Helping Clients Retain Valuable Life Insurance Amid Rising Costs

ARTICLE
27 February 2025 dot 3 mins read
As cost-of-living pressures continue to challenge household budgets, many clients may be re-evaluating their life insurance policies. 
Rising premiums often lead to difficult decisions, with life insurance being one of the first expenses clients consider removing. However, this decision could leave them underinsured and vulnerable during unexpected life events. As a financial adviser, you play a pivotal role in helping clients maintain essential coverage while managing affordability.

Reinforce the importance of Life Insurance

Life insurance provides financial security for individuals and their families in times of need, such as serious illness, disability, or death. Without it, loved ones may face significant financial burdens, including mortgage repayments, daily expenses, or funeral costs.
 
AIA's claims data highlights the value of life insurance, with $2.3 billion paid in claims in 2023 alone. The average age of claimants varies across products, with most claims occurring between 47 and 54 years of age. This underscores the importance of maintaining cover at different life stages.

Ways to help clients retain cover

Rather than cancelling policies, there are several proactive strategies to help clients reduce premiums while retaining valuable protection:
 
  • By adding AIA Vitality to an existing policy, clients receive an initial premium discount of 7.5% for IP and 17.5% for Lump Sum# policies - plus up to $760 in e-gift cards or cashbacks and more.
  • Reviewing the sum insured or monthly benefits: Adjusting coverage levels to match current financial needs can lower premiums without sacrificing essential protection.
  • Modifying policy features: Options like extending waiting periods or pausing indexation can reduce costs.
  • Updating lifestyle factors: Improved health or quitting smoking may allow clients to remove premium loadings.
These adjustments ensure clients maintain a level of cover tailored to their needs and budget.

Linking solutions to client needs

To further support your clients, you can use resources like AIA's reduction options flyer, which outlines practical ways to adjust policies while preserving critical protection. By leveraging these tools and strategies, you can help clients navigate affordability challenges without compromising their financial security.
By guiding your clients through these strategies and emphasising the importance of life insurance, you can help them make informed decisions that safeguard their future and provide peace of mind for themselves and their families.

References

# The 17.5% initial lump sum discount is only available for applications on the 7 December 2019 SPDS and after. Policies issued on the 18 May 2019 PDS and prior will only receive a 12.5% lump sum discount.