover
• Based on estimated cost for same sum insured (min premium issues)
• Average cost of life is based on five insurers
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
$100.00
55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70
Rat
e Pe
r $
10
,00
0
Age
Life Cover vs Funeral Cover Average $30 per month more expensive for Funeral
Avg Funeral
Avg Life
$-
$20.00
$40.00
$60.00
$80.00
$100.00
$120.00
$140.00
55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70
Rat
e Pe
r $
10
,00
0
Age
Life Cover vs Funeral Cover Average with 100% loading
Avg Funeral
Avg Life
100% Loading
$-
$5,000
$10,000
$15,000
$20,000
$25,000
$30,000
$35,000
$40,000
55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70
Cover Comparison
Funeral Cover Level to age 80
$-
$10.00
$20.00
$30.00
$40.00
$50.00
$60.00
$70.00
$80.00
$90.00
$100.00
55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70
Rat
e Pe
r $
10
,00
0
Age
Life Cover vs Funeral Cover Avg $30 per month more expensive
Avg Funeral
Avg Life
Level age 35
Reasons to take Funeral Cover• Older (above 80)
• People that have a pre-existing
• People that do not like answering health questions
• Quick and simple
• We are living longer
Thank You
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