Is Bancassurance the future for insurance companies?

bancassuranceIn recent years, the market share of insurance tied agency was on the downtrend. Two rising sales channels are independent financial advisers and Bancassurance. Bancassurance is probably growing at the fastest pace.

Bancassurance is the partnership between a bank and an insurance company whereby the insurance company uses the bank sales channel in order to sell insurance products, so that the insurance company reach its products to the bank’s client base.

Bancassurance is very lucrative for the commercial banks. After all, it is the model that banks focus on selling and leave the servicing to the insurance companies themselves. The insurers are even willing to pay a hefty upfront fee to the bank first.

For example, AIA last year struck a 15-year exclusive deal with Citibank, it was reported that AIA paid an US$800 million ($1.02 billion) upfront payment.

Prudential also struck an agreement this year with Standard Chartered Bank, agreeing to pay US$1.25 billion in fees, to extend its current agreement for 15 years.

The latest move was reported by Reuters that “DBS Group Holdings has hired Morgan Stanley to find a partner to sell life insurance products in Asia under a new deal, after its pact with Aviva ends in 2015″.

With all these mega deals and fees paid, you are almost certain to feel the push factor from the banks to entice you to buy insurance products from them.

Oh, did I mention that AXA announced in July that they have entered into an exclusive postassurance partnership with SingPost to sell life insurance products starting in January 2015?

So the question is, will you buy insurance products from the banks, or post office?

AIA Re-Launch Wealth Accumulator 2 – Guaranteed Interest 1.68%

AIA has re-launched AIA Wealth Accumulator 2, a non-participating Single Premium endowment plan that provides financial protection against death and guaranteed returns on capital at maturity.

Key Highlights of The Plan

  • Provides an effective yield of 1.68% per year
  • Capital guaranteed at maturity
  • Guaranteed Issuance without any medical underwriting
  • Short policy term of 4 years

aia-wealth-accumulator-2It is interesting that AIA has launched this product in current environment where interest rate has been record low for years and seemingly is going to rise.

AIA used to offer this product at 2.55% Guaranteed interest for 5 years in 2009. It was snapped up within a day. The current 1.68% interest is much lower than what was offered, nearly as low as NTUC’s Capital Plus which last offered 1.4% interest for 2 years in 2011.

It is worth watching how the market will react to this offer. It is still too early to jump into conclusion.

In 2010, when AIA launched A$ Wealth Accumulator and offered 4.7% interest for 4.5 years, many have criticized that the interest rate was not attractive. Today, with the Reserve Bank of Australia cut its policy interest rate to an all-time low of 2.5%, people who hold A$ cannot find a better place to put their money.

This plan is available on a limited tranche basis. The offer period is till 30 August 2013 (Friday), 5pm or when tranche size is met, whichever is earlier.

You can contact me for more information of such products.

AIA Increase Platinum Legacy Crediting Rate

AIA_platinum-legacy_sgWith decreasing interest rates in the past few years, universal life products were forced to reduce their crediting interest rates. Since the recent Fed’s hint of “tapering”, risk of increasing interest rates spooked the bond market.

Realistically speaking, rising interest rate is bad for most insurance products. your whole life policy, your endowment and your annuities all suffer due to strong sell off of the underlying bonds, at least in short term.

However, AIA chooses to increase their crediting interest rate from current 4.0% to 4.2% for their Platinum Legacy Plan now. This is because universal life operates in a different manner from traditional life insurance products. the return is largely determined by the underlying “tranches”.

If you would like to understand more about such products, please feel free to contact me. The promotion is till 30 Aug or when the tranche limit is reach.

AIA launched their first disability income protection plan

AIA has launched Premier Disability Cover on 2 July 2012, their first disability income plan.

AIA Premier Disability Cover is a disability income protection plan, which provides you with protection in the event of a disability due to illness or injury, resulting in your inability to work and earn an income.

Comparing to its rivals, AIA has introduced some First-to-market features:

First of all, AIA guarantees benefit payout regardless of any future changes to your income or payouts received from other disability income policies, while to other insurers, such changes will affect the benefit payout.

Secondly, the plan provides you with an income, in the event you are unable to work due either to an injury or illness, regardless of employment status at the point of claim. This is crucial especially if disability happens during unemployment, it becomes double whammy with loss of income and additional living expenses.

The plan is open to anyone aged before 16 and 60 years on their last birthday. Applicants do not need to be employed to apply. Housewives and retirees may also apply with a maximum monthly benefit of $2,500.

Thirdly, AIA has introduced Payback benefit of up to two times the monthly benefit to replace lost income during the deferment period and additional lump sum payout of 24 times the insured amount should you suffer from Catastrophic disability. Such benefits are not available from other insurers currently.

The plan also has higher limit for Rehabilitation Benefit and Death Benefit

Overall, I would say the plan is supposed to be more comprehensive comparing to other disability income products in the market and of course you should expect a relatively higher premium.

Enhancement in Claims Services for AIA Healthshield and Letter of Guarantee (LoG)

A Letter of Guarantee (LoG) is an assurance of payment offered by insurers to hospitals, on behalf of a patient, for the portion of the hospital bill covered by insurance.

