AIG announces policy changes and trimmed benefits in favour of ‘cost over quality’

American International Group (AIG) has announced changes to its critical illness cover to favour the current economic climate.

Related topics:  critical illness,  children's cover
Tabitha Lambie | Editorial assistant, Barcadia Media
20th September 2022
Person in a hospital bed
"AIG’s move will likely resonate with advisers looking for a value budget offering."
- CIExpert

AIG believes the current economic climate is likely to result in consumers paying more attention to cost than quality as the cost of living crisis forces utility bills to rise and household expenditure to soar.

Consequently, the finance and insurance company has opted to introduce two new levels of cover for children: Enhanced Children’s Cover and Core Children’s Cover. The Enhance Children’s Cover will retain the same high quality child cover offered in the Enhanced Adult policy whereas the Core Children’s Cover (offered in the Core Adult policy) has had its benefits trimmed.

AIG has said the decision to trim benefits will result in keener pricing, favouring budget plans.

Although children's cover remains optional, AIG has stressed that these recent changes to the Core Children’s Cover means congenital conditions, together with numerous additional Group 1 & 2 conditions, will no longer be covered. Furthermore, Birth Defect Cover will only be available with Enhanced Children’s Cover.

Group 1 conditions now include loss of two limbs, Muscular Dystrophy, permanent dependence of specified severity, and Spina Bifida.

Group 2 conditions include accidental hospitalisation, benign spinal cord tumour, Bowel Disease, Cerebral Palsy, Cerebral or Spinal Arteriovenous Malformation, Cystic Fibrosis, Diabetes Type 1, Down’s Syndrome, Edward’s Syndrome, Hydrocephalus, Intensive Care (7 days on mechanical ventilation), Osteogenesis Imperfecta, Patau Syndrome, permanent pacemaker insertion, severe mental illness, severe Sepsis, and third-degree burns – 5% or more of body/10% or more of the face.

To reflect these alterations in cover, payment levels on both Group 1 & 2 conditions have been lowered with Group 1 reduced to lower of £25,000 or 50% of adult cover and Group 2 lower of £25,000 or 25% of adult’s cover. The child death benefit has also been reduced to £5,000 from £10,000.  

Commenting on these changes to bring AIG’s Core Children’s Cover more in line with the standard level of children’s cover on the market, CIExpert has said:  

“Many advisers believe that consumers will increasingly favour cost over quality as their financial burden becomes ever heavier.  CIExpert has always advocated quality over price but the reality is that any cover is better than none so value-for-money budget plans are likely to become ever more popular.”

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