360Private

Tue19Jan2021

If ever there was a year to see your risk insurance adviser, this is the year.

Premiums are on the rise and the Income Protection market has changed dramatically.

Over the past 5 years Australia’s life insurance industry has made billion-dollar losses, primarily due to a large increase in the cost of claims and the continuing long-term low interest rate environment. Income Protection policies are the main culprit behind the increasing cost of claims, with far greater numbers of successful Income Protection claims made and for longer durations. Whilst successful claims and usage of insurance policies is a good thing for consumers, the continual incurring of losses has prompted concern from the regulator, Australian Prudential Regulation Authority (APRA), that the life insurance industry is unsustainable based on the current insurance contract arrangements.

To ensure continuity and sustainability of their business model, insurers have exercised their rights to increase insurance premiums. These increases range from expected inflationary adjustments up to 72.5%, depending on insurer and product.

Given Australia’s well documented underinsurance problem and continuing need for a sustainable life insurance industry, in March 2020 APRA mandated the introduction of new Income Protection insurance contracts with significant differences to those previously available, as follows:

  • Removal of Agreed Value Income Protection contracts, meaning monthly benefits payable to an insured person after a successful claim will be restricted to the lesser of the insured amount and 75% of pre-disability income for all new contracts. Agreed Value contracts allowed clients to have a guaranteed payment regardless of any reduction in income which is often considered more beneficial. (Note existing Agreed Value contracts can remain in place).

Further changes expected during this year include:

  • Alteration of definitions reducing the possible claims that can be made.
  • A reduction to the amount that can be insured.
  • Income Protection contracts will no longer be guaranteed renewable. Policies will be offered for a term of 5 years and insurers can alter or cancel the policy at this time.
  • Removal of additional benefits attached to policies.

Prior to all these changes being finalised, there exists an opportunity to obtain Income Protection coverage under a more comprehensive contract of cover. If you require Income Protection insurance, it is vital you consider the availability of superior policies now before all these changes are initiated.

Whilst the landscape for personal insurance is changing, the importance remains the same. If you cannot work due to illness or injury, how will you pay your mortgage? School fees? Everyday living expenses? If you were to pass away, how will your family manage financially?

We regularly review policies to ensure they remain appropriate and competitive and will be focussing on these reviews even more so given the significant increase in premiums.  Our advisors welcome contact from clients regarding policy queries or review requests and can assist in assessing appropriate replacement cover or methods to reduce premium cost.

These changes are affecting everyone, but rest assured we can help you navigate these challenging times and ensure you have cover to suit your needs at a cost that is sustainable for you.

Recent posts

  • Covid-19 Business Support Grant

    Written by 360Private

    Published: 29 July 2021

    A new Covid-19 Business Support Grant has been announced by the South Australian State Government to assist small and medium businesses that suffer a significant loss of income as a result of the Covid-19 health restrictions. Eligible employing businesses can apply for a $3,000 cash grant, whilst a $1,000 cash grant is on offer to eligible non-employing businesses. To be eligible for the one-off $3,000 grant, a business must, as at 12:01am Tuesday 20 July 2021: Be located within South Australia; Have an annual turnover of $75,000 or more in 2020-21 or 2019-20 financial years, and be registered for GST; Employ people in South Australia; Have an Australia-wide payroll of less than $10 million in the 2019-20 financial year; Have a valid and active Australian Business Number (ABN); and Have experienced at least a 30 per cent reduction in turnover in the week of Tuesday 20 July 2021 to Monday 26 July 2021 (inclusive) compared to the week prior, due to the restricted trading conditions.
  • Employee Superannuation Changes

    Written by 360Private

    Published: 27 May 2021

    Employers should be aware of some key changes to superannuation laws that will impact the calculation of employee superannuation entitlements. Superannuation Guarantee Rate Increase to 10% Employers in Australia are required by law to make regular contributions to their employee’s superannuation fund. The legislated Superannuation Guarantee (SG) rate is currently set at 9.5% of ordinary time earnings. The first increase to the SG rate will occur on 1 July 2021 and will see the contribution rate that employers are required to pay increase from 9.5% to 10%. This will then be followed by incremental half percentage point (0.5%) increases each year until the rate reaches 12 per cent on 1 July 2025.
  • Changes to the Fair Work Act

    Written by 360Private

    Published: 29 April 2021

    The Fair Work Act 2009 has recently been amended to change workplace rights and obligations for casual employees. The changes were made by the Fair Work Amendment Act 2021 and came into effect on 27th March 2021. These amendments update the definition of casual employment and provide guidelines for moving casual employees to permanent employment. In addition, the amendments introduce requirements for all Employers to provide a Casual Employment Information Statement. Employers are required to give every new casual employee a Casual Employment Information Statement (CEIS) before, or as soon as possible after, they start their new job.
  • Retirement Village Masterclass

    Written by 360Private

    Published: 01 April 2021

    Retirement Village Masterclass Last week, Mark Lumley of 360Private Legal, gave a series of presentations at a Retirement Village Masterclass being held at Aveo Retirement Villages. These presentations on Retirement Village Contracts gave an overview on all Estate Planning considerations, as well as advice around legal obligations which should be considered prior to signing any such retirement village contracts. 360Private Legal can provide in depth analysis of your current circumstances and review any succession issues that need to be addressed. 360Private Legal can also provide you with recommendations including referrals to associated professionals who will assist you in the delivery of considered and comprehensive estate planning documentation and business succession planning.
  • Expensing of Depreciable Assets

    Written by 360Private

    Published: 12 March 2021

    The 2020 – 2021 Federal Budget announced significant temporary changes to the tax rules surrounding depreciating assets. These new, full expensing rules apply to businesses with a turnover of up to $5 billion. An immediate 100% deduction can be taken for eligible depreciating assets incurred from 6 October 2020 until 30 June 2022. Which assets are eligible? A depreciating asset qualifies for full expensing if after 6 October 2020, and on or before 30 June 2022 the entity: Starts to hold the asset; and Starts to use the asset, or has it installed ready for use for a taxable purpose. An asset is not eligible for full expensing if:

Financial health check

Whether it be a query about superannuation, investments, insurance, mortgage or any other financial based questions, get 360Private to check on your financial health.

Client testimonials

Very high quality professional advice

The team from 360Private have been our taxation and superannuation advisors for the past 15 years. Throughout that time we have received very high quality professional advice to assist us progress to long term goals of financial independence.

Read more ...

 

.

We use cookies

We use cookies on our website. Some of them are essential for the operation of the site, while others help us to improve this site and the user experience (tracking cookies). You can decide for yourself whether you want to allow cookies or not. Please note that if you reject them, you may not be able to use all the functionalities of the site.