Aviva Australia, a leading provider of life insurance, investments and superannuation, today announced an improved benefit that will provide greater peace of mind for wealthy individuals who have a high level of personal debt.
Aviva Australia, a leading provider of life insurance, investments and superannuation, today announced an improved benefit that will provide greater peace of mind for wealthy individuals who have a high level of personal debt.
Natalie Eckersall, general manager wealth protection products, says Aviva's unique Debt Replacement option*, available with its Income Protection Gold product, provides payment of a higher monthly income to claimants during the first 12 months of injury or illness. This benefit is a first in the Australian market and is currently not offered by any other financial services provider.
"Usually in the first 12 months of injury or illness, lifestyle adjustments have to be made to meet ‘personal debt commitments'," said Natalie.
"In the case of Australians who earn high incomes, this adjustment is often more significant, as their committed living expenses are generally much higher than the average Australian."
The range of personal debt commitments borne by many high income earners include a home mortgage, personal equity or overdraft facilities, residential and commercial property investment-linked loans, car leases or loans, private school tuition fees and loans in their name, family trust or company for which they are personally liable.
"Many high income earners have a high level of personal debt and if they are unable to work due to illness or injury, they experience a significant reduction in income if they are to rely on the maximum monthly benefit offered by most income protection policies available on the Australian market," said Natalie.
"A period of illness or injury is stressful enough without having to worry about how to pay for it all and maintain a standard of living for their household.
"In recognising this gap, and an opportunity to relieve stress and provide greater peace of mind to our policyholders, we introduced the Debt Replacement option. This is designed to give claimants the ability to better control their personal debt during the first 12 months of their illness or injury - many other policies simply wouldn't cover this and we are pleased that we can."
Example:
John Brown is a CEO and has an annual salary of A$500,000.
He qualifies for a monthly benefit of A$23,960 for the duration of the benefit period, without adding the Debt Replacement option.
John selected the Debt Replacement option with his policy, as he has a high level of personal debt of A$10,000** per month. By adding this option, it provides John with a monthly benefit of A$32,710 for the first 12 months. Thereafter John's ongoing monthly benefit is A$22,710, reduced from A$23,960.
John develops arthritis and his condition gradually deteriorates to the extent it debilitates his ability to perform the important duties of his occupation and the future is unclear, as John's condition worsens.
With the Debt Replacement option John qualifies to receive for the first 12 months beginning after his nominated waiting period:
- A$22,710 (monthly benefit), plus
- A$10,000 (Debt Replacement option).
That's A$32,710 per month for the first 12 months. After this period, John is eligible to receive A$22,710 per month thereafter, while he is unable to work.
If John had decided not to take out the debt replacement option, his total monthly benefit would be A$23,960.
By adding the Debt Replacement option the payment in the first 12 months may be increased significantly with a small reduction in the ongoing monthly benefit thereafter. In the example above, John's income from his monthly benefit after the first year is reduced from A$23,960 to A$22,710.
"The new Debt Replacement option is a valuable tool for clients to consider, as typically the first year is the most difficult both emotionally and financially for a claimant," said Natalie.
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* Debt Replacement option is only available as a benefit if the insured has applied or has at least A$1 million of death cover with Aviva, and has earnings of at least A$295,000 per annum.
** Benefits payable under Debt Replacement are based on the actual level of allowable personal expenses in the 12 months prior to disability.
For further information please contact:
Tim Cobb
General Manager Marketing and Public Relations
Phone: (03) 9829 8509
Mobile: 0418 529 387
Notes to editors:
- Aviva Australia is a group of two specialist financial services companies: Navigator and Norwich Union Life Australia Ltd. Portfolio Partners is the Australian funds management arm of Aviva plc. Through these companies we provide products and services in the areas of wealth creation and wealth protection for more than 300,000 customers throughout Australia.
- Aviva is one of the leading providers of life and pensions to Europe with substantial positions in other markets around the world, making it the world's fifth largest insurance group based on gross worldwide premiums at 31 December 2006.
- Aviva's principal business activities are long-term savings, fund management and general insurance, with worldwide total sales* of £41.5 billion at 31 December 2006 and assets under management of £377 billion at 30 June 2007.
* Based on life and pensions PVNBP, total investment sales and general insurance and health net written premiums including share of associates' premiums. - The information in this document reflects Aviva Australia Holdings Limited (ABN 38 095 045 784) and its related entities understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. The information given in this document is of a general nature and has not taken into account the investment objectives, financial situation or particular needs of any particular person and it is not a substitute for professional advice. Applications to invest in a financial product issued by Aviva, or any of its related entities, must be made by completing the application form attached to the applicable Product Disclosure Statement ("PDS"). A PDS is available from Aviva or your financial adviser. Before making an investment decision on the basis of the information above, a prospective investor needs to consider, with or without the assistance of a professional adviser whether the information is appropriate in the light of their particular investment needs, objectives and financial circumstances. Aviva does not receive any remuneration in relation to the provision of information available from this press release which is of a general nature only.