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Rent cover goes live

AIA has today launched a policy designed to cover rent payments.

Monday, February 23rd 2015, 2:00PM 4 Comments

by Susan Edmunds

Graeme Edwards said it was a response to how much the housing market had changed, particularly in Auckland.

“If you look at the statistics, a third of people are long-term renters and there’s no cover for them.”

AIA had been looking at its product range and had decided that instead of enhancing its mortgage protection product, it would close it and start up a new product that could be used as situations changed.

AIA’s Mortgage, Income and Rent Cover can be used to cover rent, then transferred to cover a mortgage without the need for underwriting.

“Then if you sell the house and have no mortgage it converts to income protection at the same level of cover,” Edwards said. “Ideally we’d have launched three products but we wanted the flexibility of one contract that moves with you if your circumstances change.”

Customers provide a copy of a tenancy agreement and proof of three months’ of payments that match that agreement. When a claim is made, it is then paid at that level without any further discussion required.

Edwards said it would work for people in a similar situation to his. “I rent a house and we pay $800 a week in rent in Auckland. The way it works is my wife pays the rent and the household expenses and we save my salary. She earns less… if we took out income protection for her we wouldn’t get this amount of cover but I can take our tenancy agreement to AIA and show the repayments going out of our account and say I want 115% of $800 and that’s in place. She doesn’t have to prove her income. She’s got $50,000 of cover and if something happens to her we can keep saving and the rent is paid.”

Edwards said AIA had tried to futureproof the product to guard against rent increases.

Quotemonster is not rating the coverage level of 115% of mortgage or rent and 45% of income.

Edwards said AIA was bundling the product with $100,000 of life cover.  “That’s enabled us to make the combination price effective. It’s not high-margin but if we bundle it, it’s a good price for the consumer.”

AIA siad the most competitive pricing is for longer-term benefit periods in the 40- plus age bracket; and bundled with life cover.

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Comments from our readers

On 23 February 2015 at 4:53 pm Tash said:
There IS cover for renters - has been in the market for more than a year from several providers. Unsubstantiated representations are now a breach of the Fair Trading Act!
On 23 February 2015 at 5:01 pm Newby said:
"If you look at the statistics, a third of people are long-term renters and there’s no cover for them." am i missing something but how is this really diffrent to the Partners Life Household Expenses cover
On 24 February 2015 at 3:12 pm billy the broker said:
Newby its not different, but it makes a change from hearing how fine Partners is!! Do the numbers on this new one it stacks up pretty well.
On 24 February 2015 at 5:49 pm Southern Man said:
Yes Tash and Newby you are quite correct, Partners and Asteron are way ahead of AIA with this product, a pity that this manager guy did not do his homework, or even do a quote on Quotemonster, its all there for the world to see, including policy documents. Could have saved his company a million dollars, or put the product developemnt money into something meaningfull and not just play the ratings game!

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