September 2021 Newsletter
Important - Big income protection changes coming mid-September 2021
Insurance companies have been making large losses on their income protection policies and have asked their regulator to step in and only allow more limited policies from the end of this month (September 2021).
This means that if you want to take out an income protection policy under the current rules, you need to do it in the next few days or it will be too late!
The main changes are:
Currently you can have a policy that pays you until age 65 if you can’t work. That will be reduced to five years.
One problem plaguing the insurance industry is that people take out a large policy but then earn substantially less and then have a strong incentive to go on claim as the insurance pays more than they are currently earning.
Currently insurers pay a maximum of 75% of the best 12 months in the previous 1, 2, or 3 years before a claim, depending on the insurer and options you have chosen. It matters a lot if the period is 1, 2, or 3 years if your income is variable or if you took maternity leave or you worked shorter hours – the best 12 months of the previous 3 years is much more generous than the “best” 12 months of the previous 1 year (12 months).
In future it seems in either all or most cases only the last 12 months count. If you want a policy that gives you 3 years, you need to apply now.
The cost of income protection depends greatly on your profession. Currently if you get cover under a safe profession like administrative or clerical and you later do something considered more dangerous like a trade, then you don’t pay more. In future, you will need to update your information every five years and you will then be re-classified.
If you would like to take out new insurance under the better terms or review your existing policy you need to move fast.
Please feel free to contact me immediately (1800 332 225) for a free consultation. Due the urgent deadline I will make myself available at extra hours including early morning to fit the demand.
Financial Adviser and Life Insurance Specialist
AFP LRS GradDipFinPlan
Life Risk Specialist | SMSF Specialist Advisor
MBiostats | GStat Graduate Statistician
Accredited Aged Care Professional
Accredited Estate Planning Professional
Authorised Representative 308223