April 2020- Has the Income Protection ship sailed?
As of April 1st 2020 you will no longer be able to get an Agreed Value Income Protection policy. This is a definite. Some providers set their cutoff as today but most are still 31st of March. That said, many of the changes proposed by APRA that we last wrote about December are still yet to take affect and be clarified. So what do you need to know if you haven’t got things sorted by now?
Applications for Agreed Value Income Protection
We have been hearing that many other advises are at capacity. NOR has temporarily more than doubled it’s team this month to handle demand and we can still handle new business as we have a few tricks to move faster than we normally would. The core points are:
Applications lodged before 31st of March can still apply for Agreed value and have until 30 June to complete underwriting.
As long as a quote is completed before 31st of March we can follow with a manual applications as long as they are received and processed by April 30.
Any agreed value contract in place can be modified (increases and change of ownership etc) at any time in the foreseeable future.
While we know we have a hard cut off on March 31st for new people walking in the door, we can still solve problems right up to midnight on that day, and yes we will be working (only 9pm WST) but its not all doom and gloom from then on.
So you missed the cutoff, what can you do
Insurers are all going back to the drawing board and need to design new types of insurance products that suit the new offering. This will require new software and pricing and of course even printed PDS which all takes time. In the meantime, existing products will be unchanged, likely until June 2021. So what will change but is currently still available?
Indemnity contracts with up to best consecutive 12 months income in previous 3 years are still on offer.
Guaranteed renewable contracts are still available meaning the 5 years review will not be applied.
Based on the above age 65 benefit periods with “own occupation” IP are still on offer.
Ancillary benefits such as specified injury or trauma benefits etc are currently built in to “plus” contracts.
Moving Forward
So once again, we all move forward at a fast pace. We expect some price increases on cover to flow through from all this mayhem in the next year and this has already been announced in the last couple of weeks for a few major providers increasing price by 18% or even 35% in coming months (even on level premiums). We can’t say if this trend will continue or these changes will settle things down but we do believe strongly in getting the best cover for our clients that we can. If it turns out in a few years that better value can be found elsewhere then sure we can change things but its our job to be cautious, not optimistic.