In a positive start to the week, AEGON have become the first insurer to respond to FCA guidance published last week by implementing a premium deferral option. The FCA guidance set out the regulators expectations of insurers in order to support customers suffering financial difficulties due to COVID-19.

AEGON have now joined LV= and Zurich who had started to offer premium deferral options before the guidance was issued. AEGON will start to offer premium deferrals to customers from today if after discussions about their situation other options are not deemed suitable.

The premium deferral option closely follows the guidance issued by the FCA. No minimum qualifying period has been added in terms of how long a policy must be in force before the option can be taken. Clients can elect to defer premiums for up to three months, which mirrors what both LV= and Zurich offer as well as FCA expectations.

At the end of the three month deferral period the client will be contacted in order to inform them that AEGON will recommence collection of premiums and to discuss how the client will repay the missed premiums. This can be repaid either by a one off lump sum or over a period of up to three months. If the client elects to repay over the three months the expectation is that AEGON will effectively take double premiums over this period. In comparison Zurich will offer clients two months to repay premiums if they have a policy on their life protection platform (policy no prefix PR) and until the end of 2020 to repay if they have a policy taken out before September 2018. LV= on the other do not ask clients taking their premium break option to repay the premiums as they use their member support fund to pay this.

In more positive news for advisers, AEGON have confirmed that where a client takes a premium deferral this will have no impact on commission as no clawback will be generated unless the client is unable to repay the premiums and a lapse is triggered.

Although the lock down is slowly being lifted, the extension of the government furlough scheme for another four months suggests that for many their financial difficulties are unlikely to ease any time soon. As such it is vital that insurers do everything possible to help those who have seen their income reduce or even stop altogether. The FCA guidance issued last Thursday (read our full thoughts on this here) set out the regulators expectations and it is really encouraging to see AEGON respond to this so quickly. We expect more similar announcements to follow over the coming days and weeks and hope that every insurer follows suit sooner rather than later.  

To view AEGON’s responses to our Premium Holiday/Premium Deferral questions click here

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