ARE YOUR INSURANCE PREMIUM INCREASES TO HIGH?

Options available to you regarding your insurance premium increases

We are understandably being inundated with requests for assistance with premium increases. We have written to you previously to explain the new insurance landscape and the government enforced changes that insurers must abide by. It has resulted in premium increases across the board from every insurer, not just yours and often in excess of 30%. To learn more about the changes insurers have been required to undertake, we have written this article that you may find useful to understand your increase when considering your insurance options.

On the 14th of December 2023 ASIC and APRA launched an investigation into premium increase stability and transparency, we hope this improves the unsustainable situation of large and persistent increases by all insurers.

BREAKING NEWS

14/12/2023

BREAKING NEWS 14/12/2023

ASIC and APRA issue joint letter on premium increases in life insurance

"The Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) have issued a joint letter to life insurers and friendly societies (life companies) about life insurance industry practices in relation to premium increases.

The letter outlines ASIC and APRA’s observations from a joint review of life companies’ past practices, following concerns raised by ASIC and APRA in December 2022. The letter identifies regulatory expectations and areas for further industry focus in relation to future life insurance premium increases, disclosure and marketing materials, and product design. Read the letter (PDF 205 KB)."

How can Equitem help you navigate premium increases?

We are keen to assist you to save money or to receive financial advice. The following are the ways we can assist you:

  1. If you want to solely to save money on your insurance premiums, you may instruct us to change your insurance policies to reduce your premiums, or

  2. If you require a full strategic review based on your or current financial situation and goals, you may request a new comprehensive financial plan from us where we will update your financial position, identify your objectives and needs, perform appropriate research and provide you with a new Statement of Advice. This process may not necessarily save you money and will incur additional fees as the purpose of such a review is to provide you with a new financial plan (note: it cannot be limited to insurance only advice).

How can you save money?

Changing aspects of your existing policies can result in significant premium savings. However any variation to your existing policies is a variation to the personal financial advice you received when you took out the insurance, therefore any changes may leave you underinsured and may not provide you or your family with the financial security you require upon the death, disability, illness or accident of yourself or loved ones.

  • Reducing the amount insured (the benefit amount you would receive if you were to make a claim) on any Life, TPD, Trauma or Income Protection policy will reduce your premiums. Each type of policy attracts its own premium. Reducing each/any of the premiums by a percentage will save you a similar percentage amount on that policy's premium (the exact saving will be calculated by your insurer).

  • Some insurers offer Extra Benefits as additional cost options on their policies. Examples of such benefits include claim amounts increasing with CPI over the life of the claim, lump sum payments for specified injuries or illnesses (I.e. a broken shoulder), hospital benefits, partial income benefits, reduced waiting periods, Superannuation Guarantee payments or the ability to 'buy back' your cover after a claim to continue to be protected (please refer to your PDS for a full list of benefits). Turning off this option will save you money, but you will forego this extra protection.

  • Most Income Protection policies have a 30 day waiting period (the length of time you must be medically unable to work before your policy will commence paying you a replacement income). Extending the waiting period to 60 days, 90 days or 2 years can drastically reduce your premium. However you will have to be off work for longer periods of time and therefore you must ensure you can survive financially with lengthened waiting periods.

  • Most Income Protection Policies pay your benefit to Age 65-67 (your anticipated retirement age based on your DOB). You could save money by reducing the Benefit Period to only 2 or 5 years. You must be aware however that if you make a claim, your insurer will cease paying your income replacement benefit after either 2 or 5 years. If you are still unable to work, no further payments will be made and you will be reliant on personal savings and/or potentially government disability benefits for an income.

Important considerations before making any changes:

If you reduce your benefits and wish to add them back again in the future (I.e. you want to increase your cover again, add back benefits, reduce your waiting periods or switch insurers), you will be subject to new applications and medical underwriting, you will only be able to access the new style of insurance policies and you may not qualify for insurance.

Making these changes may leave you in a detrimental financial position if you were to ever make a claim on one of your policies. Making these changes are 'self-directed', we will execute the changes for you, but unless you request a new comprehensive financial plan, we have not taken into account your current financial situation, the appropriateness of insurance, the claim outcome or the impact the changes you make will have to your personal and financial goals.

How to request a quote to make changes

If you wish to make any of the above Optional changes to your policies please email clientservices@equitem.com.au with your requested changes or complete this form.

We will then contact your insurer and request a revised premium quote. Once we receive the quote from your insurer, we will send it to you for your consideration and decision. If you wish to implement the changes to save money, you must sign and date the quote and return it to us. We will process the change on your behalf with your insurer.

General Advice Warning

This information has been prepared and provided without taking into account your objectives, financial situation or needs. Before acting on this information, you should consider its appropriateness (having regard to your objectives, financial situation and needs) and any other information pertaining to your superannuation product by referring to its PDS.