25% increase in Income Protection Insurance premium

Can't believe this.

A couple of years ago, I changed my ANZ Income protection insurance to Level premium (paying more premium) assuming that premium won't change significantly with this option.

But I received the renewal notice with a 25% increase in premium. Can they increase like this? Is there any government body that reviews these increases and approves them?

Roughly premium increased from $2000 to $2500 per annum.

Funny they say that My Peace of Mind is not changed in their premium increase justification brochure.

 

I've got a mate who got crushed at work because an idiot he worked with turned it on whilst he was inside. Long story short they pay him but he can't work anywhere or he'll lose the payment but he can't just sit at home bored for the next 30+years. He's crippled and in incredible pain some days. His mental health sucks but at least he's able to provide for his daughter. He's ended up buying and selling cars to keep him busy. I cancelled mine for a few reasons but if you're into any sort of semi dangerous sport/, recreation, I'd recommend keeping it. I've funnelled the funds into a seperate "health" offset that's sitting there with enough to pay for an operation or injury work loss. It's significant given we've been incident free for 10 years now.

 

And the other thing to ask is are you covered from time of incident/injury or is there a wait time. I know my husband pays extra so he is covered from day 1. A friend of his had to wait 30 days and then the insurance kicks in and then it takes another 30 odd says for any money to come in.

 

ANZ sold their OnePath Zurich. They might be trying to move people from their legacy books to a new policy.

It is the government bodies making insurance companies to increase their IP premiums. Why? Because insurance companies have been making a loss on their IP product. The government doesn't want these companies to go bankrupt.

Premiums are basically set based on the risk level. Most people get back to work after an injury within a shorter period. Hence, the longer wait period becomes cheaper. It is all probability.
Similarly 'any type of work' is cheaper because anyone can do data entry!

 

I had a similar hike on a policy retailed through ING. To be fair it was stupidly cheap in the first place so circa 25% wasn't a concern in actual dollar terms.

 

The big hikes in premiums have come about because of the latest reforms I believe.

Most policies with long-term benefits or level premiums etc are impacted.

 

If he can work, then he isn't entitle to the payments.

 

Depends on the policy.

 

The issue is he cannot do the job he's trained and qualified to do, so he's stuck with the dilemma of volunteering or part time job amidst the pain,( company refuses to do the surgery required to fix the mess) but never could he reliably or enjoyably go to FT. So he's sitting on his arse Infront of a tv getting paid 100k/year but has zero purpose to life. It's certainly been an interesting journey.

 

Might be confusing TPDisability insurance with Income Protection insurance. IP works, for example, if you are undergoing cancer treatment and you cant work for several months, but will return to your job when you get better.

 

I believe even if you will not return to work, you will get paid monthly insured amount until you reach 60 or whatever the age the policy says.

And this monthly benefit is in addition to TPD and Trauma payout.

To clarify my policy is with Onepath.

 

I never understood how they increase 25% premium if its level premium.

 

Level premiums can and do increase for "class" of people. It's like private health insurance which is based on group risk and claims.

If you did't have any medical conditions since you took the policy, see an insurance advisor to see if they can find a provider that'll transfer your policy rather than start a new one.

 

But whats the point of level premium of the premium is anyway going to increase. I know i need to ask this question to my advisor but love hear if someone here come across this situation

 

Level premium means just that "level/fixed" for a group of people based on risk/claims. Unfortunate that it went up by a lot in a one go. Zurich policies are quite competitive but no guarantees they won't go up.

 

All premiums generally increase with time.
Additionally, the step premiums increase with age as well.

 

ANZ OnePath was sold. The new owners may be aiming to make a profit and align pricing with their other products (IOOF). That said many super policies have also been increased after a large scale industry review of pricing into insurances.

You may be able to consider variation to the policy with wait times. Wait times of 1 day may be foolish if you have accumulated sick leave / LSL for example. Its like choosing a $0 excess for your car cover. The $500 excess savings for your car may equal a $400 a year incraese in premiums so you have to argue are you really that bad a driver ? What is my risk I want to cover ? . A 30-60 wait period may substantially reduce premiums without a financial impact of concern.

 

It's a substantial increase this year given the changes in the industry, normally level premiums increase far less each year compared to stepped but that's why they have a higher premium in the initial years - works out more cost-effective in the long run if you will have your cover for a long period of time.

Level premiums start higher and increase at a slower rate than stepped premiums so can be more cost-effective for long-term cover. Insurance policy quotes can have a comparison of cumulative premiums over so many years so you can evaluate which is a better outcome - normally your adviser would be able to look at this for you.