Time is running out to put in place a current-style income protection policy, and we have been getting numerous enquiries from doctors and dentists wanting to do just that before March 2020.
This is in response to newspaper articles about the upcoming changes to income protection policies.
In response to ongoing heavy losses in respect of individual disability income insurance (DII), the Australian Prudential Regulation Authority (APRA) has launched a series of measures requiring life insurers to address flaws in product design and pricing.
There is now a genuine risk insurers may start withdrawing from the market, with at least one major reinsurer indicating it was no longer prepared to reinsure individual DII.
By introducing this package of measures, APRA is forcing the industry to better manage the risks associated with DII and to address unsustainable product design features – or face additional financial penalties.
APRA expects life companies to better manage riskier product features, including by:
• ensuring DII benefits do not exceed the policyholder’s income at the time of claim, and ceasing the sale of agreed value policies;
• avoiding offering DII policies with fixed terms and conditions of more than five years; and
• ensuring effective controls are in place to manage the risks associated with longer benefit periods.
In summary, future policies will definitely be less generous in their terms and conditions. As a doctor or dentist, your income is your biggest asset, so it makes sense to protect it.
We provide this type of advice on a fixed fee basis, with full rebate of commissions, providing up to a 30% discount from normal retail premiums.
Please contact me on 0432 885 295 or Yves@affluenceprivate.com.au for any particular questions.
You can also refer to this video, on the important features of income protection policies.