Your future earning ability is one of your most important assets – what position would you be in if something happened and you were unable to work in the event of a serious illness or injury?
Income protection insurance is an essential tool to partially replace your income in the event of either a serious illness or an injury that leaves you unable to work.
It’s important to note that annual premiums of income protection insurance are tax-deductible.
There are key changes coming to income protection insurance – with some commencing on 1 October 2021. Make sure you are across all the changes.
Australian Prudential Regulation Authority’s intervention in the income protection market is coming – intended to address issues with income protection insurance in that it has become an unsustainable product for many insurers, leading to substantial losses across the industry.
On top of substantial premium increases on existing policies, from 1 October 2021 some significant changes are coming:
- Proving income upon claim: policy holders deemed to be ‘stable income earners’ will only be able to use the previous 12 months income to substantiate their claim. This is a big change to existing policies which have either an ‘Agreed’ benefit or the opportunity to use ‘the best 12 of the last 36 months’.
It is also proposed, that from 2022, income protection contracts will be for a term of five years, after which a new contract will be offered. While there will be no medical review, insurers will be able to set new terms and conditions, and any changes to your circumstances can be reflected, such as occupation, financial situation, risky pastimes & pursuits, and broader societal and economic changes.
HLB Insurance Services can help you, review your current insurance policies and provide advice on the most suitable policies for your needs.