Income Protection insurance protects our most valuable asset – our ability to earn an income. Our experience has shown that families and assets can be saved from financial ruin, those that are sick or injured and unable to work can service their debts, ensuring their standard of living can continue in spite of the tragic circumstances of their health. Insurers paid out more than $4.3B in Income Protection claims to tens of thousands of Australian families in 2019.
On the 1st October, 2021, your ability to purchase comprehensive Income Protection insurance will cease. Policies offered after this date will be limited and compromise your ability to claim, most significantly:
- Monetary limits will apply to your ability to insure your income and claim payments
- The assessment of ongoing claims will be tested against your ability to never work in any occupation
- Your entitlements to passive income such as from investments may be taken into account when calculating entitlements to claim payments
- Removal of ancillary benefits from policies
High income earners are those that are most likely to be severely impacted by the above. These changes are unprecedented and further changes have been mooted for October 2022 which will give insurers the discretion to amend terms of policies every five years, according to claims experience and profitability.
We recommend you contact our office immediately using the contact form below if you wish to consider your options relating to Income Protection. The process of applying for Income Protection is onerous and can take some weeks, as such, it is critical that you advise us of your interest urgently. Insurers have advised that they will be cutting off applications in advance of the 1st October deadline and the cutoffs vary from insurer to insurer. Whilst we pride ourselves on our ability to stay informed of changes in the market, the extent of the changes were only recently confirmed and it is now clear that most insurers will be following a similar trajectory with the new product launches.
The content on this page is general advice only as we have not taken into account your personal and financial circumstances when making this recommendation. We invite you to contact us should you have any concerns about your current investments and/or if your circumstances have changed to ensure our previous recommendations remain appropriate.