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:
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 firstname.lastname@example.org.
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