I have written a lot in the past year about the availability of a very fairly priced AD&D product from a company that covers everything from simple AD&D to war risk for civilian contractors working in Afghanistan.
The company that offers the coverage is Global Underwriters and as I understand it the end product is underwritten and carried by AIG. I was encouraged to provide a link to my clients to a Travel Insurance Center website so they could learn more about the products, see approximate costs and actually apply on line.
We’ve placed some really nice cases for the clients where traditional life insurance would have been too costly. One case in particular was a skydiving instructor who also flies jump planes. This would have been a minimum $5 per thousand flat extra charge on traditional life, but we were able to get an aviation/skydiving exclusion on the life insurance and were quoted and issued the AD&D policy at the “approximate cost” on the website plus the hazardous activity rider which adds 25% to the cost. To put that in perspective the traditional insurance with the flat extra for $250,000 would have cost about $1700 annually, $1250 of that being the flat extra. By splitting the risk we were able to get the coverage for right at $800.
I have been quoted and placed other policies since, but for the purposes of this post there are two cases that make the point I’m getting to. First was a man who races airplanes around a pylon course. This is high speed stuff with the premier race being in Reno Nevada. The other was a private pilot who had not flown in 16 years but wanted to get back into it. His wife insisted he get additional life insurance. Because of his time away he would be treated as a student pilot for underwriting purposes. I got quotes from Global Underwriters for both of these cases at the base policy cost plus 25% for the hazardous activities rider. These were verbal quotes and essentially I was told to quote my customers the “approximate cost” from the Travel Insurance Center website. Putting that in perspective my client that flies in races would pay $1050 a year for $1mm of accidental death insurance. Doesn’t cover any cause of death other than accidental and only those activities included in the hazardous activities rider.
That rider reads, “**Hazardous Activity Rider
Policy is amended to cover the following activities: Motorcycling, Scuba Diving, Jet, Snow and Water Skiing, Mountain Climbing, Piloting any Aircraft, Sky Diving, Amateur Racing, Bungee Jumping, Spelunking, Whitewater Rafting, Surfing, Canopying, Zip lining, Paragliding and Parasailing.”
So, to the point. It was a great surprise when I asked for a quote a few days ago on a student pilot. Nothing extraordinary. A guy wanted to take up flying and wanted to ensure he was covered for that activity. I referred him to the website and he completed the form to get a quote, but I also referred him to the benefits and approximate cost pages on the site. He sent in the quote request. The “approximate cost” of his coverage was $1050 annually for $1mm of AD&D which included the hazardous activities rider. I was a bit confused when the Travel Center came back with a quote from Lloyds of London for $2150 annually, stating in their email that “We have to use Lloyd’s since he is a student pilot. The GAP (Global Accident Protection) from AIG would be much more than this.”
Does the term bait and switch seem appropriate. I mean if someone tells you the approximate cost of something is $1000 and the actual price is 2 or 3 times that much, does that really reflect an approximate cost?
Bottom line. The answer is no and for that reason I have forwarded this information to the insurance commissioner of the state of Colorado asking to know just exactly what Global Underwriters has filed for rates and products.