AXA Protection has linked up with LifeSearch to pilot a claims guarantee on term life insurance.
The pilot aims to test the appetite of consumers to buy a guaranteed product and build trust in the industry that insurers payout on claims. If the pilot is successful, it will be the first time in the UK that a full two-year non-contestability guarantee will be brought to market.
The AXA product will guarantee full payment on death after a two-year period, even if consumers have not disclosed important health information on their application form.
AXA will review the pilot gauging reaction from consumers, before deciding whether to offer a guaranteed product on a permanent basis.
One of the problems with protection insurance is that, if a person has not revealed important medical information on their application form, the insurer may give a partial or no payout. This is no help to the person taking out cover. They need a straightforward guarantee that, if the worst should happen, there will be enough money to pay off their mortgage or look after their family.
If the pilot is successful, the product will likely be launched in early 2009.