SOME AIA CLIENTS FACING LONGER PREMIUM PERIOD

Singapore’s America International Assurance (AIA), a subsidiary of US insurer AIG, is to tell about 23,000 customers who bought certain life policies up to a decade ago that they may have to continue paying premiums beyond the date that they expected, reports Singapore Straits Times . The selling point of these policies was that, after a cut-off date, the policies would become self-funding, making premium payments unnecessary. However, low interest rates and poor investment returns have made those initial projections inaccurate. AIA noted that the policies contained disclaimers over the timeframe in which payments would have to continue being made. One policyholder with a “Choice Life 15” policy said that the agent who had sold her the policy had made no mention of the fact that the “15” in the name of the policy did not guarantee that payments would cease after 15 years. The other affected policy is “Choice Life 10”. AIA said that policyholders had three options. They could either continue paying premiums until age 100, they could pay premiums until the end of a newly projected period, or they could stop payments and give cash for future premiums if necessary. AIA said that the “critical year” for Choice Life 10 products bought in 1996 could be between four and seven years in the future. AIA also stated at a press conference that it would partially restore terminal bonuses on 216,000 AIA endowment policies sold between 1995 and 1998, and that it would be cutting the dividend rates on two Choice Life plans and on AIA Prime Life, affecting some 120,000 policyholders. In 2003 AIA faced a similar scandal with its AIA Financial Guardian policy. AIA said that poor investment returns meant that the “critical year” could have to be delayed by up to eight years. However, many claimed that they had been told that the critical year was guaranteed, which forced AIA to compensate policyholders with “support offers”.