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Insurance premiums have gone up. What can you do about it?

Posted by Alex Menzie on 1 October 2020
Insurance premiums have gone up. What can you do about it?

Increasing insurance premiums. A tale as old as time.

Over the past 12-18 months, we've seen a recalibration of personal insurance and personal insurance premiums. While it's important that insurance providers are profitable (so they're equipped to pay policy holder claims), this recalibration has led to price increases, which, in many cases, have been significant.  

If you're holding your income protection insurance through your superannuation provider, you may not yet have noticed that premiums have increased - out of sight, out of mind.  But it's worth checking - some industry funds are now 3 to 4 times more expensive than comparable polices!

So, what can you do about it?

Addressing increasing premiums
Where premiums are causing cashflow stress, there are several things you can look at to reduce the impact of these premiums and maintain the benefits of your insurance. Potential solutions include:

  • Reviewing your current provider - are they still competitive?
  • Reviewing your income protection waiting period - do you have increased savings or sick leave?
  • Making sure you're not over insured - did you obtain cover for a mortgage or when you had a young family?
  • Making a proactive choice about annual indexation - do you need these increases?
  • Extras options and additional features - are they doubling up on other cover you hold?
  • Having a portion of your insurance paid by superannuation - this is different from holding cover in your regular super account but approach with caution as it does impact your retirement savings.

Importance of acting now
If you have questions about your income protection insurance, it's crucial that you have these policies reviewed as soon as possible.

In December 2019, the Australian Prudential Regulation Authority (APRA) announced a number of legislative changes to personal insurance that are designed to make the industry as a whole more sustainable. The first of these came into effect on 1 April 2020 but even more significant changes are due to take place next year, on 1 July 2021. 

For policies that commence after 1 July 2021, insurance companies will be able to review the terms of your insurance contract every five years. In this instance, their ability to review includes changing the terms of the policy (including medical definitions), changing the amount for which you're insured and placing tighter controls on longer term claims.

In effect, these changes act to remove certainty and peace of mind - the very reason we have insurance in the first place - and will impact you regardless of whether you hold income protection personally or through your superannuation.

So pull out your income protection policy this weekend and see where you stand.

If you have any questions or concerns about how the new changes will impact you, please contact us on (07) 3363 5800 or info@medicalfinanical.com.au.

Author: Alex Menzie
Tags: Insurance

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The information on this site is of a general nature. It does not take your specific needs or circumstances into consideration, so you should look at your own financial position, objectives and requirements and seek financial advice before making any financial decisions.

The financial planning services are provided by Medical Financial Pty Ltd trading as Medical Financial Planning (AFSL 506557)