Synchron and AIA Australia are to introduce a term-level life insurance product later this year.

Synchron director Don Trapnell says the product’s policies will offer extended terms – such as five, 10 or 15 years – and create an affordable cover with guaranteed renewal.

Extending a policy will require no additional underwriting.

At the end of the term advisers can give clients the option to renew for a further term or move to a stepped or level premium, with stepped premium the default.

“Australia is the only country in the world that has this fixation with yearly renewable premium rating structures,” Mr Trapnell said.

“Yet this kind of insurance is, by its very nature, designed not to be inforce when a claim is most likely to happen. That is unacceptable to us.”

Synchron approached several life insurers to help design the product, finally picking AIA.

AIA National Manager Retail Products John Ashton says it is not a new product, but is an alternative approach to policy structure and pricing.

He says Synchron advisers have been involved in the development phase.

“We asked advisers which clients would value the offer,” he said.

“One market is business clients, and there’s a very obvious correlation with business loans for a five to 10-year period.”

He says the product will give clients options on how their policy is structured, rather than simply putting older clients on stepped premiums and younger ones on level.

“Advisers will be able to match up a business client’s exit strategy with a particular term of five, 10 or 15 years, with premiums priced in line with that term.”