Life insurance that's straight up and straightforward
So you'll be relieved to know there's now a better way. It's straight up and straightforward. AA Life lets you bypass all this complication. We'll:
- explain everything in straightforward, plain English so you understand exactly what you're buying
- cut out the middle man so you can be sure you're getting what you need and not what someone else thinks you should have
- provide tools to help you assess your life insurance needs and find the kind of insurance that's best suited to you
- put the control back where it belongs - in your hands
How we calculate premiums
To those you leave behind, your life is priceless. In the insurance industry we have to take a more calculated approach in working out the premiums you will pay and the payout your family will receive. It's worth knowing how it works so you can satisfy yourself you're getting value for money. Premiums are based on a number of factors.
What do you think you're worth?
How much do you want to insure your life for? Quite simply, the bigger the payout you want for your family when you die, the higher your premiums will be.
Mortality - a dead cert
Life insurance is not like car insurance. Not every driver has an accident, but everyone dies.
The big question we have to ask is how likely the death is of any particular person, so we take into account personal factors such as health status, age, gender, and whether you smoke.
We apply certain basic mortality statistics, for example, women tend to live longer than men, young people tend to be healthier than elderly people, smoking causes cancer.
This means the lowest premiums would typically be paid by a young female non-smoker.
The premium you pay also includes an amount to cover business expenses for establishing and administering your policy.
Interest earned through investments
Some of your premium is invested by insurance companies. The interest it earns helps to reduce the premium you pay. So premiums are calculated on the basis of this equation: Premium = mortality + expenses and commissions - interest earned.
When it comes to disability policies such as Accident Recovery insurance, mortality isn't an issue. Instead we factor into the equation morbidity which is the chance of becoming disabled. Premium = morbidity + expenses and commissions - interest earned.
You're in good hands
It's reassuring to have life insurance - but only if you're confident about the insurer you've chosen. So allow us to reassure you with some background about ourselves.
AA Life is brought to you by a partnership between the New Zealand Automobile Association (AA) and Asteron Life Ltd. Asteron underwrites all our life insurance products.
Important: financial strength rating
The Insurance (Prudential Supervision) Act 2010 requires all licenced insurers to have a current financial strength rating that is given by an approved rating agency.
Asteron Life Limited (who provide and underwrite AA Life policies) has been given an A+ financial strength rating by Standard and Poor's. The outlook is Stable.
The rating scale is: Standard & Poor’s Long-Term Insurer Financial Strength Ratings*
||An insurer rated 'AAA' has extremely strong financial security characteristics. 'AAA' is the highest insurer financial strength rating assigned by Standard & Poor's.|
||An insurer rated 'AA' has very strong financial security characteristics, differing only slightly from those rated higher.|
||An insurer rated 'A' has strong financial security characteristics, but is somewhat more likely to be affected by adverse business conditions than are insurers with higher ratings.|
||An insurer rated 'BBB' has good financial security characteristics, but is more likely to be affected by adverse business conditions than are higher-rated insurers.|
|BB; CCC; and CC
||An insurer rated 'BB' or lower is regarded as having vulnerable characteristics that may outweigh its strengths. 'BB' indicates the least degree of vulnerability within the range; 'CC' the highest.|
||An insurer rated 'BB' has marginal financial security characteristics. Positive attributes exist, but adverse business conditions could lead to insufficient ability to meet financial commitments.|
||An insurer rated 'B' has weak financial security characteristics. Adverse business conditions will likely impair its ability to meet financial commitments.|
||An insurer rated 'CCC' has very weak financial security characteristics, and is dependent on favorable business conditions to meet financial commitments.|
||An insurer rated 'CC' has extremely weak financial security characteristics and is likely not to meet some of its financial commitments.|
||An insurer rated 'R' is under regulatory supervision owing to its financial condition. During the pendency of the regulatory supervision, the regulators may have the power to favor one class of obligations over others or pay some obligations and not others. The rating does not apply to insurers subject only to nonfinancial actions such as market conduct violations.|
||An insurer designated 'NR' is not rated, which implies no opinion about the insurer's financial security.|
*Ratings from 'AA' to 'CCC' may be modified by the addition of a plus (+) or minus (-) sign to show relative standing within the major rating categories.
NB: Our current application forms use a general Standard and Poors’ rating scale rather than one specific to insurer financial strength, such as the scale above. We are currently updating our application forms to be consistent with the rating scale above. This work will be completed by July 2013.