Changes to the interest rates AIA charges some of its clients have been outlined by the firm.
It says customers who hold a Traditional Whole of Life or Endowment policy may have a loan against their policy, which can either be a customer initiated or arrears loan. The firm will increase its interest rate from 4.5% to 7% a year on 1 April 2023.
AIA NZ says interest is calculated on, and applied to, the outstanding loan balance monthly at a compounding rate.
There are approximately 5,000 AIA customers with policy loans, and the company has written to them to explain the change, says the firm.
AIA says that ex-AIA branch Permanent Term and Universal Life policies may also have policy loans. This change does not affect these loans which already have an interest rate of 7%.