The End of Agreed Value policies for Income Protection insurance.
There are some proposed changes coming to how insurance companies offer income protection. The proposed changes are :-
- No more offering agreed value income protection insurance, that is where you agree on a monthly benefit when you apply for the cover. All policies will be offered on an indemnity basis only, which means at the time of claim they will assess your past two years of income when you make a claim to work out the benefit.
- No more offering payment periods to age 65. The only payment periods available will be 5 years or 2 years. The Australian Insurance market is one of the few in the world that still offers to age 65 payment periods for income protection and also agreed value policies for income protection. The companies here have been looked at as offering terms that are not sustainable according to the government agency that oversees this area ( APRA). They have not forced companies to change yet, however, all signs point to this.
These changes are not law yet, however some companies have already stopped offering these products for example “clearview” insurance announced yesterday they were no longer offering agreed value income protection.
If you currently have an agreed value or payment to age 65 policy, you should not be affected by the changes, however if you were thinking of taking out an agreed value income protection policy, or taking out one that pays to age 65, please contact our office 02 4648 0431 as soon as possible so that we can apply before these changes are made industry-wide.
