Only available through a financial adviser, not directly
AIG’s life insurance includes whole of life policies, over-50s plans, and critical illness cover that won a Lifesearch award in 2019. If you’re worried about loved ones being able to afford bills and living costs if the worst happens to you, read on to find out if AIG’s life insurance could meet your needs.
The UK's leading broker of health and protection insurance products
AIG – or American International Group, Inc to give its full name – is an American brand with fingers in proverbial pies in more than 80 countries. Founded in 1919, it now offers a wide range of insurance products internationally, but in the UK its main area of focus is life insurance.
AIG Life Limited is the life insurance arm of AIG in the UK, Channel Islands, Isle of Man and Gibraltar.
What types of life insurance does AIG offer?
Alongside its critical illness cover and over-50s plans, AIG offers no less than 4 flavours of life insurance, including term insurance and whole of life insurance. All of its products pay out a lump sum in the event of either your death or diagnosis of a life-changing condition. All but AIG’s over-50s plans are available individually or as joint cover.
AIG’s life insurance products are only available through a financial adviser – you can’t buy directly from AIG.
AIG’s term life insurance offers cover for a fixed period of between 2 and 70 years. If you die or are diagnosed with a terminal illness, it pays out a lump sum that can be used to repay a mortgage or other living expenses. You can choose the term based on your needs – you might be happy to cut it off when your little ones have flown the nest, for example.
AIG offers three types of term life insurance.
Level Term Life Insurance, where both your monthly payments and the cover amount stays the same.
Increasing Life Insurance, where the cover amount increases by 5% each year. Your monthly payments are reviewed annually and increase by a higher percentage.
Decreasing Life Insurance, where your payments stay the same but the level of cover decreases over time, to zero at the end of the policy.
This could be a good option if money is a bit tight initially and you don’t want to have to choose between protecting a new family in the future and keeping them in toys and nappies in the present. It offers the same cover as AIG’s term life insurance, but premiums start lower and increase over time.
AIG says the online questionnaire for its Instant Life Insurance takes just eight minutes to complete and it will let you know straight away whether it can insure you. It says more than 85% of applicants are accepted.
You can only apply up to age 55 (likely reflecting the lower health risks of younger people) and, unlike AIG’s other life insurance policies, the level of cover is capped. As with its term insurance, you can choose level, decreasing or increasing life insurance. With the latter, your cover increases by inflation (RPI) each year up to a maximum of 10%.
AIG’s whole of life cover works in the same way as its term life insurance, except that there is no fixed end date – it will last until you die, provided you keep paying your premiums. If you have a joint policy, this usually only pays out for one person in the couple, but AIG also has a “continuing cover” option. This allows a surviving person covered to apply for further cover up to the original sum assured.
AIG’s critical illness plans cover you if you’re diagnosed with one of more than 80 life-changing illnesses. For some conditions, you’ll receive a lump sum payment of the full level of cover, and the cover will then end; for others, you’ll get a lower payout of £35,000 or 50% of the premium, whichever is lower. For the latter group, your cover won’t end after a payment is made. Any children you have will also be covered for certain conditions.
Premiums are based on your age and health at the start of the policy and rise over time to reflect increased risks as you get older.
AIG offers two variants on its critical illness cover:
You can enhance cover by adding on protection in the event of permanent or temporary disability that pays a portion of the total cover if you are incapacitated (unable to work).
Key3 Critical Illness Insurance covers only cancer, heart attack and stroke, which AIG says are the three most claimed-upon illnesses. It’s a cheaper option than full critical illness cover.
Many people take out over-50s life insurance to save their nearest and dearest the stress of worrying about funeral costs. As with other plans, you’ll get a lump sum when you die, though this is limited to a maximum of £15,000, in exchange for paying a monthly premium of between £5 and £50. The older you are when you take out the plan, the lower the possible payout is likely to be, and as with all over-50s plans, you may end up paying more in premiums than the value of the lump sum.
Premiums stop on your 90th birthday, though the cover will continue. AIG also offers something called “protected benefit”. As long as you’ve paid half the premiums due before you turn 90, if you cancel your policy or stop paying premiums, AIG will still pay a lump sum of at least half your original cover.
Unlike some other insurers, for some plans, you don’t have to be resident in the UK to take out the cover and/or for a valid claim to be made (though you do have to be a British citizen).
For some policies, you can add something called “waiver of premium” for an additional fee. Availability depends on your age and other factors, but it means that you won’t have to pay your premium if you’re unable to work for longer than 26 weeks.
AIG’s over-50s plans are 5-star Defaqto rated, likely in part thanks to the protected benefit which means you’ll receive a partial lump sum even if you stop paying premiums, as long as you’ve made half of the payments due.
Drawbacks of AIG life insurance
AIG’s life insurance policies are only available through a financial adviser – you can’t buy them directly.
With most of AIG’s policies, unless you’ve paid extra for waiver of premium, if you stop making payments you won’t get any money back and your cover may stop.
AIG life insurance exclusions
As with all insurance, if you don’t answer questions truthfully when you apply, this might invalidate your cover.
You can’t claim under a terminal illness in the last 12 months of AIG’s life insurance plans.
AIG’s life insurance won’t pay a claim if you die as a result of suicide within the first year of your policy.
AIG’s critical illness policies only cover you for the conditions named in the policy.
If you die because of anything other than an accident in the first two years of an over-50s plan, you will only receive 1.5 times the monthly premiums already paid, rather than the full amount. However, if you die because of an accident, you’ll get three times the current lump sum.
What’s the claims process for AIG’s life insurance?
You can make a claim by phone (0345 600 6815) or email (firstname.lastname@example.org). Having details of the policy and, depending on the claim, either the death certificate or relevant medical information will help make the administrative process run smoother during a stressful time.
Frequently asked questions
Buying life insurance is an important decision and what you need will depend on all sorts of things, including whether you have kids, benefits you have through work, and your general finances. AIG’s life insurance is only available through an adviser, who will be able to assess your needs and help you decide what’s right for you.
There’s no easy answer to this question – the best way to find out is to get quotes so you can compare on cost as well as the features of AIG’s cover. As with all life insurance providers, the premium you pay will depend on the level of cover you choose and your personal circumstances, such as your age, health and lifestyle.
Usually you can, though it depends on the type of cover you have. For example, for AIG’s term and whole of life insurance and critical illness cover, you can increase the amount of cover up to a certain limit. If you’re under 55 and are increasing the cover for certain reasons, including getting married or having a child, you won’t need to provide further medical evidence. You’ll need to check the details of your specific policy for exactly what changes you can make.
Life insurance payments are currently free from income and capital gains tax for UK residents, but may be subject to inheritance tax, depending on the value of your estate. It’s also worth noting that tax rules could change in the future, which might affect the tax implications on your payout.
In most cases, if any premium remains unpaid for more than 30 days from the date it was due to be collected, AIG will cancel your policy and you will no longer be covered. Exceptions to this rule include if you’ve purchased Waiver of Premium with qualifying policies, or over-50s plans where you’ve paid at least half the premiums and qualify for a protected benefit amount.
Life insurance ratings
★★★★★ — Excellent
★★★★★ — Good
★★★★★ — Average
★★★★★ — Subpar
★★★★★ — Poor
Our customer satisfaction scores (“Customers say”) are based on a survey of 750 customers carried out in December 2019.
Ceri Stanaway is a researcher, writer and editor with more than 15 years’ experience, including a long stint at independent publisher Which?. She’s helped people find the best products and services, and avoid the pitfalls, across topics ranging from broadband to insurance. Outside of work, you can often find her sampling the fares in local cafes, or compensating for the calories through running and yoga.
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