"It seemed logical to us to offer more choice by combining all these options, to allow consumers and insurance consultants to choose what suits them best when protecting the mortgage, and to take advantage of the full potential cost savings."

The cover offers three major choices all in one package. The First-to-Die option means a couple no longer has to pay premiums for both to protect their mortgage. It ensures the mortgage is paid off when one dies, and the survivor then has the option to renew life cover with no underwriting.

The Decreasing Term Cover allows consumers to choose a fixed percentage that the mortgage protection cover will reduce each year, in line with the anticipated reduction in the mortgage value, which provides significant savings on premiums over the long term.

The Fixed Term Benefits option allows a policyholder to specify that the cover be terminated in line with the end of the mortgage, which generally provides for reduced premium amounts.

For example, with AIG Life's enhancements, a couple aged 37 and 40 with a $300,000 mortgage on a 25-year term now has a range of options:

• To save from 2% to 7% annually with the First-to-Die option;
• To save an additional 2-3% when selecting mortgage cover in line with the 25-year mortgage term, under the Fixed Term Benefits option;
• To make a further premium saving with Decreasing Term Cover, reducing the level of cover as the mortgage reduces.