The Life and Accident & Health sectors, The Australian Insurance Regulators have been reviewing income protection policies since early 2020.
The Australian Prudential Regulation Authority (APRA) proposed new measures for income protection insurance, after substantial ongoing costs to income protection insurance. This was briefly halted due to the pandemic and then APRA was advised that the majority of changes were to be put into practice as early as late 2021.
The new measures would need to be considered by insurers when designing the policy and pricing to improve the insurers’ losses within the income protection market.
These changes included that after 31st March 2020, agreed value income protection was no longer available for new policies. Agreed value income protection policy is a type of income protection that allows you to lock in the specific amount that you will receive every month based on your income, when you buy the policy. It has nothing to do with what your income is when claiming the policy.
Here are some other changes for Income Protection that are expected to be in motion from October 2021:
Income Protection Policies Will Not Have “Guaranteed Renewable”
Insurers will now review an income protection policy before it can be renewed – the terms and condition will be revised, and the insured’s income and occupation will be reassessed.
For example, if you change your job and enter into a riskier occupation, you may not get the same level of cover with your existing premiums. The insurer can also change the terms and conditions that you need to satisfy when making an insurance claim.
Policies Will Have Strict Disability Definition
If you are buying a policy with a long-term benefit period such as ‘to age 65’, the policy will have a tier of disability definition.
You can currently get the monthly benefit if you are unable to perform your regular job, but after the changes, you may not be able to do so. The policy holder can be asked to find work before they are ready, if they do not meet the prescribed disability criteria.
So why do I need income protection?
Life is uncertain and we cannot assume that nothing will happen to us, leading to a situation where we will have to stop working. Income protection can offer great help if you are hospitalised by providing you with an upfront payment.
Is This the Right Time to Get Income Protection Insurance?
It is always the right time to get Income Protection Insurance Without it you are putting your financial future at risk for not just you, but also your family. So, no matter what changes come through the insurance industry, it is best to consider income protection insurance before it’s too late and you find yourself in a situation where you need it.
Get in touch with Aspect Underwriting – the insurance specialist in Australia, for the best income protection quote.