Last year, APRA (the governing body for insurance companies) released sustainability measures for income protection policies.
The purpose of these measures was to address the insurance industry’s poor performance of income protection policies and to ensure the industry is moving to a more sustainable model moving forward.
One of the key measures that insurance companies have implemented in more recent times is the end of Agreed Value income protection policies.
What is Agreed Value?
Agreed Value means that if in the future you are to claim on your income protection policy, then the amount that your insured for is guaranteed to be paid at claim time.
As of 1 April 2020 most, if not all insurance companies will no longer be offering to apply for Agreed Value policies. Instead they will only be offering application for Indemnity Value policies.
What is Indemnity Value?
Indemnity Value policy means that at the time of claim the insurance company will only pay up to 75% of your wage at the time of claim, which may not necessarily be the amount that you have insured yourself for.
If you have been thinking of having your income protection insurance reviewed, I would encouraged to seek the services of a financial adviser as soon as possible since the deadline for new applications for Agreed Value income protection policies are coming to an end.
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