Income Protection and TPD Price Increase FAQsInformation on our recent pricing changes
Recent premium increases are the result of higher-than-expected claims volumes across the industry, which has resulted that many insurers across Australia have ultimately required to plan for higher than expected future claims by increasing premium rates.
Decisions to change premium rates do not occur because of changes to an individual customer’s own circumstances. Premiums are determined in relation to the group of customers that we insure, broad population trends and economic conditions that may impact expected claim costs.
Our premiums are determined so that the total premiums payable by specific groups of members are sufficient to cover their expected future claims costs and our associated business costs in providing protection to those members.
We act responsibly when making decisions to change our premium rates and only make changes to the extent necessary to protect our long-term commitment to pay benefits to customers.
You don’t need to take any action. You will be sent your renewal notice prior to the anniversary of your plan. Your renewal notice will provide details of your new premium before the new premium takes effect.
Depending on your type of policy, premiums may increase each year as you get older.
For this type of policy, known as ‘stepped premium’, the premium you pay each year reflects the risk of you needing to make a claim. This risk generally increases as you get older, so the premium increases too. Premium increases due to age usually range from 3% up to 15% each year, with larger increases more common at older ages.
You may also have built-in annual increases to your sum insured, which provides protection against the rising cost of living (inflation) without the need to apply for more cover. As your sum insured increases your premium will also increase by the same proportion. This increase is typically linked to CPI and has recently been around 5%. This is an option that you can remove at renewal if you don’t want your cover amount to increase.
Higher than expected claim trends have been well documented over recent years, including a joint study completed by the Financial Services Council of Australia and KPMG, which was published in 2020. A link to this study can be found here: Joint study reveals large rise in life insurance claims – KPMG Australia
We review factors that affect premium rates on an ongoing basis which may include, but are by no means limited to, our assessment of regulatory or legislative requirements, our operating costs, the commercial environment, and expected future claims experience. These are only some examples of factors that we may consider, and others may apply.
The outcome of any premium review may result in a change to the premium rates we charge. If we change the premium rates, you will be advised of before the change takes effect at your next renewal.
We provide sustainably priced products with features valued by our members and focus on operating efficiencies to reduce administrative costs. However, when claims experience are higher than anticipated for an extended period, we unfortunately must respond with pricing increases.
Insurance premiums are calculated by forecasting expected claims, administration, and management costs into the future, and spreading these costs over the expected policy duration. Grouping of policies by age, gender, smoker status and occupation (for Income Protection and TPD benefits) is undertaken, so that each customer is paying a premium which reflects the likelihood of claim for someone in their group.
To prepare these forecasts, insurers rely on ‘industry tables’ which aggregate data relating to death, injury, illness and claims rates across all Australian life insurers over a specified period. These tables are produced by an independent party (the FSC), not an insurer, to help insurance companies calculate the most credible forecasts possible. Insurance companies may then adjust these forecasts to allow for their unique circumstances, such as product features, administration costs, business strategy.
We have a responsibility to provide insurance cover that is sustainable over the long term, so that we can continue to pay claim benefits long into the future, as such premiums need to reflect the expected long-term risks and uncertainties.
We guarantee to renew your insurance cover each year provided coverage has not expired or been cancelled by you and provided premiums are paid when due.
We provide options to help you manage the cost of your cover which we have detailed in the letter sent to you. However, please feel to call our Client Services Team on 1300 551 044, 8.30am to 6.00pm Monday to Friday (AEDT) to discuss this further with you.
You always have the option to reduce the premium by reducing your cover or changing options, subject to any minimum premiums or sum insured applicable to your policy.
You always have the right to cancel your cover, at any time and for any reason, including a premium increase. There are no cancellation fees or penalties for cancelling your policy. However please consider your needs carefully before cancelling your cover.
Your policy offers a variety of options should you wish to manage the cost of your premiums, but still stay protected. Some of the options you may wish to consider are:
|Maintain your current cover||Your cover will remain unchanged, and your premium payments will continue to occur as scheduled.
|Revise your benefit amount||You may no longer need the level of cover that you currently have. You may decide that you could reduce your cover amount.
Please note: If you do decide in the future to increase the benefit amount again, it will be subject to underwriting at the time.*
You will be asked questions about your lifestyle and any current health conditions, including those that have arisen since you took your cover out. As a result, you may have to supply additional medical evidence.
* Unless it is an increase to TPD cover of the lesser of $100,000 or 20% of your cover amount as a result of an allowable event, under the Future Increases Benefit.
|Change your waiting period||If you hold Income Protection cover the waiting period on your policy is the length of time that you must be disabled before we will commence paying any Income Protection Monthly Benefits after you make a claim. Information about the waiting period is in your PDS and you would have chosen either a 30- or 90-day waiting period when you took out your policy.
Generally, the shorter your waiting period, the more expensive your premiums. If you originally chose a 30-day waiting period and you increase your waiting period to 90 days, this will reduce your premiums.
|Amend your benefit period||If you hold Income Protection cover, the longer your benefit period (to age 65) the higher your premiums will be. The benefit period is the maximum length of time that we will pay your claim should you become ill or injured, whilst you remain unable to work during that period.
You may be able to reduce your benefit period to reduce your premiums. Importantly, you need to consider the fact that if you reduce your benefit period, the amount of time during which you will receive monthly benefit payments whilst you remain unable to work, will be reduced.
|Change your payment frequency||If you pay your premium monthly, you can change it to an annual payment frequency. As noted in the PDS, monthly premium payments attract a 5% loading which does not apply if you pay annually.
If you don’t want to pay your premium in an annual lump sum, you can pay monthly to help you spread the cost out over the year.
|Opt out of indexation||Benefit amounts and premiums are automatically increased at each anniversary based on the increase in the Consumer Price Index (CPI) or 3% (whichever is the greater), known as indexation. You can request to have automatic CPI increases switched off, which will prevent the cover increase (and the corresponding premium increase, for the greater amount of cover) occurring from your next anniversary.
This means your sum insured will no longer increase in line with CPI automatically at each plan anniversary date. However, you will have the option to switch the increase back on in the future, at renewal time, if you decide to do so.
|Choose to take a premium freeze||If you hold TPD cover, you can fix the cost of your cover by contacting us to freeze the premium amount. This means that your future premiums will be fixed at the amount you were paying on the date of notification, and each year your cover amount will be reduced to the amount of cover that can be purchased for the frozen premium amount. You can contact us at any time to end the premium freeze (if so, it will end on the next anniversary of your cover).|