Income Protection Insurance – Important Changes

Our go-to expert Cameron Peck, Director at Safeguard Life, offers some insight into the forthcoming changes to income protection insurance policies – a very important read for many.

It’s time to review your Income Protection policy now!

All new Income Protection policies will have WEAKER definitions from 1/10/2021, due to a mandated and permanent industry-wide change.  You may also be unsatisfied with recent price rises, which have been too common of recent, so we trust that this communication is timely for you.  If you have thought about reviewing your insurance needs including your existing income protection policy or implementing new income protection for the first time the window will cease permanently for the higher quality products we enjoy today.

Why the upcoming Rule changes?

APRA, the Australian Insurance industry regulator, has made changes to the income protection market that in essence downgrade the high-quality conditions and features that are currently available. This is to curb the $3.4b losses sustained by the industry in recent years, in a bid for industry sustainability.  In other words, these measures are to make insurers profitable again, to the detriment of the consumer.

What are the key changes after 1/10/2021?

  • New income protection cover will be weaker, reducing the ability to claim
  • Indemnity income protection contracts determine eligibility and the quantum of a claim using an income lookback period.  This is currently as good as 3 years, with the insurer looking at your best income over a rolling 12-months to maximise your insured amount. The ‘lookback’ period will be reduced to 12 months only.
  • This means that in a year like 2020 with COVID that the benefit payable could be vastly reduced, possibly NIL.
  • Other adverse changes will also be implemented after 1/10/2021 that will even more detrimentally reduce the quality and features of new policies on the market.

This means that the opportunity to review your needs, has a highly limited timeframe.  Cameron Peck is a specialist in this market, who has helped our clients for many years, and if needed he can help to simplify your options.  I encourage you to call or email Cameron Peck for a chat.  Contact Details are: Cameron Peck (Director/Adviser): ; Mobile 0400 440 128.

Safeguard Life also specialise in providing personal insurance advice to small business owners, professionals, executives and family business around Life, Income Protection, Trauma & TPD Insurance.  Safeguard Life are a separate business and we do not receive remuneration for any referrals.