When you are hospitalised, if your hospital can obtain a letter of guarantee from your insurer, you can reduce the amount of your upfront payment to the hospital.

With effect from July, all AIA policyholders under the Medisave-approved Integrated HealthShield plans can request for an AIA Letter of Guarantee from these restructured hospitals.

  • Alexandra Hospital
  • Changi General Hospital
  • Khoo Teck Puat Hospital
  • National University Hospital
  • Singapore General Hospital
  • Tan Tock Seng Hospital
  • Singapore National Eye Centre

The LoG can be generated instantly and issued by the hospital staff on behalf of AIA, and the hospital may waive the deposit required for the admission.

Processing of Essential benefits with HealthShield Policy

With immediate effect, when HealthShield customers’ claims are received from the medical institutions, if the customer has an Essential rider, AIA will assess and process both the HealthShield and the Essential rider concurrently. What this means is that AIA will settle the cost of the admission/treatment with the medical institution, resulting in a truly paperless, cashless and hassle free settlement.

I am glad that such enhancement finally come true. For years, It has been ridiculous that client has to file manual claim for riders of Medisave-approved Integrated Insurance Plans even when the basic policy has been approved.

I hope other insurers who have not done so will catch up soon.

AIA Healthshield Gold Max opens to Foreigners

Hospital bills in Singapore are constantly on the rise. Medisave Approved Integrated Insurance Plan is no longer a luxury but a necessary component of anyone’s financial health. It is very affordable and covers high sum assured.

However, if you are a foreigner working or living here, being a student, working expatriate or dependent of a Singaporean or PR, a large medical bill can create an overwhelming financial strain on you. Even if you are willing to purchase a medical insurance, the cost is normally much higher.

The good news is that effective from February 15, 2012, AIA HealthShield Gold Max, one of the popular integrated plan,  is now open to foreigners at a slightly higher but affordable premium.

You can apply if you are holding one of the following valid passes:

1. Employment Pass
2. Personalised Employment Pass
3. Entre Pass
4. S Pass
5. Dependent Pass
6. Student Pass or
7. Selected Categories of Long Term Visit Pass.

AIA to Transfer Insurance Business

American International Assurance Company, Limited (AIA) announced today plans to transfer its Singapore life and general insurance business, which has to-date been owned and operated by its Singapore branch to AIA Singapore Private Limited (AIA Singapore), a wholly-owned, Singapore-incorporated subsidiary of AIA Group.

AIA has lodged the formal Scheme of Transfer with the Monetary Authority of Singapore (MAS). The Scheme of Transfer is also subject to confirmation by the High Court of Singapore and is expected to take effect on 1 January 2012 or such later date as the High Court may approve. AIA Singapore will replace AIA as the insurer for the insurance policies once the transfer is effective.

“With the transfer of the life and general insurance business to AIA Singapore, our policyholders will enjoy the same terms and conditions of their insurance policies. Any policy benefits due will continue to be honoured by AIA Singapore Private Limited, and the transfer will be a seamless process,” said Mr Tan Hak Leh, Senior Vice President and Chief Executive Officer of AIA (Singapore branch).

AIA will be sending notifications to all policyholders on details of the transfer from next month.

S&P Raised AIA Group Rating TO AA-

HONG KONG, 23 NOVEMBER 2010 – AIA Group Limited, (“AIA”; stock code: 1299), the largest independent listed pan-Asian life insurance group in the world, is pleased to confirm that Standard & Poor’s Rating Services (“S&P”) has raised its ratings on two of AIA operating entities — American International Assurance Company, Limited (“AIA Ltd”) and its wholly owned subsidiary American International Assurance Company (Bermuda) Limited (“AIAB”) — to ‘AA-’ from ‘A+’, outlook stable.

AIA IPO will start trading in Hong Kong today

AIA Group Ltd. will debut on the Hong Kong stock exchange today after climbing in unofficial over-the-counter trading following the biggest initial public offering in the city’s history.

Shares of Hong Kong-based AIA, the insurer sold by American International Group Inc. in a $17.8 billion IPO, last traded at HK$21.50 each yesterday in gray market transactions brokered by BTIG LLC, said Christian Kielland, a managing director at the firm’s Hong Kong office. That’s 9.2 percent higher than the IPO price of HK$19.68 each.

Read the full story at Bloomberg

AIA A$ Wealth Accumulator – Up to 4.7% Interest per year

Once Again, AIA is offering the highest Guranteed interest up to 4.7% per year. If you are interested in the product, you may contact me for professional advice.

Note: This product is not suitable for those who are averse to foreign currency exchange rate risk or who are unable to understand the implications of currency risk.

AIA A$ Wealth Accumulator is a:

  • non-participating Endowment plan
  • 4.5 year term plan
  • single premium plan available in AUD only

The AIA A$ Wealth Accumulator is ideal for customers who wish to

  • Diversify their portfolio with foreign currency investments
  • Invest in the A$ for specific goals eg. children’s education and/or retirement in Australia