By Eric Bohl | Newleaf Tailored Financial Solutions
Last year, APRA released sustainability measures to address the Life Insurance industry’s poor performance within the income protection area. APRA is seeking to move to a more sustainable model therefore the industry is required to cease offering Agreed Value cover.
APRA requires Life Companies to cease offering Agreed Value (and endorsed agreed value) income protection by 1 April 2020. This applies to all policies (including direct) where the sum assured is based on earnings at policy application and does not consider earnings at time of claim, therefore this means Agreed Value, Guaranteed or Flexi-Guaranteed will no longer be available.
Please note, that as a result of these changes, Guaranteed Business Expenses will also be removed.
From 1 April 2020, new contracts will be issued only for Indemnity income protection. Indemnity income protection requires the insured to prove their level of income at time of claim.
How does this affect existing customers with agreed value?
Existing customers with Agreed Value income protection as at 1 April 2020 can continue to maintain and increase their cover as before. There are no new restrictions on CPI increases, increasing level of income protected or underwritten increases.
Act now before 1st April 2020 before it’s too late
If you have a current income protection policy in place and it is not an Agreed Value or Guaranteed contract, please call Eric Bohl at Newleaf on 303 202 70 immediately to have this reviewed to see if you are eligible to have your policy upgraded.